Merchants & Marine Bancorp, Inc. (OTCQX: MNMB), the parent company of Merchants & Marine Bank, has announced its financial results for the third quarter of 2024, revealing a net income of $3.40 million, or $2.55 per share. This marks a decline compared to the previous year’s earnings of $5.17 million, or $3.88 per share, during the same period. Despite this decrease in net income, the company’s gross income for the first nine months of 2024 reached $37.56 million, reflecting a robust increase of 24.17% from the prior year.
The bank’s balance sheet also showed significant growth, with total assets rising by 12.24% to $725.73 million as of September 30, 2024. Net loans increased to $449.34 million from $411.36 million at the end of the same period last year, representing a growth rate of 9.23%. Total deposits saw a notable rise of 13.25%, climbing from $514.19 million to $582.31 million.
This growth can be attributed in part to the acquisition of Mississippi River Bank, completed on April 10, 2024, which has contributed to both balance sheet expansion and increased operational capabilities. However, it also led to a significant rise in one-time non-interest expenses during the first nine months of 2024.
Key financial highlights from the report include a substantial increase in total interest income for the year-to-date period, which rose to $29.66 million from $22.99 million in 2023, a lift of 28.97%. This increase was primarily driven by higher interest income on loans, which grew to $23.33 million from $18.79 million year-over-year.
While the cost of funding assets also increased through September 30th, it did so at a slower pace compared to broader market trends. Interest expense as a function of total assets rose to an annualized rate of 64 basis points from just 22 basis points in the same period last year. The rise in funding costs was largely due to the bank’s utilization of the Federal Reserve Bank Term Funding Program (BTFP). Notably, all liabilities under this program were repaid in September 2024 using excess liquidity on the balance sheet, coinciding with a recent reduction in the Federal Reserve’s target rate by 50 basis points.
Credit quality remained strong at the end of Q3, although there was a slight uptick in loans past due by 30-89 days, which rose to 1.13% of total loans, primarily attributed to one specific problem loan currently being addressed.
Accumulated Other Comprehensive Income (AOCI) mark-to-market losses in the securities portfolio decreased significantly to ($6.62 million) at quarter-end, down from ($13.20 million) at the same time last year—representing just 4.24% and 9.33% of total securities portfolios for these periods.
Liquidity levels are solid, with cash and cash equivalents totaling $43.97 million at the end of Q3 2024. In addition to this liquidity position, Merchants & Marine Bancorp maintains over $250 million in additional borrowing capacity through lines with the Federal Home Loan Bank of Dallas and the Federal Reserve.
Casey Hill, Chief Financial Officer, commented on the bank’s performance: “Our core financial performance continues to strengthen,” noting that interest income is running nearly 30% ahead compared to last year’s figures and projecting total revenues could approach or exceed $50 million by fiscal year-end.
Clayton Legear, Chief Executive Officer, emphasized that consistent earnings above a 1% return on average assets demonstrate effective execution of their long-term strategic plan initiated in 2021. He stated that their diversified income streams and strong liquidity position are particularly impressive given current economic conditions.
Founded in 1899 and reborn during the Great Depression in 1932, Merchants & Marine Bank has evolved into a significant player in community banking within the Gulf South region. Today, it offers an array of services including mortgage financing and specialized banking for medical cannabis through its various divisions. As Merchants & Marine Bancorp continues to leverage its unique operating model and robust balance sheet, it remains well-positioned for future growth and profitability within an evolving financial landscape.
