UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 8-K
___________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 25, 2022
___________________________
(Exact Name of Registrant as Specified in its Charter)
___________________________
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (256 ) 241-1092
Securities registered pursuant to Section 12(b) of the Act:
___________________________
| Title of each class | Trading Symbols(s) | Name of exchange on which registered | ||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item. 2.02 Results of Operations and Financial Condition.
On July 25, 2022, Southern States Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2022 (the “Earnings Release”). A copy of the Earnings Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Report”).
The information set forth under Item 7.01 is also furnished pursuant to this Item 2.02
Item 7.01 Regulation FD Disclosure.
The Company has prepared a presentation of its results for the second quarter ended June 30, 2022 (the “Presentation”) to be used from time to time during meetings with members of the investment community. A copy of the Presentation is furnished as Exhibit 99.2 to this Report. The Presentation will also be made available on the Company’s investor relations website at ir.southernstatesbank.net under the Presentations section.
The information contained in Items 2.02 and 7.01, including Exhibits 99.1 and 99.2 furnished herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference into any registration statement or other documents pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: July 27, 2022 | SOUTHERN STATES BANCSHARES, INC. | |||||||
| By: | /s/ Lynn Joyce | |||||||
| Name: | Lynn Joyce | |||||||
| Title: | Senior Executive Vice President and Chief Financial Officer | |||||||
Southern States Bancshares, Inc. Announces
Second Quarter 2022 Financial Results
Second Quarter 2022 Highlights
•Linked-quarter loan growth was 36.8% annualized
•Net income of $5.2 million, or $0.59 per diluted share
•Core net income(1) of $5.3 million, or $0.59 per diluted share(1)
•Net interest margin (“NIM”) of 3.84%, up 31 basis points from the prior quarter
•NIM of 3.86% on a fully-taxable equivalent basis(1)
•Return on average assets (“ROAA”) of 1.15%; return on average stockholders’ equity (“ROAE”) of 12.32%; and return on average tangible common equity (“ROATCE”)(1) of 13.80%
•Core ROAA(1) of 1.16%; and core ROATCE(1) of 13.89%
(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., July 25, 2022 – 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 $5.2 million, or $0.59 diluted earnings per share, for the second quarter of 2022. This compares to net income of $4.6 million, or $0.50 diluted earnings per share, for the first quarter of 2022, and net income of $3.9 million, or $0.50 diluted earnings per share, for the second quarter of 2021. The Company reported core net income of $5.3 million, or $0.59 diluted core earnings per share, for the second quarter of 2022. This compares to core net income of $4.8 million, or $0.53 diluted core earnings per share, for the first quarter of 2022, and core net income of $3.9 million, or $0.50 diluted core earnings per share, for the second quarter of 2021 (see “Reconciliation of Non-GAAP Financial Measures”).
Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “Our dedicated lending teams generated strong production in the second quarter, with linked-quarter annualized loan growth of 36.8% that helped bolster our net interest income. We made a concerted effort in 2021 to invest in more talent to capitalize on our robust deposit base and meet the steady demand we are seeing across our economically dynamic footprint. These new hires, in partnership with our long-tenured bankers, continue to pursue an abundance of opportunities, giving us confidence in ongoing growth in the second half of 2022.”
“As we grow, we remain disciplined with our expense control and prudent with our underwriting, ensuring that our solid asset quality remains a fixture of the Southern States story. Our nonperforming loans in the second quarter totaled just 0.25% of total loans,” Mr. Whatley continued. “Responsible growth has and will always be the centerpiece of our strategy, enabling us to deliver consistently for our shareholders across credit cycles.”
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Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2022 was $16.4 million, an increase of 11.7% from $14.7 million for the first quarter of 2022. The increase was primarily attributable to an increase in interest-earning assets coupled with a higher net interest margin.
Relative to the second quarter of 2021, net interest income increased $3.5 million, or 26.9%. The increase was substantially the result of an increase in interest-earning assets.
Net interest margin for the second quarter of 2022 was 3.84%, compared to 3.53% for the first quarter of 2022. The increase was primarily the result of a 34 basis point increase in the yield on interest-earning assets, partially offset by a 3 basis point increase in the cost of interest-bearing liabilities.
Relative to the second quarter of 2021, net interest margin increased from 3.75%. The increase was primarily due to an increase in the yield on interest-earning assets combined with a decrease in the cost of interest-bearing liabilities.
Noninterest Income
Noninterest income for the second quarter of 2022 was $1.4 million, an increase of 5.3% from $1.3 million for the first quarter of 2022. The increase was substantially the result of a $320,000 decline in the net loss on securities, partially offset by a $296,000 reduction in gains on sale of SBA/USDA loans from the first quarter of 2022.
Relative to the second quarter of 2021, noninterest income decreased 31.3% from $2.0 million. The decreases include reductions in swap fees, mortgage income and SBA income, which are reflective of the market conditions and timing.
Noninterest Expense
Noninterest expense for the second quarter of 2022 was $9.7 million, up from $9.3 million for the first quarter of 2022. The increase was primarily attributable to an increase in salaries and benefits as a result of additional employee staffing.
Relative to the second quarter of 2021, noninterest expense increased 6.0% from $9.1 million. The increase was primarily attributable to higher salaries and employee benefits expense as production personnel were added in the Georgia market, plus higher insurance and professional fees as a result of going public, net of a reduction in SBA expense associated with the Paycheck Protection Program (“PPP”) from the second quarter of 2021. This net increase was partially offset by a decrease in occupancy expense as a result of accelerated depreciation during the second quarter of 2021 on a formerly leased Birmingham branch location.
Loan Portfolio
Total loans outstanding, before allowance for loan losses, were $1.4 billion at June 30, 2022, up $120.1 million from March 31, 2022 and up from $1.1 billion at June 30, 2021. The linked-quarter increase in loans was primarily attributable to an increase in commercial real estate loans in the Atlanta market.
Deposits
Total deposits were $1.6 billion at June 30, 2022, compared with $1.5 billion at March 31, 2022 and $1.3 billion at June 30, 2021. The $103.1 million net increase in total deposits from March 31, 2022 was due to an increase of $105.6 million in interest-bearing account balances that more than offset a slight decrease in noninterest-bearing deposits.
Asset Quality
Nonperforming loans totaled $3.6 million, or 0.25% of gross loans, at June 30, 2022, compared with $3.2 million, or 0.25% of gross loans, at March 31, 2022, and $2.2 million, or 0.20% of gross loans, at June 30, 2021. The $304,000 net increase in nonperforming loans from March 31, 2022 was primarily attributable to two commercial and industrial loans that were placed on nonaccrual and partially offset by one commercial real
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estate loan that was moved back to accruing status. The $1.4 million increase in nonperforming loans from June 30, 2021 was primarily attributable to two commercial and industrial loans, one commercial real estate loan and one residential mortgage loan that were placed on nonaccrual. These increases were partially offset by one commercial real estate loan being moved back to accruing status and one commercial and industrial loan that was ninety days past due but was subsequently paid off during the first quarter of 2022.
The Company recorded a provision for loan losses of $1.3 million for the second quarter of 2022, compared to $700,000 for the first quarter of 2022. The provision was primarily due to robust loan growth.
Net recoveries for the second quarter of 2022 were $11,000, or 0.00% of average loans on an annualized basis, compared to net charge-offs of $52,000, or 0.02% of average loans on an annualized basis, for the first quarter of 2022, and net charge-offs of $16,000, or 0.01% of average loans on an annualized basis, for the second quarter of 2021.
The Company’s allowance for loan losses was 1.18% of total loans and 473.44% of nonperforming loans at June 30, 2022, compared with 1.18% of total loans and 477.26% of nonperforming loans at March 31, 2022.
Capital
As of June 30, 2022, total stockholders’ equity was $167.9 million, compared with $169.2 million at March 31, 2022. The decrease of $1.2 million was primarily due to an increase in accumulated other comprehensive loss resulting from changes in the value of the available for sale securities portfolio due to rapid increases in interest rates during the quarter.
In connection with its recently announced stock repurchase program, the Company repurchased 58,258 shares of its common stock during the second quarter of 2022 at an average price of $21.03 per share.
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 15 branches in Alabama and Georgia and two loan production offices in Atlanta.
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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 the current COVID-19 pandemic and uncertainty about its continuation. 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, 2021 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 earnings 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
(205) 820-8065
ljoyce@ssbank.bank
Kevin Dobbs
(310) 622-8245
ssbankir@finprofiles.com
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| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||||||||
| (In thousands, except share amounts) | |||||||||||||||||||||||
| June 30, 2022 (Unaudited) | March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | June 30, 2021 (Unaudited) | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and due from banks | $ | 22,167 | $ | 22,851 | $ | 6,397 | $ | 17,953 | |||||||||||||||
| Interest-bearing deposits in banks | 95,156 | 111,951 | 203,537 | 131,169 | |||||||||||||||||||
| Federal funds sold | 73,024 | 74,022 | 74,022 | 39,021 | |||||||||||||||||||
| Total cash and cash equivalents | 190,347 | 208,824 | 283,956 | 188,143 | |||||||||||||||||||
| Securities available for sale, at fair value | 151,749 | 151,027 | 132,172 | 105,617 | |||||||||||||||||||
| Securities held to maturity, at amortized cost | 19,662 | 19,667 | 19,672 | 19,683 | |||||||||||||||||||
| Other equity securities, at fair value | 6,958 | 8,937 | 9,232 | 8,985 | |||||||||||||||||||
| Restricted equity securities, at cost | 2,825 | 2,825 | 2,600 | 2,788 | |||||||||||||||||||
| Loans held for sale | 2,709 | 2,509 | 2,400 | 2,767 | |||||||||||||||||||
| Loans, net of unearned income | 1,430,205 | 1,310,070 | 1,250,300 | 1,097,559 | |||||||||||||||||||
| Less allowance for loan losses | 16,807 | 15,492 | 14,844 | 13,339 | |||||||||||||||||||
| Loans, net | 1,413,398 | 1,294,578 | 1,235,456 | 1,084,220 | |||||||||||||||||||
| Premises and equipment, net | 28,467 | 28,065 | 27,044 | 25,011 | |||||||||||||||||||
| Accrued interest receivable | 4,839 | 4,427 | 4,170 | 3,725 | |||||||||||||||||||
| Bank owned life insurance | 29,509 | 29,343 | 22,201 | 22,710 | |||||||||||||||||||
| Annuities | 15,540 | 15,523 | 12,888 | 12,941 | |||||||||||||||||||
| Foreclosed assets | 2,930 | 2,930 | 2,930 | 10,146 | |||||||||||||||||||
| Goodwill | 16,862 | 16,862 | 16,862 | 16,862 | |||||||||||||||||||
| Core deposit intangible | 1,368 | 1,434 | 1,500 | 1,632 | |||||||||||||||||||
| Other assets | 15,332 | 11,883 | 9,509 | 9,206 | |||||||||||||||||||
| Total assets | $ | 1,902,495 | $ | 1,798,834 | $ | 1,782,592 | $ | 1,514,436 | |||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Noninterest-bearing | $ | 512,598 | $ | 515,110 | $ | 541,546 | $ | 369,479 | |||||||||||||||
| Interest-bearing | 1,132,348 | 1,026,729 | 1,014,905 | 943,131 | |||||||||||||||||||
| Total deposits | 1,644,946 | 1,541,839 | 1,556,451 | 1,312,610 | |||||||||||||||||||
| Other borrowings | — | — | 12,498 | 12,490 | |||||||||||||||||||
| FHLB advances | 25,000 | 25,950 | 25,950 | 31,900 | |||||||||||||||||||
| Subordinated notes | 47,013 | 47,154 | — | — | |||||||||||||||||||
| Accrued interest payable | 88 | 107 | 132 | 175 | |||||||||||||||||||
| Other liabilities | 17,501 | 14,595 | 10,363 | 8,358 | |||||||||||||||||||
| Total liabilities | 1,734,548 | 1,629,645 | 1,605,394 | 1,365,533 | |||||||||||||||||||
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| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||||||||
| (In thousands, except share amounts) | |||||||||||||||||||||||
| June 30, 2022 (Unaudited) | March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | June 30, 2021 (Unaudited) | ||||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||
| Common stock | 43,458 | 43,749 | 45,064 | 38,582 | |||||||||||||||||||
| Capital surplus | 75,597 | 76,426 | 80,640 | 65,978 | |||||||||||||||||||
| Retained earnings | 58,039 | 53,604 | 49,858 | 42,385 | |||||||||||||||||||
| Accumulated other comprehensive income (loss) | (8,439) | (3,755) | 2,113 | 2,683 | |||||||||||||||||||
| Unvested restricted stock | (708) | (835) | (477) | (725) | |||||||||||||||||||
| Total stockholders' equity | 167,947 | 169,189 | 177,198 | 148,903 | |||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,902,495 | $ | 1,798,834 | $ | 1,782,592 | $ | 1,514,436 | |||||||||||||||
| Shares issued and outstanding | 8,691,620 | 8,749,878 | 9,012,857 | 7,716,428 | |||||||||||||||||||
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| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans, including fees | $ | 16,265 | $ | 14,766 | $ | 13,484 | $ | 31,031 | $ | 26,505 | |||||||||||||||||||
| Taxable securities | 788 | 619 | 332 | 1,407 | 733 | ||||||||||||||||||||||||
| Nontaxable securities | 309 | 299 | 255 | 608 | 462 | ||||||||||||||||||||||||
| Other interest and dividends | 390 | 188 | 124 | 578 | 172 | ||||||||||||||||||||||||
| Total interest income | 17,752 | 15,872 | 14,195 | 33,624 | 27,872 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 889 | 873 | 1,131 | 1,762 | 2,321 | ||||||||||||||||||||||||
| Other borrowings | 498 | 345 | 171 | 843 | 374 | ||||||||||||||||||||||||
| Total interest expense | 1,387 | 1,218 | 1,302 | 2,605 | 2,695 | ||||||||||||||||||||||||
| Net interest income | 16,365 | 14,654 | 12,893 | 31,019 | 25,177 | ||||||||||||||||||||||||
| Provision for loan losses | 1,304 | 700 | 750 | 2,004 | 1,500 | ||||||||||||||||||||||||
| Net interest income after provision for loan losses | 15,061 | 13,954 | 12,143 | 29,015 | 23,677 | ||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | 480 | 445 | 337 | 925 | 698 | ||||||||||||||||||||||||
| Swap fees | 21 | 15 | 279 | 36 | 836 | ||||||||||||||||||||||||
| SBA/USDA fees | 93 | 388 | 439 | 481 | 3,304 | ||||||||||||||||||||||||
| Mortgage origination fees | 213 | 286 | 396 | 499 | 802 | ||||||||||||||||||||||||
| Net gain (loss) on securities | (42) | (361) | 27 | (403) | (206) | ||||||||||||||||||||||||
| Other operating income | 639 | 560 | 567 | 1,199 | 1,108 | ||||||||||||||||||||||||
| Total noninterest income | 1,404 | 1,333 | 2,045 | 2,737 | 6,542 | ||||||||||||||||||||||||
| Noninterest expenses: | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 5,982 | 5,725 | 5,530 | 11,707 | 10,587 | ||||||||||||||||||||||||
| Equipment and occupancy expenses | 719 | 705 | 909 | 1,424 | 1,789 | ||||||||||||||||||||||||
| Data processing fees | 570 | 564 | 527 | 1,134 | 1,042 | ||||||||||||||||||||||||
| Regulatory assessments | 262 | 263 | 221 | 525 | 441 | ||||||||||||||||||||||||
| Other operating expenses | 2,119 | 2,033 | 1,919 | 4,152 | 3,779 | ||||||||||||||||||||||||
| Total noninterest expenses | 9,652 | 9,290 | 9,106 | 18,942 | 17,638 | ||||||||||||||||||||||||
| Income before income taxes | 6,813 | 5,997 | 5,082 | 12,810 | 12,581 | ||||||||||||||||||||||||
| Income tax expense | 1,590 | 1,440 | 1,176 | 3,030 | 2,993 | ||||||||||||||||||||||||
| Net income | $ | 5,223 | $ | 4,557 | $ | 3,906 | $ | 9,780 | $ | 9,588 | |||||||||||||||||||
| Basic earnings per share | $ | 0.60 | $ | 0.51 | $ | 0.51 | $ | 1.11 | $ | 1.25 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.59 | $ | 0.50 | $ | 0.50 | $ | 1.09 | $ | 1.23 | |||||||||||||||||||
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The following table provides an analysis of the allowance for loan losses as of the dates indicated.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Average loans, net of unearned income | $ | 1,359,320 | $ | 1,278,413 | $ | 1,091,139 | $ | 1,319,090 | $ | 1,078,915 | |||||||||||||||||||
| Loans, net of unearned income | $ | 1,430,205 | $ | 1,310,070 | $ | 1,097,559 | $ | 1,430,205 | $ | 1,097,559 | |||||||||||||||||||
| Allowance for loan losses at beginning of the period | $ | 15,492 | $ | 14,844 | $ | 12,605 | $ | 14,844 | $ | 11,859 | |||||||||||||||||||
| Charge-offs: | |||||||||||||||||||||||||||||
| Construction and development | — | 66 | — | 66 | — | ||||||||||||||||||||||||
| Residential | 7 | — | 28 | 7 | 44 | ||||||||||||||||||||||||
| Commercial | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial and industrial | — | — | — | — | — | ||||||||||||||||||||||||
| Consumer and other | 1 | 6 | — | 7 | 2 | ||||||||||||||||||||||||
| Total charge-offs | 8 | 72 | 28 | 80 | 46 | ||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||
| Construction and development | — | — | — | — | — | ||||||||||||||||||||||||
| Residential | 18 | 17 | 3 | 35 | 5 | ||||||||||||||||||||||||
| Commercial | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial and industrial | — | — | 2 | — | 13 | ||||||||||||||||||||||||
| Consumer and other | 1 | 3 | 7 | 4 | 8 | ||||||||||||||||||||||||
| Total recoveries | 19 | 20 | 12 | 39 | 26 | ||||||||||||||||||||||||
| Net charge-offs (recoveries) | $ | (11) | $ | 52 | $ | 16 | $ | 41 | $ | 20 | |||||||||||||||||||
| Provision for loan losses | $ | 1,304 | $ | 700 | $ | 750 | $ | 2,004 | $ | 1,500 | |||||||||||||||||||
| Balance at end of period | $ | 16,807 | $ | 15,492 | $ | 13,339 | $ | 16,807 | $ | 13,339 | |||||||||||||||||||
| Ratio of allowance to end of period loans | 1.18 | % | 1.18 | % | 1.22 | % | 1.18 | % | 1.22 | % | |||||||||||||||||||
| Ratio of net charge-offs (recoveries) to average loans | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||||
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The following table sets forth the allocation of the Company’s nonperforming assets among different asset categories as of the dates indicated. Nonperforming assets consist of nonperforming loans plus OREO and repossessed property. Nonperforming loans include nonaccrual loans and loans past due 90 days or more.
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Nonaccrual loans | $ | 3,550 | $ | 3,246 | $ | 1,478 | $ | 2,010 | |||||||||||||||
| Past due loans 90 days or more and still accruing interest | — | — | 494 | 144 | |||||||||||||||||||
| Total nonperforming loans | 3,550 | 3,246 | 1,972 | 2,154 | |||||||||||||||||||
| OREO | 2,930 | 2,930 | 2,930 | 10,146 | |||||||||||||||||||
| Total nonperforming assets | $ | 6,480 | $ | 6,176 | $ | 4,902 | $ | 12,300 | |||||||||||||||
Troubled debt restructured loans – nonaccrual(1) | 676 | 904 | 940 | 695 | |||||||||||||||||||
| Troubled debt restructured loans - accruing | 1,323 | 1,058 | 1,072 | 1,096 | |||||||||||||||||||
| Total troubled debt restructured loans | $ | 1,999 | $ | 1,962 | $ | 2,012 | $ | 1,791 | |||||||||||||||
| Allowance for loan losses | $ | 16,807 | $ | 15,492 | $ | 14,844 | $ | 13,339 | |||||||||||||||
| Gross loans outstanding at the end of period | $ | 1,435,089 | $ | 1,314,066 | $ | 1,254,117 | $ | 1,101,677 | |||||||||||||||
| Allowance for loan losses to gross loans | 1.17 | % | 1.18 | % | 1.18 | % | 1.21 | % | |||||||||||||||
| Allowance for loan losses to nonperforming loans | 473.44 | % | 477.26 | % | 752.74 | % | 619.27 | % | |||||||||||||||
| Nonperforming loans to gross loans | 0.25 | % | 0.25 | % | 0.16 | % | 0.20 | % | |||||||||||||||
| Nonperforming assets to gross loans and OREO | 0.45 | % | 0.47 | % | 0.39 | % | 1.11 | % | |||||||||||||||
| Nonaccrual loans by category: | |||||||||||||||||||||||
| Real estate mortgages: | |||||||||||||||||||||||
| Construction & Development | $ | 73 | $ | 76 | $ | 346 | $ | 84 | |||||||||||||||
| Residential Mortgages | 563 | 510 | 167 | 250 | |||||||||||||||||||
| Commercial Real Estate Mortgages | 2,135 | 2,388 | 674 | 1,347 | |||||||||||||||||||
| Commercial & Industrial | 768 | 269 | 285 | 316 | |||||||||||||||||||
| Consumer and other | 11 | 3 | 6 | 13 | |||||||||||||||||||
| $ | 3,550 | $ | 3,246 | $ | 1,478 | $ | 2,010 | ||||||||||||||||
(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.
9
The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and average costs of our liabilities for the periods indicated. Yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross loans, net of unearned income(1) | $ | 1,359,320 | $ | 16,265 | 4.80 | % | $ | 1,278,413 | $ | 14,766 | 4.68 | % | $ | 1,091,139 | $ | 13,484 | 4.96 | % | |||||||||||||||||||||||||||||||||||
| Taxable securities | 121,677 | $ | 788 | 2.60 | % | 106,820 | 619 | 2.35 | % | 67,785 | $ | 332 | 1.96 | % | |||||||||||||||||||||||||||||||||||||||
| Nontaxable securities | 56,850 | $ | 309 | 2.18 | % | 54,863 | 299 | 2.21 | % | 44,991 | $ | 255 | 2.28 | % | |||||||||||||||||||||||||||||||||||||||
| Other interest-earnings assets | 172,175 | $ | 390 | 0.91 | % | 244,202 | 188 | 0.31 | % | 176,542 | $ | 124 | 0.28 | % | |||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 1,710,022 | $ | 17,752 | 4.16 | % | $ | 1,684,298 | $ | 15,872 | 3.82 | % | $ | 1,380,457 | $ | 14,195 | 4.12 | % | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (15,815) | (15,041) | (12,869) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 127,230 | 117,758 | 123,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 1,821,437 | $ | 1,787,015 | $ | 1,491,372 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing transaction accounts | 114,743 | 27 | 0.09 | % | 110,983 | 26 | 0.09 | % | 97,202 | 24 | 0.10 | % | |||||||||||||||||||||||||||||||||||||||||
| Savings and money market accounts | 735,845 | 625 | 0.34 | % | 675,504 | 591 | 0.36 | % | 501,155 | 713 | 0.57 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 208,774 | 237 | 0.46 | % | 237,411 | 256 | 0.44 | % | 317,522 | 394 | 0.50 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 25,000 | 21 | 0.33 | % | 25,950 | 22 | 0.34 | % | 31,900 | 35 | 0.44 | % | |||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 47,066 | 477 | 4.07 | % | 32,924 | 323 | 3.98 | % | 12,535 | 136 | 4.36 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 1,131,428 | $ | 1,387 | 0.49 | % | $ | 1,082,772 | $ | 1,218 | 0.46 | % | $ | 960,314 | $ | 1,302 | 0.54 | % | |||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 502,728 | $ | 514,456 | $ | 374,166 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 17,243 | 12,543 | 9,409 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 519,971 | $ | 526,999 | $ | 383,575 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity | 170,038 | 177,244 | 147,483 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,821,437 | $ | 1,787,015 | $ | 1,491,372 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 16,365 | $ | 14,654 | $ | 12,893 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread(2) | 3.67 | % | 3.36 | % | 3.58 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin(3) | 3.84 | % | 3.53 | % | 3.75 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin - FTE(4)(5) | 3.86 | % | 3.55 | % | 3.77 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(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 23.5% tax rate.
(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.
10
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
| Gross loans, net of unearned income(1) | $ | 1,319,090 | $ | 31,031 | 4.74 | % | $ | 1,078,915 | $ | 26,505 | 4.95 | % | |||||||||||||||||||||||
| Taxable securities | 114,289 | $ | 1,407 | 2.48 | % | 73,040 | 733 | 2.02 | % | ||||||||||||||||||||||||||
| Nontaxable securities | 55,862 | $ | 608 | 2.19 | % | 39,156 | 462 | 2.38 | % | ||||||||||||||||||||||||||
| Other interest-earnings assets | 207,990 | $ | 578 | 0.56 | % | 127,620 | 172 | 0.27 | % | ||||||||||||||||||||||||||
| Total interest-earning assets | $ | 1,697,231 | $ | 33,624 | 4.00 | % | $ | 1,318,731 | $ | 27,872 | 4.26 | % | |||||||||||||||||||||||
| Allowance for loan losses | (15,430) | (12,506) | |||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 122,520 | 123,862 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 1,804,321 | $ | 1,430,087 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing transaction accounts | 112,874 | 53 | 0.09 | % | 92,914 | 42 | 0.09 | % | |||||||||||||||||||||||||||
| Savings and money market accounts | 705,841 | 1,217 | 0.35 | % | 471,145 | 1,391 | 0.60 | % | |||||||||||||||||||||||||||
| Time deposits | 223,013 | 492 | 0.45 | % | 321,075 | 888 | 0.56 | % | |||||||||||||||||||||||||||
| FHLB advances | 25,472 | 43 | 0.34 | % | 32,569 | 86 | 0.53 | % | |||||||||||||||||||||||||||
| Other borrowings | 40,034 | 800 | 4.03 | % | 12,644 | 288 | 4.59 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 1,107,234 | $ | 2,605 | 0.47 | % | $ | 930,347 | $ | 2,695 | 0.58 | % | |||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 508,560 | $ | 345,518 | |||||||||||||||||||||||||||||||
| Other liabilities | 14,906 | 8,973 | |||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 523,466 | $ | 354,491 | |||||||||||||||||||||||||||||||
| Stockholders’ Equity | 173,621 | 145,249 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,804,321 | $ | 1,430,087 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 31,019 | $ | 25,177 | |||||||||||||||||||||||||||||||
| Net interest spread(2) | 3.53 | % | 3.68 | % | |||||||||||||||||||||||||||||||
| Net interest margin(3) | 3.69 | % | 3.85 | % | |||||||||||||||||||||||||||||||
| Net interest margin - FTE(4)(5) | 3.70 | % | 3.87 | % | |||||||||||||||||||||||||||||||
(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 23.5% tax rate.
(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.
11
| Per Share Information | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Net income | $ | 5,223 | $ | 4,557 | $ | 3,906 | $ | 9,780 | $ | 9,588 | |||||||||||||||||||
| Earnings per share - basic | $ | 0.60 | $ | 0.51 | $ | 0.51 | $ | 1.11 | $ | 1.25 | |||||||||||||||||||
| Earnings per share - diluted | $ | 0.59 | $ | 0.50 | $ | 0.50 | $ | 1.09 | $ | 1.23 | |||||||||||||||||||
| Weighted average shares outstanding | 8,740,295 | 8,935,384 | 7,691,084 | 8,818,327 | 7,691,084 | ||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 8,894,577 | 9,065,364 | 7,810,952 | 8,960,565 | 7,809,943 | ||||||||||||||||||||||||
| Shares issued and outstanding | 8,691,620 | 8,749,878 | 7,716,428 | 8,691,620 | 7,716,428 | ||||||||||||||||||||||||
| Total stockholders' equity | $ | 167,947 | $ | 169,189 | $ | 148,903 | $ | 167,947 | $ | 148,903 | |||||||||||||||||||
| Book value per share | $ | 19.32 | $ | 19.34 | $ | 19.30 | $ | 19.32 | $ | 19.30 | |||||||||||||||||||
| Performance Ratios | Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| Net interest margin | 3.84 | % | 3.53 | % | 3.75 | % | 3.69 | % | 3.85 | % | |||||||||||||||||||
| Net interest spread | 3.67 | % | 3.36 | % | 3.58 | % | 3.53 | % | 3.68 | % | |||||||||||||||||||
| Efficiency ratio | 54.19 | % | 56.83 | % | 61.07 | % | 55.45 | % | 55.25 | % | |||||||||||||||||||
| Return on average assets | 1.15 | % | 1.03 | % | 1.05 | % | 1.09 | % | 1.35 | % | |||||||||||||||||||
| Return on average stockholders’ equity | 12.32 | % | 10.43 | % | 10.62 | % | 11.36 | % | 13.31 | % | |||||||||||||||||||
| Core and PPP Loans | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Core loans | $ | 1,435,089 | $ | 1,313,173 | $ | 1,244,914 | $ | 1,063,913 | |||||||||||||||
| PPP loans | — | 893 | 9,203 | 37,764 | |||||||||||||||||||
| Unearned income | (4,884) | (3,996) | (3,817) | (4,118) | |||||||||||||||||||
| Loans, net of unearned income | 1,430,205 | 1,310,070 | 1,250,300 | 1,097,559 | |||||||||||||||||||
| Allowance for loan losses | (16,807) | (15,492) | (14,844) | (13,339) | |||||||||||||||||||
| Loans, net | $ | 1,413,398 | $ | 1,294,578 | $ | 1,235,456 | $ | 1,084,220 | |||||||||||||||
12
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.
13
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Net income | $ | 5,223 | $ | 4,557 | $ | 3,906 | $ | 9,780 | $ | 9,588 | |||||||||||||||||||
| Add: Merger expenses | — | — | — | — | — | ||||||||||||||||||||||||
| Add: Net OREO gains | — | — | (8) | — | (8) | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (42) | (361) | 27 | (403) | (206) | ||||||||||||||||||||||||
| Less: Tax effect | 11 | 94 | (9) | 105 | (678) | ||||||||||||||||||||||||
| Core net income | $ | 5,254 | $ | 4,824 | $ | 3,880 | $ | 10,078 | $ | 7,658 | |||||||||||||||||||
| Average assets | $ | 1,821,437 | $ | 1,787,015 | $ | 1,491,372 | $ | 1,804,321 | $ | 1,430,087 | |||||||||||||||||||
| Core return on average assets | 1.16 | % | 1.09 | % | 1.04 | % | 1.13 | % | 1.08 | % | |||||||||||||||||||
| Net income | $ | 5,223 | $ | 4,557 | $ | 3,906 | $ | 9,780 | $ | 9,588 | |||||||||||||||||||
| Add: Merger expenses | — | — | — | — | — | ||||||||||||||||||||||||
| Add: Net OREO gains | — | — | (8) | — | (8) | ||||||||||||||||||||||||
| Add: Provision | 1,304 | 700 | 750 | 2,004 | 1,500 | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (42) | (361) | 27 | (403) | (206) | ||||||||||||||||||||||||
| Add: Income taxes | 1,590 | 1,440 | 1,176 | 3,030 | 2,993 | ||||||||||||||||||||||||
| Pretax pre-provision core net income | $ | 8,159 | $ | 7,058 | $ | 5,797 | $ | 15,217 | $ | 11,473 | |||||||||||||||||||
| Average assets | $ | 1,821,437 | $ | 1,787,015 | $ | 1,491,372 | $ | 1,804,321 | $ | 1,430,087 | |||||||||||||||||||
| Pretax pre-provision core return on average assets | 1.80 | % | 1.60 | % | 1.56 | % | 1.70 | % | 1.62 | % | |||||||||||||||||||
| Net interest income | $ | 16,365 | $ | 14,654 | $ | 12,893 | $ | 31,019 | $ | 25,177 | |||||||||||||||||||
| Add: Fully-taxable equivalent adjustments(1) | 83 | 78 | 68 | 161 | 128 | ||||||||||||||||||||||||
| Net interest income - FTE | $ | 16,448 | $ | 14,732 | $ | 12,961 | $ | 31,180 | $ | 25,305 | |||||||||||||||||||
| Net interest margin | 3.84 | % | 3.53 | % | 3.75 | % | 3.69 | % | 3.85 | % | |||||||||||||||||||
| Effect of fully-taxable equivalent adjustments(1) | 0.02 | % | 0.02 | % | 0.02 | % | 0.01 | % | 0.02 | % | |||||||||||||||||||
| Net interest margin - FTE | 3.86 | % | 3.55 | % | 3.77 | % | 3.70 | % | 3.87 | % | |||||||||||||||||||
| Total stockholders' equity | $ | 167,947 | $ | 169,189 | $ | 148,903 | $ | 167,947 | $ | 148,903 | |||||||||||||||||||
| Less: Intangible assets | 18,230 | 18,296 | 18,494 | 18,230 | 18,494 | ||||||||||||||||||||||||
| Less: Monitory interest not included in tangible assets | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Tangible common equity | $ | 149,717 | $ | 150,893 | $ | 130,409 | $ | 149,717 | $ | 130,409 | |||||||||||||||||||
14
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Core net income | $ | 5,254 | $ | 4,824 | $ | 3,880 | $ | 10,078 | $ | 7,658 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 8,894,577 | 9,065,364 | 7,810,952 | 8,960,565 | 7,809,943 | ||||||||||||||||||||||||
| Diluted core earnings per share | $ | 0.59 | $ | 0.53 | $ | 0.50 | $ | 1.12 | $ | 0.98 | |||||||||||||||||||
| Common shares outstanding at year or period end | 8,691,620 | 8,749,878 | 7,716,428 | 8,691,620 | 7,716,428 | ||||||||||||||||||||||||
| Tangible book value per share | $ | 17.23 | $ | 17.25 | $ | 16.90 | $ | 17.23 | $ | 16.90 | |||||||||||||||||||
| Total assets at end of period | $ | 1,902,495 | $ | 1,798,834 | $ | 1,514,436 | $ | 1,902,495 | $ | 1,514,436 | |||||||||||||||||||
| Less: Intangible assets | 18,230 | 18,296 | 18,494 | 18,230 | 18,494 | ||||||||||||||||||||||||
| Adjusted assets at end of period | $ | 1,884,265 | $ | 1,780,538 | $ | 1,495,942 | $ | 1,884,265 | $ | 1,495,942 | |||||||||||||||||||
| Tangible common equity to tangible assets | 7.95 | % | 8.47 | % | 8.72 | % | 7.95 | % | 8.72 | % | |||||||||||||||||||
| Total average shareholders equity | $ | 170,038 | 177,244 | $ | 147,483 | $ | 173,621 | $ | 145,249 | ||||||||||||||||||||
| Less: Average intangible assets | 18,270 | 18,337 | 18,535 | 18,304 | 18,568 | ||||||||||||||||||||||||
| Less: Average monitory interest not included in tangible assets | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Average tangible common equity | $ | 151,768 | $ | 158,907 | $ | 128,948 | $ | 155,317 | $ | 126,681 | |||||||||||||||||||
| Net income to common shareholders | $ | 5,223 | $ | 4,557 | $ | 3,906 | $ | 9,780 | $ | 9,588 | |||||||||||||||||||
| Return on average tangible common equity | 13.80 | % | 11.63 | % | 12.15 | % | 12.70 | % | 15.26 | % | |||||||||||||||||||
| Average tangible common equity | $ | 151,768 | $ | 158,907 | $ | 128,948 | $ | 155,317 | $ | 126,681 | |||||||||||||||||||
| Core net income | $ | 5,254 | $ | 4,824 | $ | 3,880 | $ | 10,078 | $ | 7,658 | |||||||||||||||||||
| Core return on average tangible common equity | 13.89 | % | 12.31 | % | 12.07 | % | 13.08 | % | 12.19 | % | |||||||||||||||||||
| Net interest income | $ | 16,365 | $ | 14,654 | 12,893 | 31,019 | 25,177 | ||||||||||||||||||||||
| Add: Noninterest income | 1,404 | 1,333 | 2,045 | 2,737 | 6,542 | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (42) | (361) | 27 | (403) | (206) | ||||||||||||||||||||||||
| Operating revenue | $ | 17,811 | $ | 16,348 | $ | 14,911 | $ | 34,159 | $ | 29,119 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Total noninterest expense | $ | 9,652 | $ | 9,290 | $ | 9,106 | $ | 18,942 | $ | 17,638 | |||||||||||||||||||
| Less: Merger expenses | — | — | — | — | — | ||||||||||||||||||||||||
| Less: Net OREO gains | — | — | (8) | — | (8) | ||||||||||||||||||||||||
| Adjusted noninterest expenses | $ | 9,652 | $ | 9,290 | $ | 9,114 | $ | 18,942 | $ | 17,646 | |||||||||||||||||||
| Core efficiency ratio | 54.19 | % | 56.83 | % | 61.12 | % | 55.45 | % | 60.60 | % | |||||||||||||||||||
(1)Assumes a 23.5% tax rate.
15
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Q2 2022 Investor Presentation July 25, 2022
2 Important Notices and Disclaimers Forward-Looking Statements This presentation 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 the current COVID-19 pandemic and uncertainty about its continuation. 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 from those in the forward-looking statements are set forth in the Company’s Annual Report Form 10K for the year ended December 31, 2021 under the sections 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 presentation and may include statements about business strategy and prospects for growth, operations, ability to pay dividends, competition, regulation and general economic conditions. Non-GAAP Financial Measures In addition to reporting GAAP results, the Company reports non-GAAP financial measures in this presentation 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. For a reconciliation of the non-GAAP measures we use to the most comparable GAAP measures, see the Appendix to this presentation.
3 Q2 2022 Results Highlights (1) Please refer to non-U.S. GAAP reconciliation in the appendix Operating Results Loans Deposits Capital Asset Quality • Net income of $5.2 million, or $0.59 per diluted share, and core net income of $5.3 million (1), or $0.59 per diluted share (1) • ROAA of 1.15% and ROATCE of 13.80%; Core ROAA of 1.16% (1) and Core ROATCE of 13.89% (1) • Net interest margin of 3.84% • Core efficiency ratio of 54.19% (1) • Annualized Loan growth of 36.8% from Q1 2022 • Loan portfolio of $1.4 billion increased 9.2% from Q1 2022 • Average yield on loans of 4.80% grew from 4.68% for Q1 2022 • Loans / deposits ratio of 86.9% compared to 85.0% for Q1 2022 • Deposits of $1.6 billion increased $103.1 million, or 6.7%, from Q1 2022 • Average cost of total deposits remained at 0.23% from Q1 2022 • Noninterest-bearing deposits comprised 31.2% of total deposits compared to 33.4% at Q1 2022 • Nonperforming loans to gross loans of 0.25% at Q2 2022 • Net recoveries at $11,000 • Allowance for loan losses to gross loans of 1.17% • OREO balance remained at $2.9 million from Q1 2022 • Announced and paid quarterly dividend of $0.09 per share • Tangible common equity to tangible assets of 7.95% (1) • Tangible book value per share of $17.23 (1) • Repurchased 58,258 shares at an average price of $21.03 per share
4 Branches (15) Legend Huntsville Birmingham Montgomery Columbus Atlanta Alabama Georgia 65 85 75 Anniston Auburn 20 85 75 85 65 65 59 Tuscaloosa LPOs (2) YoY Core Deposit Growth: 25.2%Loans / Deposits: 86.9% Overview of Southern States Bancshares, Inc. Q2 ‘22 Financial Highlights YoY Asset Growth: 25.6%Assets ($B): $1.9 NPLs / Loans: 0.25% YoY Loan Growth: 30.3%Gross Loans ($B): $1.4 LLR / Loans: 1.18% YoY Deposit Growth: 25.3%Deposits ($B): $1.6 YTD NCOs / Avg. Loans: 0.00% TCE / TA(1): 7.95% Core Net Income(1)($M): $5.3 Core ROAA(1): 1.16% NIM: 3.84% Core Efficiency Ratio(1): 54.19% Mobile Savannah Macon Valdosta Augusta Southern States Bancshares (Nasdaq: SSBK) was founded in August 2007 by current CEO and Chairman, Steve Whatley, and a group of organizing directors and priced its IPO on August 11, 2021 Management team with 200 years of collective experience in the banking industry and deep ties to local markets History of solid growth, top-tier profitability and a strong credit culture Bifurcated growth strategy through organic growth and disciplined M&A Focused on being a dominant bank in our smaller markets and a competitive player in the larger metropolitan areas Diversified loan portfolio complemented by low-cost, core funding base Source: S&P Global Market Intelligence; Company Documents Financial data as of the three months ended 6/31/22 unless otherwise noted Note: Core Deposits defined as total deposits less jumbo time deposits; jumbo time deposits classified as deposits larger than $250,000 (1) Please refer to non-U.S. GAAP reconciliation in the appendix
5 2007 Our History and Growth Source: S&P Global Market Intelligence; Company Documents Dollars in billions H is to ri ca l H ig hl ig ht s August 2007 Established Anniston, AL headquarters and Opelika, AL Office with $31 million in capital at $10.00 per share May 2012 Acquired Alabama Trust Bank in Sylacauga, AL 2015 Opened offices in Huntsville, AL, Carrollton, GA, and an LPO in Atlanta, GA Acquired Columbus Community Bank in Columbus, GA and opened a second location in Columbus February 2017 Completed $3.4 million local capital raise at $14 per share 2018 Established a full-service banking office in Newnan, GA 2020 through Q22022 Hired 4 commercial bankers in Georgia franchise Completed $48.0 million subordinated debt offering Anniston Opelika Anniston Mobile Huntsville Tuscaloosa Dothan Savannah Columbus Birmingham Huntsville Montgomery Mobile Athens Tuscaloosa Albany Dothan Valdosta Montgomery Birmingham 16 20 75 65 65 59 65 65 59 Opelika Anniston Atlanta Total Assets ($B) September 2019 Closed acquisition of Small Town Bank in Wedowee, AL 2016 Opened Auburn, AL office Issued $4.5 million of 10-year subordinated notes Completed $41.2 million capital raise at $14 per share 2022 2 Branches 15 Branches and two LPOs Branch LPO 2008 Established a full-service banking office in Birmingham, AL $0.1 $0.2 $0.2 $0.2 $0.3 $0.3 $0.3 $0.5 $0.6 $0.7 $0.9 $1.1 $1.3 $1.8 $1.9 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2Q22
6 Columbus, GA $56.4 $56.7 $69.8 $73.1 $85.7 $67.8 Columbus MSA Auburn- Opelika MSA Birmingham MSA Huntsville MSA Atlanta MSA National Average 1.4% 2.5% 4.6% 4.6% 5.7% 2.9% Birmingham MSA Columbus MSA Auburn- Opelika MSA Huntsville MSA Atlanta MSA National Average Major Employers Market Highlights Robust Market Dynamics Creates Growth Opportunities Source: U.S. Bureau of Labor Statistics; S&P Global Market Intelligence; Forbes; Money.com; Business Facilities; USA Today; Smartasset Financial Technology; US News; Auburn.edu - 9th largest Metro Area in the USA - Voted 3rd metro area for corporate headquarters - Ranked 13th Best Places for Business and Careers - 16 Fortune 500 companies headquartered in Atlanta - Largest market in Alabama - One of the lowest costs of living in America - A top 10 moving destination for new college graduates - University of Alabama Birmingham serves as an international leader in healthcare - Voted 3rd best place to live in the country by US News - Highest concentration of engineers in the US - A Top 10 best city for jobs in STEM - Home of the Redstone Arsenal which includes the U.S. Space and Rocket Center, NASA’s Marshall Space Flight Center, and the U.S. Army Aviation and Missile Command - One of the fastest growing MSAs in the Southeast - Auburn University contributes $5.6 billion annually and 27,000 jobs to the Alabama economy - A U.S. city with most job growth per USA Today - Ranked 4th MSA for migration growth - Fort Benning Military Base • U.S. Army Infantry and Armor Training Post • Columbus Chamber of Commerce estimates annual economic impact of $4.8 billion - Major companies headquartered include Aflac and Total Systems Services, Inc. Huntsville, AL Birmingham, AL Atlanta, GA ‘21 – ‘26 Projected Median HHI ($M) ‘21 – ‘26 Projected Population Growth (%) Auburn / Opelika, AL
7 Loans / DepositsTotal Deposits ($M) Total Loans ($M)Total Assets ($M) Balance Sheet Growth Source: S&P Global Market Intelligence; Company Documents PPP Loans PPP Loans $629 $736 $888 $1,095 $1,266 $1,774 $1,902 $67 $9 2016 2017 2018 2019 2020 2021 2Q22 $1,783 $1,333 $520 $622 $776 $951 $1,140 $1,556 $1,645 2016 2017 2018 2019 2020 2021 2Q22 $503 $567 $704 $840 $964 $1,241 $1,430 $67 $9 2016 2017 2018 2019 2020 2021 2Q22 $1,250 $1,030 95.5% 90.2% 90.0% 88.1% 90.4% 80.3% 86.9% 2016 2017 2018 2019 2020 2021 2Q22
8 Nonperforming Assets by Type Asset Quality Source: S&P Global Market Intelligence; Company Documents Dollars in millions (1) TDRs reflect COVID-19 relief under the CARES Act and bank regulatory COVID-19 relief in 2020 and 2021 Reserves / Loans NCOs / Avg. Loans $4.8 $3.1 $6.3 $15.4 (0.05%) 0.10% 0.02% 0.57% 0.07% $6.9 0.00% Comprehensive and conservative underwriting process Highly experienced bankers incentivized with equity ownership Commitment to a diverse loan portfolio while maintaining strong asset quality metrics Proactively manage loan concentrations with all collateral types capped at approximately 50% of risk- based capital Caps periodically utilized when needed Proactive approach to resolving problem credits $1.8 $0.5 $3.9 $13.4 $3.4 $2.0 - $3.6 $2.9 $2.1 $1.8 $3.0 $1.8 $2.0 - $2.0 $0.1 $0.5 $0.6 $4.2 $10.2 $2.9 $2.9 0.4% 0.2% 0.6% 2.5% 1.3% 0.4% 0.5% $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 2016 2017 2018 2019 2020 2021 2Q22 Nonaccruals ($mm) TDRs ($mm) OREO ($mm) NPAs / Loans + OREO $20.6 0.99% 1.02% 1.11% 1.11% 1.22% 1.19% 1.18% 2016 2017 2018 2019 2020 2021 2Q22 0.00% $8.5 (1)
9 Building Shareholder Value Our Strategic Focus Maintain focus on strong, profitable organic growth without compromising our credit quality Expand into new markets by hiring commercial bankers Focus on high growth markets and further scaling our Atlanta franchise Evaluate strategic acquisition opportunities Further grow our core deposit franchise Continue implementing technology to optimize customer service and provide efficient opportunities to scale the business Prudently manage capital between balance sheet growth and return to shareholders
10 Near-Term Outlook Loan balances expected to continue growing at a healthy pace supported by a robust pipeline Loan growth aided by prior year opportunistic commercial banker hires driven by talent dislocation from bank consolidation in our markets Deposit balances expected to increase slightly Net interest income expected to increase incrementally from loan growth and rate increases Net interest margin expected to increase modestly as rates rise Core noninterest income expected to be fairly consistent with Q2 2022 as swaps decline and mortgage income moderates Quarterly adjusted noninterest expense is expected to remain fairly consistent with Q2 2022 Continued strong credit metrics are expected to allow for modest provision levels based on growth, but we are monitoring for credit issues as rates rise Balanced approach to capital deployment with flexibility to support strong organic loan growth trajectory and cash dividend while evaluating stock repurchases Well-positioned to capitalize on additional accretive acquisition opportunities
Appendix
12 Non-GAAP Financial Measures Reconciliations ($000) June 30, 2022 March 31, 2022 June 30, 2021 Net income $5,223 $4,557 $3,906 Add: Net OREO gains — — (8) Less: Gain (loss) on securities (42) (361) 27 Less: Tax effect 11 94 (9) Core net income $5,254 $4,824 $3,880 Average assets $1,821,437 $1,787,015 $1,491,372 Core return on average assets 1.16% 1.09% 1.04% Total stockholders' equity $167,947 $169,189 $148,903 Less: Intangible assets 18,230 18,296 18,494 Tangible common equity $149,717 $150,893 $130,409 Core net income $5,254 $4,824 $3,880 Diluted weighted average shares outstanding 8,894,577 9,065,364 7,810,952 Diluted core earnings per share $0.59 $0.53 $0.50 Common shares outstanding at year or period end 8,691,620 8,749,878 7,716,428 Tangible book value per share $17.23 $17.25 $16.90
13 Non-GAAP Financial Measures Reconciliations ($000) June 30, 2022 March 31, 2022 June 30, 2021 Total assets at end of period $1,902,495 $1,798,834 $1,514,436 Less: Intangible assets 18,230 18,296 18,494 Adjusted assets at end of period $1,884,265 $1,780,538 $1,495,942 Tangible common equity to tangible assets 7.95% 8.47% 8.72% Total average shareholders equity $170,038 $177,244 $147,483 Less: Average intangible assets 18,270 18,337 18,535 Average tangible common equity $151,768 $158,907 $128,948 Net income to common shareholders $5,223 $4,557 $3,906 Return on average tangible common equity 13.80% 11.63% 12.15% Core net income $5,254 $4,824 $3,880 Core return on average tangible common equity 13.89% 12.31% 12.07% Net interest income $16,365 $14,654 $12,893 Add: Noninterest income $1,404 $1,333 $2,045 Less: Gain (loss) on securities (42) (361) (27) Operating revenue $17,811 $16,348 $14,911 Expenses: ` Total noninterest expense $9,652 $9,290 $9,106 Less: Net OREO gains — — (8)$ Adjusted noninterest expenses $9,652 $9,290 $9,114 Core efficiency ratio 54.19% 56.83% 61.12%