Morris State Bancshares Announces Quarterly Earnings and Declares Third Quarter Dividend

DUBLIN, Ga., July 25, 2023 (GLOBE NEWSWIRE) -- Morris State Bancshares, Inc. (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $4.8 million for the quarter ending June 30, 2023, representing an increase of $704 thousand, or 17.15%, compared to net income of $4.1 million for the quarter ended March 31, 2023. Higher quarter-over-quarter net earnings were a result of three primary factors:

1. Higher net interest income
2. Lower credit provisioning
3. Lower salaries and benefits costs centered around lower bonus compensation and deferred compensation valuation adjustments
   

“We’re pleased with our execution of operational resiliency during the second quarter, which produced higher quarterly net income,” said Spence Mullis, Chairman and CEO. “While we experienced slight contraction in both loans and deposits during the quarter, we were able to produce a higher net interest margin of 4.04% and slightly higher net interest income of $13.0 million versus $12.9 in the first quarter. The Federal Reserve’s ongoing attempt to tame inflation by increasing rates continued to affect both our deposit and loan levels. We saw net loans decrease $15.9 million, or 1.55%, during the quarter, while overall deposits were down $24.1 million, or 2.01%. Net loan balances decreased due to normal amortization of the portfolio and many customers continuing to sell underlying collateral and paying off their debt. However, our bankers worked hard generating $112 million in gross new loans during the quarter pushing our average earning asset yield up by 32 basis points. Increased asset yields outpaced our cost of funds increase of 29 basis points. We expect competition for solid loans will remain strong, but we are confident in our team of relationship bankers and their focus on not only producing solid loans but more core deposits as well.”

Credit quality of the loan book continued to improve during the quarter with adversely classified assets to Tier 1 Capital plus the allowance ending at 6.41%, down from 6.49% in March and 6.82% at the end of June in the prior year. Due to net loans decreasing slightly and the bank’s recent transition to CECL, the bank recorded a negative provision expense of $141 thousand during the quarter. The bank’s allowance for loan losses as a percentage of loans increased during the same period to 1.36% from 1.35% at the end of the first quarter and 1.24% at the end of the second quarter a year ago.

Noninterest expense decreased $731,944, or 8.24%, from March 31, 2023. The decrease in noninterest expense was due primarily to lower exempt and non-exempt employee salaries and bonuses as well as a market adjustment to employee stock appreciation rights (SAR) values. “Overhead cost control remains an important strategic initiative. We are continually reviewing and monitoring our operating expenses to ascertain further opportunities to improve efficiency while not compromising the excellent service we provide to customers,” said Mullis. “As a result, the bank’s overall full-time equivalent (FTE) count is down by 5 over the prior year and now stands at 185 FTE’s.”

The Company’s total shareholders’ equity increased 6.80% year-over-year to $170 million as of June 30, 2023, and was up 2.03% or $3.4 million from March 31, 2023. Tangible book value per share grew to $74.93 on June 30, 2023, from $69.52, or 7.78%, from June 30, 2022, and was up from $73.14, or 2.45%, from the value as of March 31, 2023. On July 19, 2023, the board of directors approved a third quarter dividend of $0.44 per share payable on or about September 15, 2023, to all shareholders of record as of August 15, 2023.

During the quarter, Morris Bank was recognized as the number 38^th ranked publicly traded bank by American Banker in the banks under $2 billion in total assets category. American Banker’s rankings were based on various financial performance metrics averaged over the past three years. Mullis relayed “receiving this kind of recognition is an honor, but more so, a testament to our team of bankers that hustle and get after it everyday to make a difference in our customers’ lives and the communities we serve.”

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.