DUBLIN, Ga., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.5 million for the quarter ending September 30, 2023, representing a decrease of $315 thousand, or 6.55%, compared to net income of $4.8 million for the quarter ended June 30, 2023. The Company also announced diluted earnings per share of $2.12 for quarter, representing a 0.15% decrease from diluted earnings per share of $2.27 for the prior quarter. Net earnings for the third quarter were driven by the bank’s lower provisioning for income taxes due to the accretion of deferred tax assets (DTA’s) related to a prior merger and the accelerated use of solar tax credits associated with solar projects coming online as supply chain issues improved through the year.
“In the third quarter, we generated net interest income of $12.9 million, just below the second quarter level of $13.2 million,” said Spence Mullis, Chairman and CEO. “As projected, our margin compressed slightly in the third quarter, but we had solid loan growth of $25.4 million, or 10.0% annualized. This loan growth bolstered our net interest income as it remained in line of that of the second quarter. Our non-interest expense increased slightly during the quarter due to increased salaries and employee costs as well as expenses associated with selling and financing of a large, long-held piece of other real estate (ORE). The said ORE will remain on the bank’s balance sheet in the near term as the purchaser is in the process of improving the property with their funds which will eventually allow us to carry the asset as a loan versus ORE.”
The Company’s total shareholders’ equity increased 2.05% to $173.3 million as of September 30, 2023, as compared to $170.0 million as of June 30, 2023. Tangible book value per share increased to $76.61 as of September 30, 2023, a 2.24% increase from $74.93 per share on June 30, 2023. On October 18, 2023, the board of directors approved its fourth quarter dividend of $0.44 per share payable on or about December 15th to all shareholders of record as of November 15th.
Deposits grew slightly by $2.3 million during the quarter. The Company’s funding mix continues to shift towards certificates of deposit (CDs) as interest rates have continued to rise. CDs as a percentage of total deposits has increased and represented approximately 9% of total deposits at the end of the third quarter. In the current interest-rate environment, management anticipates CD levels will continue to rise and represent a higher percentage of the overall funding mix on a go-forward basis. From a historical perspective, ten years ago, CD funding represented 38% of our overall deposit mix at the quarter ending September 30, 2013. Management remains focused on managing overall deposit costs as tightly as possible and booking or renewing new loans at higher rates to minimize margin compression. Due to economic growth in the bank’s various markets related to many new manufacturing projects, solid loan growth opportunity is expected to continue.
Credit quality of the loan book remained consistent during the quarter. Adversely classified assets to Tier 1 Capital plus the allowance ended the quarter at 7.00%, as compared to 6.41% at the end of the second quarter. The bank’s allowance for credit losses as a percentage of loans was 1.32%, as compared with 1.36% at the end of the second quarter.
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
September 30,
June 30,
September 30,
2023
2023
Change
% Change
2022
Change
% Change
(Unaudited)
(Unaudited)
(Unaudited)
ASSETS
Cash and due from banks
$
36,373,555
$
49,157,915
$
(12,784,360
)
-26.01
%
$
61,031,336
$
(24,657,781
)
-40.40
%
Federal funds sold
8,695,149
16,908,217
(8,213,068
)
-48.57
%
24,137,905
(15,442,756
)
-63.98
%
Total cash and cash equivalents
45,068,704
66,066,132
(20,997,428
)
-31.78
%
85,169,241
(40,100,537
)
-47.08
%
Interest-bearing time deposits in other banks
100,000
100,000
-
0.00
%
100,000
-
0.00
%
Securities available for sale, at fair value
3,879,531
-
3,879,531
0.00
%
-
3,879,531
0.00
%
Securities held to maturity, at cost (net of CECL Reserve)
244,837,916
253,917,288
(9,079,372
)
-3.58
%
266,551,405
(21,713,489
)
-8.15
%
Federal Home Loan Bank stock, restricted, at cost
1,727,100
1,494,300
232,800
15.58
%
1,494,400
232,700
15.57
%
Loans, net of unearned income
1,049,730,890
1,024,348,931
25,381,959
2.48
%
1,030,422,253
19,308,637
1.87
%
Less-allowance for credit losses
(13,860,420
)
(13,912,231
)
51,811
-0.37
%
(13,027,473
)
(832,947
)
6.39
%
Loans, net
1,035,870,470
1,010,436,700
25,433,770
2.52
%
1,017,394,780
18,475,690
1.82
%
Bank premises and equipment, net
13,325,846
13,528,556
(202,710
)
-1.50
%
14,018,310
(692,464
)
-4.94
%
ROU assets for operating lease, net
1,216,601
1,327,882
(111,281
)
-8.38
%
1,569,358
(352,757
)
-22.48
%
Goodwill
9,361,704
9,361,704
-
0.00
%
9,361,704
-
0.00
%
Intangible assets, net
1,765,877
1,851,765
(85,888
)
-4.64
%
2,110,003
(344,126
)
-16.31
%
Other real estate and foreclosed assets
3,567,309
3,749,267
(181,958
)
-4.85
%
3,774,402
(207,093
)
-5.49
%
Accrued interest receivable
5,585,081
5,224,150
360,931
6.91
%
4,737,122
847,959
17.90
%
Cash surrender value of life insurance
14,613,337
14,516,332
97,005
0.67
%
14,244,800
368,537
2.59
%
Other assets
25,711,989
23,327,101
2,384,888
10.22
%
14,373,367
11,338,622
78.89
%
Total Assets
$
1,406,631,465
$
1,404,901,177
$
1,730,288
0.12
%
$
1,434,898,892
(28,267,427
)
-1.97
%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing
$
316,825,603
$
318,451,205
$
(1,625,602
)
-0.51
%
$
368,015,994
(51,190,391
)
-13.91
%
Interest bearing
862,167,812
858,291,311
3,876,501
0.45
%
870,746,377
(8,578,565
)
-0.99
%
1,178,993,415
1,176,742,516
2,250,899
0.19
%
1,238,762,371
(59,768,956
)
-4.82
%
-
Other borrowed funds
42,132,633
45,113,982
(2,981,349
)
-6.61
%
28,808,031
13,324,602
46.25
%
Lease liability for operating lease
1,216,601
1,327,882
(111,281
)
-8.38
%
1,569,358
(352,757
)
-22.48
%
Accrued interest payable
979,913
580,607
399,306
68.77
%
306,662
673,251
219.54
%
Accrued expenses and other liabilities
10,056,934
11,359,139
(1,302,205
)
-11.46
%
5,784,488
4,272,446
73.86
%
-
Total liabilities
1,233,379,496
1,235,124,126
(1,744,630
)
-0.14
%
1,275,230,910
(41,851,414
)
-3.28
%
Shareholders' Equity:
Common stock
2,179,210
2,179,075
135
0.01
%
2,171,665
7,545
0.35
%
Paid in capital surplus
42,177,860
42,167,829
10,031
0.02
%
41,086,276
1,091,584
2.66
%
Retained earnings
116,076,498
116,950,728
(874,230
)
-0.75
%
100,832,787
15,243,711
15.12
%
Current year earnings
13,404,804
8,911,726
4,493,078
50.42
%
14,464,536
(1,059,732
)
-7.33
%
Accumulated other comprehensive income (loss)
2,148,509
2,302,605
(154,096
)
-6.69
%
2,809,715
(661,206
)
-23.53
%
Treasury Stock, at cost 63,014
(2,734,912
)
(2,734,912
)
-
0.00
%
(1,696,997
)
(1,037,915
)
61.16
%
Total shareholders' equity
173,251,969
169,777,051
3,474,918
2.05
%
159,667,982
13,583,987
8.51
%
Total Liabilities and Shareholders' Equity
$
1,406,631,465
$
1,404,901,177
1,730,288
0.12
%
$
1,434,898,892
(28,267,427
)
-1.97
%
MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
September 30,
June 30,
September 30,
2023
2023
Change
% Change
2022
Change
% Change
(Unaudited)
(Unaudited)
(Unaudited)
Interest and Dividend Income:
Interest and fees on loans
$
15,803,711
$
15,361,766
$
441,945
2.88
%
$
13,401,241
$
2,402,470
17.93
%
Interest income on securities
2,051,695
2,099,593
(47,898
)
-2.28
%
1,882,931
168,764
8.96
%
Income on federal funds sold
216,377
106,490
109,887
103.19
%
58,422
157,955
270.37
%
Income on time deposits held in other banks
302,545
267,047
35,498
13.29
%
284,617
17,928
6.30
%
Other interest and dividend income
43,630
66,236
(22,606
)
-34.13
%
53,095
(9,465
)
-17.83
%
Total interest and dividend income
18,417,958
17,901,132
516,826
2.89
%
15,680,306
2,737,652
17.46
%
Interest Expense:
Deposits
5,109,712
4,290,251
819,461
19.10
%
1,298,347
3,811,365
293.56
%
Interest on other borrowed funds
455,105
574,301
(119,196
)
-20.75
%
433,142
21,963
5.07
%
Interest on federal funds purchased
--
705
(705
)
0.00
%
2,854
(2,854
)
0.00
%
Total interest expense
5,564,817
4,865,257
699,560
14.38
%
1,734,343
3,830,474
220.86
%
Net interest income before provision for loan losses
12,853,141
13,035,875
(182,734
)
-1.40
%
13,945,963
(1,092,822
)
-7.84
%
Less-provision for credit losses
(33,351
)
(141,187
)
107,836
-76.38
%
3,750,000
(3,783,351
)
-100.89
%
Net interest income after provision for credit losses
12,886,492
13,177,062
(290,570
)
-2.21
%
10,195,963
2,690,529
26.39
%
Noninterest Income:
Service charges on deposit accounts
532,598
533,273
(675
)
-0.13
%
639,971
(107,373
)
-16.78
%
Other service charges, commissions and fees
399,587
376,266
23,321
6.20
%
411,386
(11,799
)
-2.87
%
Gain on sales of foreclosed assets
--
--
--
--
--
--
--
Increase in CSV of life insurance
97,005
92,372
4,633
5.02
%
90,902
6,103
6.71
%
Other income
7,681
106,051
(98,370
)
-92.76
%
70,907
(63,226
)
-89.17
%
Total noninterest income
1,036,871
1,107,962
(71,091
)
-6.42
%
1,213,166
(176,295
)
-14.53
%
Noninterest Expense:
Salaries and employee benefits
4,374,087
3,889,461
484,626
12.46
%
4,499,343
(125,256
)
-2.78
%
Occupancy and equipment expenses, net
599,714
570,746
28,968
5.08
%
618,367
(18,653
)
-3.02
%
Loss on sales of premises and equipment
54,269
--
54,269
--
220,280
(166,011
)
-75.36
%
Loss on sales of foreclosed assets
320,110
5,816
314,294
0.00
%
995
319,115
0.00
%
Other expenses
3,837,844
3,681,617
156,227
4.24
%
3,401,150
436,694
12.84
%
Total noninterest expense
9,186,024
8,147,640
1,038,384
12.74
%
8,740,135
445,889
5.10
%
Income Before Income Taxes
4,737,339
6,137,384
(1,400,045
)
-22.81
%
2,668,994
2,068,345
77.50
%
Provision for income taxes
244,258
1,329,595
(1,085,337
)
-81.63
%
568,076
(323,818
)
-57.00
%
-
Net Income
$
4,493,081
$
4,807,789
(314,708
)
-6.55
%
$
2,100,918
2,392,163
113.86
%
Earnings per common share:
Basic
$
2.12
$
2.27
(0.15
)
-6.61
%
$
0.98
1.14
116.33
%
Diluted
$
2.12
$
2.27
(0.15
)
-6.61
%
$
0.98
1.14
116.33
%
Quarter Ending
September 30,
June 30,
Sept 30,
2023
2023
2022
Dollars in thousand, except per share data
(Unaudited)
(Unaudited)
(Unaudited)
Per Share Data
Basic Earnings per Common Share
$
2.12
$
2.27
$
0.98
Diluted Earnings per Common Share
2.12
2.27
0.98
Dividends per Common Share
0.44
0.44
0.44
Book Value per Common Share
81.87
80.23
75.42
Tangible Book Value per Common Share
76.61
74.93
70.01
Average Diluted Shared Outstanding
2,116,186
2,118,681
2,116,463
End of Period Common Shares Outstanding
2,116,196
2,116,061
2,116,921
Annualized Performance Ratios (Bank Only)
Return on Average Assets
1.45
%
1.60
%
0.80
%
Return on Average Equity
11.37
%
12.79
%
6.34
%
Equity/Assets
12.79
%
12.45
%
12.49
%
Yield on Earning Assets
5.48
%
5.38
%
4.50
%
Cost of Funds
1.69
%
1.47
%
0.43
%
Net Interest Margin
3.94
%
4.04
%
4.12
%
Efficiency Ratio
62.46
%
54.37
%
52.81
%
Credit Metrics
Allowance for Loan Losses to Total Loans
1.32
%
1.36
%
1.27
%
Adversely Classified Assets to Tier 1 Capital plus Allowance for Loan Losses
7.00
%
6.41
%
5.59
%
CONTACT: CONTACT: Morris State Bancshares Chris Bond Chief Financial Officer 478-272-5202