Merchants & Marine Bancorp, Inc. Announces Second Quarter Financial Results

August 06, 2024 --

Merchants & Marine Bancorp, Inc. (OTCQX: MNMB), the parent company of Merchants & Marine Bank, reported net income through the second quarter of $1.72 million, or $1.29 per share, compared with earnings of $1.87 million, or $1.41 per share, in the same period of the prior year. Gross income through the first six months of 2024 totaled $24.53 million, an increase of 33.43% from the prior year. Balance sheet footings increased by 18.25% to $777.40 million during the 12 months ended June 30, 2024. Net loans grew to $442.17 million in at June 30, 2024 from $413.91 million at the end of the same period in the prior year, an increase of 6.83%. Total deposits increased 11.61% from the same period in the prior year, from $527.45 million to $588.44 million. Balance sheet growth, and the significant increase in one-time non-interest expenses during the first half of 2024, was driven primarily by the acquisition of Mississippi River Bank, which was completed on April 10, 2024.

Selected financial highlights:

Net loans grew by $28.26 million, or 6.83%, from June 20, 2023.
Total interest income for the first six months of the year increased to $19.06 million from $14.87 million during the same period in 2023, a lift of 28.15%. The increase is primarily due to increased interest income on loans, which increased to $15.07 million the first six months of 2024 from $12.06 million during the same period in 2023. This increase is due both to improved loan yields and, to a lesser extent, loan growth from the Mississippi River Bank acquisition.
The company’s cost of funding its assets also increased through June 30th, though much more slowly than seen in the broader market. Interest expense as a function of total assets grew to 60 basis points (annualized)from 20 basis points (annualized) in the first six months of 2023. The increase in funding costs is primarily due to the company’s utilization of the Federal Reserve Bank Term Funding Program (BTFP).
Credit quality remained strong at the end of the second quarter. The ratio of loans past due 30-89 days fell to just 0.63% of total loans compared to 1.07% at the end of the second quarter of 2023. The ratio of non-accrual loans decreased to 0.50% of total loans at the end of the second quarter 2024 from 1.42% of total loans at the end of the second quarter of the prior year.
Accumulated Other Comprehensive Income (AOCI) mark-to-market losses in the securities portfolio increased to ($12.95 million) at the end of the quarter from ($9.51 million) at the end of the same period in 2023. These losses represent just 7.82% and 6.60% of the total portfolio for the respective reporting periods. A material portion of the increase is due to the addition of securities that were added through the Mississippi River Bank acquisition.
On balance sheet liquidity levels remain very healthy, with cash and cash equivalents totaling $93.51 million at the end of the second quarter 2024. In addition to these large cash balances, the Company’s $166 million investment portfolio remains highly liquid, with a significant portion able to be liquidated with minimal losses.
In addition to the sizeable on-balance sheet liquidity position, the Company has more than $250 million in additional borrowing capacity at the Federal Home Loan Bank of Dallas and the Federal Reserve.

“The company’s core financial performance continued to strengthen during the first half of 2024. Both top line revenue and net interest margin continue to grow as assets continue to reprice at a faster rate than liabilities, something that is relatively unique in today’s banking environment,” said the company’s Chief Financial Officer, Casey Hill. He continued “In addition to strong core performance in our legacy operations, the addition of the Mississippi River Bank balance sheet stands to lift forward earnings significantly. The merger was detrimental to earnings in the first half of the year as the company realized one-time merger-related expenses exceeding $600 thousand. We expect the second half of 2024 to reflect further increases in profitability, now that we’re clear of the non-recurring expenses associated with acquiring an exceptionally high performing bank like Mississippi River Bank.”

The bank drew on the Federal Reserve’s Bank Term Funding Program (BTFP) in November of 2023, and financed the $50 million balance in December to capitalize on lower rates. The advance rate, at that time, was based on the overnight one-year overnight index swap rate plus 10 basis points, fixed for one year. Since that time, the Federal Reserve has updated the rate on new borrowings to be floored at the effective Federal Funds rate.

“The company possesses enough on-balance sheet cash to repay the BTFP at any point that we deem it advantageous to do so and still maintain a highly liquid balance sheet. However, due to small net profit position that we realize on those borrowed funds, we do not foresee prepaying at this time unless and until the rate environment changes,” commented Hill. “In the meantime, we will continue to explore avenues of opportunity and growth, but will only execute on those opportunities if they are highly accretive to our current enterprise.”

”Our team’s performance through the first half of 2024, and the strong financial results produced by the efforts, are very encouraging,” remarked Clayton Legear, the company’s Chief Executive Officer. “In addition to shepherding increasingly strong financial results of our core franchises, our team successfully integrated Mississippi River Bank into our growing Family of Brands. We are excited to already see tangible positive impacts from this addition both in terms of earnings and through contributions to our ‘Battle Ready Balance Sheet.’ We look forward to even more progress as Mississippi River Bank Brand Chief Executive Officer Mike Bush and his team further leverage the expanded tools and resources now at their disposal. As we move into the second half of the year, we remain focused on operating from a position of strength across each of our brands and in being opportunistic in seizing opportunities to drive significant value for our clients, our team members, our shareholders and the communities we serve.”

Merchants & Marine Bancorp, Inc. (OTCQX: MNMB) is the parent company of Merchants & Marine Bank, a Mississippi chartered community bank serving the Gulf South region. Originally founded in 1899, Merchants & Marine Bank was reborn in 1932 during the middle of the worst economic disaster in the history of the United States: The Great Depression. More than eight decades later, Merchants & Marine Bank has grown from $25,000 to nearly $800 million in assets. The bank offers banking services to customers in Southern Mississippi and Coastal Alabama under its legacy Merchants & Marine Bank brand, and in Southern Louisiana through its Mississippi River Bank division. It offers mortgage financing through its Canvas Mortgage division, medical cannabis banking through its CannaFirst Financial division, and access to government-guaranteed credit through Voyager Lending. It provides bank operational, risk, and support services through its Community of Resources bank services division. For more information on Merchants & Marine Bancorp, Inc., visit https://mandmbank.com/investor-relations.

MERCHANTS & MARINE BANCORP, INC.
CONSOLIDATED FINANCIALS (UNAUDITED)
BALANCE SHEET

ASSETS	June 30, 2024			June 30, 2023
TOTAL CASH & DUE FROM		93,507,728.62			43,471,583.41

TOTAL SECURITIES		165,650,760.36			143,986,019.05
TOTAL FEDERAL FUNDS SOLD		97,006.75			199,563.45

TOTAL LOANS		449,991,168.99			422,226,713.78
Begin Year Reserve for Loss		(7,684,072.00	)		(3,566,893.00	)
Recoveries on Charge Off		(134,827.56	)		(189,056.20	)
Charge Offs Current Year		174,673.38			387,559.91
Allowance-Current Year		(177,845.82	)		(4,945,682.71	)
RESERVE FOR LOSSES ON LOANS		(7,822,072.00	)		(8,314,072.00	)
NET LOANS		442,169,096.99			413,912,641.78

NET FIXED ASSETS		29,211,629.53			25,458,102.98

Other Real Estate		-			27,000.00
Other Assets		46,765,538.94			30,355,581.79
TOTAL OTHER ASSETS		46,765,538.94			30,382,581.79
TOTAL ASSETS	$	777,401,761.19		$	657,410,492.46

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Demand Deposits	$	405,391,088.52		$	361,025,898.80
Public Funds		16,479,553.86			18,821,588.29
TOTAL DEMAND DEPOSITS		421,870,642.38			379,847,487.09

Savings		111,727,068.43			95,629,788.93
C D's		44,750,226.36			41,012,210.52
I R A's		7,636,171.47			8,304,380.75
CDARS		2,458,674.07			2,452,228.58
TOTAL TIME & SAVINGS DEPOSITS		166,572,140.33			147,398,608.78
TOTAL DEPOSITS		588,442,782.71			527,246,095.87

SECURITIES SOLD UNDER REPO
& BORRROWINGS		52,917,019.62			3,362,542.82

DIVIDENDS PAYABLE		399,101.40			399,101.40

TOTAL OTHER LIABILITIES		11,541,966.66			9,573,008.57

Stockholders' Equity
Preferred Stock	$	50,595,000.00		$	50,595,000.00
Common Stock		3,325,845.00			3,325,845.00
Earned Surplus		14,500,000.00			14,500,000.00
Undivided Profits		66,917,737.88			61,332,410.71
Current Profits		1,722,734.72			1,161,435.04
Total Unrealized Gain/Loss AFS		(9,135,917.80	)		(9,505,333.95	)
Defined Benefit Pension FASB 158		(3,824,509.00	)		(4,579,613.00	)
TOTAL CAPITAL		124,100,890.80			116,829,743.80

TOTAL LIABILITIES & CAPITAL	$	777,401,761.19		$	657,410,492.46

MERCHANTS & MARINE BANCORP, INC.
CONSOLIDATED FINANCIALS (UNAUDITED)
INCOME STATEMENT
ACCOUNT NAME	Through June 30, 2024		Through June 30, 2023
Interest & Fees on Loans	$	15,067,319.01	$	12,064,896.09
Interest on Securities Portfolio		3,742,622.12		2,394,390.89
Interest on Fed Funds & EBA		250,003.00		414,137.91
TOTAL INTEREST INCOME		19,059,944.13		14,873,424.89

Total Service Charges		1,631,360.13		1,413,344.60
Total Miscellaneous Income		3,653,343.63		2,069,246.32
TOTAL NON INT INCOME		5,284,703.76		3,482,590.92

Gains/(Losses) on Secs		183,835.86		-
Gains/(Losses) on Sales REO		823.47		27,000.00
Gains/(Losses) on Sale of Loans		-		-
TOTAL INCOME		24,529,307.22		18,383,015.81

TOTAL INT ON DEPOSITS		1,284,613.89		653,909.88
Int Fed Funds Purchased/Sec Sold Repo		1,062,881.73		2,467.52
TOTAL INT EXPENSE		2,347,495.62		656,377.40

PROVISION-LOAN LOSS		128,845.82		(1,230.14	)

Salary & Employee Benefits		11,092,460.29		8,177,902.00
Total Premises Expense		4,108,006.93		3,114,019.58
FDIC, Sales and Franchise		248,001.78		201,214.70
Professional Fees		1,332,231.41		1,129,837.10
Miscellaneous Office Expense		445,394.37		384,094.25
Dues, Donations and Advertising		401,719.47		449,975.28
Checking, ATM/Debit Card Expenses		1,058,199.68		912,678.15
ORE Expenses		869.64		4,200.00
Total Miscellaneous Expense		1,330,360.82		1,166,651.14
TOTAL OTHER OPERATING		20,017,244.39		15,540,572.20

FEDERAL & STATE INCOME TAXES		290,500.00		316,752.38

TOTAL EXPENSES		22,784,085.83		16,512,471.84
NET INCOME	$	1,745,221.39	$	1,870,543.97
Preferred Stock Dividends	$	22,486.67	$	-
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,722,734.72	$	1,870,543.97

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