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): April 24, 2023
___________________________
(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 April 24, 2023, Southern States Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2023 (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 first quarter ended March 31, 2023 (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: April 25, 2023 | SOUTHERN STATES BANCSHARES, INC. | |||||||
| By: | /s/ Lynn Joyce | |||||||
| Name: | Lynn Joyce | |||||||
| Title: | Senior Executive Vice President and Chief Financial Officer | |||||||
SOUTHERN STATES BANCSHARES, INC. | 615 Quintard Avenue / Anniston, AL 36201 / (256) 241-1092 | ||||
Southern States Bancshares, Inc. Announces First Quarter 2023 Financial Results | ||||||||||||||
First Quarter 2023 Performance and Operational Highlights | ||||||||||||||
•Net income of $7.7 million, or $0.85 per diluted share | ||||||||||||||
•Core net income(1) of $7.3 million, or $0.80 per diluted share(1) | ||||||||||||||
•Net interest income of $19.5 million, a decrease of $1.3 million from the prior quarter | ||||||||||||||
•Net interest margin (“NIM”) of 4.07%, down 31 basis points from the prior quarter | ||||||||||||||
•NIM of 4.09% on a fully-taxable equivalent basis (“NIM - FTE”)(1) | ||||||||||||||
•Return on average assets (“ROAA”) of 1.51%; return on average stockholders’ equity (“ROAE”) of 16.67%; and return on average tangible common equity (“ROATCE”)(1) of 18.45% | ||||||||||||||
•Core ROAA(1) of 1.44%; and core ROATCE(1) of 17.51% | ||||||||||||||
•Efficiency ratio of 48.79% | ||||||||||||||
•Linked-quarter loan growth was 14.9% annualized | ||||||||||||||
•Linked-quarter deposit growth was 16.2% annualized | ||||||||||||||
•Repurchased $575,000 of common stock, representing 24,000 shares at an average price of $23.95 during the quarter | ||||||||||||||
| (1) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures. | ||||||||||||||
ANNISTON, Ala., April 24, 2023 – Southern States Bancshares, Inc. (NASDAQ: SSBK) (“Southern States” or the “Company”), the holding company for Southern States Bank, an Alabama state-chartered commercial bank (the “Bank”), today reported net income of $7.7 million, or $0.85 diluted earnings per share, for the first quarter of 2023. This compares to net income of $10.6 million, or $1.18 diluted earnings per share, for the fourth quarter of 2022, and net income of $4.6 million, or $0.50 diluted earnings per share, for the first quarter of 2022. The Company reported core net income of $7.3 million, or $0.80 diluted core earnings per share, for the first quarter of 2023. This compares to core net income of $8.1 million, or $0.90 diluted core earnings per share, for the fourth quarter of 2022, and core net income of $4.8 million, or $0.53 diluted core earnings per share, for the first quarter of 2022 (see “Reconciliation of Non-GAAP Financial Measures”).
| CEO Commentary | ||||||||||||||
Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “Despite the recent volatility in our industry, we continued to drive strong earnings, growing both loans and deposits and improving upon our already strong capital levels. After several quarters of Federal Reserve interest rate hikes, combined with increased competition for funding, our deposit betas accelerated in the first quarter and we continued to see a moderate deposit mix shift from noninterest-bearing to interest-bearing deposits, impacting our net interest margin. We are confident in our ability to strategically manage our deposit balances, which we believe reflects the diversity and durability of our franchise.’’ | ||||||||||||||
| Mr. Whatley continued, “We also continue to prudently meet the needs of clients across our vibrant and resilient footprint. We grew loans during the quarter by 14.9% annualized, while maintaining excellent credit quality. We are focused on selectively growing our loan portfolio while carefully managing asset quality and exercising disciplined expense management as we have throughout multiple economic cycles.’’ | ||||||||||||||
| Mr. Whatley concluded, “We are of course closely monitoring the fallout from recent regional bank failures. But it is important to emphasize that Southern States is focused on traditional banking services. The banks that failed had unique business models with idiosyncratic challenges that are unrelated to Southern States. We are confident our robust balance sheet and conservative underwriting principles position us well to navigate the current environment while delivering strong returns for our shareholders.” | ||||||||||||||
| Net Interest Income and Net Interest Margin | ||||||||||||||
 | Three Months Ended | % Change March 31, 2023 vs. | |||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Average interest-earning assets | $ | 1,947,957 | $ | 1,893,069 | $ | 1,684,298 | 2.9 | % | 15.7 | % | |||||||||||||||||||
| Net interest income | $ | 19,546 | $ | 20,884 | $ | 14,654 | (6.4) | % | 33.4 | % | |||||||||||||||||||
| Net interest margin | 4.07 | % | 4.38 | % | 3.53 | % | (31) | bps | 54 | bps | |||||||||||||||||||
Net interest income for the first quarter of 2023 was $19.5 million, a decrease of 6.4% from $20.9 million for the fourth quarter of 2022. The decrease was primarily attributable to the higher cost of deposits and other borrowings, which more than offset an increase in the yield on interest-earnings assets.
Relative to the first quarter of 2022, net interest income increased $4.9 million, or 33.4%. The increase was partially the result of improvement in the yield on interest-earning assets, which outpaced the rise in deposit costs and other borrowings. In addition, we benefited from the significant organic growth over the last year.
Net interest margin for the first quarter of 2023 was 4.07%, compared to 4.38% for the fourth quarter of 2022. The decrease was primarily due to higher interest rates paid on deposits, which outpaced the increase in yields on interest-earning assets.
Relative to the first quarter of 2022, net interest margin increased from 3.53%. The increase was primarily due to a rapid increase in interest rates, which produced higher yields on interest-earning assets.
| Noninterest Income | ||||||||||||||
| Three Months Ended | % Change March 31, 2023 vs. | |||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | $ | 450 | $ | 431 | $ | 445 | 4.4 | % | 1.1 | % | |||||||||||||||||||
| Swap fees | (4) | 2 | 15 | (300.0) | % | (126.7) | % | ||||||||||||||||||||||
| SBA/USDA fees | 134 | 70 | 388 | 91.4 | % | (65.5) | % | ||||||||||||||||||||||
| Mortgage origination fees | 100 | 98 | 286 | 2.0 | % | (65.0) | % | ||||||||||||||||||||||
Net gain (loss) on securities | 514 | (86) | (361) | (697.7) | % | (242.4) | % | ||||||||||||||||||||||
| Other operating income | 592 | 4,088 | 560 | (85.5) | % | 5.7 | % | ||||||||||||||||||||||
| Total noninterest income | $ | 1,786 | $ | 4,603 | $ | 1,333 | (61.2) | % | 34.0 | % | |||||||||||||||||||
Noninterest income for the first quarter of 2023 was $1.8 million, a decrease of 61.2% from $4.6 million for the fourth quarter of 2022. The fourth quarter 2022 results included a $2.6 million gain on the sale of two branches and a bank owned life insurance ("BOLI") benefit claim of $774,000. The first quarter decrease was partially offset by a realized net gain on securities during the quarter, compared to a net loss on securities during the previous quarter.
Relative to the first quarter of 2022, noninterest income increased 34.0% from $1.3 million. The increase was primarily due to a realized net gain on securities during the first quarter of 2023 compared to a net loss on securities during the first quarter of 2022. This increase was partially offset by a decrease in SBA/USDA fees and mortgage fees during the first quarter of 2023.
| Noninterest Expense | ||||||||||||||
| Three Months Ended | % Change March 31, 2023 vs. | |||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 6,311 | $ | 6,738 | $ | 5,725 | (6.3) | % | 10.2 | % | |||||||||||||||||||
| Equipment and occupancy expenses | 683 | 730 | 705 | (6.4) | % | (3.1) | % | ||||||||||||||||||||||
| Data processing fees | 593 | 711 | 564 | (16.6) | % | 5.1 | % | ||||||||||||||||||||||
| Regulatory assessments | 342 | 165 | 263 | 107.3 | % | 30.0 | % | ||||||||||||||||||||||
| Other operating expenses | 2,229 | 2,092 | 2,033 | 6.5 | % | 9.6 | % | ||||||||||||||||||||||
| Total noninterest expenses | $ | 10,158 | $ | 10,436 | $ | 9,290 | (2.7) | % | 9.3 | % | |||||||||||||||||||
Noninterest expense for the first quarter of 2023 was $10.2 million, a decrease of 2.7% from $10.4 million for the fourth quarter of 2022. The decrease was primarily attributable to a decrease in salaries and benefits as a result of expenses related to the issuance of restricted stock units in a deferred compensation plan during the fourth quarter of 2022 and partially offset by various increases in other operating expenses, none of which were individually significant. The fourth quarter 2022 results also included waivers of regulatory assessments from State regulators.
Relative to the first quarter of 2022, noninterest expense increased 9.3% from $9.3 million. The increase was primarily attributable to an increase in salaries and benefits as a result of various equity, retirement and incentive plans.
| Loans and Credit Quality | ||||||||||||||
| Three Months Ended | % Change March 31, 2023 vs. | |||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Core loans | $ | 1,650,929 | $ | 1,592,707 | $ | 1,313,173 | 3.7 | % | 25.7 | % | |||||||||||||||||||
| PPP loans | — | — | 893 | — | % | NM | |||||||||||||||||||||||
| Gross loans | 1,650,929 | 1,592,707 | 1,314,066 | 3.7 | % | 25.6 | % | ||||||||||||||||||||||
| Unearned income | (5,614) | (5,543) | (3,996) | 1.3 | % | 40.5 | % | ||||||||||||||||||||||
| Loans, net of unearned income (“Loans”) | $ | 1,645,315 | $ | 1,587,164 | $ | 1,310,070 | 3.7 | % | 25.6 | % | |||||||||||||||||||
| Average loans, net of unearned (“Average loans”) | $ | 1,609,564 | $ | 1,563,255 | $ | 1,278,413 | 3.0 | % | 25.9 | % | |||||||||||||||||||
| Nonperforming loans (“NPL”) | $ | 1,646 | $ | 2,245 | $ | 3,246 | (26.7) | % | (49.3) | % | |||||||||||||||||||
| Provision for loan losses | $ | 1,181 | $ | 1,938 | $ | 700 | (39.1) | % | 68.7 | % | |||||||||||||||||||
| Allowance for loan losses (“ALLL”) | $ | 21,140 | $ | 20,156 | $ | 15,492 | 4.9 | % | 36.5 | % | |||||||||||||||||||
| Net charge-offs (recoveries) | $ | 197 | $ | 205 | $ | 52 | (3.9) | % | 278.8 | % | |||||||||||||||||||
| NPL to gross loans | 0.10 | % | 0.14 | % | 0.25 | % | |||||||||||||||||||||||
Net charge-offs (recoveries) to average loans(1) | 0.05 | % | 0.05 | % | 0.02 | % | |||||||||||||||||||||||
| ALLL to loans | 1.28 | % | 1.27 | % | 1.18 | % | |||||||||||||||||||||||
| (1) Ratio is annualized. | |||||||||||||||||||||||||||||
| NM = Not meaningful | |||||||||||||||||||||||||||||
Loans, net of unearned income, were $1.6 billion at March 31, 2023, up $58.2 million from December 31, 2022 and up $335.2 million from March 31, 2022. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.
Nonperforming loans totaled $1.6 million, or 0.10% of gross loans, at March 31, 2023, compared with $2.2 million, or 0.14% of gross loans, at December 31, 2022, and $3.2 million, or 0.25% of gross loans, at March 31, 2022. The $599,000 net decrease in nonperforming loans in the first quarter was primarily attributable to three loans that were returned to accruing status or charged-off. The $1.6 million net decrease in nonperforming loans from March 31, 2022 was primarily attributable to a significant commercial real estate loan being moved back to accruing status.
The Company recorded a provision for loan losses of $1.2 million for the first quarter of 2023, compared to $1.9 million for the fourth quarter of 2022. The lower provision was primarily due to changes in our qualitative economic factors and less loan growth for the the quarter.
Net charge-offs for the first quarter of 2023 were $197,000, or 0.05% of average loans, compared to net charge-offs of $205,000, or 0.05% of average loans, for the fourth quarter of 2022, and net charge-offs of $52,000, or 0.02% of average loans, for the first quarter of 2022.
The Company’s allowance for loan losses was 1.28% of total loans and 1284.33% of nonperforming loans at March 31, 2023, compared with 1.27% of total loans and 897.82% of nonperforming loans at December 31, 2022.
| Deposits | ||||||||||||||
| Three Months Ended | % Change March 31, 2023 vs. | |||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 433,832 | $ | 460,977 | $ | 515,110 | (5.9) | % | (15.8) | % | |||||||||||||||||||
| Interest-bearing deposits | 1,355,659 | 1,259,766 | 1,026,729 | 7.6 | % | 32.0 | % | ||||||||||||||||||||||
| Total deposits | $ | 1,789,491 | $ | 1,720,743 | $ | 1,541,839 | 4.0 | % | 16.1 | % | |||||||||||||||||||
Total deposits were $1.8 billion at March 31, 2023, up from $1.7 billion at December 31, 2022 and $1.5 billion at March 31, 2022. The $68.7 million increase in total deposits in the first quarter was due to an increase of $95.9 million in interest-bearing account balances, partially offset by a $27.1 million decrease in noninterest-bearing deposits. Included in the increase was $35.1 million in brokered deposits.
| Capital | ||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||||
| Company | Bank | Company | Bank | Company | Bank | ||||||||||||||||||||||||||||||
| Tier 1 capital ratio to average assets | 8.89 | % | 12.19 | % | 8.82 | % | 12.17 | % | 8.75 | % | 10.88 | % | |||||||||||||||||||||||
| Risk-based capital ratios: | |||||||||||||||||||||||||||||||||||
| Common equity tier 1 (“CET1”) capital ratio | 9.00 | % | 12.34 | % | 8.86 | % | 12.21 | % | 9.90 | % | 12.32 | % | |||||||||||||||||||||||
| Tier 1 capital ratio | 9.00 | % | 12.34 | % | 8.86 | % | 12.21 | % | 9.90 | % | 12.32 | % | |||||||||||||||||||||||
| Total capital ratio | 14.41 | % | 13.38 | % | 14.34 | % | 13.24 | % | 13.97 | % | 13.31 | % | |||||||||||||||||||||||
As of March 31, 2023, total stockholders’ equity was $189.7 million, up from $181.7 million at December 31, 2022. The increase of $7.9 million was substantially due to strong earnings growth.
| About Southern States Bancshares, Inc. | ||||||||||||||
Headquartered in Anniston, Alabama, Southern States Bancshares, Inc. is a bank holding company that operates primarily through its wholly-owned subsidiary, Southern States Bank. The Bank is a full service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. The Bank operates 13 branches in Alabama and Georgia and two loan production offices in Atlanta.
| Forward-Looking Statements | ||||||||||||||
This press release contains forward-looking statements within the meaning of the federal securities laws, which reflect our current expectations and beliefs with respect to, among other things, future events and our financial performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. This may be especially true given recent events and trends in the banking industry, the inflationary environment, the COVID-19 pandemic and governmental responses. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the dates made, we cannot give any assurance that such expectations will prove correct and actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 under the section entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.
These statements are often, but not always, made through the use of words or phrases such as “may,” “can,” “should,” “could,” “to be,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “likely,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “target,” “project,” “would” and “outlook,” or the negative version of those words or other similar words or phrases of a future or forward-looking nature. Forward-looking statements appear in a number of places in this press release and may include statements about business strategy and prospects for growth, operations, ability to pay dividends, competition, regulation and general economic conditions.
| Contact Information | ||||||||||||||
| Lynn Joyce | Kevin Dobbs | |||||||||||||
| (205) 820-8065 | (310) 622-8245 | |||||||||||||
| ljoyce@ssbank.bank | ssbankir@finprofiles.com | |||||||||||||
| SELECT FINANCIAL DATA | |||||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| Results of Operations | |||||||||||||||||
| Interest income | $ | 28,699 | $ | 26,706 | $ | 15,872 | |||||||||||
| Interest expense | 9,153 | 5,822 | 1,218 | ||||||||||||||
| Net interest income | 19,546 | 20,884 | 14,654 | ||||||||||||||
| Provision for loan losses | 1,181 | 1,938 | 700 | ||||||||||||||
| Net interest income after provision | 18,365 | 18,946 | 13,954 | ||||||||||||||
| Noninterest income | 1,786 | 4,603 | 1,333 | ||||||||||||||
| Noninterest expense | 10,158 | 10,436 | 9,290 | ||||||||||||||
Income tax expense(1) | 2,322 | 2,521 | 1,440 | ||||||||||||||
| Net income | $ | 7,671 | $ | 10,592 | $ | 4,557 | |||||||||||
Core net income(2) | $ | 7,280 | $ | 8,081 | $ | 4,824 | |||||||||||
| Share and Per Share Data | |||||||||||||||||
| Shares issued and outstanding | 8,723,763 | 8,706,920 | 8,749,878 | ||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 8,762,450 | 8,707,026 | 8,935,384 | ||||||||||||||
| Diluted | 9,044,490 | 8,932,585 | 9,065,364 | ||||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 0.87 | $ | 1.22 | $ | 0.51 | |||||||||||
| Diluted | $ | 0.85 | $ | 1.18 | $ | 0.50 | |||||||||||
Core - diluted(2) | $ | 0.80 | $ | 0.90 | $ | 0.53 | |||||||||||
| Book value per share | $ | 21.74 | $ | 20.87 | $ | 19.34 | |||||||||||
Tangible book value per share(2) | $ | 19.68 | $ | 18.79 | $ | 17.25 | |||||||||||
| Cash dividends declared | $ | 0.09 | $ | 0.09 | $ | 0.09 | |||||||||||
| Performance and Financial Ratios | |||||||||||||||||
| ROAA | 1.51 | % | 2.11 | % | 1.03 | % | |||||||||||
| ROAE | 16.67 | % | 23.77 | % | 10.43 | % | |||||||||||
Core ROAA(2) | 1.44 | % | 1.61 | % | 1.09 | % | |||||||||||
ROATCE(2) | 18.45 | % | 26.49 | % | 11.63 | % | |||||||||||
Core ROATCE(2) | 17.51 | % | 20.21 | % | 12.31 | % | |||||||||||
| NIM | 4.07 | % | 4.38 | % | 3.53 | % | |||||||||||
NIM - FTE(2) | 4.09 | % | 4.39 | % | 3.55 | % | |||||||||||
| Net interest spread | 3.33 | % | 3.84 | % | 3.36 | % | |||||||||||
| Yield on loans | 6.38 | % | 6.05 | % | 4.68 | % | |||||||||||
| Yield on interest-earning assets | 5.97 | % | 5.60 | % | 3.82 | % | |||||||||||
| Cost of interest-bearing liabilities | 2.64 | % | 1.76 | % | 0.46 | % | |||||||||||
Cost of funds(3) | 2.01 | % | 1.29 | % | 0.31 | % | |||||||||||
| Cost of interest-bearing deposits | 2.42 | % | 1.52 | % | 0.35 | % | |||||||||||
| Cost of total deposits | 1.81 | % | 1.09 | % | 0.23 | % | |||||||||||
| Noninterest deposits to total deposits | 24.24 | % | 26.79 | % | 33.41 | % | |||||||||||
| Total loans to total deposits | 91.94 | % | 92.24 | % | 84.97 | % | |||||||||||
| Efficiency ratio | 48.79 | % | 40.81 | % | 56.83 | % | |||||||||||
Core efficiency ratio(2) | 48.79 | % | 45.98 | % | 56.83 | % | |||||||||||
(1) Three months ended December 31, 2022 included a $540,000 investment tax credit.
(2) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(3) Includes total interest-bearing liabilities and noninterest deposits.
| SELECT FINANCIAL DATA | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| Financial Condition (ending) | |||||||||||||||||
| Total loans | $ | 1,645,315 | $ | 1,587,164 | $ | 1,310,070 | |||||||||||
| Total securities | 183,197 | 175,196 | 170,694 | ||||||||||||||
| Total assets | 2,134,337 | 2,045,204 | 1,798,834 | ||||||||||||||
| Total noninterest bearing deposits | 433,832 | 460,977 | 515,110 | ||||||||||||||
| Total deposits | 1,789,491 | 1,720,743 | 1,541,839 | ||||||||||||||
| Total borrowings | 131,372 | 117,295 | 73,104 | ||||||||||||||
| Total liabilities | 1,944,674 | 1,863,485 | 1,629,645 | ||||||||||||||
| Total shareholders’ equity | $ | 189,663 | $ | 181,719 | $ | 169,189 | |||||||||||
| Financial Condition (average) | |||||||||||||||||
| Total loans | $ | 1,609,564 | $ | 1,563,255 | $ | 1,278,413 | |||||||||||
| Total securities | 192,348 | 188,765 | 161,683 | ||||||||||||||
| Other interest-earning assets | 146,045 | 141,049 | 244,202 | ||||||||||||||
| Total interest-bearing assets | 1,947,957 | 1,893,069 | 1,684,298 | ||||||||||||||
| Total assets | 2,057,005 | 1,994,087 | 1,787,015 | ||||||||||||||
| Noninterest-bearing deposits | 438,735 | 477,301 | 514,456 | ||||||||||||||
| Interest-bearing deposits | 1,300,632 | 1,216,492 | 1,023,898 | ||||||||||||||
| Total deposits | 1,739,367 | 1,693,793 | 1,538,354 | ||||||||||||||
| Total borrowings | 104,901 | 99,111 | 58,874 | ||||||||||||||
| Total interest-bearing liabilities | 1,405,533 | 1,315,603 | 1,082,772 | ||||||||||||||
| Total shareholders’ equity | $ | 186,639 | $ | 176,769 | $ | 177,244 | |||||||||||
| Asset Quality | |||||||||||||||||
| Nonperforming loans | $ | 1,646 | $ | 2,245 | $ | 3,246 | |||||||||||
| Other real estate owned (“OREO”) | $ | 2,930 | $ | 2,930 | $ | 2,930 | |||||||||||
| Nonperforming assets (“NPA”) | $ | 4,576 | $ | 5,175 | $ | 6,176 | |||||||||||
Net charge-offs (recovery) to average loans(1) | 0.05 | % | 0.05 | % | 0.02 | % | |||||||||||
Provision for loan losses to average loans(1) | 0.30 | % | 0.49 | % | 0.22 | % | |||||||||||
| ALLL to loans | 1.28 | % | 1.27 | % | 1.18 | % | |||||||||||
| ALLL to gross loans | 1.28 | % | 1.27 | % | 1.18 | % | |||||||||||
| ALLL to NPL | 1284.33 | % | 897.82 | % | 477.26 | % | |||||||||||
| NPL to loans | 0.10 | % | 0.14 | % | 0.25 | % | |||||||||||
| NPL to gross loans | 0.10 | % | 0.14 | % | 0.25 | % | |||||||||||
| NPA to gross loans and OREO | 0.28 | % | 0.32 | % | 0.47 | % | |||||||||||
| NPA to total assets | 0.21 | % | 0.25 | % | 0.34 | % | |||||||||||
| Regulatory and Other Capital Ratios | |||||||||||||||||
| Total shareholders’ equity to total assets | 8.89 | % | 8.89 | % | 9.41 | % | |||||||||||
Tangible common equity to tangible assets(2) | 8.11 | % | 8.07 | % | 8.47 | % | |||||||||||
| Tier 1 capital ratio to average assets | 8.89 | % | 8.82 | % | 8.75 | % | |||||||||||
Risk-based capital ratios: | |||||||||||||||||
| CET1 capital ratio | 9.00 | % | 8.86 | % | 9.90 | % | |||||||||||
| Tier 1 capital ratio | 9.00 | % | 8.86 | % | 9.90 | % | |||||||||||
| Total capital ratio | 14.41 | % | 14.34 | % | 13.97 | % | |||||||||||
(1) Ratio is annualized.
(2) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | March 31, 2022 (Unaudited) | ||||||||||||||
| Assets | |||||||||||||||||
| Cash and due from banks | $ | 17,245 | $ | 15,260 | $ | 22,851 | |||||||||||
| Interest-bearing deposits in banks | 99,541 | 90,198 | 111,951 | ||||||||||||||
| Federal funds sold | 76,010 | 63,041 | 74,022 | ||||||||||||||
| Total cash and cash equivalents | 192,796 | 168,499 | 208,824 | ||||||||||||||
| Securities available for sale, at fair value | 163,550 | 155,544 | 151,027 | ||||||||||||||
| Securities held to maturity, at amortized cost | 19,647 | 19,652 | 19,667 | ||||||||||||||
| Other equity securities, at fair value | 3,806 | 4,444 | 8,937 | ||||||||||||||
| Restricted equity securities, at cost | 3,862 | 3,134 | 2,825 | ||||||||||||||
| Loans held for sale | 2,376 | 1,047 | 2,509 | ||||||||||||||
| Loans, net of unearned income | 1,645,315 | 1,587,164 | 1,310,070 | ||||||||||||||
| Less allowance for loan losses | 21,140 | 20,156 | 15,492 | ||||||||||||||
| Loans, net | 1,624,175 | 1,567,008 | 1,294,578 | ||||||||||||||
| Premises and equipment, net | 27,098 | 27,345 | 28,065 | ||||||||||||||
| Accrued interest receivable | 7,077 | 6,963 | 4,427 | ||||||||||||||
| Bank owned life insurance | 29,350 | 29,186 | 29,343 | ||||||||||||||
| Annuities | 15,489 | 15,478 | 15,523 | ||||||||||||||
| Foreclosed assets | 2,930 | 2,930 | 2,930 | ||||||||||||||
| Goodwill | 16,862 | 16,862 | 16,862 | ||||||||||||||
| Core deposit intangible | 1,144 | 1,226 | 1,434 | ||||||||||||||
| Other assets | 24,175 | 25,886 | 11,883 | ||||||||||||||
| Total assets | $ | 2,134,337 | $ | 2,045,204 | $ | 1,798,834 | |||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||
| Liabilities: | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Noninterest-bearing | $ | 433,832 | $ | 460,977 | $ | 515,110 | |||||||||||
| Interest-bearing | 1,355,659 | 1,259,766 | 1,026,729 | ||||||||||||||
| Total deposits | 1,789,491 | 1,720,743 | 1,541,839 | ||||||||||||||
| Other borrowings | (16) | (19) | — | ||||||||||||||
| FHLB advances | 45,000 | 31,000 | 25,950 | ||||||||||||||
| Subordinated notes | 86,388 | 86,314 | 47,154 | ||||||||||||||
| Accrued interest payable | 844 | 584 | 107 | ||||||||||||||
| Other liabilities | 22,967 | 24,863 | 14,595 | ||||||||||||||
| Total liabilities | 1,944,674 | 1,863,485 | 1,629,645 | ||||||||||||||
| Stockholders' equity: | |||||||||||||||||
| Common stock | 43,798 | 43,714 | 43,749 | ||||||||||||||
| Capital surplus | 77,053 | 76,785 | 76,426 | ||||||||||||||
| Retained earnings | 80,642 | 73,764 | 53,604 | ||||||||||||||
| Accumulated other comprehensive loss | (9,846) | (11,048) | (3,755) | ||||||||||||||
| Unvested restricted stock | (965) | (477) | (835) | ||||||||||||||
| Vested restricted stock units | (1,019) | (1,019) | — | ||||||||||||||
| Total stockholders' equity | 189,663 | 181,719 | 169,189 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,134,337 | $ | 2,045,204 | $ | 1,798,834 | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| Interest income: | |||||||||||||||||
| Loans, including fees | $ | 25,335 | $ | 23,853 | $ | 14,766 | |||||||||||
| Taxable securities | 1,383 | 1,206 | 619 | ||||||||||||||
| Nontaxable securities | 291 | 322 | 299 | ||||||||||||||
| Other interest and dividends | 1,690 | 1,325 | 188 | ||||||||||||||
| Total interest income | 28,699 | 26,706 | 15,872 | ||||||||||||||
| Interest expense: | |||||||||||||||||
| Deposits | 7,768 | 4,655 | 873 | ||||||||||||||
| Other borrowings | 1,385 | 1,167 | 345 | ||||||||||||||
| Total interest expense | 9,153 | 5,822 | 1,218 | ||||||||||||||
| Net interest income | 19,546 | 20,884 | 14,654 | ||||||||||||||
| Provision for loan losses | 1,181 | 1,938 | 700 | ||||||||||||||
| Net interest income after provision for loan losses | 18,365 | 18,946 | 13,954 | ||||||||||||||
| Noninterest income: | |||||||||||||||||
| Service charges on deposit accounts | 450 | 431 | 445 | ||||||||||||||
| Swap fees | (4) | 2 | 15 | ||||||||||||||
| SBA/USDA fees | 134 | 70 | 388 | ||||||||||||||
| Mortgage origination fees | 100 | 98 | 286 | ||||||||||||||
Net gain (loss) on securities | 514 | (86) | (361) | ||||||||||||||
| Other operating income | 592 | 4,088 | 560 | ||||||||||||||
| Total noninterest income | 1,786 | 4,603 | 1,333 | ||||||||||||||
| Noninterest expenses: | |||||||||||||||||
| Salaries and employee benefits | 6,311 | 6,738 | 5,725 | ||||||||||||||
| Equipment and occupancy expenses | 683 | 730 | 705 | ||||||||||||||
| Data processing fees | 593 | 711 | 564 | ||||||||||||||
| Regulatory assessments | 342 | 165 | 263 | ||||||||||||||
| Other operating expenses | 2,229 | 2,092 | 2,033 | ||||||||||||||
| Total noninterest expenses | 10,158 | 10,436 | 9,290 | ||||||||||||||
| Income before income taxes | 9,993 | 13,113 | 5,997 | ||||||||||||||
| Income tax expense | 2,322 | 2,521 | 1,440 | ||||||||||||||
| Net income | $ | 7,671 | $ | 10,592 | $ | 4,557 | |||||||||||
| Basic earnings per share | $ | 0.87 | $ | 1.22 | $ | 0.51 | |||||||||||
| Diluted earnings per share | $ | 0.85 | $ | 1.18 | $ | 0.50 | |||||||||||
| AVERAGE BALANCE SHEET AND NET INTEREST MARGIN | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | |||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, net of unearned income(1) | $ | 1,609,564 | $ | 25,335 | 6.38 | % | $ | 1,563,255 | $ | 23,853 | 6.05 | % | $ | 1,278,413 | $ | 14,766 | 4.68 | % | |||||||||||||||||||||||||||||||||||
| Taxable securities | 139,516 | 1,383 | 4.02 | % | 132,222 | 1,206 | 3.62 | % | 106,820 | 619 | 2.35 | % | |||||||||||||||||||||||||||||||||||||||||
| Nontaxable securities | 52,832 | 291 | 2.24 | % | 56,543 | 322 | 2.26 | % | 54,863 | 299 | 2.21 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest-earnings assets | 146,045 | 1,690 | 4.69 | % | 141,049 | 1,325 | 3.73 | % | 244,202 | 188 | 0.31 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | $ | 1,947,957 | $ | 28,699 | 5.97 | % | $ | 1,893,069 | $ | 26,706 | 5.60 | % | $ | 1,684,298 | $ | 15,872 | 3.82 | % | |||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (20,493) | (19,374) | (15,041) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 129,541 | 120,392 | 117,758 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 2,057,005 | $ | 1,994,087 | $ | 1,787,015 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing transaction accounts | 93,951 | 20 | 0.08 | % | 98,978 | 22 | 0.09 | % | 110,983 | 26 | 0.09 | % | |||||||||||||||||||||||||||||||||||||||||
| Savings and money market accounts | 806,001 | 5,040 | 2.54 | % | 794,692 | 3,126 | 1.56 | % | 675,504 | 591 | 0.36 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 400,680 | 2,708 | 2.74 | % | 322,822 | 1,507 | 1.85 | % | 237,411 | 256 | 0.44 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 18,578 | 159 | 3.47 | % | 22,739 | 147 | 2.56 | % | 25,950 | 22 | 0.34 | % | |||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 86,323 | 1,226 | 5.76 | % | 76,372 | 1,020 | 5.30 | % | 32,924 | 323 | 3.98 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 1,405,533 | $ | 9,153 | 2.64 | % | $ | 1,315,603 | $ | 5,822 | 1.76 | % | $ | 1,082,772 | $ | 1,218 | 0.46 | % | |||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 438,735 | $ | 477,301 | $ | 514,456 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 26,098 | 24,414 | 12,543 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 464,833 | $ | 501,715 | $ | 526,999 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity | 186,639 | 176,769 | 177,244 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 2,057,005 | $ | 1,994,087 | $ | 1,787,015 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 19,546 | $ | 20,884 | $ | 14,654 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread(2) | 3.33 | % | 3.84 | % | 3.36 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin(3) | 4.07 | % | 4.38 | % | 3.53 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin - FTE(4)(5) | 4.09 | % | 4.39 | % | 3.55 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of funds(6) | 2.01 | % | 1.29 | % | 0.31 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of interest-bearing deposits | 2.42 | % | 1.52 | % | 0.35 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of total deposits | 1.81 | % | 1.09 | % | 0.23 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes nonaccrual loans.
(2)Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest-bearing liabilities.
(3)Net interest margin is a ratio of net interest income to average interest earning assets for the same period.
(4)Net interest margin - FTE is a ratio of fully-taxable equivalent net interest income to average interest earning assets for the same period. It assumes a 24.0% tax rate for the three months ended March 31, 2023 and December 31, 2022 and a 23.5% tax rate for the three months ended March 31, 2022.
(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.
(6)Includes total interest-bearing liabilities and noninterest deposits.
| LOAN COMPOSITION | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||||
| Amount | % of gross | Amount | % of gross | Amount | % of gross | ||||||||||||||||||||||||||||||
| Real estate mortgages: | |||||||||||||||||||||||||||||||||||
| Construction and development | $ | 227,560 | 13.8 | % | $ | 255,736 | 16.1 | % | $ | 165,400 | 12.6 | % | |||||||||||||||||||||||
| Residential | 196,923 | 11.9 | % | 167,891 | 10.5 | % | 154,143 | 11.7 | % | ||||||||||||||||||||||||||
| Commercial | 948,251 | 57.5 | % | 904,872 | 56.8 | % | 765,685 | 58.3 | % | ||||||||||||||||||||||||||
| Commercial and industrial | 270,825 | 16.4 | % | 256,553 | 16.1 | % | 218,868 | 16.6 | % | ||||||||||||||||||||||||||
| PPP loans | — | — | % | — | — | % | 893 | 0.1 | % | ||||||||||||||||||||||||||
| Consumer and other | 7,370 | 0.4 | % | 7,655 | 0.5 | % | 9,077 | 0.7 | % | ||||||||||||||||||||||||||
| Gross loans | 1,650,929 | 100.0 | % | 1,592,707 | 100.0 | % | 1,314,066 | 100.0 | % | ||||||||||||||||||||||||||
| Unearned income | (5,614) | (5,543) | (3,996) | ||||||||||||||||||||||||||||||||
| Loans, net of unearned income | 1,645,315 | 1,587,164 | 1,310,070 | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | (21,140) | (20,156) | (15,492) | ||||||||||||||||||||||||||||||||
| Loans, net | $ | 1,624,175 | $ | 1,567,008 | $ | 1,294,578 | |||||||||||||||||||||||||||||
| DEPOSIT COMPOSITION | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||||
| Amount | % of total | Amount | % of total | Amount | % of total | ||||||||||||||||||||||||||||||
| Noninterest-bearing transaction | $ | 433,833 | 24.2 | % | $ | 460,977 | 26.8 | % | $ | 515,110 | 33.4 | % | |||||||||||||||||||||||
| Interest-bearing transaction | 877,166 | 49.0 | % | 837,127 | 48.6 | % | 749,119 | 48.6 | % | ||||||||||||||||||||||||||
| Savings | 47,742 | 2.7 | % | 49,235 | 2.9 | % | 62,462 | 4.1 | % | ||||||||||||||||||||||||||
| Time deposits, $250,000 and under | 366,271 | 20.5 | % | 307,145 | 17.8 | % | 189,172 | 12.2 | % | ||||||||||||||||||||||||||
| Time deposits, over $250,000 | 64,479 | 3.6 | % | 66,259 | 3.9 | % | 25,976 | 1.7 | % | ||||||||||||||||||||||||||
| Total deposits | $ | 1,789,491 | 100.0 | % | $ | 1,720,743 | 100.0 | % | $ | 1,541,839 | 100.0 | % | |||||||||||||||||||||||
| Nonperfoming Assets | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||
| Nonaccrual loans | $ | 1,646 | $ | 2,245 | $ | 3,246 | |||||||||||
| Past due loans 90 days or more and still accruing interest | — | — | — | ||||||||||||||
| Total nonperforming loans | 1,646 | 2,245 | 3,246 | ||||||||||||||
| OREO | 2,930 | 2,930 | 2,930 | ||||||||||||||
| Total nonperforming assets | $ | 4,576 | $ | 5,175 | $ | 6,176 | |||||||||||
Troubled debt restructured loans – nonaccrual(1) | 805 | 832 | 904 | ||||||||||||||
| Troubled debt restructured loans – accruing | 1,272 | 1,292 | 1,058 | ||||||||||||||
| Total troubled debt restructured loans | $ | 2,077 | $ | 2,124 | $ | 1,962 | |||||||||||
| Allowance for loan losses | $ | 21,140 | $ | 20,156 | $ | 15,492 | |||||||||||
| Loans, net of unearned income at the end of the period | $ | 1,645,315 | $ | 1,587,164 | $ | 1,310,070 | |||||||||||
| Gross loans outstanding at the end of period | $ | 1,650,929 | $ | 1,592,707 | $ | 1,314,066 | |||||||||||
| Total assets | $ | 2,134,337 | $ | 2,045,204 | $ | 1,798,834 | |||||||||||
| Allowance for loan losses to nonperforming loans | 1284.33 | % | 897.82 | % | 477.26 | % | |||||||||||
| Nonperforming loans to loans, net of unearned income | 0.10 | % | 0.14 | % | 0.25 | % | |||||||||||
| Nonperforming loans to gross loans | 0.10 | % | 0.14 | % | 0.25 | % | |||||||||||
| Nonperforming assets to gross loans and OREO | 0.28 | % | 0.32 | % | 0.47 | % | |||||||||||
| Nonperforming assets to total assets | 0.21 | % | 0.25 | % | 0.34 | % | |||||||||||
| Nonaccrual loans by category: | |||||||||||||||||
| Real estate mortgages: | |||||||||||||||||
| Construction & Development | $ | 64 | $ | 67 | $ | 76 | |||||||||||
| Residential Mortgages | 267 | 565 | 510 | ||||||||||||||
| Commercial Real Estate Mortgages | 1,263 | 1,278 | 2,388 | ||||||||||||||
| Commercial & Industrial | 51 | 312 | 269 | ||||||||||||||
| Consumer and other | 1 | 23 | 3 | ||||||||||||||
| Total | $ | 1,646 | $ | 2,245 | $ | 3,246 | |||||||||||
(1) Troubled debt restructured loans are excluded from nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are more than 90 days past due.
| Allowance for Loan Losses | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| Average loans, net of unearned income | $ | 1,609,564 | $ | 1,563,255 | $ | 1,278,413 | |||||||||||
| Loans, net of unearned income | $ | 1,645,315 | $ | 1,587,164 | $ | 1,310,070 | |||||||||||
| Gross loans | $ | 1,650,929 | $ | 1,592,707 | $ | 1,314,066 | |||||||||||
| Allowance for loan losses at beginning of the period | $ | 20,156 | $ | 18,423 | $ | 14,844 | |||||||||||
| Charge-offs: | |||||||||||||||||
| Construction and development | — | — | 66 | ||||||||||||||
| Residential | — | — | — | ||||||||||||||
| Commercial | — | — | — | ||||||||||||||
| Commercial and industrial | 218 | 210 | — | ||||||||||||||
| Consumer and other | 6 | 18 | 6 | ||||||||||||||
| Total charge-offs | 224 | 228 | 72 | ||||||||||||||
| Recoveries: | |||||||||||||||||
| Construction and development | — | — | — | ||||||||||||||
| Residential | 11 | 4 | 17 | ||||||||||||||
| Commercial | — | — | — | ||||||||||||||
| Commercial and industrial | 14 | 1 | — | ||||||||||||||
| Consumer and other | 2 | 18 | 3 | ||||||||||||||
| Total recoveries | 27 | 23 | 20 | ||||||||||||||
| Net charge-offs (recoveries) | $ | 197 | $ | 205 | $ | 52 | |||||||||||
| Provision for loan losses | $ | 1,181 | $ | 1,938 | $ | 700 | |||||||||||
| Balance at end of period | $ | 21,140 | $ | 20,156 | $ | 15,492 | |||||||||||
| Allowance to loans, net of unearned income | 1.28 | % | 1.27 | % | 1.18 | % | |||||||||||
| Allowance to gross loans | 1.28 | % | 1.27 | % | 1.18 | % | |||||||||||
Net charge-offs (recoveries) to average loans, net of unearned income(1) | 0.05 | % | 0.05 | % | 0.02 | % | |||||||||||
Provision for loan losses to average loans, net of unearned income(1) | 0.30 | % | 0.49 | % | 0.22 | % | |||||||||||
(1) Ratio is annualized.
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||
In addition to reporting GAAP results, the Company reports non-GAAP financial measures in this earnings release and other disclosures. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
The following table provides a reconciliation of the non-GAAP financial measures to their most directly comparable financial measure presented in accordance with GAAP.
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||
| (Dollars in thousands, except share and per share amounts | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| Net income | $ | 7,671 | $ | 10,592 | $ | 4,557 | |||||||||||
| Less: Net gain on sale of branches | — | 2,372 | — | ||||||||||||||
| Less: BOLI benefit claim | — | 774 | — | ||||||||||||||
| Less: Gain (loss) on securities | 514 | (86) | (361) | ||||||||||||||
| Less: Tax effect | (123) | (549) | 94 | ||||||||||||||
| Core net income | $ | 7,280 | $ | 8,081 | $ | 4,824 | |||||||||||
| Average assets | $ | 2,057,005 | $ | 1,994,087 | $ | 1,787,015 | |||||||||||
| Core return on average assets | 1.44 | % | 1.61 | % | 1.09 | % | |||||||||||
| Net income | $ | 7,671 | $ | 10,592 | $ | 4,557 | |||||||||||
| Add: Provision | 1,181 | 1,938 | 700 | ||||||||||||||
| Less: Net gain on sale of branches | — | 2,372 | — | ||||||||||||||
| Less: BOLI benefit claim | — | 774 | — | ||||||||||||||
| Less: Gain (loss) on securities | 514 | (86) | (361) | ||||||||||||||
| Add: Income taxes | 2,322 | 2,521 | 1,440 | ||||||||||||||
| Pretax pre-provision core net income | $ | 10,660 | $ | 11,991 | $ | 7,058 | |||||||||||
| Average assets | $ | 2,057,005 | $ | 1,994,087 | $ | 1,787,015 | |||||||||||
| Pretax pre-provision core return on average assets | 2.10 | % | 2.39 | % | 1.60 | % | |||||||||||
| Net interest income | $ | 19,546 | $ | 20,884 | $ | 14,654 | |||||||||||
Add: Fully-taxable equivalent adjustments(1) | 85 | 84 | 78 | ||||||||||||||
| Net interest income - FTE | $ | 19,631 | $ | 20,968 | $ | 14,732 | |||||||||||
| Net interest margin | 4.07 | % | 4.38 | % | 3.53 | % | |||||||||||
Effect of fully-taxable equivalent adjustments(1) | 0.02 | % | 0.01 | % | 0.02 | % | |||||||||||
| Net interest margin - FTE | 4.09 | % | 4.39 | % | 3.55 | % | |||||||||||
| Total stockholders' equity | $ | 189,663 | $ | 181,719 | $ | 169,189 | |||||||||||
| Less: Intangible assets | 18,006 | 18,088 | 18,296 | ||||||||||||||
| Tangible common equity | $ | 171,657 | $ | 163,631 | $ | 150,893 | |||||||||||
| (1) Assumes a 24.0% tax rate for the three months ended March 31, 2023 and December 31, 2022 and a 23.5% tax rate for the three months ended March 31, 2022. | |||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||
| (Dollars in thousands, except share and per share amounts | |||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| Core net income | $ | 7,280 | $ | 8,081 | $ | 4,824 | |||||||||||
| Diluted weighted average shares outstanding | 9,044,490 | 8,932,585 | 9,065,364 | ||||||||||||||
| Diluted core earnings per share | $ | 0.80 | $ | 0.90 | $ | 0.53 | |||||||||||
| Common shares outstanding at year or period end | 8,723,763 | 8,706,920 | 8,749,878 | ||||||||||||||
| Tangible book value per share | $ | 19.68 | $ | 18.79 | $ | 17.25 | |||||||||||
| Total assets at end of period | $ | 2,134,337 | $ | 2,045,204 | $ | 1,798,834 | |||||||||||
| Less: Intangible assets | 18,006 | 18,088 | 18,296 | ||||||||||||||
| Adjusted assets at end of period | $ | 2,116,331 | $ | 2,027,116 | $ | 1,780,538 | |||||||||||
| Tangible common equity to tangible assets | 8.11 | % | 8.07 | % | 8.47 | % | |||||||||||
| Total average shareholders equity | $ | 186,639 | $ | 176,769 | $ | 177,244 | |||||||||||
| Less: Average intangible assets | 18,055 | 18,134 | 18,337 | ||||||||||||||
| Average tangible common equity | $ | 168,584 | $ | 158,635 | $ | 158,907 | |||||||||||
| Net income to common shareholders | $ | 7,671 | $ | 10,592 | $ | 4,557 | |||||||||||
| Return on average tangible common equity | 18.45 | % | 26.49 | % | 11.63 | % | |||||||||||
| Average tangible common equity | $ | 168,584 | $ | 158,635 | $ | 158,907 | |||||||||||
| Core net income | $ | 7,280 | $ | 8,081 | $ | 4,824 | |||||||||||
| Core return on average tangible common equity | 17.51 | % | 20.21 | % | 12.31 | % | |||||||||||
| Net interest income | $ | 19,546 | $ | 20,884 | $ | 14,654 | |||||||||||
| Add: Noninterest income | 1,786 | 4,603 | 1,333 | ||||||||||||||
| Less: Gain on sale of branches | — | 2,600 | — | ||||||||||||||
| Less: BOLI benefit claim | — | 774 | — | ||||||||||||||
| Less: Gain (loss) on securities | 514 | (86) | (361) | ||||||||||||||
| Operating revenue | $ | 20,818 | $ | 22,199 | $ | 16,348 | |||||||||||
| Expenses: | |||||||||||||||||
| Total noninterest expense | $ | 10,158 | $ | 10,436 | $ | 9,290 | |||||||||||
| Less: Loss on sale of branches | — | 228 | — | ||||||||||||||
| Adjusted noninterest expenses | $ | 10,158 | $ | 10,208 | $ | 9,290 | |||||||||||
| Core efficiency ratio | 48.79 | % | 45.98 | % | 56.83 | % | |||||||||||
Q1 2023 Investor Presentation April 24, 2023
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, 2022 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 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) Quarterly Core Deposit Growth(2): 9.3%Loans / Deposits: 91.94% Overview of Southern States Bancshares, Inc. Q1 ‘23 Financial Highlights Quarterly Asset Growth(2): 17.7%Assets ($B): $2.1 NPLs / Loans: 0.10% Quarterly Loan Growth(2): 14.9%Gross Loans ($B): $1.7 LLR / Loans: 1.28% Quarterly Deposit Growth(2): 16.2%Deposits ($B): $1.8 YTD NCOs / Avg. Loans: 0.05% TCE / TA(1): 8.11% Core Net Income(1)($M): $7.3 Core ROAA(1): 1.44% NIM: 4.07% Core Efficiency Ratio(1): 48.79% Mobile Savannah Macon Valdosta Augusta Southern States Bancshares (Nasdaq: SSBK) was founded in August 2007 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: Company Documents Financial data as of the three months ended 3/31/23 unless otherwise noted Note: Core Deposits defined as total deposits less brokered and 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 (2) Annualized
4 $62.3 $69.2 $72.8 $88.1 $93.1 $70.7 $83.3 Columbus MSA Auburn- Opelika MSA Birmingham MSA Huntsville MSA Atlanta MSA Southeast Average National Average 1.6% 1.9% 4.7% 5.9% 6.6% 3.2% 2.1% Birmingham MSA Columbus MSA Atlanta MSA Huntsville MSA Auburn- Opelika MSA Southeast Average National Average Columbus, GA Major Employers Market Highlights Robust Market Dynamics Source: U.S. Bureau of Labor Statistics; S&P Global Market Intelligence; Fortune; Forbes; Money.com; moneygeek.com; Business Facilities; USA Today; Livability,com; US News; Auburn.edu; Columbus, Georgia Economic Development Note: Southeast defined as AL, AR, FL. GA, KY, LA, MS, NC. SC, TN, VA, and WV - 8th largest Metro Area in the USA - Ranked 10th largest economy in the country - Ranked 13th Best Places for Business and Careers by Forbes - 17 Fortune 500 companies headquartered in Atlanta - Largest market in Alabama, supported by strong steel, biotechnology, and banking industries - Ranked 2nd best US city for job seekers by MoneyGeek - University of Alabama Birmingham serves as an international leader in medicine and dentistry - Voted best place to live in the country by US News - Highest concentration of engineers in the US - Ranked #1 best city for STEM workers by Livability - 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 - Auburn University contributes $5.6 billion annually and 27,000 jobs to the Alabama economy - Named top-five growth city in America by U-Haul - High-tech manufacturing and industrial hub for companies like Kia Motors, Hanwha Cimarron, and Niagara Bottling - Fort Benning Military Base • U.S. Army Infantry and Armor Training Post • Columbus Chamber of Commerce estimates annual economic impact of $4.8 billion - Major companies headquartered include Aflac and Total Systems Services, Inc. - Contains seven colleges and universities, with 83,000 students pursuing degrees in higher education Huntsville, AL Birmingham, AL Atlanta, GA ‘28 Projected Median HHI ($M) ‘23 – ‘28 Projected Population Growth (%) Auburn / Opelika, AL
5 Q1 2023 Results Highlights (1) Please refer to non-U.S. GAAP reconciliation in the appendix (2) Uninsured deposits are 31.4% of total deposits Operating Results Deposits/Liquidity Loans Capital Asset Quality • Net income of $7.7 million, or $0.85 per diluted share, and core net income (1) of $7.3 million, or $0.80 per diluted share (1) • ROAA of 1.51% and ROATCE of 18.45%; Core ROAA (1) of 1.44% and Core ROATCE (1) of 17.51% • Net interest margin of 4.07% • Efficiency ratio (1) of 48.79% • YTD monthly margin trends – January 4.16%, February 4.17%, and March 3.90% • Loan portfolio of $1.6 billion increased $58.2 million from Q4 2022 • Annualized loan growth of 14.9% from Q4 2022 • Average yield on loans of 6.38% improved from 6.05% for Q4 2022 • Loans / deposits ratio of 91.94% compared to 92.24% for Q4 2022 • Deposits of $1.8 billion increased $68.7 million, or 4.0%, from Q4 2022 (2) • Average cost of total deposits increased to 1.81% from 1.09% in Q4 2022 • Noninterest-bearing deposits comprised 24.24% of total deposits compared to 26.79% at Q4 2022 • Nonperforming loans to gross loans of 0.10% improved from 0.14% at Q4 2022 • Net charge-offs at $197,000, or 0.05% of average loans • Allowance for loan losses to gross loans of 1.28% compared to 1.27% at Q4 2022 • OREO balance remained flat from Q4 at $2.9 million • Announced and paid quarterly dividend of $0.09 per share • Tangible common equity to tangible assets (1) of 8.11%, up from 8.07% at Q4 2022 • Tangible book value per share (1) of $19.68, up 4.7% from Q4 2022
6 $14.7 $16.4 $19.4 $20.9 $19.5 3.53% 3.84% 4.15% 4.38% 4.07% $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 1Q22 2Q22 3Q22 4Q22 1Q23 Net Interest Income Net Interest Margin Net Interest Margin and Net Interest Income Net Interest Margin Source: Company Documents (Dollars in millions)
7 Time Deposits $285.7 Brokered Deposits $145.0 Noninterest-bearing Checking $433.8 Interest-bearing Checking $91.6 Money Market $785.5 Savings $47.7 Deposits by Type – $1.79B Deposit Portfolio Source: Company Documents; data as of March 31, 2023 (1) Excludes brokered deposits; dollars in thousands Deposit Type Composition % Average Balance Commercial 57% $131.9 Retail 43% $44.3 Account Composition (1) (Dollars in millions)
8 OO-CRE 29.2% NOO-CRE 28.3% C&I 16.4% C & D 13.8% Residential 11.9% Consumer & Other 0.4% Loans by Type $1.65B Loan Portfolio Source: Company Documents; data as of March 31, 2023 Loan Type Composition % Fixed 55% Variable 45% Loan Composition Loan Type Total Office Buildings $178.1 Convenience Stores $144.9 Industrial Warehouse / Heavy Manufacturing $107.2 Retail Warehouse / Light Manufacturing $103.0 Hotels / Motels $89.1 Commercial Retail Building $77.7 Multi-Family (5+) $74.8 Concentration Highlights(Dollars in millions)
9 $0.5 $3.9 $13.4 $3.4 $2.0 $2.2 - $1.6$2.1 $1.8 $3.0 $1.8 $2.0 $2.1 - $2.1 $0.5 $0.6 $4.2 $10.2 $2.9 $2.9 $2.9 0.2% 0.6% 2.5% 1.3% 0.4% 0.3% 0.3%$0.0 $5.0 $10.0 $15.0 $20.0 $25.0 2017 2018 2019 2020 2021 2022 1Q23 Nonaccruals ($mm) TDRs ($mm) OREO ($mm) NPAs / Loans + OREO $20.6 Nonperforming Assets by Type Asset Quality Source: 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 $6.6 $3.1 $6.3 $15.4 (0.10%) 0.02% 0.57% 0.07% 0.00% $6.9 0.02% 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 Proactive approach to resolving problem credits 1.02% 1.11% 1.11% 1.22% 1.19% 1.27% 1.28% 2017 2018 2019 2020 2021 2022 1Q23 0.05% $7.2 (1)
10 $567 $704 $840 $1,030 $963 $1,241 $1,645 $67 $9 2017 2018 2019 2020 2021 2022 1Q23 $1,587 $1,250 $622 $776 $951 $1,140 $1,556 $1,721 $1,789 2017 2018 2019 2020 2021 2022 1Q23 $736 $888 $1,095 $1,333 $1,774 $1,266 $2,134 $67 $9 2017 2018 2019 2020 2021 2022 1Q23 $2,045 Loans / DepositsTotal Deposits ($M) Total Assets ($M) Total Loans ($M) Balance Sheet Growth Source: Company Documents PPP Loans PPP Loans $1,783 90.2% 90.0% 88.1% 90.4% 80.3% 92.2% 91.9% 2017 2018 2019 2020 2021 2022 1Q23
11 Building Shareholder Value Our Strategic Focus Maintain focus on strong, profitable organic growth without compromising our credit quality Further grow our core deposit franchise Expand into new markets by hiring commercial bankers Focus on high growth markets and further expanding our Atlanta franchise Evaluate strategic acquisition opportunities 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
12 Near-Term Outlook Loan balances expected to continue to grow at a modest pace compared to 2022 Deposit balances expected to grow moderately Net interest income expected to increase modestly as loans grow, though this will be further offset by net interest margin declines NIM expected to decrease as deposit betas increase Core noninterest income expected to be fairly consistent with Q1 2023 Quarterly adjusted noninterest expense is expected to increase slightly Credit metrics are currently strong and future provision levels are expected to consider both current and evolving economic conditions, as well as changes in credit Balanced approach to capital deployment with flexibility to support organic loan growth trajectory and cash dividend while evaluating stock repurchases Well-positioned to capitalize on additional accretive acquisition opportunities
Appendix
14 Non-GAAP Financial Measures Reconciliations March 31, 2023 December 31, 2022 March 31, 2022 Three Months Ended Net income $ 7,671 $ 10,592 $ 4,557 Less: Net gain on sale of branches — 2,372 — Less: BOLI benefit claim — 774 — Less: Gain (loss) on securities 514 (86) (361) Less: Tax effect (123) (549) 94 Core net income $ 7,280 $ 8,081 $ 4,824 Average assets $ 2,057,005 $ 1,994,087 $ 1,787,015 Core return on average assets 1.44% 1.61% 1.09% Net income $ 7,671 $ 10,592 $ 4,557 Add: Provision 1,181 1,938 700 Less: Net gain on sale of branches — 2,372 — Less: BOLI benefit claim — 774 — Less: Gain (loss) on securities 514 (86) (361) Add: Income taxes 2,322 2,521 1,440 Pretax pre-provision core net income $ 10,660 $ 11,991 $ 7,058 Average assets $ 2,057,005 $ 1,994,087 $ 1,787,015 Pretax pre-provision core return on average assets 2.10% 2.39% 1.60%
15 Non-GAAP Financial Measures Reconciliations March 31, 2023 December 31, 2022 March 31, 2022 Three Months Ended 1) Assumes a 24.0% tax rate for the three months ended March 31, 2023 and December 31, 2022 and a 23.5% tax rate for the three months ended March 31, 2022. Net interest income $ 19,546 $ 20,884 $ 14,654 Add: Fully-taxable equivalent adjustments(1) 85 84 78 Net interest income - FTE $ 19,631 $ 20,968 $ 14,732 Net interest margin 4.07 % 4.38 % 3.53 % Effect of fully-taxable equivalent adjustments(1) 0.02 % 0.01 % 0.02 % Net interest margin - FTE 4.09 % 4.39 % 3.55 % Total stockholders' equity $ 189,663 $ 181,719 $ 169,189 Less: Intangible assets 18,006 18,088 18,296 Tangible common equity $ 171,657 $ 163,631 $ 150,893
16 Non-GAAP Financial Measures Reconciliations March 31, 2023 December 31, 2022 March 31, 2022 Three Months Ended Core net income $ 7,280 $ 8,081 $ 4,824 Diluted weighted average shares outstanding 9,044,490 8,932,585 9,065,364 Diluted core earnings per share $ 0.80 $ 0.90 $ 0.53 Tangible book value per share $ 19.68 $ 18.79 $ 17.25 Total assets at end of period $ 2,134,337 $ 2,045,204 $ 1,798,834 Less: Intangible assets 18,006 18,088 18,296 Adjusted assets at end of period $ 2,116,331 $ 2,027,116 $ 1,780,538 Total average shareholders equity $ 186,639 $ 176,769 $ 177,244 Less: Average intangible assets 18,055 18,134 18,337 Average tangible common equity $ 168,584 $ 158,635 $ 158,907 Net income to common shareholders $ 7,671 $ 10,592 $ 4,557 Return on average tangible common equity 18.45 % 26.49 % 11.63 % Average tangible common equity $ 168,584 $ 158,635 $ 158,907 Core net income $ 7,280 $ 8,081 $ 4,824 Core return on average tangible common equity 17.51 % 20.21 % 12.31 % Common shares outstanding at year or period end 8,723,763 8,706,920 8,749,878 Tangible common equity to tangible assets 8.11 % 8.07 % 8.47 %
17 Non-GAAP Financial Measures Reconciliations March 31, 2023 December 31, 2022 March 31, 2022 Three Months Ended Net interest income $ 19,546 $ 20,884 $ 14,654 Add: Noninterest income 1,786 4,603 1,333 Less: Gain on sale of branches — 2,600 — Less: BOLI benefit claim — 774 — Less: Gain (loss) on securities 514 (86) (361) Operating revenue $ 20,818 $ 22,199 $ 16,348 Expenses: Total noninterest expense $ 10,158 $ 10,436 $ 9,290 Less: Loss on sale of branches — 228 — Adjusted noninterest expenses $ 10,158 $ 10,208 $ 9,290 Core efficiency ratio 48.79 % 45.98 % 56.83 %