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): October 24, 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 October 24, 2022, Southern States Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 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 third quarter ended September 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: October 24, 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
Third Quarter 2022 Financial Results
Third Quarter 2022 Highlights
•Linked-quarter loan growth was 26.3% annualized
•Net income of $6.7 million, or $0.75 per diluted share
•Core net income(1) of $6.8 million, or $0.77 per diluted share(1)
•Net interest margin (“NIM”) of 4.15%, up 31 basis points from the prior quarter
•NIM of 4.17% on a fully-taxable equivalent basis(1)
•Return on average assets (“ROAA”) of 1.35%; return on average stockholders’ equity (“ROAE”) of 15.42%; and return on average tangible common equity (“ROATCE”)(1) of 17.24%
•Core ROAA(1) of 1.37%; and core ROATCE(1) of 17.51%
•Efficiency ratio of 48.94%, an improvement from 54.19% for the prior 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., October 24, 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 $6.7 million, or $0.75 diluted earnings per share, for the third quarter of 2022. This compares to net income of $5.2 million, or $0.59 diluted earnings per share, for the second quarter of 2022, and net income of $4.9 million, or $0.58 diluted earnings per share, for the third quarter of 2021. The Company reported core net income of $6.8 million, or $0.77 diluted core earnings per share, for the third quarter of 2022. This compares to core net income of $5.3 million, or $0.59 diluted core earnings per share, for the second quarter of 2022, and core net income of $4.0 million, or $0.48 diluted core earnings per share, for the third quarter of 2021 (see “Reconciliation of Non-GAAP Financial Measures”).
Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “Our team’s ongoing diligent business development efforts fueled robust annualized third quarter loan growth of 26.3%, extending the momentum we’ve generated throughout the past year. Our net interest income increased 18.8% from the second quarter and was up 42.5% from a year earlier on a combination of robust loan growth and increasing yields on interest-earning assets, which drove our expanded NIM.”
“As always, we are focused on disciplined, prudent expansion that minimizes risk and maintains our stellar credit quality. Our bank is dedicated to superior customer service and sound underwriting, key pillars of strength that we believe position the franchise for continued growth and improved profitability. This gives us confidence in our ability to deliver long-term value for our shareholders.”
1
Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2022 was $19.4 million, an increase of 18.8% from $16.4 million for the second quarter of 2022. The increase was primarily attributable to rising interest rates, coupled with an increase in interest-bearing assets and partially offset by an increase in expense on interest-bearing liabilities.
Relative to the third quarter of 2021, net interest income increased $5.8 million, or 42.5%. The increase was substantially the result of an increase in interest-earning assets.
Net interest margin for the third quarter of 2022 was 4.15%, up from 3.84% for the second quarter of 2022. The increase was primarily the result of a 65 basis point increase in the yield on interest-earning assets, partially offset by a 46 basis point increase in the cost of interest-bearing liabilities.
Relative to the third quarter of 2021, net interest margin increased from 3.77%. The increase was primarily due to an increase in the yield on interest-earning assets that more than offset an increase in the cost of interest-bearing liabilities.
Noninterest Income
Noninterest income for the third quarter of 2022 was $1.3 million, a decrease of 4.6% from $1.4 million for the second quarter of 2022. The decrease was substantially the result of a $101,000 increase in the net loss on securities.
Relative to the third quarter of 2021, noninterest income decreased 46.6% from $2.5 million. The third quarter 2021 included a bank owned life insurance (“BOLI”) death benefit claim of $742,000 and a net gain on securities. The third quarter 2022 results included reductions in mortgage income and a net loss on securities.
Noninterest Expense
Noninterest expense for the third quarter of 2022 was $10.2 million, up from $9.7 million for the second quarter of 2022. The increase was substantially attributable to a $336,000 increase in fraud losses, of which a portion has since been recovered, and an increase in salaries and benefits as a result of additional incentive accruals based on operating results. The efficiency ratio for the third quarter improved to 48.94% from 54.19% in the second quarter.
Relative to the third quarter of 2021, noninterest expense increased 11.5% from $9.2 million. The increase was primarily attributable to higher salaries and incentive expense as production personnel were added in the Georgia market. Also contributing to the increase were fraud losses, of which a portion has since been recovered. These increases were partially offset by a decrease in occupancy expense as a result of accelerated depreciation during the third quarter of 2021 on a formerly leased Birmingham branch location and a reduction in SBA expense from the third quarter of 2021.
Loan Portfolio
Total loans outstanding, before allowance for loan losses, were $1.5 billion at September 30, 2022, up $94.8 million from June 30, 2022 and up $379.5 million from September 30, 2021. The linked-quarter increase in loans was primarily attributable to increases in construction/development and commercial real estate loans in the Auburn, Alabama and Georgia markets.
Deposits
Total deposits were $1.8 billion at September 30, 2022, compared with $1.6 billion at June 30, 2022 and $1.3 billion at September 30, 2021. The $122.1 million net increase in total deposits in the third quarter was due to an increase of $135.1 million in interest-bearing account balances that more than offset a slight decrease in noninterest-bearing deposits.
2
Asset Quality
Nonperforming loans totaled $4.0 million, or 0.26% of gross loans, at September 30, 2022, compared with $3.6 million, or 0.25% of gross loans, at June 30, 2022, and $3.3 million, or 0.29% of gross loans, at September 30, 2021. The $400,000 net increase in nonperforming loans in the third quarter was primarily attributable to one commercial real estate loan and one commercial and industrial loan that were placed on nonaccrual and partially offset by one commercial and industrial loan that was sold. The $642,000 increase in nonperforming loans from September 30, 2021 was primarily attributable to three commercial real estate loans, one residential loan and one commercial and industrial loan that were placed on nonaccrual. These increases were partially offset by one residential loan being moved back to accruing status and multiple loans associated with one borrower being paid off.
The Company recorded a provision for loan losses of $1.7 million for the third quarter of 2022, compared to $1.3 million for the second quarter of 2022. The provision was due to robust loan growth as well as changes in our qualitative economic factors.
Net charge-offs for the third quarter of 2022 were $47,000, or 0.01% of average loans on an annualized basis, compared to net recoveries of $11,000, or 0.00% of average loans on an annualized basis, for the second quarter of 2022, and net recoveries of $8,000, or 0.00% of average loans on an annualized basis, for the third quarter of 2021.
The Company’s allowance for loan losses was 1.21% of total loans and 466.41% of nonperforming loans at September 30, 2022, compared with 1.18% of total loans and 473.44% of nonperforming loans at June 30, 2022.
Capital
As of September 30, 2022, total stockholders’ equity was $170.3 million, compared with $167.9 million at June 30, 2022. The increase of $2.4 million was primarily due to strong earnings growth that more than offset 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.
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.
3
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 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, 2021 and in other SEC filings 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 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
(205) 820-8065
ljoyce@ssbank.bank
Kevin Dobbs
(310) 622-8245
ssbankir@finprofiles.com
4
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||||||||
| (In thousands, except share amounts) | |||||||||||||||||||||||
| September 30, 2022 (Unaudited) | June 30, 2022 (Unaudited) | December 31, 2021 (Audited) | September 30, 2021 (Unaudited) | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and due from banks | $ | 17,394 | $ | 22,167 | $ | 6,397 | $ | 19,000 | |||||||||||||||
| Interest-bearing deposits in banks | 165,637 | 95,156 | 203,537 | 114,800 | |||||||||||||||||||
| Federal funds sold | 63,031 | 73,024 | 74,022 | 44,022 | |||||||||||||||||||
| Total cash and cash equivalents | 246,062 | 190,347 | 283,956 | 177,822 | |||||||||||||||||||
| Securities available for sale, at fair value | 150,718 | 151,749 | 132,172 | 113,317 | |||||||||||||||||||
| Securities held to maturity, at amortized cost | 19,657 | 19,662 | 19,672 | 19,678 | |||||||||||||||||||
| Other equity securities, at fair value | 5,694 | 6,958 | 9,232 | 9,227 | |||||||||||||||||||
| Restricted equity securities, at cost | 2,791 | 2,825 | 2,600 | 2,600 | |||||||||||||||||||
| Loans held for sale | 1,643 | 2,709 | 2,400 | 2,097 | |||||||||||||||||||
| Loans, net of unearned income | 1,524,990 | 1,430,205 | 1,250,300 | 1,145,447 | |||||||||||||||||||
| Less allowance for loan losses | 18,423 | 16,807 | 14,844 | 14,097 | |||||||||||||||||||
| Loans, net | 1,506,567 | 1,413,398 | 1,235,456 | 1,131,350 | |||||||||||||||||||
| Premises and equipment, net | 28,585 | 28,467 | 27,044 | 25,916 | |||||||||||||||||||
| Accrued interest receivable | 5,699 | 4,839 | 4,170 | 3,933 | |||||||||||||||||||
| Bank owned life insurance | 29,677 | 29,509 | 22,201 | 22,081 | |||||||||||||||||||
| Annuities | 15,564 | 15,540 | 12,888 | 12,968 | |||||||||||||||||||
| Foreclosed assets | 2,930 | 2,930 | 2,930 | 10,146 | |||||||||||||||||||
| Goodwill | 16,862 | 16,862 | 16,862 | 16,862 | |||||||||||||||||||
| Core deposit intangible | 1,302 | 1,368 | 1,500 | 1,566 | |||||||||||||||||||
| Other assets | 18,974 | 15,332 | 9,509 | 9,499 | |||||||||||||||||||
| Total assets | $ | 2,052,725 | $ | 1,902,495 | $ | 1,782,592 | $ | 1,559,062 | |||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Noninterest-bearing | $ | 499,613 | $ | 512,598 | $ | 541,546 | $ | 380,111 | |||||||||||||||
| Interest-bearing | 1,267,479 | 1,132,348 | 1,014,905 | 956,211 | |||||||||||||||||||
| Total deposits | 1,767,092 | 1,644,946 | 1,556,451 | 1,336,322 | |||||||||||||||||||
| Other borrowings | 19,978 | — | 12,498 | 12,498 | |||||||||||||||||||
| FHLB advances | 26,000 | 25,000 | 25,950 | 26,900 | |||||||||||||||||||
| Subordinated notes | 47,042 | 47,013 | — | — | |||||||||||||||||||
| Accrued interest payable | 359 | 88 | 132 | 125 | |||||||||||||||||||
| Other liabilities | 21,929 | 17,501 | 10,363 | 8,996 | |||||||||||||||||||
| Total liabilities | 1,882,400 | 1,734,548 | 1,605,394 | 1,384,841 | |||||||||||||||||||
5
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||||||||
| (In thousands, except share amounts) | |||||||||||||||||||||||
| September 30, 2022 (Unaudited) | June 30, 2022 (Unaudited) | December 31, 2021 (Audited) | September 30, 2021 (Unaudited) | ||||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||
| Common stock | 43,529 | 43,458 | 45,064 | 45,064 | |||||||||||||||||||
| Capital surplus | 75,835 | 75,597 | 80,640 | 80,547 | |||||||||||||||||||
| Retained earnings | 63,956 | 58,039 | 49,858 | 46,611 | |||||||||||||||||||
| Accumulated other comprehensive income (loss) | (12,403) | (8,439) | 2,113 | 2,600 | |||||||||||||||||||
| Unvested restricted stock | (592) | (708) | (477) | (601) | |||||||||||||||||||
| Total stockholders' equity | 170,325 | 167,947 | 177,198 | 174,221 | |||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,052,725 | $ | 1,902,495 | $ | 1,782,592 | $ | 1,559,062 | |||||||||||||||
| Shares issued and outstanding | 8,705,920 | 8,691,620 | 9,012,857 | 9,012,857 | |||||||||||||||||||
6
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans, including fees | $ | 20,052 | $ | 16,265 | $ | 13,923 | $ | 51,083 | $ | 40,429 | |||||||||||||||||||
| Taxable securities | 1,010 | 788 | 402 | 2,417 | 1,134 | ||||||||||||||||||||||||
| Nontaxable securities | 323 | 309 | 266 | 931 | 729 | ||||||||||||||||||||||||
| Other interest and dividends | 1,135 | 390 | 143 | 1,713 | 315 | ||||||||||||||||||||||||
| Total interest income | 22,520 | 17,752 | 14,734 | 56,144 | 42,607 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 2,489 | 889 | 1,034 | 4,251 | 3,355 | ||||||||||||||||||||||||
| Other borrowings | 596 | 498 | 60 | 1,439 | 435 | ||||||||||||||||||||||||
| Total interest expense | 3,085 | 1,387 | 1,094 | 5,690 | 3,790 | ||||||||||||||||||||||||
| Net interest income | 19,435 | 16,365 | 13,640 | 50,454 | 38,817 | ||||||||||||||||||||||||
| Provision for loan losses | 1,663 | 1,304 | 750 | 3,667 | 2,250 | ||||||||||||||||||||||||
| Net interest income after provision for loan losses | 17,772 | 15,061 | 12,890 | 46,787 | 36,567 | ||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | 508 | 480 | 403 | 1,433 | 1,101 | ||||||||||||||||||||||||
| Swap fees | 11 | 21 | 101 | 48 | 938 | ||||||||||||||||||||||||
| SBA/USDA fees | 95 | 93 | 130 | 575 | 3,434 | ||||||||||||||||||||||||
| Mortgage origination fees | 218 | 213 | 393 | 717 | 1,196 | ||||||||||||||||||||||||
| Net gain (loss) on securities | (143) | (42) | 189 | (546) | (17) | ||||||||||||||||||||||||
| Other operating income | 650 | 639 | 1,293 | 1,847 | 2,399 | ||||||||||||||||||||||||
| Total noninterest income | 1,339 | 1,404 | 2,509 | 4,074 | 9,051 | ||||||||||||||||||||||||
| Noninterest expenses: | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 6,152 | 5,982 | 5,517 | 17,859 | 16,104 | ||||||||||||||||||||||||
| Equipment and occupancy expenses | 764 | 719 | 908 | 2,188 | 2,697 | ||||||||||||||||||||||||
| Data processing fees | 599 | 570 | 524 | 1,733 | 1,565 | ||||||||||||||||||||||||
| Regulatory assessments | 235 | 262 | 248 | 760 | 689 | ||||||||||||||||||||||||
| Other operating expenses | 2,487 | 2,119 | 1,988 | 6,638 | 5,768 | ||||||||||||||||||||||||
| Total noninterest expenses | 10,237 | 9,652 | 9,185 | 29,178 | 26,823 | ||||||||||||||||||||||||
| Income before income taxes | 8,874 | 6,813 | 6,214 | 21,683 | 18,795 | ||||||||||||||||||||||||
| Income tax expense | 2,174 | 1,590 | 1,293 | 5,204 | 4,287 | ||||||||||||||||||||||||
| Net income | $ | 6,700 | $ | 5,223 | $ | 4,921 | $ | 16,479 | $ | 14,508 | |||||||||||||||||||
| Basic earnings per share | $ | 0.77 | $ | 0.60 | $ | 0.59 | $ | 1.87 | $ | 1.84 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.75 | $ | 0.59 | $ | 0.58 | $ | 1.84 | $ | 1.82 | |||||||||||||||||||
7
The following table provides an analysis of the allowance for loan losses as of the dates indicated.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Average loans, net of unearned income | $ | 1,480,735 | $ | 1,359,320 | $ | 1,122,741 | $ | 1,373,564 | $ | 1,093,684 | |||||||||||||||||||
| Loans, net of unearned income | $ | 1,524,990 | $ | 1,430,205 | $ | 1,145,447 | $ | 1,524,990 | $ | 1,145,447 | |||||||||||||||||||
| Allowance for loan losses at beginning of the period | $ | 16,807 | $ | 15,492 | $ | 13,339 | $ | 14,844 | $ | 11,859 | |||||||||||||||||||
| Charge-offs: | |||||||||||||||||||||||||||||
| Construction and development | — | — | — | 66 | — | ||||||||||||||||||||||||
| Residential | — | 7 | — | 7 | 44 | ||||||||||||||||||||||||
| Commercial | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial and industrial | 269 | — | — | 269 | — | ||||||||||||||||||||||||
| Consumer and other | 1 | 1 | — | 8 | 2 | ||||||||||||||||||||||||
| Total charge-offs | 270 | 8 | — | 350 | 46 | ||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||
| Construction and development | — | — | — | — | — | ||||||||||||||||||||||||
| Residential | 11 | 18 | 7 | 46 | 12 | ||||||||||||||||||||||||
| Commercial | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial and industrial | 204 | — | 1 | 204 | 14 | ||||||||||||||||||||||||
| Consumer and other | 8 | 1 | — | 12 | 8 | ||||||||||||||||||||||||
| Total recoveries | 223 | 19 | 8 | 262 | 34 | ||||||||||||||||||||||||
| Net charge-offs (recoveries) | $ | 47 | $ | (11) | $ | (8) | $ | 88 | $ | 12 | |||||||||||||||||||
| Provision for loan losses | $ | 1,663 | $ | 1,304 | $ | 750 | $ | 3,667 | $ | 2,250 | |||||||||||||||||||
| Balance at end of period | $ | 18,423 | $ | 16,807 | $ | 14,097 | $ | 18,423 | $ | 14,097 | |||||||||||||||||||
| Ratio of allowance to end of period loans | 1.21 | % | 1.18 | % | 1.23 | % | 1.21 | % | 1.23 | % | |||||||||||||||||||
| Ratio of net charge-offs (recoveries) to average loans | 0.00 | % | 0.00 | % | 0.00 | % | 0.01 | % | 0.00 | % | |||||||||||||||||||
8
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.
| September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Nonaccrual loans | $ | 3,950 | $ | 3,550 | $ | 1,478 | $ | 3,308 | |||||||||||||||
| Past due loans 90 days or more and still accruing interest | — | — | 494 | — | |||||||||||||||||||
| Total nonperforming loans | 3,950 | 3,550 | 1,972 | 3,308 | |||||||||||||||||||
| OREO | 2,930 | 2,930 | 2,930 | 10,146 | |||||||||||||||||||
| Total nonperforming assets | $ | 6,880 | $ | 6,480 | $ | 4,902 | $ | 13,454 | |||||||||||||||
Troubled debt restructured loans – nonaccrual(1) | 1,011 | 676 | 940 | 1,041 | |||||||||||||||||||
| Troubled debt restructured loans - accruing | 1,307 | 1,323 | 1,072 | 1,085 | |||||||||||||||||||
| Total troubled debt restructured loans | $ | 2,318 | $ | 1,999 | $ | 2,012 | $ | 2,126 | |||||||||||||||
| Allowance for loan losses | $ | 18,423 | $ | 16,807 | $ | 14,844 | $ | 14,097 | |||||||||||||||
| Gross loans outstanding at the end of period | $ | 1,530,129 | $ | 1,435,089 | $ | 1,254,117 | $ | 1,149,340 | |||||||||||||||
| Allowance for loan losses to gross loans | 1.20 | % | 1.17 | % | 1.18 | % | 1.23 | % | |||||||||||||||
| Allowance for loan losses to nonperforming loans | 466.41 | % | 473.44 | % | 752.74 | % | 426.15 | % | |||||||||||||||
| Nonperforming loans to gross loans | 0.26 | % | 0.25 | % | 0.16 | % | 0.29 | % | |||||||||||||||
| Nonperforming assets to gross loans and OREO | 0.45 | % | 0.45 | % | 0.39 | % | 1.16 | % | |||||||||||||||
| Nonaccrual loans by category: | |||||||||||||||||||||||
| Real estate mortgages: | |||||||||||||||||||||||
| Construction & Development | $ | 70 | $ | 73 | $ | 346 | $ | 1,972 | |||||||||||||||
| Residential Mortgages | 550 | 563 | 167 | 339 | |||||||||||||||||||
| Commercial Real Estate Mortgages | 2,888 | 2,135 | 674 | 690 | |||||||||||||||||||
| Commercial & Industrial | 434 | 768 | 285 | 300 | |||||||||||||||||||
| Consumer and other | 8 | 11 | 6 | 7 | |||||||||||||||||||
| $ | 3,950 | $ | 3,550 | $ | 1,478 | $ | 3,308 | ||||||||||||||||
(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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 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) | $ | 1,480,735 | $ | 20,052 | 5.37 | % | $ | 1,359,320 | $ | 16,265 | 4.80 | % | $ | 1,122,741 | $ | 13,923 | 4.92 | % | |||||||||||||||||||||||||||||||||||
| Taxable securities | 128,932 | 1,010 | 3.11 | % | 121,677 | 788 | 2.60 | % | 76,612 | 402 | 2.08 | % | |||||||||||||||||||||||||||||||||||||||||
| Nontaxable securities | 56,738 | 323 | 2.26 | % | 56,850 | 309 | 2.18 | % | 48,162 | 266 | 2.20 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest-earnings assets | 192,699 | 1,135 | 2.34 | % | 172,175 | 390 | 0.91 | % | 189,131 | 143 | 0.30 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 1,859,104 | $ | 22,520 | 4.81 | % | $ | 1,710,022 | $ | 17,752 | 4.16 | % | $ | 1,436,646 | $ | 14,734 | 4.07 | % | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (17,250) | (15,815) | (13,645) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 124,702 | 127,230 | 125,870 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 1,966,556 | $ | 1,821,437 | $ | 1,548,871 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing transaction accounts | 114,517 | 26 | 0.09 | % | 114,743 | 27 | 0.09 | % | 98,203 | 24 | 0.10 | % | |||||||||||||||||||||||||||||||||||||||||
| Savings and money market accounts | 811,349 | 1,644 | 0.80 | % | 735,845 | 625 | 0.34 | % | 565,861 | 665 | 0.47 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 281,931 | 819 | 1.15 | % | 208,774 | 237 | 0.46 | % | 290,460 | 345 | 0.47 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 27,380 | 102 | 1.47 | % | 25,000 | 21 | 0.33 | % | 31,520 | 34 | 0.43 | % | |||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 47,659 | 494 | 4.12 | % | 47,066 | 477 | 4.07 | % | 6,652 | 26 | 1.57 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 1,282,836 | $ | 3,085 | 0.95 | % | $ | 1,131,428 | $ | 1,387 | 0.49 | % | $ | 992,696 | $ | 1,094 | 0.44 | % | |||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 491,917 | $ | 502,728 | $ | 384,207 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 19,401 | 17,243 | 9,663 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 511,318 | $ | 519,971 | $ | 393,870 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity | 172,402 | 170,038 | 162,305 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,966,556 | $ | 1,821,437 | $ | 1,548,871 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 19,435 | $ | 16,365 | $ | 13,640 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread(2) | 3.86 | % | 3.67 | % | 3.63 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin(3) | 4.15 | % | 3.84 | % | 3.77 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin - FTE(4)(5) | 4.17 | % | 3.86 | % | 3.79 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(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 and nine months ended September 30, 2022 and 2021 and a 23.5% tax rate for the three months ended June 30, 2022.
(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.
10
| Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2022 | September 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) | $ | 1,373,564 | $ | 51,083 | 4.97 | % | $ | 1,093,684 | $ | 40,429 | 4.94 | % | |||||||||||||||||||||||
| Taxable securities | 119,224 | 2,417 | 2.71 | % | 74,244 | 1,134 | 2.04 | % | |||||||||||||||||||||||||||
| Nontaxable securities | 56,157 | 931 | 2.22 | % | 42,191 | 729 | 2.31 | % | |||||||||||||||||||||||||||
| Other interest-earnings assets | 202,837 | 1,713 | 1.13 | % | 148,349 | 315 | 0.28 | % | |||||||||||||||||||||||||||
| Total interest-earning assets | $ | 1,751,782 | $ | 56,144 | 4.29 | % | $ | 1,358,468 | $ | 42,607 | 4.19 | % | |||||||||||||||||||||||
| Allowance for loan losses | (16,044) | (12,890) | |||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 123,255 | 124,539 | |||||||||||||||||||||||||||||||||
| Total Assets | $ | 1,858,993 | $ | 1,470,117 | |||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Interest-bearing transaction accounts | 113,427 | 78 | 0.09 | % | 94,696 | 66 | 0.09 | % | |||||||||||||||||||||||||||
| Savings and money market accounts | 741,397 | 2,862 | 0.52 | % | 503,064 | 2,056 | 0.55 | % | |||||||||||||||||||||||||||
| Time deposits | 242,869 | 1,311 | 0.72 | % | 310,758 | 1,233 | 0.53 | % | |||||||||||||||||||||||||||
| FHLB advances | 26,115 | 144 | 0.74 | % | 32,215 | 120 | 0.50 | % | |||||||||||||||||||||||||||
| Other borrowings | 42,604 | 1,295 | 4.06 | % | 10,625 | 315 | 3.96 | % | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 1,166,412 | $ | 5,690 | 0.65 | % | $ | 951,358 | $ | 3,790 | 0.53 | % | |||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 502,951 | $ | 358,556 | |||||||||||||||||||||||||||||||
| Other liabilities | 16,420 | 9,207 | |||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 519,371 | $ | 367,763 | |||||||||||||||||||||||||||||||
| Stockholders’ Equity | 173,210 | 150,996 | |||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,858,993 | $ | 1,470,117 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 50,454 | $ | 38,817 | |||||||||||||||||||||||||||||||
| Net interest spread(2) | 3.64 | % | 3.66 | % | |||||||||||||||||||||||||||||||
| Net interest margin(3) | 3.85 | % | 3.82 | % | |||||||||||||||||||||||||||||||
| Net interest margin - FTE(4)(5) | 3.87 | % | 3.84 | % | |||||||||||||||||||||||||||||||
(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 and nine months ended September 30, 2022 and 2021 and a 23.5% tax rate for the three months ended June 30, 2022.
(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.
11
| Per Share Information | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Net income | $ | 6,700 | $ | 5,223 | $ | 4,921 | $ | 16,479 | $ | 14,508 | |||||||||||||||||||
| Earnings per share - basic | $ | 0.77 | $ | 0.60 | $ | 0.59 | $ | 1.87 | $ | 1.84 | |||||||||||||||||||
| Earnings per share - diluted | $ | 0.75 | $ | 0.59 | $ | 0.58 | $ | 1.84 | $ | 1.82 | |||||||||||||||||||
| Weighted average shares outstanding | 8,693,745 | 8,740,295 | 8,354,860 | 8,797,720 | 7,861,780 | ||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 8,871,116 | 8,894,577 | 8,467,460 | 8,952,600 | 7,980,159 | ||||||||||||||||||||||||
| Shares issued and outstanding | 8,705,920 | 8,691,620 | 9,012,857 | 8,705,920 | 9,012,857 | ||||||||||||||||||||||||
| Total stockholders' equity | $ | 170,325 | $ | 167,947 | $ | 174,221 | $ | 170,325 | $ | 174,221 | |||||||||||||||||||
| Book value per share | $ | 19.56 | $ | 19.32 | $ | 19.33 | $ | 19.56 | $ | 19.33 | |||||||||||||||||||
| Performance Ratios | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Net interest margin | 4.15 | % | 3.84 | % | 3.77 | % | 3.85 | % | 3.82 | % | |||||||||||||||||||
| Net interest spread | 3.86 | % | 3.67 | % | 3.63 | % | 3.64 | % | 3.66 | % | |||||||||||||||||||
| Efficiency ratio | 48.94 | % | 54.19 | % | 57.55 | % | 52.98 | % | 56.02 | % | |||||||||||||||||||
| Return on average assets | 1.35 | % | 1.15 | % | 1.26 | % | 1.19 | % | 1.32 | % | |||||||||||||||||||
| Return on average stockholders’ equity | 15.42 | % | 12.32 | % | 12.03 | % | 12.72 | % | 12.85 | % | |||||||||||||||||||
| Core and PPP Loans | September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Core loans | $ | 1,530,129 | $ | 1,435,089 | $ | 1,244,914 | $ | 1,129,075 | |||||||||||||||
| PPP loans | — | — | 9,203 | 20,265 | |||||||||||||||||||
| Unearned income | (5,139) | (4,884) | (3,817) | (3,893) | |||||||||||||||||||
| Loans, net of unearned income | 1,524,990 | 1,430,205 | 1,250,300 | 1,145,447 | |||||||||||||||||||
| Allowance for loan losses | (18,423) | (16,807) | (14,844) | (14,097) | |||||||||||||||||||
| Loans, net | $ | 1,506,567 | $ | 1,413,398 | $ | 1,235,456 | $ | 1,131,350 | |||||||||||||||
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 | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Net income | $ | 6,700 | $ | 5,223 | $ | 4,921 | $ | 16,479 | $ | 14,508 | |||||||||||||||||||
| Add: Net OREO gains | — | — | — | — | (8) | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: BOLI death benefits | — | — | 742 | — | 742 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (143) | (42) | 189 | (546) | (17) | ||||||||||||||||||||||||
| Less: Tax effect | 37 | 11 | (52) | 142 | (730) | ||||||||||||||||||||||||
| Core net income | $ | 6,806 | $ | 5,254 | $ | 4,042 | $ | 16,883 | $ | 11,699 | |||||||||||||||||||
| Average assets | $ | 1,966,556 | $ | 1,821,437 | $ | 1,548,871 | $ | 1,858,993 | $ | 1,470,117 | |||||||||||||||||||
| Core return on average assets | 1.37 | % | 1.16 | % | 1.04 | % | 1.21 | % | 1.06 | % | |||||||||||||||||||
| Net income | $ | 6,700 | $ | 5,223 | $ | 4,921 | $ | 16,479 | $ | 14,508 | |||||||||||||||||||
| Add: Net OREO gains | — | — | — | — | (8) | ||||||||||||||||||||||||
| Add: Provision | 1,663 | 1,304 | 750 | 3,667 | 2,250 | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: BOLI death benefits | — | — | 742 | — | 742 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (143) | (42) | 189 | (546) | (17) | ||||||||||||||||||||||||
| Add: Income taxes | 2,174 | 1,590 | 1,293 | 5,204 | 4,287 | ||||||||||||||||||||||||
| Pretax pre-provision core net income | $ | 10,680 | $ | 8,159 | $ | 6,033 | $ | 25,896 | $ | 17,506 | |||||||||||||||||||
| Average assets | $ | 1,966,556 | $ | 1,821,437 | $ | 1,548,871 | $ | 1,858,993 | $ | 1,470,117 | |||||||||||||||||||
| Pretax pre-provision core return on average assets | 2.15 | % | 1.80 | % | 1.55 | % | 1.86 | % | 1.59 | % | |||||||||||||||||||
| Net interest income | $ | 19,435 | $ | 16,365 | $ | 13,640 | $ | 50,454 | $ | 38,817 | |||||||||||||||||||
| Add: Fully-taxable equivalent adjustments(1) | 86 | 83 | 72 | 251 | 203 | ||||||||||||||||||||||||
| Net interest income - FTE | $ | 19,521 | $ | 16,448 | $ | 13,712 | $ | 50,705 | $ | 39,020 | |||||||||||||||||||
| Net interest margin | 4.15 | % | 3.84 | % | 3.77 | % | 3.85 | % | 3.82 | % | |||||||||||||||||||
| Effect of fully-taxable equivalent adjustments(1) | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | |||||||||||||||||||
| Net interest margin - FTE | 4.17 | % | 3.86 | % | 3.79 | % | 3.87 | % | 3.84 | % | |||||||||||||||||||
| Total stockholders' equity | $ | 170,325 | $ | 167,947 | $ | 174,221 | $ | 170,325 | $ | 174,221 | |||||||||||||||||||
| Less: Intangible assets | 18,164 | 18,230 | 18,428 | 18,164 | 18,428 | ||||||||||||||||||||||||
| Tangible common equity | $ | 152,161 | $ | 149,717 | $ | 155,793 | $ | 152,161 | $ | 155,793 | |||||||||||||||||||
14
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||||||||
| Core net income | $ | 6,806 | $ | 5,254 | $ | 4,042 | $ | 16,883 | $ | 11,699 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 8,871,116 | 8,894,577 | 8,467,460 | 8,952,600 | 7,980,159 | ||||||||||||||||||||||||
| Diluted core earnings per share | $ | 0.77 | $ | 0.59 | $ | 0.48 | $ | 1.89 | $ | 1.47 | |||||||||||||||||||
| Common shares outstanding at year or period end | 8,705,920 | 8,691,620 | 9,012,857 | 8,705,920 | 9,012,857 | ||||||||||||||||||||||||
| Tangible book value per share | $ | 17.48 | $ | 17.23 | $ | 17.29 | $ | 17.48 | $ | 17.29 | |||||||||||||||||||
| Total assets at end of period | $ | 2,052,725 | $ | 1,902,495 | $ | 1,559,062 | $ | 2,052,725 | $ | 1,559,062 | |||||||||||||||||||
| Less: Intangible assets | 18,164 | 18,230 | 18,428 | 18,164 | 18,428 | ||||||||||||||||||||||||
| Adjusted assets at end of period | $ | 2,034,561 | $ | 1,884,265 | $ | 1,540,634 | $ | 2,034,561 | $ | 1,540,634 | |||||||||||||||||||
| Tangible common equity to tangible assets | 7.48 | % | 7.95 | % | 10.11 | % | 7.48 | % | 10.11 | % | |||||||||||||||||||
| Total average shareholders equity | $ | 172,402 | 170,038 | $ | 162,305 | $ | 173,210 | $ | 150,996 | ||||||||||||||||||||
| Less: Average intangible assets | 18,203 | 18,270 | 18,470 | 18,270 | 18,535 | ||||||||||||||||||||||||
| Average tangible common equity | $ | 154,199 | $ | 151,768 | $ | 143,835 | $ | 154,940 | $ | 132,461 | |||||||||||||||||||
| Net income to common shareholders | $ | 6,700 | $ | 5,223 | $ | 4,921 | $ | 16,479 | $ | 14,508 | |||||||||||||||||||
| Return on average tangible common equity | 17.24 | % | 13.80 | % | 13.57 | % | 14.22 | % | 14.64 | % | |||||||||||||||||||
| Average tangible common equity | $ | 154,199 | $ | 151,768 | $ | 143,835 | $ | 154,940 | $ | 132,461 | |||||||||||||||||||
| Core net income | $ | 6,806 | $ | 5,254 | $ | 4,042 | $ | 16,883 | $ | 11,699 | |||||||||||||||||||
| Core return on average tangible common equity | 17.51 | % | 13.89 | % | 11.15 | % | 14.57 | % | 11.81 | % | |||||||||||||||||||
| Net interest income | $ | 19,435 | $ | 16,365 | 13,640 | 50,454 | 38,817 | ||||||||||||||||||||||
| Add: Noninterest income | 1,339 | 1,404 | 2,509 | 4,074 | 9,051 | ||||||||||||||||||||||||
| Less: Gain on sale of USDA loan | — | — | — | — | 2,806 | ||||||||||||||||||||||||
| Less: BOLI death benefits | — | — | 742 | — | 742 | ||||||||||||||||||||||||
| Less: Gain (loss) on securities | (143) | (42) | 189 | (546) | (17) | ||||||||||||||||||||||||
| Operating revenue | $ | 20,917 | $ | 17,811 | $ | 15,218 | $ | 55,074 | $ | 44,337 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Total noninterest expense | $ | 10,237 | $ | 9,652 | $ | 9,185 | $ | 29,178 | $ | 26,823 | |||||||||||||||||||
| Less: Net OREO gains | — | — | — | — | (8) | ||||||||||||||||||||||||
| Adjusted noninterest expenses | $ | 10,237 | $ | 9,652 | $ | 9,185 | $ | 29,178 | $ | 26,831 | |||||||||||||||||||
| Core efficiency ratio | 48.94 | % | 54.19 | % | 60.36 | % | 52.98 | % | 60.52 | % | |||||||||||||||||||
(1)Assumes a 24.0% tax rate for the three and nine months ended September 30, 2022 and 2021 and a 23.5% tax rate for the three months ended June 30, 2022.
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Q3 2022 Investor Presentation October 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 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, 2021 and in other SEC filings 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 press release 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 Q3 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 $6.7 million, or $0.75 per diluted share, and core net income (1) of $6.8 million, or $0.77 per diluted share (1) • ROAA of 1.35% and ROATCE of 17.24%; Core ROAA (1) of 1.37% and Core ROATCE (1) of 17.51% • Net interest margin of 4.17% • Core efficiency ratio (1) of 48.94% • Annualized Loan growth of 26.3% from Q2 2022 • Loan portfolio of $1.5 billion increased 6.6% from Q2 2022 • Average yield on loans of 5.37% improved from 4.80% for Q2 2022 • Loans / deposits ratio of 86.3% compared to 86.9% for Q2 2022 • Deposits of $1.8 billion increased $122.1 million, or 7.4%, from Q2 2022 • Average cost of total deposits increased to 0.58% from 0.23% in Q2 2022 • Noninterest-bearing deposits comprised 28.3% of total deposits compared to 31.2% at Q2 2022 • Nonperforming loans to gross loans of 0.26% • Net charge-offs at $47,000 • Allowance for loan losses to gross loans of 1.20% • OREO balance remained at $2.9 million from Q2 2022 • Announced and paid quarterly dividend of $0.09 per share • Tangible common equity to tangible assets (1) of 7.48% • Tangible book value per share (1) of $17.48
4 Branches (13) Legend Huntsville Birmingham Montgomery Columbus Atlanta Alabama Georgia 65 85 75 Anniston Auburn 20 85 75 85 65 65 59 Tuscaloosa LPOs (2) YoY Core Deposit Growth: 30.2%Loans / Deposits: 86.3% Overview of Southern States Bancshares, Inc. Q3 ‘22 Financial Highlights YoY Asset Growth: 31.7%Assets ($B): $2.1 NPLs / Loans: 0.26% YoY Loan Growth: 33.1%Gross Loans ($B): $1.5 LLR / Loans: 1.21% YoY Deposit Growth: 32.2%Deposits ($B): $1.8 YTD NCOs / Avg. Loans: 0.01% TCE / TA(1): 7.48% Core Net Income(1)($M): $6.8 Core ROAA(1): 1.37% NIM: 4.17% Core Efficiency Ratio(1): 48.94% 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 9/30/22 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 Experienced Management Team (1) Refers to management and directors, excluding institutional owners and a director representative of an institutional owner and a direct representative or institutional owner Steve Whatley Founder, Chairman & CEO Lynn Joyce SEVP & Chief Financial Officer Greg Smith SEVP & Chief Risk and Credit Officer Jack Swift SEVP & Chief Operating Officer Our senior management team has an average of over 30 years of experience in the banking industry Mark Chambers President Company insiders own 14.6% of the common shares and equivalents(1) • 1982-2006 Market President Colonial Bank • 1980-1982 Vice President Commercial Lender AmSouth Bank • 1978-1980 Vice President Trust Company Bank • 1973-1978 Loan Officer/Mgt. Trainee Security Pacific Bank • 2007-2019 SEVP & President Southeast Region Southern States Bank • 2004-2007 Market President Wachovia Bank • 1998-2004 Commercial Lender Aliant Bank • 1992-2013 EVP & CFO First Financial Bank, a NASDAQ listed Financial Institution • 1986-1992 Arthur Andersen & Co • 2006-2019 SEVP & CCO Southern States Bank • 1986-2006 Credit Admin, Commercial Loan Officer and Market President Regions Bank • 2006-2019 SEVP & President Central Region Southern States Bank • 1996-2006 Senior Vice President Colonial Bank • 1992-1996 Vice President SouthTrust Bank
6 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 Q3 2022 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 13 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 $2.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 3Q22
7 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
8 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 $2,053 $67 $9 2016 2017 2018 2019 2020 2021 3Q22 $1,783 $1,333 $520 $622 $776 $951 $1,140 $1,556 $1,767 2016 2017 2018 2019 2020 2021 3Q22 $503 $567 $704 $840 $964 $1,241 $1,525 $67 $9 2016 2017 2018 2019 2020 2021 3Q22 $1,250 $1,030 95.5% 90.2% 90.0% 88.1% 90.4% 80.3% 86.3% 2016 2017 2018 2019 2020 2021 3Q22
9 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 - $4.0 $2.9 $2.1 $1.8 $3.0 $1.8 $2.0 - $2.3$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 $25.0 2016 2017 2018 2019 2020 2021 3Q22 Nonaccruals ($mm) TDRs ($mm) OREO ($mm) NPAs / Loans + OREO $20.6 0.99% 1.02% 1.11% 1.11% 1.22% 1.19% 1.21% 2016 2017 2018 2019 2020 2021 3Q22 0.00% $9.2 (1)
10 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 expanding 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
11 Near-Term Outlook Loan balances expected to continue growing based on our healthy pipeline The pace of growth is likely to ease from the robust third-quarter level Deposit balances expected to increase slightly Net interest income expected to increase incrementally from loan growth and rate increases Net interest margin expected to moderate or decrease slightly as deposit betas increase Core noninterest income expected to be fairly consistent with Q3 2022 Quarterly adjusted noninterest expense is expected to remain fairly consistent with Q3 2022 Continued strong credit metrics are expected to allow for provision levels based on growth, but we will consider current and evolving economic conditions 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
13 Non-GAAP Financial Measures Reconciliations (Three Months Ended) ($000) September 30, 2022 June 30, 2022 September 30, 2021 Net Income $6,700 $5,223 $4,921 Add: Net OREO gains — — — Less: BOLI death benefits — — 742 Less: Gain (loss) on securities (143) (42) 189 Less: Tax effect 37 11 (52) Core net income $6,806 $5,254 $4,042 Average assets $1,966,556 $1,821,437 $1,548,871 Core return on average assets 1.37% 1.16% 1.04% Total stockholders' equity $170,325 $167,947 $174,221 Less: Intangible assets 18,164 18,230 18,428 Tangible common equity $152,161 $149,717 $155,793 Core net income $6,806 $5,254 $4,042 Diluted weighted average shares outstanding 8,871,116 8,894,577 8,467,460 Diluted core earnings per share $0.77 $0.59 $0.48 Common shares outstanding at year or period end 8,705,920 8,691,620 9,012,857 Tangible book value per share $17.48 $17.23 $17.29
14 Non-GAAP Financial Measures Reconciliations (Three Months Ended) ($000) September 30, 2022 June 30, 2022 September 30, 2021 Total assets at end of period $2,052,725 $1,902,495 $1,559,062 Less: Intangible assets 18,164 18,230 18,428 Adjusted assets at end of period $2,034,561 $1,884,265 $1,540,634 Tangible common equity to tangible assets 7.48% 7.95% 10.11% Total average shareholders equity $172,402 $170,038 $162,305 Less: Average intangible assets 18,203 18,270 18,470 Average tangible common equity $154,199 $151,768 $143,835 Net income to common shareholders $6,700 $5,223 $4,921 Return on average tangible common equity 17.24% 13.80% 13.57% Core net income $6,806 $5,254 $4,042 Core return on average tangible common equity 17.51% 13.89% 11.15% Net interest income $19,435 $16,365 $13,640 Add: Noninterest income 1,339 1,404 2,509 Less: BOLI death benefits — — 742 Less: Gain (loss) on securities (143) (42) 189 Operating revenue $20,917 $17,811 $15,218 Expenses: Total noninterest expense $10,237 $9,652 $9,185 Less: Net OREO gains — — — Adjusted noninterest expenses $10,237 $9,652 $9,185 Core efficiency ratio 48.94% 54.19% 60.36%