Morris State Bancshares Announces Quarterly Earnings And Declares Fourth Quarter Dividend

2024-10-23 08:02:18

(MENAFN- GlobeNewsWire - Nasdaq) DUBLIN, Ga., Oct. 23, 2024 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the“Company”), the parent of Morris Bank, today announced net income of $5.4 million for the quarter ending September 30, 2024, representing an increase of $124 thousand, or 2.34%, compared to net income of $5.3 million for the quarter ended June 30, 2024. Year over year the Company's net income increased $954 thousand, or 21.23%, compared to net income of $4.5 million for the quarter ended September 30, 2023. The Company's quarterly net earnings rose due to sustained loan growth, higher loan yields, an increase in noninterest-bearing deposit accounts, and some stabilization in the cost of funds. These factors combined to strengthen the bank's net interest margin, bringing it to 4.10%.

“We had a solid third quarter. Our core earnings engine remains strong as reflected by the growth in our net interest income. In the third quarter, we generated net interest income of $14.0 million, which was $428 thousand above the June 30, 2024, level of $13.6 million and $1.1 million above the September 30, 2023 level of $12.9 million,” said Spence Mullis, Chairman and CEO.“The Federal Reserve's reduction in the Fed funds rate, combined with robust growth in noninterest-bearing balances, has contributed to stabilizing our cost of funds. Despite continued payoffs of larger loans, we continue to fund a good volume of new loans and previously unfunded commitments driving our loan balances slightly higher.”

The net interest margin was 4.10% for the third quarter of 2024 compared to 4.02% for the second quarter of 2024 and 3.94% for the third quarter of 2023. The average yield on earning assets grew nine basis points from 5.96%, as of June 30, 2024, to 6.05%, while the Company's cost of funds increased two basis points from 2.16% to 2.18% during the same period.

Total deposits declined during the quarter by $16.6 million, or 1.37%, which included a $24 million reduction in brokered money market deposits. However, non-interest-bearing deposits increased $21.5 million, or 7.19% during the quarter, helping to bolster the net interest margin. The bank took down $15.0 million in borrowings from the Federal Home Loan Bank during the third quarter of 2024 to help fund new loan demand and offset the reduction in brokered deposits. Loans increased $6.3 million, or an annualized 2.36% during the third quarter, slowing from the second quarter's annualized growth of 7.24%. Management anticipates steady loan demand in the fourth quarter as political uncertainty eases in November, providing customers with greater clarity to advance their growth strategies.

The bank's reserve as a percentage of total loans was 1.30% for September 30, 2024, as compared to 1.30% for June 30, 2024, and 1.32% as of September 30, 2023. The Company's adversely classified index increased slightly from 6.04% as of June 30, 2024, to 6.15% as of September 30, 2024. The bank's efficiency ratio increased slightly from 58.36% as of June 30, 2024, to 58.90% as of September 30, 2024.

The Company's total shareholders' equity increased 2.35% to $190.6 million as of September 30, 2024, as compared to $186.2 million as of June 30, 2024. Tangible book value per share increased to $16.97 as of September 30, 2024, a 2.66% increase from $16.53 per share on June 30, 2024. On October 16, 2024, the board of directors approved its fourth quarter dividend of $0.092 per share payable on or about December 15th to all shareholders of record as of November 15th.

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,
		2024			2024		Change		% Change			2023		Change		% Change
	(Unaudited)		(Unaudited)				(Unaudited)
ASSETS

Cash and due from banks	$	48,180,615		$	43,688,884		$	4,491,731			10.28	%	$	36,373,555			$	11,807,060		32.46	%
Federal funds sold		11,932,122			14,624,710			(2,692,588	)		-18.41	%		8,695,149				3,236,973		37.23	%
Total cash and cash equivalents		60,112,737			58,313,594			1,799,143			3.09	%		45,068,704				15,044,033		33.38	%

Interest-bearing time deposits in other banks		100,000			100,000			--			0.00	%		100,000				--		0.00	%
Securities available for sale, at fair value		6,299,609			7,669,642			(1,370,033	)		-17.86	%		3,879,531				2,420,078		0.00	%
Securities held to maturity, at cost (net of CECL Reserve)		224,532,603			227,532,821			(3,000,218	)		-1.32	%		244,837,916				(20,305,313	)	-8.29	%
Federal Home Loan Bank stock, restricted, at cost		1,740,300			1,027,800			712,500			69.32	%		1,727,100				13,200		0.76	%
Loans, net of unearned income		1,088,132,851			1,081,790,223			6,342,628			0.59	%		1,049,730,890				38,401,961		3.66	%
Less-allowance for credit losses		(14,179,392	)		(14,109,191	)		(70,201	)		0.50	%		(13,860,420	)			(318,972	)	2.30	%
Loans, net		1,073,953,459			1,067,681,032			6,272,427			0.59	%		1,035,870,470				38,082,989		3.68	%
										-
Bank premises and equipment, net		12,912,111			13,051,972			(139,861	)		-1.07	%		13,325,846				(413,735	)	-3.10	%
ROU assets for operating lease, net		854,808			945,268			(90,460	)		-9.57	%		1,216,601				(361,793	)	-29.74	%
Goodwill		9,361,704			9,361,704			--			0.00	%		9,361,704				--		0.00	%
Intangible assets, net		1,422,326			1,508,214			(85,888	)		-5.69	%		1,765,877				(343,551	)	-19.45	%
Other real estate and foreclosed assets		39,755			43,408			(3,653	)		-8.42	%		3,567,309				(3,527,554	)	-98.89	%
Accrued interest receivable		6,640,617			6,421,999			218,618			3.40	%		5,585,081				1,055,536		18.90	%
Cash surrender value of life insurance		15,022,374			14,915,967			106,407			0.71	%		14,613,337				409,037		2.80	%
Other assets		22,311,520			21,721,225			590,295			2.72	%		25,711,989				(3,400,469	)	-13.23	%
Total Assets	$	1,435,303,923		$	1,430,294,646		$	5,009,277			0.35	%	$	1,406,631,465				28,672,458		2.04	%


LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
Non-interest bearing	$	320,503,732		$	298,997,994		$	21,505,738			7.19	%	$	316,825,603				3,678,129		1.16	%
Interest bearing		876,274,737			914,360,430			(38,085,693	)		-4.17	%		862,167,812				14,106,925		1.64	%
		1,196,778,469			1,213,358,424			(16,579,955	)		-1.37	%		1,178,993,415				17,785,054		1.51	%
										-
Other borrowed funds		34,009,138			18,998,904			15,010,234			79.01	%		42,132,633				(8,123,495	)	-19.28	%
Lease liability for operating lease		854,808			945,268			(90,460	)		-9.57	%		1,216,601				(361,793	)	-29.74	%
Accrued interest payable		2,114,956			1,730,280			384,676			22.23	%		979,913				1,135,043		115.83	%
Accrued expenses and other liabilities		10,938,057			9,038,821			1,899,236			21.01	%		10,056,934				881,123		8.76	%
										-
Total liabilities		1,244,695,428			1,244,071,697			623,731			0.05	%		1,233,379,496				11,315,932		0.92	%

Shareholders' Equity:
Common stock		10,688,223			10,688,223			--			0.00	%		2,179,210				8,509,013		390.46	%
Paid in capital surplus		34,867,691			34,729,351			138,340			0.40	%		41,548,417				(6,680,726	)	-16.08	%
Retained earnings		131,085,914			132,061,494			(975,580	)		-0.74	%		116,705,941				14,379,973		12.32	%
Current year earnings		15,660,043			10,213,197			5,446,846			53.33	%		13,404,804				2,255,239		16.82	%
Accumulated other comprehensive income (loss)		1,582,952			1,648,392			(65,440	)		-3.97	%		2,148,509				(565,557	)	-26.32	%
Treasury Stock, at cost 91,878		(3,276,328	)		(3,117,708	)		(158,620	)		5.09	%		(2,734,912	)			(541,416	)	19.80	%
Total shareholders' equity		190,608,495			186,222,949			4,385,546			2.35	%		173,251,969				17,356,526		10.02	%

Total Liabilities and Shareholders' Equity	$	1,435,303,923		$	1,430,294,646			5,009,277			0.35	%	$	1,406,631,465				28,672,458		2.04	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES

Consolidating Statement of Income
for the Three Months Ended

	September 30,		June 30,					September 30,
		2024			2024	Change		% Change		2023		Change		% Change
	(Unaudited)		(Unaudited)					(Unaudited)
Interest and Dividend Income:
Interest and fees on loans	$	18,630,690		$	17,879,134	$	751,556		4.20	%	$	15,803,711			$	2,826,979		17.89	%
Interest income on securities		1,825,236			1,837,396		(12,160	)	-0.66	%		2,051,695				(226,459	)	-11.04	%
Income on federal funds sold		163,624			156,184		7,440		4.76	%		216,377				(52,753	)	-24.38	%
Income on time deposits held in other banks		338,433			590,205		(251,772	)	-42.66	%		302,545				35,888		11.86	%
Other interest and dividend income		21,031			64,639		(43,608	)	-67.46	%		43,630				(22,599	)	-51.80	%
Total interest and dividend income		20,979,014			20,527,558		451,456		2.20	%		18,417,958				2,561,056		13.91	%

Interest Expense:
Deposits		6,671,982			6,568,679		103,303		1.57	%		5,109,712				1,562,270		30.57	%
Interest on other borrowed funds		309,265			389,629		(80,364	)	-20.63	%		455,105				(145,840	)	-32.05	%
Interest on federal funds purchased		--			--		--		--			--				--		0.00	%
Total interest expense		6,981,247			6,958,308		22,939		0.33	%		5,564,817				1,416,430		25.45	%

Net interest income before provision for loan losses		13,997,767			13,569,250		428,517		3.16	%		12,853,141				1,144,626		8.91	%
Less-provision for credit losses		252,021			272,419		(20,398	)	-7.49	%		(33,351	)			285,372		-855.66	%
Net interest income after provision for credit losses		13,745,746			13,296,831		448,915		3.38	%		12,886,492				859,254		6.67	%

Noninterest Income:
Service charges on deposit accounts		576,751			535,847		40,904		7.63	%		532,598				44,153		8.29	%
Other service charges, commissions and fees		399,839			397,787		2,052		0.52	%		399,587				252		0.06	%
Gain on sales of foreclosed assets		--			--		--		0.00	%		--				--		0.00	%
Gain on sales of premises and equipment		--			141		(141	)	-100.00	%		--				--		0.00	%
Increase in CSV of life insurance		106,407			102,828		3,579		3.48	%		97,005				9,402		9.69	%
Other income		23,002			355,155		(332,153	)	-93.52	%		7,681				15,321		199.47	%
Total noninterest income		1,105,999			1,391,758		(285,759	)	-20.53	%		1,036,871				69,128		6.67	%

Noninterest Expense:
Salaries and employee benefits		4,794,940			4,650,704		144,236		3.10	%		4,374,087				420,853		9.62	%
Occupancy and equipment expenses, net		592,165			536,330		55,835		10.41	%		599,714				(7,549	)	-1.26	%
Loss on sales and calls of securities		--			265		(265	)	0.00	%		--				--		0.00	%
Loss on Sales of premises and equipment		--			--		--		0.00	%		54,269				(54,269.0	)	0.00	%
Loss on sales of foreclosed assets		2,065			--		2,065		0.00	%		320,110				(318,045	)	0.00	%
Other expenses		3,752,517			3,860,188		(107,671	)	-2.79	%		3,837,844				(85,327	)	-2.22	%
Total noninterest expense		9,141,687			9,047,487		94,200		1.04	%		9,186,024				(44,337	)	-0.48	%

Income Before Income Taxes		5,710,058			5,641,102		68,956		1.22	%		4,737,339				972,719		20.53	%
Provision for income taxes		263,212			318,723		(55,511	)	17.42	%		244,258				18,954		7.76	%
										-
Net Income	$	5,446,846		$	5,322,379		124,467		2.34	%	$	4,493,081				953,765		21.23	%


Earnings per common share:
Basic	$	0.51		$	0.50		0.01		2.43	%	$	0.42				0.09		21.00	%
Diluted	$	0.51		$	0.50		0.01		2.00	%	$	0.42				0.09		21.43	%

Per share amounts for September 30, 2023 and previous quarters have been adjusted to reflect the April 22, 2024 5-for-1 stock dividend.

				Quarter Ending

				September 30,	June 30,	September 30,
					2024				2024				2023
Dollars in thousand		(Unaudited)	(Unaudited)	(Unaudited)

Per Share Data
Basic Earnings per Common Share	$	0.51			$	0.50			$	0.42
Diluted Earnings per Common Share		0.51				0.50				0.42
Dividends per Common Share		0.092				0.092				0.088
Book Value per Common Share		17.99				17.56				16.37
Tangible Book Value per Common Share	16.97				16.53				15.32

Average Diluted Shared Outstanding		10,602,348				10,611,811				10,582,485
End of Period Common Shares Outstanding	10,596,345				10,605,080				10,582,494


Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.65%				1.73%				1.45%
Return on Average Equity			12.37%				13.12%				11.37%
Equity/Assets				13.23%				13.18%				12.79%
Yield on Earning Assets			6.05%				5.96%				5.48%
Cost of Funds				2.18%				2.16%				1.69%
Net Interest Margin			4.10%				4.02%				3.94%
Efficiency Ratio				58.90%				58.36%				62.24%

Credit Metrics
Allowance for Loan Losses to Total Loans	1.30%				1.30%				1.32%
Adversely Classified Assets to Tier 1 Capital
plus Allowance for Loan Losses		6.15%				6.04%				7.00%

Per share amounts for September 30, 2023 and previous quarters have been adjusted to reflect the April 22, 2024 5-for-1 stock dividend.

CONTACT: CONTACT: Morris State Bancshares Chris Bond Chief Financial Officer 478-272-5202

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