Southern States Bancshares, Inc. Announces First Quarter 2023 Financial Results

April 24, 2023 at 4:06 PM EDT

First Quarter 2023 Performance and Operational Highlights

Net income of $7.7 million, or $0.85 per diluted share
Core net income⁽¹⁾ of $7.3 million, or $0.80 per diluted share⁽¹⁾
Net interest income of $19.5 million, a decrease of $1.3 million from the prior quarter
Net interest margin (“NIM”) of 4.07%, down 31 basis points from the prior quarter
NIM of 4.09% on a fully-taxable equivalent basis (“NIM - FTE”)⁽¹⁾
Return on average assets (“ROAA”) of 1.51%; return on average stockholders’ equity (“ROAE”) of 16.67%; and return on average tangible common equity (“ROATCE”)⁽¹⁾ of 18.45%
Core ROAA⁽¹⁾ of 1.44%; and core ROATCE⁽¹⁾ of 17.51%
Efficiency ratio of 48.79%
Linked-quarter loan growth was 14.9% annualized
Linked-quarter deposit growth was 16.2% annualized
Repurchased $575,000 of common stock, representing 24,000 shares at an average price of $23.95 during the quarter

(1) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.

ANNISTON, Ala., April 24, 2023 (GLOBE NEWSWIRE) -- Southern States Bancshares, Inc. (NASDAQ: SSBK) (“Southern States” or the “Company”), the holding company for Southern States Bank, an Alabama state-chartered commercial bank (the “Bank”), today reported net income of $7.7 million, or $0.85 diluted earnings per share, for the first quarter of 2023. This compares to net income of $10.6 million, or $1.18 diluted earnings per share, for the fourth quarter of 2022, and net income of $4.6 million, or $0.50 diluted earnings per share, for the first quarter of 2022. The Company reported core net income of $7.3 million, or $0.80 diluted core earnings per share, for the first quarter of 2023. This compares to core net income of $8.1 million, or $0.90 diluted core earnings per share, for the fourth quarter of 2022, and core net income of $4.8 million, or $0.53 diluted core earnings per share, for the first quarter of 2022 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary

Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “Despite the recent volatility in our industry, we continued to drive strong earnings, growing both loans and deposits and improving upon our already strong capital levels. After several quarters of Federal Reserve interest rate hikes, combined with increased competition for funding, our deposit betas accelerated in the first quarter and we continued to see a moderate deposit mix shift from noninterest-bearing to interest-bearing deposits, impacting our net interest margin. We are confident in our ability to strategically manage our deposit balances, which we believe reflects the diversity and durability of our franchise.’’
Mr. Whatley continued, “We also continue to prudently meet the needs of clients across our vibrant and resilient footprint. We grew loans during the quarter by 14.9% annualized, while maintaining excellent credit quality. We are focused on selectively growing our loan portfolio while carefully managing asset quality and exercising disciplined expense management as we have throughout multiple economic cycles.’’
Mr. Whatley concluded, “We are of course closely monitoring the fallout from recent regional bank failures. But it is important to emphasize that Southern States is focused on traditional banking services. The banks that failed had unique business models with idiosyncratic challenges that are unrelated to Southern States. We are confident our robust balance sheet and conservative underwriting principles position us well to navigate the current environment while delivering strong returns for our shareholders.”

Net Interest Income and Net Interest Margin

	Three Months Ended									% Change March 31, 2023 vs.
	March 31, 2023			December 31, 2022			March 31, 2022			December 31, 2022		March 31, 2022
	(Dollars in thousands)

Average interest-earning assets	$	1,947,957		$	1,893,069		$	1,684,298		2.9	%	15.7	%
Net interest income	$	19,546		$	20,884		$	14,654		(6.4	)%	33.4	%
Net interest margin		4.07	%		4.38	%		3.53	%	(31	) bps	54	bps

Net interest income for the first quarter of 2023 was $19.5 million, a decrease of 6.4% from $20.9 million for the fourth quarter of 2022. The decrease was primarily attributable to the higher cost of deposits and other borrowings, which more than offset an increase in the yield on interest-earnings assets.

Relative to the first quarter of 2022, net interest income increased $4.9 million, or 33.4%. The increase was partially the result of improvement in the yield on interest-earning assets, which outpaced the rise in deposit costs and other borrowings. In addition, we benefited from the significant organic growth over the last year.

Net interest margin for the first quarter of 2023 was 4.07%, compared to 4.38% for the fourth quarter of 2022. The decrease was primarily due to higher interest rates paid on deposits, which outpaced the increase in yields on interest-earning assets.

Relative to the first quarter of 2022, net interest margin increased from 3.53%. The increase was primarily due to a rapid increase in interest rates, which produced higher yields on interest-earning assets.

Noninterest Income

	Three Months Ended									% Change March 31, 2023 vs.
	March 31, 2023			December 31, 2022			March 31, 2022			December 31, 2022		March 31, 2022
	(Dollars in thousands)

Service charges on deposit accounts	$	450		$	431		$	445		4.4	%	1.1	%
Swap fees		(4	)		2			15		(300.0	)%	(126.7	)%
SBA/USDA fees		134			70			388		91.4	%	(65.5	)%
Mortgage origination fees		100			98			286		2.0	%	(65.0	)%
Net gain (loss) on securities		514			(86	)		(361	)	(697.7	)%	(242.4	)%
Other operating income		592			4,088			560		(85.5	)%	5.7	%
Total noninterest income	$	1,786		$	4,603		$	1,333		(61.2	)%	34.0	%

Noninterest income for the first quarter of 2023 was $1.8 million, a decrease of 61.2% from $4.6 million for the fourth quarter of 2022. The fourth quarter 2022 results included a $2.6 million gain on the sale of two branches and a bank owned life insurance ("BOLI") benefit claim of $774,000. The first quarter decrease was partially offset by a realized net gain on securities during the quarter, compared to a net loss on securities during the previous quarter.

Relative to the first quarter of 2022, noninterest income increased 34.0% from $1.3 million. The increase was primarily due to a realized net gain on securities during the first quarter of 2023 compared to a net loss on securities during the first quarter of 2022. This increase was partially offset by a decrease in SBA/USDA fees and mortgage fees during the first quarter of 2023.

Noninterest Expense

	Three Months Ended						% Change March 31, 2023 vs.
	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2022		March 31, 2022
	(Dollars in thousands)

Salaries and employee benefits	$	6,311	$	6,738	$	5,725	(6.3	)%	10.2	%
Equipment and occupancy expenses		683		730		705	(6.4	)%	(3.1	)%
Data processing fees		593		711		564	(16.6	)%	5.1	%
Regulatory assessments		342		165		263	107.3	%	30.0	%
Other operating expenses		2,229		2,092		2,033	6.5	%	9.6	%
Total noninterest expenses	$	10,158	$	10,436	$	9,290	(2.7	)%	9.3	%

Noninterest expense for the first quarter of 2023 was $10.2 million, a decrease of 2.7% from $10.4 million for the fourth quarter of 2022. The decrease was primarily attributable to a decrease in salaries and benefits as a result of expenses related to the issuance of restricted stock units in a deferred compensation plan during the fourth quarter of 2022 and partially offset by various increases in other operating expenses, none of which were individually significant. The fourth quarter 2022 results also included waivers of regulatory assessments from State regulators.

Relative to the first quarter of 2022, noninterest expense increased 9.3% from $9.3 million. The increase was primarily attributable to an increase in salaries and benefits as a result of various equity, retirement and incentive plans.

Loans and Credit Quality

	Three Months Ended									% Change March 31, 2023 vs.
	March 31, 2023			December 31, 2022			March 31, 2022			December 31, 2022		March 31, 2022
	(Dollars in thousands)

Core loans	$	1,650,929		$	1,592,707		$	1,313,173		3.7	%	25.7	%
PPP loans		—			—			893		—	%	NM
Gross loans		1,650,929			1,592,707			1,314,066		3.7	%	25.6	%
Unearned income		(5,614	)		(5,543	)		(3,996	)	1.3	%	40.5	%
Loans, net of unearned income (“Loans”)	$	1,645,315		$	1,587,164		$	1,310,070		3.7	%	25.6	%
Average loans, net of unearned (“Average loans”)	$	1,609,564		$	1,563,255		$	1,278,413		3.0	%	25.9	%

Nonperforming loans (“NPL”)	$	1,646		$	2,245		$	3,246		(26.7	)%	(49.3	)%
Provision for loan losses	$	1,181		$	1,938		$	700		(39.1	)%	68.7	%
Allowance for loan losses (“ALLL”)	$	21,140		$	20,156		$	15,492		4.9	%	36.5	%
Net charge-offs (recoveries)	$	197		$	205		$	52		(3.9	)%	278.8	%
NPL to gross loans		0.10	%		0.14	%		0.25	%
Net charge-offs (recoveries) to average loans⁽¹⁾		0.05	%		0.05	%		0.02	%
ALLL to loans		1.28	%		1.27	%		1.18	%

(1) Ratio is annualized.
NM = Not meaningful

Loans, net of unearned income, were $1.6 billion at March 31, 2023, up $58.2 million from December 31, 2022 and up $335.2 million from March 31, 2022. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.

Nonperforming loans totaled $1.6 million, or 0.10% of gross loans, at March 31, 2023, compared with $2.2 million, or 0.14% of gross loans, at December 31, 2022, and $3.2 million, or 0.25% of gross loans, at March 31, 2022. The $599,000 net decrease in nonperforming loans in the first quarter was primarily attributable to three loans that were returned to accruing status or charged-off. The $1.6 million net decrease in nonperforming loans from March 31, 2022 was primarily attributable to a significant commercial real estate loan being moved back to accruing status.

The Company recorded a provision for loan losses of $1.2 million for the first quarter of 2023, compared to $1.9 million for the fourth quarter of 2022. The lower provision was primarily due to changes in our qualitative economic factors and less loan growth for the the quarter.

Net charge-offs for the first quarter of 2023 were $197,000, or 0.05% of average loans, compared to net charge-offs of $205,000, or 0.05% of average loans, for the fourth quarter of 2022, and net charge-offs of $52,000, or 0.02% of average loans, for the first quarter of 2022.

The Company’s allowance for loan losses was 1.28% of total loans and 1284.33% of nonperforming loans at March 31, 2023, compared with 1.27% of total loans and 897.82% of nonperforming loans at December 31, 2022.

Deposits

	Three Months Ended						% Change March 31, 2023 vs.
	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2022		March 31, 2022
	(Dollars in thousands)

Noninterest-bearing deposits	$	433,832	$	460,977	$	515,110	(5.9	)%	(15.8	)%
Interest-bearing deposits		1,355,659		1,259,766		1,026,729	7.6	%	32.0	%
Total deposits	$	1,789,491	$	1,720,743	$	1,541,839	4.0	%	16.1	%

Total deposits were $1.8 billion at March 31, 2023, up from $1.7 billion at December 31, 2022 and $1.5 billion at March 31, 2022. The $68.7 million increase in total deposits in the first quarter was due to an increase of $95.9 million in interest-bearing account balances, partially offset by a $27.1 million decrease in noninterest-bearing deposits. Included in the increase was $35.1 million in brokered deposits.

Capital

	March 31, 2023				December 31, 2022				March 31, 2022
	Company		Bank		Company		Bank		Company		Bank

Tier 1 capital ratio to average assets	8.89	%	12.19	%	8.82	%	12.17	%	8.75	%	10.88	%
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio	9.00	%	12.34	%	8.86	%	12.21	%	9.90	%	12.32	%
Tier 1 capital ratio	9.00	%	12.34	%	8.86	%	12.21	%	9.90	%	12.32	%
Total capital ratio	14.41	%	13.38	%	14.34	%	13.24	%	13.97	%	13.31	%

As of March 31, 2023, total stockholders’ equity was $189.7 million, up from $181.7 million at December 31, 2022. The increase of $7.9 million was substantially due to strong earnings growth.

About Southern States Bancshares, Inc.

Headquartered in Anniston, Alabama, Southern States Bancshares, Inc. is a bank holding company that operates primarily through its wholly-owned subsidiary, Southern States Bank. The Bank is a full service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. The Bank operates 13 branches in Alabama and Georgia and two loan production offices in Atlanta.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which reflect our current expectations and beliefs with respect to, among other things, future events and our financial performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. This may be especially true given recent events and trends in the banking industry, the inflationary environment, the COVID-19 pandemic and governmental responses. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the dates made, we cannot give any assurance that such expectations will prove correct and actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 under the section entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.

These statements are often, but not always, made through the use of words or phrases such as “may,” “can,” “should,” “could,” “to be,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “likely,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “target,” “project,” “would” and “outlook,” or the negative version of those words or other similar words or phrases of a future or forward-looking nature. Forward-looking statements appear in a number of places in this press release and may include statements about business strategy and prospects for growth, operations, ability to pay dividends, competition, regulation and general economic conditions.

Contact Information

Lynn Joyce				Kevin Dobbs
(205) 820-8065				(310) 622-8245
ljoyce@ssbank.bank				ssbankir@finprofiles.com


SELECT FINANCIAL DATA
(In thousands, except share and per share amounts)

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022

Results of Operations
Interest income	$	28,699		$	26,706		$	15,872
Interest expense		9,153			5,822			1,218
Net interest income		19,546			20,884			14,654
Provision for loan losses		1,181			1,938			700
Net interest income after provision		18,365			18,946			13,954
Noninterest income		1,786			4,603			1,333
Noninterest expense		10,158			10,436			9,290
Income tax expense⁽¹⁾		2,322			2,521			1,440
Net income	$	7,671		$	10,592		$	4,557
Core net income⁽²⁾	$	7,280		$	8,081		$	4,824

Share and Per Share Data
Shares issued and outstanding		8,723,763			8,706,920			8,749,878
Weighted average shares outstanding:
Basic		8,762,450			8,707,026			8,935,384
Diluted		9,044,490			8,932,585			9,065,364
Earnings per share:
Basic	$	0.87		$	1.22		$	0.51
Diluted	$	0.85		$	1.18		$	0.50
Core - diluted⁽²⁾	$	0.80		$	0.90		$	0.53
Book value per share	$	21.74		$	20.87		$	19.34
Tangible book value per share⁽²⁾	$	19.68		$	18.79		$	17.25
Cash dividends declared	$	0.09		$	0.09		$	0.09

Performance and Financial Ratios
ROAA		1.51	%		2.11	%		1.03	%
ROAE		16.67	%		23.77	%		10.43	%
Core ROAA⁽²⁾		1.44	%		1.61	%		1.09	%
ROATCE⁽²⁾		18.45	%		26.49	%		11.63	%
Core ROATCE⁽²⁾		17.51	%		20.21	%		12.31	%
NIM		4.07	%		4.38	%		3.53	%
NIM - FTE⁽²⁾		4.09	%		4.39	%		3.55	%
Net interest spread		3.33	%		3.84	%		3.36	%
Yield on loans		6.38	%		6.05	%		4.68	%
Yield on interest-earning assets		5.97	%		5.60	%		3.82	%
Cost of interest-bearing liabilities		2.64	%		1.76	%		0.46	%
Cost of funds⁽³⁾		2.01	%		1.29	%		0.31	%
Cost of interest-bearing deposits		2.42	%		1.52	%		0.35	%
Cost of total deposits		1.81	%		1.09	%		0.23	%
Noninterest deposits to total deposits		24.24	%		26.79	%		33.41	%
Total loans to total deposits		91.94	%		92.24	%		84.97	%
Efficiency ratio		48.79	%		40.81	%		56.83	%
Core efficiency ratio⁽²⁾		48.79	%		45.98	%		56.83	%

(1) Three months ended December 31, 2022 included a $540,000 investment tax credit.
(2) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(3) Includes total interest-bearing liabilities and noninterest deposits.

SELECT FINANCIAL DATA
(In thousands)

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022

Financial Condition (ending)
Total loans	$	1,645,315		$	1,587,164		$	1,310,070
Total securities		183,197			175,196			170,694
Total assets		2,134,337			2,045,204			1,798,834
Total noninterest bearing deposits		433,832			460,977			515,110
Total deposits		1,789,491			1,720,743			1,541,839
Total borrowings		131,372			117,295			73,104
Total liabilities		1,944,674			1,863,485			1,629,645
Total shareholders’ equity	$	189,663		$	181,719		$	169,189

Financial Condition (average)
Total loans	$	1,609,564		$	1,563,255		$	1,278,413
Total securities		192,348			188,765			161,683
Other interest-earning assets		146,045			141,049			244,202
Total interest-bearing assets		1,947,957			1,893,069			1,684,298
Total assets		2,057,005			1,994,087			1,787,015
Noninterest-bearing deposits		438,735			477,301			514,456
Interest-bearing deposits		1,300,632			1,216,492			1,023,898
Total deposits		1,739,367			1,693,793			1,538,354
Total borrowings		104,901			99,111			58,874
Total interest-bearing liabilities		1,405,533			1,315,603			1,082,772
Total shareholders’ equity	$	186,639		$	176,769		$	177,244

Asset Quality
Nonperforming loans	$	1,646		$	2,245		$	3,246
Other real estate owned (“OREO”)	$	2,930		$	2,930		$	2,930
Nonperforming assets (“NPA”)	$	4,576		$	5,175		$	6,176
Net charge-offs (recovery) to average loans⁽¹⁾		0.05	%		0.05	%		0.02	%
Provision for loan losses to average loans⁽¹⁾		0.30	%		0.49	%		0.22	%
ALLL to loans		1.28	%		1.27	%		1.18	%
ALLL to gross loans		1.28	%		1.27	%		1.18	%
ALLL to NPL		1284.33	%		897.82	%		477.26	%
NPL to loans		0.10	%		0.14	%		0.25	%
NPL to gross loans		0.10	%		0.14	%		0.25	%
NPA to gross loans and OREO		0.28	%		0.32	%		0.47	%
NPA to total assets		0.21	%		0.25	%		0.34	%

Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets		8.89	%		8.89	%		9.41	%
Tangible common equity to tangible assets⁽²⁾		8.11	%		8.07	%		8.47	%
Tier 1 capital ratio to average assets		8.89	%		8.82	%		8.75	%
Risk-based capital ratios:
CET1 capital ratio		9.00	%		8.86	%		9.90	%
Tier 1 capital ratio		9.00	%		8.86	%		9.90	%
Total capital ratio		14.41	%		14.34	%		13.97	%

(1) Ratio is annualized.
(2) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)

	March 31, 2023 (Unaudited)			December 31, 2022 (Audited)			March 31, 2022 (Unaudited)


Assets
Cash and due from banks	$	17,245		$	15,260		$	22,851
Interest-bearing deposits in banks		99,541			90,198			111,951
Federal funds sold		76,010			63,041			74,022
Total cash and cash equivalents		192,796			168,499			208,824

Securities available for sale, at fair value		163,550			155,544			151,027
Securities held to maturity, at amortized cost		19,647			19,652			19,667
Other equity securities, at fair value		3,806			4,444			8,937
Restricted equity securities, at cost		3,862			3,134			2,825
Loans held for sale		2,376			1,047			2,509

Loans, net of unearned income		1,645,315			1,587,164			1,310,070
Less allowance for loan losses		21,140			20,156			15,492
Loans, net		1,624,175			1,567,008			1,294,578

Premises and equipment, net		27,098			27,345			28,065
Accrued interest receivable		7,077			6,963			4,427
Bank owned life insurance		29,350			29,186			29,343
Annuities		15,489			15,478			15,523
Foreclosed assets		2,930			2,930			2,930
Goodwill		16,862			16,862			16,862
Core deposit intangible		1,144			1,226			1,434
Other assets		24,175			25,886			11,883

Total assets	$	2,134,337		$	2,045,204		$	1,798,834

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	433,832		$	460,977		$	515,110
Interest-bearing		1,355,659			1,259,766			1,026,729
Total deposits		1,789,491			1,720,743			1,541,839

Other borrowings		(16	)		(19	)		—
FHLB advances		45,000			31,000			25,950
Subordinated notes		86,388			86,314			47,154
Accrued interest payable		844			584			107
Other liabilities		22,967			24,863			14,595

Total liabilities		1,944,674			1,863,485			1,629,645

Stockholders' equity:
Common stock		43,798			43,714			43,749
Capital surplus		77,053			76,785			76,426
Retained earnings		80,642			73,764			53,604
Accumulated other comprehensive loss		(9,846	)		(11,048	)		(3,755	)
Unvested restricted stock		(965	)		(477	)		(835	)
Vested restricted stock units		(1,019	)		(1,019	)		—

Total stockholders' equity		189,663			181,719			169,189

Total liabilities and stockholders' equity	$	2,134,337		$	2,045,204		$	1,798,834


CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022
	(Unaudited)			(Unaudited)			(Unaudited)
Interest income:
Loans, including fees	$	25,335		$	23,853		$	14,766
Taxable securities		1,383			1,206			619
Nontaxable securities		291			322			299
Other interest and dividends		1,690			1,325			188
Total interest income		28,699			26,706			15,872

Interest expense:
Deposits		7,768			4,655			873
Other borrowings		1,385			1,167			345
Total interest expense		9,153			5,822			1,218

Net interest income		19,546			20,884			14,654
Provision for loan losses		1,181			1,938			700
Net interest income after provision for loan losses		18,365			18,946			13,954

Noninterest income:
Service charges on deposit accounts		450			431			445
Swap fees		(4	)		2			15
SBA/USDA fees		134			70			388
Mortgage origination fees		100			98			286
Net gain (loss) on securities		514			(86	)		(361	)
Other operating income		592			4,088			560
Total noninterest income		1,786			4,603			1,333

Noninterest expenses:
Salaries and employee benefits		6,311			6,738			5,725
Equipment and occupancy expenses		683			730			705
Data processing fees		593			711			564
Regulatory assessments		342			165			263
Other operating expenses		2,229			2,092			2,033
Total noninterest expenses		10,158			10,436			9,290

Income before income taxes		9,993			13,113			5,997

Income tax expense		2,322			2,521			1,440

Net income	$	7,671		$	10,592		$	4,557

Basic earnings per share	$	0.87		$	1.22		$	0.51

Diluted earnings per share	$	0.85		$	1.18		$	0.50


AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)

	Three Months Ended
	March 31, 2023							December 31, 2022							March 31, 2022
	Average Balance			Interest		Yield/Rate		Average Balance			Interest		Yield/Rate		Average Balance			Interest		Yield/Rate
Assets:
Interest-earning assets:
Loans, net of unearned income⁽¹⁾	$	1,609,564		$	25,335	6.38	%	$	1,563,255		$	23,853	6.05	%	$	1,278,413		$	14,766	4.68	%
Taxable securities		139,516			1,383	4.02	%		132,222			1,206	3.62	%		106,820			619	2.35	%
Nontaxable securities		52,832			291	2.24	%		56,543			322	2.26	%		54,863			299	2.21	%
Other interest-earnings assets		146,045			1,690	4.69	%		141,049			1,325	3.73	%		244,202			188	0.31	%
Total interest-earning assets	$	1,947,957		$	28,699	5.97	%	$	1,893,069		$	26,706	5.60	%	$	1,684,298		$	15,872	3.82	%
Allowance for loan losses		(20,493	)						(19,374	)						(15,041	)
Noninterest-earning assets		129,541							120,392							117,758
Total Assets	$	2,057,005						$	1,994,087						$	1,787,015

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		93,951			20	0.08	%		98,978			22	0.09	%		110,983			26	0.09	%
Savings and money market accounts		806,001			5,040	2.54	%		794,692			3,126	1.56	%		675,504			591	0.36	%
Time deposits		400,680			2,708	2.74	%		322,822			1,507	1.85	%		237,411			256	0.44	%
FHLB advances		18,578			159	3.47	%		22,739			147	2.56	%		25,950			22	0.34	%
Other borrowings		86,323			1,226	5.76	%		76,372			1,020	5.30	%		32,924			323	3.98	%
Total interest-bearing liabilities	$	1,405,533		$	9,153	2.64	%	$	1,315,603		$	5,822	1.76	%	$	1,082,772		$	1,218	0.46	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	438,735						$	477,301						$	514,456
Other liabilities		26,098							24,414							12,543
Total noninterest-bearing liabilities	$	464,833						$	501,715						$	526,999
Stockholders’ Equity		186,639							176,769							177,244
Total Liabilities and Stockholders’ Equity	$	2,057,005						$	1,994,087						$	1,787,015

Net interest income				$	19,546						$	20,884						$	14,654
Net interest spread⁽²⁾						3.33	%						3.84	%						3.36	%
Net interest margin⁽³⁾						4.07	%						4.38	%						3.53	%
Net interest margin - FTE⁽⁴⁾⁽⁵⁾						4.09	%						4.39	%						3.55	%
Cost of funds⁽⁶⁾						2.01	%						1.29	%						0.31	%
Cost of interest-bearing deposits						2.42	%						1.52	%						0.35	%
Cost of total deposits						1.81	%						1.09	%						0.23	%

(1)	Includes nonaccrual loans.
(2)	Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest-bearing liabilities.
(3)	Net interest margin is a ratio of net interest income to average interest earning assets for the same period.
(4)	Net interest margin - FTE is a ratio of fully-taxable equivalent net interest income to average interest earning assets for the same period. It assumes a 24.0% tax rate for the three months ended March 31, 2023 and December 31, 2022 and a 23.5% tax rate for the three months ended March 31, 2022.
(5)	Refer to “Reconciliation of Non-GAAP Financial Measures”.
(6)	Includes total interest-bearing liabilities and noninterest deposits.


LOAN COMPOSITION
(Dollars in thousands)

	March 31, 2023					December 31, 2022					March 31, 2022
	Amount			% of gross		Amount			% of gross		Amount			% of gross

Real estate mortgages:
Construction and development	$	227,560		13.8	%	$	255,736		16.1	%	$	165,400		12.6	%
Residential		196,923		11.9	%		167,891		10.5	%		154,143		11.7	%
Commercial		948,251		57.5	%		904,872		56.8	%		765,685		58.3	%
Commercial and industrial		270,825		16.4	%		256,553		16.1	%		218,868		16.6	%
PPP loans		—		—	%		—		—	%		893		0.1	%
Consumer and other		7,370		0.4	%		7,655		0.5	%		9,077		0.7	%
Gross loans		1,650,929		100.0	%		1,592,707		100.0	%		1,314,066		100.0	%
Unearned income		(5,614	)				(5,543	)				(3,996	)
Loans, net of unearned income		1,645,315					1,587,164					1,310,070
Allowance for loan losses		(21,140	)				(20,156	)				(15,492	)
Loans, net	$	1,624,175				$	1,567,008				$	1,294,578

DEPOSIT COMPOSITION
(Dollars in thousands)

	March 31, 2023				December 31, 2022				March 31, 2022
	Amount		% of total		Amount		% of total		Amount		% of total


Noninterest-bearing transaction	$	433,833	24.2	%	$	460,977	26.8	%	$	515,110	33.4	%
Interest-bearing transaction		877,166	49.0	%		837,127	48.6	%		749,119	48.6	%
Savings		47,742	2.7	%		49,235	2.9	%		62,462	4.1	%
Time deposits, $250,000 and under		366,271	20.5	%		307,145	17.8	%		189,172	12.2	%
Time deposits, over $250,000		64,479	3.6	%		66,259	3.9	%		25,976	1.7	%
Total deposits	$	1,789,491	100.0	%	$	1,720,743	100.0	%	$	1,541,839	100.0	%

Nonperfoming Assets
(Dollars in thousands)

	March 31, 2023			December 31, 2022			March 31, 2022


Nonaccrual loans	$	1,646		$	2,245		$	3,246
Past due loans 90 days or more and still accruing interest		—			—			—
Total nonperforming loans		1,646			2,245			3,246
OREO		2,930			2,930			2,930
Total nonperforming assets	$	4,576		$	5,175		$	6,176

Troubled debt restructured loans – nonaccrual⁽¹⁾		805			832			904
Troubled debt restructured loans – accruing		1,272			1,292			1,058
Total troubled debt restructured loans	$	2,077		$	2,124		$	1,962

Allowance for loan losses	$	21,140		$	20,156		$	15,492
Loans, net of unearned income at the end of the period	$	1,645,315		$	1,587,164		$	1,310,070
Gross loans outstanding at the end of period	$	1,650,929		$	1,592,707		$	1,314,066
Total assets	$	2,134,337		$	2,045,204		$	1,798,834
Allowance for loan losses to nonperforming loans		1284.33	%		897.82	%		477.26	%
Nonperforming loans to loans, net of unearned income		0.10	%		0.14	%		0.25	%
Nonperforming loans to gross loans		0.10	%		0.14	%		0.25	%
Nonperforming assets to gross loans and OREO		0.28	%		0.32	%		0.47	%
Nonperforming assets to total assets		0.21	%		0.25	%		0.34	%

Nonaccrual loans by category:
Real estate mortgages:
Construction & Development	$	64		$	67		$	76
Residential Mortgages		267			565			510
Commercial Real Estate Mortgages		1,263			1,278			2,388
Commercial & Industrial		51			312			269
Consumer and other		1			23			3
Total	$	1,646		$	2,245		$	3,246

(1) Troubled debt restructured loans are excluded from nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are more than 90 days past due.

Allowance for Loan Losses
(Dollars in thousands)

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022

Average loans, net of unearned income	$	1,609,564		$	1,563,255		$	1,278,413
Loans, net of unearned income	$	1,645,315		$	1,587,164		$	1,310,070
Gross loans	$	1,650,929		$	1,592,707		$	1,314,066
Allowance for loan losses at beginning of the period	$	20,156		$	18,423		$	14,844
Charge-offs:
Construction and development		—			—			66
Residential		—			—			—
Commercial		—			—			—
Commercial and industrial		218			210			—
Consumer and other		6			18			6
Total charge-offs		224			228			72
Recoveries:
Construction and development		—			—			—
Residential		11			4			17
Commercial		—			—			—
Commercial and industrial		14			1			—
Consumer and other		2			18			3
Total recoveries		27			23			20
Net charge-offs (recoveries)	$	197		$	205		$	52

Provision for loan losses	$	1,181		$	1,938		$	700
Balance at end of period	$	21,140		$	20,156		$	15,492
Allowance to loans, net of unearned income		1.28	%		1.27	%		1.18	%
Allowance to gross loans		1.28	%		1.27	%		1.18	%
Net charge-offs (recoveries) to average loans, net of unearned income⁽¹⁾		0.05	%		0.05	%		0.02	%
Provision for loan losses to average loans, net of unearned income⁽¹⁾		0.30	%		0.49	%		0.22	%

(1) Ratio is annualized.

Reconciliation of Non-GAAP Financial Measures

In addition to reporting GAAP results, the Company reports non-GAAP financial measures in this earnings release and other disclosures. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

The following table provides a reconciliation of the non-GAAP financial measures to their most directly comparable financial measure presented in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022

Net income	$	7,671		$	10,592		$	4,557
Less: Net gain on sale of branches		—			2,372			—
Less: BOLI benefit claim		—			774			—
Less: Gain (loss) on securities		514			(86	)		(361	)
Less: Tax effect		(123	)		(549	)		94
*Core net income*	$	*7,280*		$	*8,081*		$	*4,824*
Average assets	$	2,057,005		$	1,994,087		$	1,787,015
*Core return on average assets*		*1.44*	%		*1.61*	%		*1.09*	%

Net income	$	7,671		$	10,592		$	4,557
Add: Provision		1,181			1,938			700
Less: Net gain on sale of branches		—			2,372			—
Less: BOLI benefit claim		—			774			—
Less: Gain (loss) on securities		514			(86	)		(361	)
Add: Income taxes		2,322			2,521			1,440
*Pretax pre-provision core net income*	$	*10,660*		$	*11,991*		$	*7,058*
Average assets	$	2,057,005		$	1,994,087		$	1,787,015
*Pretax pre-provision core return on average assets*		*2.10*	%		*2.39*	%		*1.60*	%

Net interest income	$	19,546		$	20,884		$	14,654
Add: Fully-taxable equivalent adjustments⁽¹⁾		85			84			78
*Net interest income - FTE*	$	*19,631*		$	*20,968*		$	*14,732*

Net interest margin		4.07	%		4.38	%		3.53	%
Effect of fully-taxable equivalent adjustments⁽¹⁾		0.02	%		0.01	%		0.02	%
*Net interest margin - FTE*		*4.09*	%		*4.39*	%		*3.55*	%

Total stockholders' equity	$	189,663		$	181,719		$	169,189
Less: Intangible assets		18,006			18,088			18,296
*Tangible common equity*	$	*171,657*		$	*163,631*		$	*150,893*

(1) Assumes a 24.0% tax rate for the three months ended March 31, 2023 and December 31, 2022 and a 23.5% tax rate for the three months ended March 31, 2022.



Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts

	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022

Core net income	$	7,280		$	8,081		$	4,824
Diluted weighted average shares outstanding		9,044,490			8,932,585			9,065,364
*Diluted core earnings per share*	$	*0.80*		$	*0.90*		$	*0.53*

Common shares outstanding at year or period end		8,723,763			8,706,920			8,749,878
*Tangible book value per share*	$	*19.68*		$	*18.79*		$	*17.25*

Total assets at end of period	$	2,134,337		$	2,045,204		$	1,798,834
Less: Intangible assets		18,006			18,088			18,296
Adjusted assets at end of period	$	2,116,331		$	2,027,116		$	1,780,538
*Tangible common equity to tangible assets*		*8.11*	%		*8.07*	%		*8.47*	%

Total average shareholders equity	$	186,639		$	176,769		$	177,244
Less: Average intangible assets		18,055			18,134			18,337
Average tangible common equity	$	168,584		$	158,635		$	158,907
Net income to common shareholders	$	7,671		$	10,592		$	4,557
*Return on average tangible common equity*		*18.45*	%		*26.49*	%		*11.63*	%
Average tangible common equity	$	168,584		$	158,635		$	158,907
Core net income	$	7,280		$	8,081		$	4,824
*Core return on average tangible common equity*		*17.51*	%		*20.21*	%		*12.31*	%

Net interest income	$	19,546		$	20,884		$	14,654
Add: Noninterest income		1,786			4,603			1,333
Less: Gain on sale of branches		—			2,600			—
Less: BOLI benefit claim		—			774			—
Less: Gain (loss) on securities		514			(86	)		(361	)
Operating revenue	$	20,818		$	22,199		$	16,348

Expenses:
Total noninterest expense	$	10,158		$	10,436		$	9,290
Less: Loss on sale of branches		—			228			—
Adjusted noninterest expenses	$	10,158		$	10,208		$	9,290
*Core efficiency ratio*		*48.79*	%		*45.98*	%		*56.83*	%

News Release Details

Southern States Bancshares, Inc. Announces First Quarter 2023 Financial Results