DUBLIN, Ga., Feb. 14, 2020 (GLOBE NEWSWIRE) -- Morris State Bancshares (OTCQX: MBLU) (the “Company”), the parent of Morris Bank, today announced net income of $13.6 million for the year ended December 31, 2019, representing a decrease of $1.6 million, or 10.60%, compared to net income of $15.2 million for the year ended December 31, 2018. The company also announced diluted earnings per share of $6.82 for 2019, representing a 18.23% decrease over diluted earnings per share of $8.34 for 2018. Net income for 2019 was impacted by a one-time merger related expense of $924 thousand related to the Company’s completed acquisition of FMB Equibanc, Inc. (“FMB”) as well as income tax expense of $2.1 million in 2019, versus none in 2018 as the company converted to a C corporation during 2019.  Excluding merger related expenses, 2019 pre-tax income was $16.7 million, versus $15.2 million for 2018, representing an increase of $1.5 million or 9.3%.  This increase was largely driven by the acquisition of FMB, which was completed at the end of April, as well as a one-time gain on sale of government guaranteed loans of $263 thousand of and a gain on sale of other real estate of $409 thousand.

“We are very pleased with the financial performance of the Company in 2019. It was a transformational year in that we completed the purchase and integration of FMB which not only significantly grew our bank’s footings but more importantly our core deposits and geographic diversity,” said Spence Mullis, President and CEO.  “We created significant value for our shareholders as we grew core deposits over 53% or $236.7 million.  Organic core deposit growth represented $109.0 million or 46% of the overall core deposit growth.”

The Company’s total shareholders’ equity to total assets ratio increased to 11.05%, as of December 31, 2019, as compared to 10.96% as of December 31, 2018. Tangible book value per share increased to $47.18 as of December 31, 2019 an 8.84% increase or $3.83 per share from December 31, 2018.  On January 9th, the board of directors approved a first quarter dividend of $0.35 per share payable on or about March 16^th to all shareholders of record on March 2, 2020.  This quarterly dividend is in addition to the special dividend of the same amount which was paid to all shareholders on January 31, 2020. It is the company’s intentions to resume paying regular quarterly dividends throughout the rest of the calendar year.

Net interest income for the years ending December 31, 2019 and 2018 was $38.9 million and $32.3 million respectively, an increase of $6.7 million or 20.69%.  Net interest margin for the years ending December 31, 2019 and 2018 was 4.65% and 4.88%, respectively.  The contraction in the margin was a combination of a decline in the yield on earning assets that outpaced the decrease in cost of funds.  Our cost of funds increased as a result of the Fed’s tightening of deposit rates throughout 2018 that were priced forward into our 2019 costs.  However, we saw our cost of funds decrease towards the end of the year as evidenced by the cost of total deposits for the quarter ended December 31, 2019 of 0.91%, as compared to 0.99% for the quarter ended September 30, 2019. We expect further decreases in our costs throughout the rest of the year.

The provision for loan losses was $1.7 million for the year ending December 31, 2019 versus $1.4 million for the year ending December 31, 2018.  Our provision as a percentage of total loans was 1.32% as of December 31, 2019 versus 1.55% as of December 31, 2018.  Our adversely classified coverage ratio was 14.49% as of December 31, 2019 versus 15.25% as of December 31, 2018. Our level of ORE decreased to $384,310 at December 31, 2019 from $590,211 at December 31, 2018.  This level of ORE is the lowest held in over ten years.

Noninterest income increased $870 thousand or 27.52% for the year ending December 31, 2019.  The increase was driven primarily by an increase in service charges on deposit accounts as a result of the FMB merger.

Noninterest expense increased 36.39% or $6.8 million to $25.6 million at December 31, 2019 from $18.8 million as of December 31, 2018.  The majority of this increase was related to the aforementioned initial FMB transaction costs as well as 8 months of normal operating costs in the newly acquired market.

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
Consolidated Balance Sheet
December 31, 2019
				2019				2018			$ Change				% Change
			(Unaudited)
ASSETS
Cash and due from banks			$	77,696,887			$	29,257,366			$	48,439,521			165.6	%
Federal funds sold				16,293,628				14,044,014				2,249,614			16.0	%
Interest bearing time deposits in other banks				1,350,000				2,098,000				(748,000	)		-35.7	%
Securities available for sale, at fair value				124,315,098				70,845,928				53,469,170			75.5	%
Securities held to maturity, at cost				4,752,384				5,716,318				(963,934	)		-16.9	%
Federal Home Loan Bank stock				842,900				993,300				(150,400	)		-15.1	%
Loans, less allowance for loan losses
of $9,716,060 and $9,480,989 respectfully				729,170,345				603,548,731				125,621,614			20.8	%
Premises and equipment, net				15,618,198				8,884,433				6,733,765			75.8	%
Goodwill				9,361,770				2,237,890				7,123,880			318.3	%
Intangible assets, net				3,067,075				288,920				2,778,155			961.6	%
Other real estate and foreclosed assets				396,486				835,921				(439,435	)		-52.6	%
Accrued interest receivable				3,962,807				3,064,254				898,553			29.3	%
Cash surrender value of life insurance				13,248,384				7,035,138				6,213,246			88.3	%
Other assets				7,979,800				1,215,978				6,763,822			556.2	%
Total assets			$	1,008,055,762			$	750,066,191			$	257,989,571			34.4	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing demand			$	195,016,771			$	122,899,907			$	72,116,864			58.7	%
Interest-bearing				682,509,497				532,608,585				149,900,912			28.1	%
				877,526,268				655,508,492				222,017,776			33.9	%
Other borrowed funds				15,003,206				9,857,143				5,146,063			52.2	%
Accrued interest payable				537,928				401,934				135,994			33.8	%
Accrued expenses and other liabilities				3,556,513				2,066,457				1,490,056			72.1	%
Total liabilities				896,623,915				667,834,026				228,789,889			34.3	%
Shareholders' Equity:
Common stock				2,144,917				1,882,740				262,177			13.9	%
Paid in capital surplus				39,298,458				24,225,182				15,073,276			62.2	%
Less: treasury stock				(1,379,632	)			(1,211,099	)			(168,533	)		13.9	%
Retained earnings				55,916,996				42,556,445				13,360,551			31.4	%
Current year earnings				13,620,624				15,236,144				(1,615,520	)		-10.6	%
Accumulated other comprehensive income (loss)				1,830,484				(457,247	)			2,287,731			-500.3	%
Total shareholders' equity				111,431,847				82,232,165				29,199,682			35.5	%
Total Liabilities and Shareholders' Equity			$	1,008,055,762			$	750,066,191				257,989,571			34.4	%

MORRIS STATE BANCSHARES, INC.
AND SUBSIDIARIES
Consolidated Statement of Income
December 31, 2019
			2019				2018			$ Change				% Change
		(Unaudited)
Interest and dividend income:
Loans, including fees		$	42,472,550			$	35,472,471			$	7,000,079			19.73	%
Securities			2,885,821				1,755,255				1,130,566			64.41	%
Federal funds sold			513,422				312,613				200,809			64.24	%
Interest-bearing deposits in banks			925,860				42,579				883,281			2074.45	%
FHLB stock			71,588				79,172				(7,584	)		-9.58	%
Other interest and dividend income			751,317				317,821				433,496			136.40	%
Total interest income			47,620,558				37,979,911				9,640,647			25.38	%
Interest expense:
Deposits			7,963,852				5,408,394			$	2,555,458			47.25	%
Borrowed funds			733,660				319,560				414,100			129.58	%
Federal funds purchased			151				946				(795	)		-84.04	%
Total interest expense			8,697,663				5,728,900				2,968,763			51.82	%
Net interest income			38,922,895				32,251,011				6,671,884			20.69	%
Provision for loan losses			1,650,000				1,425,000				225,000			15.79	%
Net interest income after
provision for loan losses			37,272,895				30,826,011				6,446,884			20.91	%
Noninterest income:
Service charges on deposit accounts			3,076,556				2,384,911				691,645			29.00	%
Other fees and commissions			61,413				155,083				(93,670	)		-60.40	%
Gain (loss) on sales and calls of securities			(24,471	)			(3,351	)			(21,120	)		630.26	%
Gain on sale of loans			263,029				47,493				215,536			453.83	%
Increase in CSV of life insurance			213,246				183,956				29,290			15.92	%
Other income			443,079				394,494				48,585			12.32	%
Total noninterest income			4,032,852				3,162,586				870,266			27.52	%
Noninterest expense:
Salaries and employee benefits			14,056,471				11,006,233				3,050,238			27.71	%
Occupancy and equipment expenses, net			2,372,548				1,771,953				600,595			33.89	%
Loss (gain) on sales and impairments of of foreclosed
and other real estate			(270,572	)			265,900				(536,472	)		-201.76	%
Loss (gain) on sales of premises and equipment			(1,000	)			435				(1,435	)		-329.89	%
Other operating			9,418,971				5,707,932				3,711,039			65.02	%
Total noninterest expense			25,576,418				18,752,453				6,823,965			36.39	%
Income before Taxes			15,729,329				15,236,144				493,185			3.24	%
Income Taxes			2,108,705				--				2,108,705
Net Income		$	13,620,624			$	15,236,144			$	(1,615,520	)		-10.60	%
Earnings per Share		$	6.82			$	8.34			$	(1.52	)		-18.23	%
TBV per Common Share		$	47.18			$	43.35			$	3.83			8.84	%

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,
			2019		2018*					2019				2019				2019				2019			2018*
(Dollars in thousand, except per share data)		(Unaudited)							(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Per Share Data
Basic Earnings per Common Share		$	6.82		$	8.34			$	1.48			$	1.95			$	0.95			$	2.50			$	2.34
Diluted Earnings per Common Share			6.82			8.34				1.48				1.95				0.95				2.50				2.34
Dividends per Common Share			0.93			2.61				-				-				-				1.02				-
Book Value per Common Share			53.11			44.72				53.11				51.87				49.78				46.71				44.72
Tangible Book Value per Common Share			47.18			43.35				47.18				45.91				43.62				45.18				43.35
Average Diluted Shares Outstanding			1,997,735			1,826,854				2,100,395				2,058,039				1,988,231				1,840,764				1,833,100
End of Period Common Shares Outstanding			2,098,250			1,838,816				2,098,250				2,100,842				2,057,568				1,840,980				1,838,816
* Subchapter S Tax Status
Annualized Performance Ratios (Bank Only)
Return on Average Assets			1.63	%		2.15	%			1.49	%			1.80	%			0.96	%			2.44	%			2.35	%
Return on Average Equity			14.56	%		20.65	%			12.37	%			14.51	%			9.52	%			23.74	%			22.23	%
Equity/Assets			11.65	%		10.66	%			11.65	%			12.23	%			12.14	%			10.92	%			10.66	%
Cost of Funds			1.02	%		0.89	%			0.91	%			0.99	%			1.06	%			1.17	%			1.05	%
Net Interest Margin			4.65	%		4.88	%			4.70	%			5.20	%			4.29	%			4.42	%			4.98	%
Efficiency Ratio			57.80	%		52.59	%			54.88	%			53.00	%			64.39	%			59.79	%			51.07	%

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

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