Morris State Bancshares Announces Solid Earnings in 2019 and Declares First Quarter Dividend
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 16th 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 StatementsCertain 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.
