Merchants & Marine Bancorp, Inc. (OTCQX: MNMB), the parent company of Merchants & Marine Bank, reports first quarter 2021 net income of $567 thousand, or 43 cents per share, compared with net income of $843 thousand, or 63 cents per share during the same period in 2020.

The bank has been an active participant in the Small Business Administration’s Paycheck Protection Program (PPP). As of March 31, 2021, PPP loans constituted $36.2 million, or 10.28 percent, of the bank’s $355.9 million loan portfolio. Excluding PPP balances, loan growth was somewhat flat over the same period in 2020, growing 1.28 percent to $319.7 million from $315.7 million over the last twelve months. Interest and fees on loans totaled $4.94 million in the first quarter. When extracting fees realized on forgiven PPP balances, this number decreases to $4.32 million, which nonetheless represents an increase of 3.04 percent over the corresponding period in 2020.

The company’s consolidated total assets grew substantially over the 12-month period ending March 31, 2021, to $745.65 million from $569.55 million, a rate of 24.99 percent. “Like most other financial institutions, the effects of the Federal Government’s COVID-19 stimulus efforts on our balance sheet have been profound,” remarked Casey Hill, the company’s Chief Financial Officer. “Our cash position as of the end of March exceeds $238 million, nearly a third of total assets. In addition to the deposit bloat that Federal stimulus has caused, the increased market demand for bonds and other investment instruments has greatly limited our ability to invest those funds at attractive rates. Further, the yield curve leads us to believe that investment into fixed income vehicles at this juncture will likely yield large unrealized losses in our securities portfolio, reversing our current unrealized gain. Management does have a very detailed strategic plan to both reallocate that cash position into earning assets, and to allow for the runoff of high-cost contractual public funds deposits that will mature in the coming year. Large components of that plan are already in motion,” continued Hill.

Selected Financial Highlights, as of March 31, 2021:

• Deposits increased year-over-year by 29.53 percent, to $650.42 million from $502.13 million. Demand deposits made up the bulk of the growth, increasing 46.69% to $477.55 million from $325.54 million, with $36.96 million of this increase centered in higher-cost, contractual public funds deposits that will be exiting over the course of the coming year.
• Interest expense decreased during the first quarter of 2021 when compared with the same period last year, by 32.96 percent – a decrease to $547 thousand from $816 thousand. This is due, primarily, to the adoption and implementation of a dynamic pricing strategy on time deposits.
• Operating expenses saw a significant increase over the same period last year, increasing to $5.55 million from $4.59 million, an increase of 20.98 percent. This occurred due to increased salary expense and premises expense owing to expansions into new markets, and consulting expenses associated with a rebranding effort and the establishment of a major business unit.
• Asset quality indicators improved substantially from year-end, with accruing past-due loans decreasing to 0.99 percent as of the end of first quarter of this year, a marked improvement from 2.64 percent at the end of the first quarter of last year.
• The resiliency of the bank’s customers has been a point of pride in our communities: of the $69.3 million in loans that were granted COVID-19 deferrals or accommodations during 2020, 98.67 percent have either paid off, or are now accruing and paying as agreed.

“Our first quarter performance reflects strong progress toward executing a series of strategic investments announced during 2020 that are designed to drive enhanced growth, profitability, and enhanced client service,” commented President & Chief Executive Officer Clayton Legear. “These investments, which were announced in 2020 and discussed in detail at our 2021 Annual Shareholders Meeting include: new market expansions in Hattiesburg, Mississippi and Mobile, Alabama; the overhaul of our marketing, advertising, and digital offerings to enhance service and support organic growth; significant investments in operational talent and technology to drive efficiency and support greater scale; and, most recently, the unveiling of our new residential mortgage division, Canvas Mortgage. We are already seeing solid returns on these investments, including our Hattiesburg Office significantly outpacing projected loan and deposit growth. We will remain focused on maximizing the returns from these investments in the months ahead as we continue executing on our strategic growth and profitability plans.”

Merchants & Marine Bank is a wholly owned subsidiary of Merchants & Marine Bancorp, Inc. (OTCQX: MNMB), a Mississippi based bank holding company. 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 in assets to over $700 million and from 2 offices to 14 offices serving Coastal Mississippi, Coastal Alabama and the Mississippi Pine Belt Region. Along the way, Merchants & Marine Bank has earned numerous awards, including a listing in U.S. Banker magazine as a Top 200 Community Bank and multiple 5-Star Superior ratings from Bauer Financial, Inc.

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