DUBLIN, Ga., July 30, 2024 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $5.3 million for the quarter ending June 30, 2024, representing an increase of $515 thousand, or 10.70%, compared to net income of $4.8 million for the quarter ended June 30, 2023. In the linked quarter comparison, the Company’s net income increased $432 thousand, or 8.82%, compared to net income of $4.9 million for the quarter ended March 31, 2024. Net interest income before provision for credit losses increased $607 thousand, or 4.68%, from prior quarter levels. Increased quarterly net earnings were a result of growth in both loan balances and loan yields which pushed the bank’s net interest margin (NIM) back over 4.00% for the year.
“We are very pleased with the second quarter as we continued to outpace our budget. Our bankers have diligently continued to grow loans, mostly construction and development in our faster growing markets, which is providing steady growth in our earning asset yield as these loans fund. The growth in our earning asset yield outpaced the increase in our cost of funds by five basis points. We remain focused on growing our deposits, specifically noninterest bearing deposits to help further protect our margin,” said Spence Mullis, Chairman and CEO.
The net interest margin was 4.06% for the second quarter of 2024 compared to 3.99% for the first quarter of 2024 and 4.04% for the second quarter of 2023. The average yield on earning assets grew 12 basis points from 5.87%, as of March 31, 2024, to 5.99%, while the bank’s cost of funds increased seven basis points from 2.09% to 2.16% during the same period.
Loans increased $21.2 million or an annualized 7.24% during the second quarter. The provision for credit losses increased $267 thousand, primarily driven by the bank’s CECL provision for unfunded commitments. The bank’s reserve as a percentage of total loans was 1.30% for June 30, 2024, as compared to 1.34% for March 31, 2024, and 1.36% as of June 30, 2023. The Company’s adversely classified index increased slightly from 5.22% as of March 31, 2024 to 6.04% as of June 30, 2024, but was down from 6.41% from the quarter ended June 30, 2023. The bank’s efficiency ratio improved to 57.97% as of June 30, 2024 from 61.48% at March 31, 2024.
The Company’s total shareholders’ equity increased 2.33% during the quarter to $186 million as of June 30, 2024, and up 9.69%, or $16.4 million, from June 30, 2023. Tangible book value of the Company grew to $16.531 on June 30, 2024, from $16.171 on March 31, 2024, and was up 10.27% from $14.99 as of June 30, 2023. On July 17, 2024, the board of directors approved a second quarter dividend of $0.0921 per share payable on or about September 15, 2024, to all shareholders of record as of August 15, 2024.
During the quarter, the Company also redeemed in full the remaining $8.25 million of its subordinated debt issued in 2019. This debt was set to reprice from its original fixed rate to a floating rate of 3-month SOFR plus 408 basis points, or 9.28% based upon current rates. The adjustment in the rate payable on this issuance would have increased the Company’s pre-tax interest expense on the issuance from $129 thousand to $193 thousand per quarter, based upon rates at the time of the redemption. The Company has one remaining issuance of subordinated debt of $15.0 million, which will convert from its current fixed rate of 5.25% to a floating rate currently equal to 10.20% in July 2025, at which time the debt will also be redeemable by the Company. As the Company continues to build cash reserves, it is management’s intention to retire this tranche in full as well when it is eligible for redemption.
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.
_______________ 1 Per share amounts for March 31, 2024 and previous quarters have been adjusted to reflect the April 22, 2024 4-for-1 stock dividend.
MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Balance Sheet
June 30,
March 31,
June 30,
2024
2024
Change
% Change
2023
Change
% Change
(Unaudited)
(Unaudited)
(Unaudited)
ASSETS
Cash and due from banks
$
43,688,884
$
67,354,916
$
(23,666,032
)
-35.14
%
$
49,157,915
$
(5,469,031
)
-11.13
%
Federal funds sold
14,624,710
3,746,408
10,878,302
290.37
%
16,908,217
(2,283,507
)
-13.51
%
Total cash and cash equivalents
58,313,594
71,101,324
(12,787,730
)
-17.99
%
66,066,132
(7,752,538
)
-11.73
%
Interest-bearing time deposits in other banks
100,000
100,000
-
0.00
%
100,000
-
0.00
%
Securities available for sale, at fair value
7,669,642
7,845,095
(175,453
)
-2.24
%
-
7,669,642
0.00
%
Securities held to maturity, at cost (net of CECL Reserve)
227,532,821
231,758,455
(4,225,634
)
-1.82
%
253,917,288
(26,384,467
)
-10.39
%
Federal Home Loan Bank stock, restricted, at cost
1,027,800
1,029,600
(1,800
)
-0.17
%
1,494,300
(466,500
)
-31.22
%
Loans, net of unearned income
1,081,790,223
1,060,755,992
21,034,231
1.98
%
1,024,348,931
57,441,292
5.61
%
Less-allowance for credit losses
(14,109,191
)
(14,236,149
)
126,958
-0.89
%
(13,912,231
)
(196,960
)
1.42
%
Loans, net
1,067,681,032
1,046,519,843
21,161,189
2.02
%
1,010,436,700
57,244,332
5.67
%
-
Bank premises and equipment, net
13,051,972
13,112,437
(60,465
)
-0.46
%
13,528,556
(476,584
)
-3.52
%
ROU assets for operating lease, net
945,268
1,035,712
(90,444
)
-8.73
%
1,327,882
(382,614
)
-28.81
%
Goodwill
9,361,704
9,361,704
-
0.00
%
9,361,704
-
0.00
%
Intangible assets, net
1,508,214
1,594,101
(85,887
)
-5.39
%
1,851,765
(343,551
)
-18.55
%
Other real estate and foreclosed assets
43,408
38,558
4,850
12.58
%
3,749,267
(3,705,859
)
-98.84
%
Accrued interest receivable
6,421,999
5,964,911
457,088
7.66
%
5,224,150
1,197,849
22.93
%
Cash surrender value of life insurance
14,915,967
14,813,139
102,828
0.69
%
14,516,332
399,635
2.75
%
Other assets
21,721,225
25,151,653
(3,430,428
)
-13.64
%
23,327,101
(1,605,876
)
-6.88
%
Total Assets
$
1,430,294,646
$
1,429,426,532
$
868,114
0.06
%
$
1,404,901,177
25,393,469
1.81
%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing
$
298,997,994
$
302,810,356
$
(3,812,362
)
-1.26
%
$
318,451,205
(19,453,211
)
-6.11
%
Interest bearing
914,360,430
904,181,606
10,178,824
1.13
%
858,291,311
56,069,119
6.53
%
1,213,358,424
1,206,991,962
6,366,462
0.53
%
1,176,742,516
36,615,908
3.11
%
-
Other borrowed funds
18,998,904
27,169,934
(8,171,030
)
-30.07
%
45,113,982
(26,115,078
)
-57.89
%
Lease liability for operating lease
945,268
1,035,712
(90,444
)
-8.73
%
1,327,882
(382,614
)
-28.81
%
Accrued interest payable
1,730,280
1,419,439
310,841
21.90
%
580,607
1,149,673
198.01
%
Accrued expenses and other liabilities
9,038,821
10,830,616
(1,791,795
)
-16.54
%
11,359,139
(2,320,318
)
-20.43
%
-
Total liabilities
1,244,071,697
1,247,447,663
(3,375,966
)
-0.27
%
1,235,124,126
8,947,571
0.72
%
Shareholders' Equity:
Common stock
10,688,223
10,645,509
42,714
0.40
%
10,645,374
42,849
0.40
%
Paid in capital surplus
34,729,351
34,349,749
379,602
1.11
%
33,015,191
1,714,160
5.19
%
Retained earnings
132,061,494
133,038,717
(977,223
)
-0.73
%
117,637,067
14,424,427
12.26
%
Current year earnings
10,213,197
4,890,818
5,322,379
108.82
%
8,911,726
1,301,471
14.60
%
Accumulated other comprehensive income (loss)
1,648,392
1,811,160
(162,768
)
-8.99
%
2,302,605
(654,213
)
-28.41
%
Treasury Stock, at cost 83,142
(3,117,708
)
(2,757,084
)
(360,624
)
13.08
%
(2,734,912
)
(382,796
)
14.00
%
Total shareholders' equity
186,222,949
181,978,869
4,244,080
2.33
%
169,777,051
16,445,898
9.69
%
Total Liabilities and Shareholders' Equity
$
1,430,294,646
$
1,429,426,532
868,114
0.06
%
$
1,404,901,177
25,393,469
1.81
%
MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidating Statement of Income
for the Three Months Ended
June 30,
March 31,
June 30,
2024
2024
Change
% Change
2023
Change
% Change
(Unaudited)
(Unaudited)
(Unaudited)
Interest and Dividend Income:
Interest and fees on loans
$
17,879,134
$
17,124,889
$
754,245
4.40
%
$
15,361,766
$
2,517,368
16.39
%
Interest income on securities
1,837,396
1,970,394
(132,998
)
-6.75
%
2,099,593
(262,197
)
-12.49
%
Income on federal funds sold
156,184
168,129
(11,945
)
-7.10
%
106,490
49,694
46.67
%
Income on time deposits held in other banks
590,205
408,412
181,793
44.51
%
267,047
323,158
121.01
%
Other interest and dividend income
64,639
75,848
(11,209
)
-14.78
%
66,236
(1,597
)
-2.41
%
Total interest and dividend income
20,527,558
19,747,672
779,886
3.95
%
17,901,132
2,626,426
14.67
%
Interest Expense:
Deposits
6,568,679
6,339,843
228,836
3.61
%
4,290,251
2,278,428
53.11
%
Interest on other borrowed funds
389,629
445,278
(55,649
)
-12.50
%
574,301
(184,672
)
-32.16
%
Interest on federal funds purchased
--
--
--
0.00
%
705
(705
)
0.00
%
Total interest expense
6,958,308
6,785,121
173,187
2.55
%
4,865,257
2,093,051
43.02
%
Net interest income before provision for loan losses
13,569,250
12,962,551
606,699
4.68
%
13,035,875
533,375
4.09
%
Less-provision for credit losses
272,419
4,501
267,918
5952.41
%
(141,187
)
413,606
-292.95
%
Net interest income after provision for credit losses
13,296,831
12,958,050
338,781
2.61
%
13,177,062
119,769
0.91
%
Noninterest Income:
Service charges on deposit accounts
535,847
491,568
44,279
9.01
%
533,273
2,574
0.48
%
Other service charges, commissions and fees
397,787
362,692
35,095
9.68
%
376,266
21,521
5.72
%
Gain on sales of foreclosed assets
--
700
(700
)
-100.00
%
--
--
0.00
%
Gain on sales of premises and equipment
141
--
--
--
--
141
0.00
%
Increase in CSV of life insurance
102,828
101,516
1,312
1.29
%
92,372
10,456
11.32
%
Other income
355,155
251,361
103,794
41.29
%
106,051
249,104
234.89
%
Total noninterest income
1,391,758
1,207,837
183,921
15.23
%
1,107,962
283,796
25.61
%
Noninterest Expense:
Salaries and employee benefits
4,650,704
4,861,534
(210,830
)
-4.34
%
3,889,461
761,243
19.57
%
Occupancy and equipment expenses, net
536,330
545,126
(8,796
)
-1.61
%
570,746
(34,416
)
-6.03
%
Loss on sales and calls of securities
265
--
265
--
--
265
--
Loss on sales of foreclosed assets
--
--
--
--
5,816
(5,816
)
--
Other expenses
3,860,188
3,716,219
143,969
3.87
%
3,681,617
178,571
4.85
%
Total noninterest expense
9,047,487
9,122,879
(75,392
)
-0.83
%
8,147,640
899,847
11.04
%
Income Before Income Taxes
5,641,102
5,043,008
598,094
11.86
%
6,137,384
(496,282
)
-8.09
%
Provision for income taxes
318,723
152,190
166,533
-109.42
%
1,329,595
(1,010,872
)
-76.03
%
-
Net Income
$
5,322,379
$
4,890,818
431,561
8.82
%
$
4,807,789
514,590
10.70
%
Earnings per common share:
Basic
$
0.50
$
0.46
0.04
8.70
%
$
0.45
0.05
11.11
%
Diluted
$
0.50
$
0.46
0.04
8.70
%
$
0.45
0.05
11.11
%
Per share amounts for each period have been adjusted to reflect the April 22, 2024 4-for-1 stock dividend.
Quarter Ending
June 30,
March 31,
June 30,
2024
2024
2023
Dollars in thousand, except per share data
(Unaudited)
(Unaudited)
(Unaudited)
Per Share Data
Basic Earnings per Common Share
$
0.50
$
0.46
$
0.45
Diluted Earnings per Common Share
0.50
0.46
0.45
Dividends per Common Share
0.092
0.092
0.088
Book Value per Common Share
17.56
17.20
16.05
Tangible Book Value per Common Share
16.53
16.17
14.99
Average Diluted Shared Outstanding
10,611,811
10,602,289
10,585,884
End of Period Common Shares Outstanding
10,605,080
10,624,932
10,583,263
Annualized Performance Ratios (Bank Only)
Return on Average Assets
1.73
%
1.55
%
1.60
%
Return on Average Equity
13.12
%
11.74
%
12.79
%
Equity/Assets
13.18
%
13.09
%
12.45
%
Yield on Earning Assets
5.99
%
5.87
%
5.38
%
Cost of Funds
2.16
%
2.09
%
1.47
%
Net Interest Margin
4.06
%
3.99
%
4.04
%
Efficiency Ratio
57.97
%
61.48
%
54.37
%
Credit Metrics
Allowance for Loan Losses to Total Loans
1.30
%
1.34
%
1.36
%
Adversely Classified Assets to Tier 1 Capital plus Allowance for Loan Losses
6.04
%
5.22
%
6.41
%
Per share amounts for each period have been adjusted to reflect the April 22, 2024 4-for-1 stock dividend.
CONTACT: CONTACT: Morris State Bancshares Chris Bond Chief Financial Officer 478-272-5202
