Merchants & Marine Bancorp, Inc. (OTCQX:MNMB) Is the parent company of China Merchants Maritime Bank. As of the first six months of 2021, net income was US$1.44 million, or US$1.08 per share, while net income for the same period in 2020 was US$3.5 million, or US$2.63 per share. It should be noted that in the same period of 2020, the company liquidated part of its securities portfolio to monetize $3.1 million in earnings (before tax), which had a significant impact on earnings per share data for the same period.
The company has been in an investment cycle since the last quarter of 2020, when its subsidiary, China Merchants Ocean Bank, acquired a branch in Mobile, Alabama, from a regional bank that had withdrawn from the market. In the same quarter, China Merchants Bank also opened a loan and deposit production office in Hattiesburg, Mississippi. In the first half of 2021, the company entered the secondary market mortgage business through the establishment of Canvas Mortgage, a subsidiary of China Merchants Bank. “With any substantial investment in new markets and business lines, especially those like Canvas Mortgage and our new Hattiesburg office, there will be a’J curve’ effect on revenue. The bottom of the J curve was reached in 2019. April 2021. I am happy to report that since then-in May and June-the company’s core income (excluding non-recurring items) has returned to net profit Capacity is accelerating,” said Casey Hill, the company’s chief financial officer. “The timing of PPP forgiveness and the income associated with it cannot be more suitable for our expansion plan, so this non-recurring income almost perfectly covers the return curve. The trough.”
The company’s balance sheet has grown significantly in the past 12 months, increasing by $89.43 million, or 13.86%. During the same period, the company’s cash position increased by more than 80%, reaching US$260.31 million. “Although the bank has grown significantly, it is almost entirely due to unexpected federal stimulus measures. This puts the company in an abnormally liquid position, but due to the current yield curve and expectations of future interest rate changes, there is no traditional investment channel. . We don’t want to make short-term investment decisions to reap the benefits now, which will hinder banks in the future,” Hill commented. “We currently have a large amount of unrealized gains in our securities portfolio. Investing at the bottom of the market may mean that gains may evaporate. Our strategic plan since last year is to eliminate higher cost municipal deposit banks. At all Under the same conditions, cancellation of these accounts should mean a six-digit increase in monthly net income starting from Marchroad The first quarter of 2022. The bank’s current liquidity situation allows us to support the outflow of deposits from this program, as well as the additional outflows that may occur as federal stimulus measures begin to weaken, while also increasing the loan portfolio. Although we have never planned for the impact of COVID-19, we are working hard to position banks so that they can escape the economic impact of the pandemic with the strongest possible posture,” Hill continued. The indicators have improved significantly. The significant improvement in non-performing assets is a testament to the hard work of our loan staff and risk functions. ”
Some financial highlights as of June 30, 2021:
Deposits increased by 16.94% year-on-year, from USD 545 million to USD 638 million. Demand deposits accounted for most of the growth, increasing 27.03% from US$366 million to US$466 million, of which the growth of US$34 million was concentrated in higher-cost contract public fund deposits, which will be withdrawn next year.
Compared with the same period last year, interest expenses in the first half of 2021 decreased by 28.61%, from US$1.72 million to US$493,000. This is mainly due to the adoption and implementation of a dynamic pricing strategy for time deposits. Although the overall deposit balance has increased significantly, the time deposit balance has fallen by 22% in the past 12 months.
Operating expenses increased significantly from the same period last year, from 9 million US dollars to 11.52 million US dollars, an increase of 28.01%. Part of the reason for this is the non-recurring costs associated with rebranding work and the start-up costs associated with the establishment of the new Canvas Mortgage Division. Another reason for the growth is the increase in operating costs and personnel expenses associated with the expansion of new markets that took place last year.
Asset quality indicators improved significantly in the first six months of 2021. As of June 30 this year, the ratio of overdue but accrued loans to total loans fell from 1.67% at the end of 2020 to 0.54%. Non-accrual loans also fell to 0.54% as of June 30 this year. The total amount of loans decreased from 2.62% at the end of 2020. Although the overall loan portfolio decreased by more than 11.00% in the first half of 2021, these ratios still improved, most of which was due to the repayment of PPP loans.
It should be noted that in the same period of 2020, the company liquidated part of its securities investment portfolio to monetize $3.1 million in earnings (pre-tax). As reflected in the beginning of this press release, this has had a significant impact on earnings per share data for this period.
“I am very satisfied with our second quarter results, and I am particularly proud of the reasons for these results: our team has made strong and continuous progress in the execution of our strategic plan,” Clayton Legear, president and CEO of the company Commented. “The investments we have made and the plans we are implementing are designed to enable banks to chart their own long-term development paths, even under the uncertain economic conditions we operate today. As we enter the second half of the year, we look forward to passing The investment continues to improve core profitability, more sustainable organic growth, stronger credit quality and significantly enhanced operating capabilities. We believe these are critical to our future growth plans and scale in an effective and controllable manner.”
Merchants & Marine Bank is a subsidiary of Merchants & Marine Bancorp, Inc. (OTCQX:MNMB), a bank holding company located in Mississippi. China Merchants Bank was first established in 1899 and was reborn during the worst economic disaster in American history in 1932: the Great Depression. More than eight years later, Merchants & Marine Bank’s assets have increased from US$25,000 to more than US$700 million, and from 2 offices to 14 offices, serving the coastal areas of Mississippi, Alabama, and the Mississippi Pine Belt.Along the way, China Merchants Maritime Bank has won numerous awards, including American Banker The magazine has rated multiple 5-star senior ratings from the top 200 community banks and Bauer Financial, Inc.
Merchants & Marine Bancorp, Inc. Consolidated Financial Statements (Unaudited)