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% | ||||||||||||||||||||