Morris State Bancshares Publicizes Strong Earnings in 2020 and Will increase Quarterly Dividend Different OTC:MBLU

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Morris State Bancshares Announces Solid Earnings in 2020 and Increases Quarterly Dividend Other OTC:MBLU

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%