DUBLIN, Ga., Oct. 23, 2020 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.5 million, or an earnings per share of $2.13, for the quarter ended September 30, 2020. The earnings represent an increase of approximately $425 thousand, or 10.56%, compared to net income of $4.0 million, or $1.97 per share, for the quarter ended September 30, 2019. On a pretax basis, the Company earned $5.8 million for the quarter versus $4.9 million for the prior year quarter and $4.6 million in the linked prior quarter representing increases of 19% and 25%, respectively.
“In the third quarter, we generated net interest income, net of PPP fees, of $11.3 million, which was a 4.5% increase as compared to the second quarter. We realized these solid core net interest earnings by way of a continued focus on lowering deposit costs and generating a slight increase in loan volume. Net earnings were further enhanced due to lower credit costs experienced in the quarter as compared to the quarter ended June 30, 2020,” said Spence Mullis, President and CEO. “As discussed last quarter, a charge on a legacy credit and additional uncertainty due to COVID led us to increase provision expense more than we budgeted at the beginning of the year. With no significant negative credit migration in the third quarter, we reserved $1.6 million less than in the prior quarter, which further enhanced our earnings. Our allowance as a percentage of gross loans net of PPP loans was 1.35% on September 30, 2020. We continue to monitor our local economies and our credit portfolio in real time. Like all Americans, we realize that we are still in the early stages of an unprecedented economic and health situation. However, up to this point, our customers and our balance sheet have both shown great resolve and stability, which gives us optimism as the rest of country follows states like ours and begins to reopen.”
Total assets of the Company increased $161 million, or 16.6%, from the end of 2019. Loans increased $115 million since year end, primarily SBA PPP loans. The bank’s business customers are saving more and keeping higher balances with the bank because of prudent planning and the stimulus still in the system. As these core deposits continue to increase, the bank’s securities portfolio and overnight cash balances have increased as well. Investment securities increased $38 million, or 29%, from year-end 2019. Fed funds and interest-bearing deposits increased $34 million during the same period. Management is focused on managing the excess liquidity in a conservative yet active fashion to generate incremental income. Total shareholders’ equity of the Company increased by $13 million, representing an increase of 11.7% from December 31, 2019. Tangible book value per share was $53.47 as of September 30, 2020, an increase of $6.29, or 13.33%, since December 31, 2019. On October 21, 2020, the board of directors approved a fourth quarter dividend of $0.35 per share payable on or about December 15th to all shareholders of record on November 30, 2020.
Net interest income for the quarters ended September 30, 2020 and 2019 was $11.5 million and $10.5 million, respectively, an increase of $1.0 million, or 10%. Morris Bank’s net interest margin for current quarter and prior year quarter was 4.40% and 4.78%, respectively. The current margin of 4.40% represents a decline from 4.70% as of the quarter ended June 30, 2020, with the decline driven by the absence of the one-time PPP fees recognized in the second quarter. Management expects further moderate margin compression as reducing deposit rates on a go-forward basis will have negligible impact on the margin while loan pricing remains competitive. Secondary mortgage fee income, while strong, fell 11% from $707 thousand in the second quarter of 2020 to $628 thousand in the third quarter of 2020. This decrease was attributed to slower closings with increased underwriting times from correspondents. Service charge income improved during the quarter as did interchange income. The bank also recognized a fee on the sale of an SBA loan of $187 thousand. As a result, total non-interest income increased 38.52%, or $399 thousand, as compared to the linked prior quarter. Efficiency of the bank remained solid at 51.38%.
As discussed in last quarter’s release, on July 22, 2020 the Company completed the issuance of $15 million of 5.25% fixed-to-floating rate subordinated notes due 2030.
COVID Relief
The bank offered two primary forms of pandemic relief options, a 90-day deferral of payment and a six-month interest only payment option. As of September 30, 2020, the bank had completed 935 payment deferrals totaling $218.9 million. Payments have resumed on 98.9% of these balances. As of September 30, 2020, the bank had completed six-month interest only modifications, totaling $22.6 million. The majority of the loans (72%) remained in the interest-only period as of September 30, 2020. Management will continue to monitor changes in the statistics and additional pandemic relief requests. To date, secondary relief request has totaled $10.7 million, representing under 5% of the total original loans that were offered relief.
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 | |||||||||||||||||||||||
| for the Three Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | June 30, | |||||||||||||||||||||
| 2020 | 2019 | Change | % Change | 2020 | Change | % Change | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||
| Interest and dividend income: | |||||||||||||||||||||||
| Loans, including fees | $ | 11,741,017 | $ | 11,608,383 | $ | 132,634 | 1.14 | % | $ | 12,758,312 | $ | (1,017,295 | ) | -7.97 | % | ||||||||
| Securities | 1,086,503 | 808,597 | 277,906 | 34.37 | % | 942,506 | 143,997 | 15.28 | % | ||||||||||||||
| Federal funds sold | 6,511 | 158,805 | (152,294 | ) | -95.90 | % | 8,615 | (2,104 | ) | -24.42 | % | ||||||||||||
| Interest-bearing deposits in banks | 4,590 | 8,191 | (3,601 | ) | -43.96 | % | 7,766 | (3,176 | ) | -40.90 | % | ||||||||||||
| FHLB stock | 9,731 | 16,861 | (7,130 | ) | -42.29 | % | 11,692 | (1,961 | ) | -16.77 | % | ||||||||||||
| Other interest and dividend income | 35,939 | 150,162 | (114,223 | ) | -76.07 | % | 26,666 | 9,273 | 34.77 | % | |||||||||||||
| Total interest income | 12,884,291 | 12,750,999 | 133,292 | 1.05 | % | 13,755,557 | (871,266 | ) | -6.33 | % | |||||||||||||
| Interest expense: | |||||||||||||||||||||||
| Deposits | 1,007,808 | 2,040,287 | (1,032,479 | ) | -50.60 | % | 1,381,632 | (373,824 | ) | -27.06 | % | ||||||||||||
| Borrowed funds | 329,114 | 205,653 | 123,461 | 60.03 | % | 179,337 | 149,777 | 83.52 | % | ||||||||||||||
| Federal funds purchased | -- | -- | -- | -- | -- | -- | |||||||||||||||||
| Total interest expense | 1,336,922 | 2,245,940 | (909,018 | ) | -40.47 | % | 1,560,969 | (224,047 | ) | -14.35 | % | ||||||||||||
| Net interest income | 11,547,369 | 10,505,059 | 1,042,310 | 9.92 | % | 12,194,588 | (647,219 | ) | -5.31 | % | |||||||||||||
| Provision for loan losses | 450,000 | 525,000 | (75,000 | ) | -14.29 | % | 2,000,000 | (1,550,000 | ) | -77.50 | % | ||||||||||||
| Net interest income after | |||||||||||||||||||||||
| provision for loan losses | 11,097,369 | 9,980,059 | 1,117,310 | 11.20 | % | 10,194,588 | 902,781 | 8.86 | % | ||||||||||||||
| Noninterest income: | |||||||||||||||||||||||
| Service charges on deposit accounts | 441,632 | 656,085 | (214,453 | ) | -32.69 | % | 387,440 | 54,192 | 13.99 | % | |||||||||||||
| Other fees and commissions | 612,688 | 446,453 | 166,235 | 37.23 | % | 544,539 | 68,149 | 12.51 | % | ||||||||||||||
| Gain on sale of securities available for sale | 31,179 | -- | 31,179 | 0.00 | % | -- | 31,179 | ||||||||||||||||
| Gain on sale of loans | 187,006 | -- | 187,006 | 0.00 | % | 93,136 | 93,870 | 100.79 | % | ||||||||||||||
| Gain on sales of premises and equipment | 4,000 | -- | 4,000 | 0.00 | % | 9,742 | (5,742 | ) | -58.94 | % | |||||||||||||
| Increase in CSV of life insurance | 94,830 | 45,117 | 49,713 | 110.19 | % | -- | 94,830 | ||||||||||||||||
| Other income | 62,163 | 1,774 | 60,389 | 3404.11 | % | -- | 62,163 | ||||||||||||||||
| Total noninterest income | 1,433,498 | 1,149,429 | 284,069 | 24.71 | % | 1,034,857 | 398,641 | 38.52 | % | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||
| Salaries and employee benefits | 4,151,167 | 3,574,237 | 576,930 | 16.14 | % | 4,377,552 | (226,385 | ) | -5.17 | % | |||||||||||||
| Occupancy and equipment expenses, net | 634,529 | 627,564 | 6,965 | 1.11 | % | 603,710 | 30,819 | 5.10 | % | ||||||||||||||
| Loss on sales of foreclosed assets | 55,882 | 10,417 | 45,465 | 436.45 | % | 2,240 | 53,642 | 2394.73 | % | ||||||||||||||
| Loss on sale of loans | -- | 215,534 | (215,534 | ) | (100.00 | %) | -- | -- | |||||||||||||||
| Other operating | 1,862,454 | 1,791,369 | 71,085 | 3.97 | % | 1,601,247 | 261,207 | 16.31 | % | ||||||||||||||
| Total noninterest expense | 6,704,032 | 6,219,121 | 484,911 | 7.80 | % | 6,584,749 | 119,283 | 1.81 | % | ||||||||||||||
| Income before Taxes | 5,826,835 | 4,910,367 | 916,468 | 18.66 | % | 4,644,696 | 1,182,139 | 25.45 | % | ||||||||||||||
| Income Taxes | 1,374,277 | 883,169 | 491,108 | 55.61 | % | 1,275,320 | 98,957 | 7.76 | % | ||||||||||||||
| Net Income | $ | 4,452,558 | $ | 4,027,198 | $ | 425,360 | 10.56 | % | $ | 3,369,376 | $ | 1,083,182 | 32.15 | % | |||||||||
| Earnings per Share | $ | 2.13 | $ | 1.97 | $ | 0.16 | 8.12 | % | $ | 1.61 | $ | 0.52 | 32.30 | % | |||||||||
| Tangible Book Value per Common Share | $ | 53.47 | $ | 45.91 | $ | 7.56 | 16.47 | % | $ | 51.07 | $ | 2.40 | 4.70 | % | |||||||||
| MORRIS STATE BANCSHARES, INC. | |||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||
| Consolidating Balance Sheet | |||||||||||||||
| September 30 | December 31 | ||||||||||||||
| 2020 | 2019 | Change | % Change | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 54,606,091 | $ | 77,696,887 | $ | (23,090,796 | ) | -29.72 | % | ||||||
| Federal funds sold | 51,404,450 | 16,293,628 | 35,110,822 | 215.49 | % | ||||||||||
| Interest bearing time deposits in other banks | 600,000 | 1,350,000 | (750,000 | ) | -55.56 | % | |||||||||
| Securities available for sale, at fair value | 153,948,056 | 124,315,098 | 29,632,958 | 23.84 | % | ||||||||||
| Securities held to maturity, at cost | 12,804,101 | 4,752,384 | 8,051,717 | 169.42 | % | ||||||||||
| Federal Home Loan Bank stock | 899,700 | 842,900 | 56,800 | 6.74 | % | ||||||||||
| Loans, less allowance for loan losses | - | ||||||||||||||
| of $10,327,369 and $9,716,060 respectfully | 843,839,602 | 729,170,345 | 114,669,257 | 15.73 | % | ||||||||||
| Premises and equipment, net | 15,941,962 | 15,618,198 | 323,764 | 2.07 | % | ||||||||||
| Goodwill | 9,361,770 | 9,361,770 | - | 0.00 | % | ||||||||||
| Intangible assets, net | 2,803,541 | 3,067,075 | (263,534 | ) | -8.59 | % | |||||||||
| Other real estate and foreclosed assets | 462,086 | 396,486 | 65,600 | 16.55 | % | ||||||||||
| Accrued interest receivable | 2,297,174 | 3,962,807 | (1,665,633 | ) | -42.03 | % | |||||||||
| Cash surrender value of life insurance | 13,529,344 | 13,248,384 | 280,960 | 2.12 | % | ||||||||||
| Other assets | 5,233,460 | 7,979,800 | (2,746,340 | ) | -34.42 | % | |||||||||
| Total assets | $ | 1,167,731,337 | $ | 1,008,055,762 | $ | 159,675,575 | 15.84 | % | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing demand | $ | 276,158,577 | $ | 195,016,771 | $ | 81,141,806 | 41.61 | % | |||||||
| Interest-bearing | 731,147,178 | 682,509,497 | 48,637,681 | 7.13 | % | ||||||||||
| 1,007,305,755 | 877,526,268 | 129,779,487 | 14.79 | % | |||||||||||
| Other borrowed funds | 29,124,000 | 15,003,206 | 14,120,794 | 94.12 | % | ||||||||||
| Accrued interest payable | 322,439 | 537,928 | (215,489 | ) | -40.06 | % | |||||||||
| Accrued expenses and other liabilities | 6,772,441 | 3,556,513 | 3,215,928 | 90.42 | % | ||||||||||
| Total liabilities | 1,043,524,635 | 896,623,915 | 146,900,720 | 16.38 | % | ||||||||||
| Shareholders' Equity: | |||||||||||||||
| Common stock | 2,144,766 | 2,144,917 | (151 | ) | -0.01 | % | |||||||||
| Paid in capital surplus | 39,292,064 | 39,298,458 | (6,394 | ) | -0.02 | % | |||||||||
| Less: treasury stock | (1,564,569 | ) | (1,379,632 | ) | (184,937 | ) | 13.40 | % | |||||||
| Retained earnings | 66,603,322 | 55,916,996 | 10,686,326 | 19.11 | % | ||||||||||
| Current year earnings | 11,859,686 | 13,620,624 | (1,760,938 | ) | (12.93 | %) | |||||||||
| Accumulated other comprehensive income gain | 5,871,433 | 1,830,484 | 4,040,949 | 220.76 | % | ||||||||||
| Total shareholders' equity | 124,206,702 | 111,431,847 | 12,774,855 | 11.46 | % | ||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,167,731,337 | $ | 1,008,055,762 | 159,675,575 | 15.84 | % | ||||||||
MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Selected Financial information
| Quarter Ending | Year Ending | |||||||||||||||
| September 30, | September 30, | June 30, | December 31, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Dollars in thousand, except per share data) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Per Share Data | ||||||||||||||||
| Basic Earnings per Common Share | $ | 2.13 | $ | 1.97 | $ | 1.61 | $ | 6.82 | ||||||||
| Diluted Earnings per Common Share | 2.13 | 1.97 | 1.61 | 6.82 | ||||||||||||
| Dividends per Common Share | 0.35 | 0.93 | ||||||||||||||
| Book Value per Common Share | 59.27 | 51.87 | 56.92 | 53.11 | ||||||||||||
| Tangible Book Value per Common Share | 53.47 | 45.91 | 51.07 | 47.18 | ||||||||||||
| Average Diluted Shared Outstanding | 2,095,443 | 2,058,039 | 2,095,451 | 1,997,735 | ||||||||||||
| End of Period Common Shares Outstanding | 2,095,468 | 2,100,993 | 2,095,468 | 2,098,250 | ||||||||||||
| Annualized Performance Ratios (Bank Only) | ||||||||||||||||
| Return on Average Assets | 1.72 | % | 1.78 | % | 1.31 | % | 1.63 | % | ||||||||
| Return on Average Equity | 14.07 | % | 14.51 | % | 11.82 | % | 14.56 | % | ||||||||
| Equity/Assets | 12.48 | % | 12.23 | % | 11.31 | % | 11.65 | % | ||||||||
| Cost of Funds | 0.40 | % | 0.99 | % | 0.57 | % | 1.02 | % | ||||||||
| Net Interest Margin | 4.40 | % | 4.78 | % | 4.70 | % | 4.65 | % | ||||||||
| Efficiency Ratio | 51.38 | % | 53.00 | % | 50.56 | % | 57.80 | % | ||||||||