SEC Filing | Southern States Bancshares, Inc

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ssbk-20230724

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________

FORM 8-K

___________________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 24, 2023

___________________________

Southern States Bancshares, Inc.

(Exact Name of Registrant as Specified in its Charter)

___________________________


Alabama	001-40727	26-2518085
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
615 Quintard Ave.
Anniston, AL		36201
(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
Common Stock, $5.00 par value	SSBK	The NASDAQ Stock Market LLC

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:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item. 2.02 Results of Operations and Financial Condition.

On July 24, 2023, Southern States Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 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 second quarter ended June 30, 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						Earnings Release issued July 24, 2023 for the Second Quarter Ended June 30, 2023.
99.2						Southern States Bancshares, Inc. Presentation of Results for the Second Quarter Ended June 30 , 2023.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: July 25, 2023	SOUTHERN STATES BANCSHARES, INC.

	By:	/s/ Lynn Joyce
	Name:	Lynn Joyce
	Title:	Senior Executive Vice President and Chief Financial Officer

Document

https://cdn.kscope.io/67980462f34d5cf3545a65dd3052eeda-ssb_symbol1.jpg


SOUTHERN STATES BANCSHARES, INC.			615 Quintard Avenue / Anniston, AL 36201 / (256) 241-1092

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

Second Quarter 2023 Performance and Operational Highlights

•Net income of $8.8 million, or $0.98 per diluted share

•Core net income(1) of $7.1 million, or $0.79 per diluted share(1)

•Net interest income of $19.4 million, a decrease of $114,000 from the prior quarter

•Net interest margin (“NIM”) of 3.73%, down 34 basis points from the prior quarter

•NIM of 3.74% on a fully-taxable equivalent basis (“NIM - FTE”)(1)

•Return on average assets (“ROAA”) of 1.60%; return on average stockholders’ equity (“ROAE”) of 18.15%; and return on average tangible common equity (“ROATCE”)(1) of 20.01%

•Core ROAA(1) of 1.29%; and core ROATCE(1) of 16.13%

•Efficiency ratio of 51.00%

•Linked-quarter loan growth was 17.4% annualized

•Linked-quarter total deposit growth was 30.1% annualized and 20.7% annualized, net of brokered deposits

•Repurchased $405,000 of common stock, representing 19,202 shares at an average price of $21.07 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., July 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 $8.8 million, or $0.98 diluted earnings per share, for the second quarter of 2023. This compares to net income of $7.7 million, or $0.85 diluted earnings per share, for the first quarter of 2023, and net income of $5.2 million, or $0.59 diluted earnings per share, for the second quarter of 2022. The Company reported core net income of $7.1 million, or $0.79 diluted core earnings per share, for the second quarter of 2023. This compares to core net income of $7.3 million, or $0.80 diluted core earnings per share, for the first quarter of 2023, and core net income of $5.3 million, or $0.59 diluted core earnings per share, for the second quarter of 2022 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary

Mark Chambers, Chief Executive Officer and President of Southern States, said, “Our team continued to identify attractive lending opportunities and build deposits across our footprint, prudently growing and delivering strong earnings while maintaining our unwavering focus on risk management and excellent credit quality.’’

“Our total loans grew 4.3% from the prior quarter and 20.0% from the second quarter of 2022. We more than funded our loan growth with an increase in our core deposits as we continued to expand our customer base. Meanwhile, our non-performing loans as a percentage of the overall portfolio totaled just 0.06%, down from both the first quarter and a year earlier. We continue to build upon the momentum we generated over the past several years across some of the most economically resilient markets in the South.’’

“While our funding costs rose during the quarter alongside higher interest rates, impacting our net interest margin, we have robust liquidity and capital levels that give Southern States the financial strength to drive ongoing growth. We are well-positioned to cultivate new business through superior customer service, giving gives us confidence in our ability to deliver long-term value for our shareholders.”

Net Interest Income and Net Interest Margin


	Three Months Ended									% Change June 30, 2023 vs.
	June 30, 2023			March 31, 2023			June 30, 2022			March 31, 2023		June 30, 2022
	(Dollars in thousands)

Average interest-earning assets	$	2,091,998		$	1,947,957		$	1,710,022		7.4	%	22.3	%
Net interest income	$	19,432		$	19,546		$	16,365		(0.6)	%	18.7	%
Net interest margin	3.73		%	4.07		%	3.84		%	(34)	bps	(11)	bps

Net interest income for the second quarter of 2023 was $19.4 million, a decrease of 0.6% from $19.5 million for the first quarter of 2023. The decrease was primarily driven by the impact of higher interest rates paid on deposits, which more than offset an increase in the yield on interest-earning assets.

Relative to the second quarter of 2022, net interest income increased $3.1 million, or 18.7%. The increase was partially the result of improvement in the yield on interest-earning assets, which outpaced the rise in costs of deposits and other borrowings. In addition, we benefited from the significant organic growth in interest-earning assets year over year.

Net interest margin for the second quarter of 2023 was 3.73%, compared to 4.07% for the first quarter of 2023. The decrease was primarily due to higher interest rates paid on interest-bearing liabilities, which outpaced the increase in yield on interest-earning assets.

Relative to the second quarter of 2022, net interest margin decreased from 3.84%. The decrease was primarily due to a rapid increase in interest rates, which accelerated cost on interest-bearing liabilities at a faster pace than the yield received on interest-earning assets. A shift from noninterest-bearing deposits to interest-bearing deposits also had a negative impact on net interest margin.

Noninterest Income


	Three Months Ended						% Change June 30, 2023 vs.
	June 30, 2023		March 31, 2023		June 30, 2022		March 31, 2023		June 30, 2022
	(Dollars in thousands)

Service charges on deposit accounts	$	456	$	450	$	480	1.3	%	(5.0)	%
Swap fees	173		(4)		21		(4425.0)	%	723.8	%
SBA/USDA fees	66		134		93		(50.7)	%	(29.0)	%
Mortgage origination fees	188		100		213		88.0	%	(11.7)	%
Net gain (loss) on securities	(45)		514		(42)		(108.8)	%	7.1	%
Other operating income	6,024		592		639		917.6	%	842.7	%
Total noninterest income	$	6,862	$	1,786	$	1,404	284.2	%	388.7	%

Noninterest income for the second quarter of 2023 was $6.9 million, an increase of 284.2% from $1.8 million for the first quarter of 2023. The second quarter included $5.1 million in employee retention credits (“ERC”) and interest from the Federal government as well as $264,000 in fees related to ERC from a third party.

Relative to the second quarter of 2022, noninterest income increased 388.7% from $1.4 million. The second quarter of 2023 included $5.1 million in ERC and interest from the Federal government as well as $264,000 in fees related to ERC from a third party.

Noninterest Expense


	Three Months Ended						% Change June 30, 2023 vs.
	June 30, 2023		March 31, 2023		June 30, 2022		March 31, 2023		June 30, 2022
	(Dollars in thousands)

Salaries and employee benefits	$	7,863	$	6,311	$	5,982	24.6	%	31.4	%
Equipment and occupancy expenses	694		683		719		1.6	%	(3.5)	%
Data processing fees	646		593		570		8.9	%	13.3	%
Regulatory assessments	180		342		262		(47.4)	%	(31.3)	%
Other operating expenses	4,049		2,229		2,119		81.7	%	91.1	%
Total noninterest expenses	$	13,432	$	10,158	$	9,652	32.2	%	39.2	%

Noninterest expense for the second quarter of 2023 was $13.4 million, an increase of 32.2% from $10.2 million for the first quarter of 2023. The increase was primarily attributable to an increase in salaries and benefits, substantially as a result of one-time retirement related expenses of our former CEO in May 2023 and professional fees paid to a third party during the second quarter related to ERC.

Relative to the second quarter of 2022, noninterest expense increased 39.2% from $9.7 million. The increase was primarily attributable to an increase in salaries and benefits, substantially as a result of one-time retirement related expenses of our former CEO in May 2023 and professional fees paid to a third party during the second quarter related to ERC.

Loans and Credit Quality


	Three Months Ended									% Change June 30, 2023 vs.
	June 30, 2023			March 31, 2023			June 30, 2022			March 31, 2023		June 30, 2022
	(Dollars in thousands)

Gross loans	1,722,278			1,650,929			1,435,089			4.3	%	20.0	%
Unearned income	(5,766)			(5,614)			(4,884)			2.7	%	18.1	%
Loans, net of unearned income (“Loans”)	$	1,716,512		$	1,645,315		$	1,430,205		4.3	%	20.0	%
Average loans, net of unearned (“Average loans”)	$	1,676,816		$	1,609,564		$	1,359,320		4.2	%	23.4	%

Nonperforming loans (“NPL”)	$	1,010		$	1,646		$	3,550		(38.6)	%	(71.5)	%
Provision for credit losses	$	1,557		$	1,181		$	1,304		31.8	%	19.4	%
Allowance for credit losses (“ACL”)	$	21,385		$	19,855		$	16,807		7.7	%	27.2	%
Net charge-offs (recoveries)	$	27		$	197		$	(11)		(86.3)	%	(345.5)	%
NPL to gross loans	0.06		%	0.10		%	0.25		%
Net charge-offs (recoveries) to average loans(1)	0.01		%	0.05		%	0.00		%
ACL to loans	1.25		%	1.21		%	1.18		%

(1) Ratio is annualized.

Loans, net of unearned income, were $1.7 billion at June 30, 2023, up $71.2 million from March 31, 2023 and up $286.3 million from June 30, 2022. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.

Nonperforming loans totaled $1.0 million, or 0.06% of gross loans, at June 30, 2023, compared with $1.6 million, or 0.10% of gross loans, at March 31, 2023, and $3.6 million, or 0.25% of gross loans, at June 30, 2022. The $636,000 net decrease in nonperforming loans in the second quarter of 2023 was primarily attributable to a commercial real estate loan that was paid-off. The $2.5 million net decrease in nonperforming loans from June 30, 2022, was primarily attributable to a significant commercial real estate loan being moved back to accruing status, two loans that were charged-off and one loan that was paid-off.

The Company recorded a provision for credit losses of $1.6 million for the second quarter of 2023, compared to $1.2 million for the first quarter of 2023. The increase in provision was primarily due to changes in our qualitative economic factors and modest loan growth for the quarter.

Net charge-offs for the second quarter of 2023 were $27,000, or 0.01% of average loans on an annualized basis, compared to net charge-offs of $197,000, or 0.05% of average loans on an annualized basis, for the first quarter of 2023, and net recoveries of $11,000, or 0.00% of average loans on an annualized basis, for the second quarter of 2022.

The Company’s allowance for credit losses was 1.25% of total loans and 2117.33% of nonperforming loans at June 30, 2023, compared with 1.21% of total loans and 1206.26% of nonperforming loans at March 31, 2023. Allowance for credit losses on unfunded commitments was $1.5 million at June 30, 2023.

Deposits


	Three Months Ended									% Change June 30, 2023 vs.
	June 30, 2023			March 31, 2023			June 30, 2022			March 31, 2023		June 30, 2022
	(Dollars in thousands)

Noninterest-bearing deposits	$	449,433		$	433,832		$	512,598		3.6	%	(12.3)	%
Interest-bearing deposits	1,474,478			1,355,659			1,132,348			8.8	%	30.2	%
Total deposits	$	1,923,911		$	1,789,491		$	1,644,946		7.5	%	17.0	%

Uninsured deposits	$	553,084		$	567,709		$	660,115		(2.6)	%	(16.2)	%
Uninsured deposits to total deposits	28.75		%	31.72		%	40.13		%
Noninterest deposits to total deposits	23.36		%	24.24		%	31.16		%

Total deposits were $1.9 billion at June 30, 2023, up from $1.8 billion at March 31, 2023 and $1.6 billion at June 30, 2022. The $134.4 million increase in total deposits in the second quarter was due to an increase of $118.8 million in interest-bearing deposits and by a $15.6 million increase in noninterest-bearing deposits. Included in the increase was $49.1 million in brokered deposits.

Capital


	June 30, 2023				March 31, 2023				June 30, 2022
	Company		Bank		Company		Bank		Company		Bank

Tier 1 capital ratio to average assets	8.70	%	11.82	%	8.89	%	12.19	%	8.78	%	10.97	%
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio	9.11	%	12.37	%	9.00	%	12.34	%	8.92	%	11.14	%
Tier 1 capital ratio	9.11	%	12.37	%	9.00	%	12.34	%	8.92	%	11.14	%
Total capital ratio	14.42	%	13.47	%	14.41	%	13.38	%	12.58	%	12.09	%

As of June 30, 2023, total stockholders’ equity was $197.2 million, up from $189.7 million at March 31, 2023. The increase of $7.6 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 and the inflationary environment. 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
(Dollars in thousands, except share and per share amounts)

	Three Months Ended									Six Months Ended
	June 30, 2023			March 31, 2023			June 30, 2022			June 30, 2023			June 30, 2022

Results of Operations
Interest income	$	32,185		$	28,699		$	17,752		$	60,884		$	33,624
Interest expense	12,753			9,153			1,387			21,906			2,605
Net interest income	19,432			19,546			16,365			38,978			31,019
Provision for credit losses	1,557			1,181			1,304			2,738			2,004
Net interest income after provision	17,875			18,365			15,061			36,240			29,015
Noninterest income	6,862			1,786			1,404			8,648			2,737
Noninterest expense	13,432			10,158			9,652			23,590			18,942
Income tax expense	2,549			2,322			1,590			4,871			3,030
Net income	$	8,756		$	7,671		$	5,223		$	16,427		$	9,780
Core net income(1)	$	7,058		$	7,280		$	5,255		$	14,339		$	10,086

Share and Per Share Data
Shares issued and outstanding	8,738,814			8,723,763			8,691,620			8,738,814			8,691,620
Weighted average shares outstanding:
Basic	8,763,635			8,762,450			8,740,295			8,763,046			8,818,327
Diluted	8,950,847			9,044,490			8,894,577			9,001,600			8,960,565
Earnings per share:
Basic	$	1.00		$	0.87		$	0.60		$	1.87		$	1.11
Diluted	$	0.98		$	0.85		$	0.59		$	1.82		$	1.09
Core - diluted(1)	$	0.79		$	0.80		$	0.59		$	1.59		$	1.13
Book value per share	$	22.57		$	21.74		$	19.32		$	22.57		$	19.32
Tangible book value per share(1)	$	20.52		$	19.68		$	17.23		$	20.52		$	17.23
Cash dividends per common share	$	0.09		$	0.09		$	0.09		$	0.18		$	0.18

Performance and Financial Ratios
ROAA	1.60		%	1.51		%	1.15		%	1.56		%	1.09		%
ROAE	18.15		%	16.67		%	12.32		%	17.43		%	11.36		%
Core ROAA(1)	1.29		%	1.44		%	1.16		%	1.36		%	1.13		%
ROATCE(2)	20.01		%	18.45		%	13.80		%	19.25		%	12.70		%
Core ROATCE(1)	16.13		%	17.51		%	13.89		%	16.80		%	13.10		%
NIM	3.73		%	4.07		%	3.84		%	3.89		%	3.69		%
NIM - FTE(2)	3.74		%	4.09		%	3.86		%	3.90		%	3.70		%
Net interest spread	2.86		%	3.33		%	3.67		%	3.08		%	3.53		%
Yield on loans	6.61		%	6.38		%	4.80		%	6.50		%	4.74		%
Yield on interest-earning assets	6.17		%	5.97		%	4.16		%	6.08		%	4.00		%
Cost of interest-bearing liabilities	3.31		%	2.64		%	0.49		%	3.00		%	0.47		%
Cost of funds(2)	2.58		%	2.01		%	0.34		%	2.31		%	0.33		%
Cost of interest-bearing deposits	3.12		%	2.42		%	0.34		%	2.79		%	0.34		%
Cost of total deposits	2.38		%	1.81		%	0.23		%	2.11		%	0.23		%
Noninterest deposits to total deposits	23.36		%	24.24		%	31.16		%	23.36		%	31.16		%
Core deposits to total deposits	86.43		%	88.57		%	94.86		%	86.43		%	94.86		%
Uninsured deposits to total deposits	28.75		%	31.72		%	40.13		%	28.75		%	40.13		%
Total loans to total deposits	89.22		%	91.94		%	86.95		%	89.22		%	86.95		%
Efficiency ratio	51.00		%	48.79		%	54.19		%	50.02		%	55.45		%
Core efficiency ratio(1)	49.96		%	48.79		%	54.19		%	49.38		%	55.45		%

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

(2) Includes total interest-bearing liabilities and noninterest deposits.


SELECT FINANCIAL DATA
(Dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30, 2023			March 31, 2023			June 30, 2022			June 30, 2023			June 30, 2022

Financial Condition (ending)
Total loans	$	1,716,512		$	1,645,315		$	1,430,205		$	1,716,512		$	1,430,205
Total securities	182,717			183,197			171,411			182,717			171,411
Total assets	2,277,803			2,135,622			1,902,495			2,277,803			1,902,495
Total noninterest bearing deposits	449,433			433,832			512,598			449,433			512,598
Total core deposits(1)	1,662,855			1,584,915			1,560,390			1,662,855			1,560,390
Total deposits	1,923,911			1,789,491			1,644,946			1,923,911			1,644,946
Total borrowings	131,472			131,372			72,013			131,472			72,013
Total liabilities	2,080,554			1,945,959			1,734,548			2,080,554			1,734,548
Total shareholders’ equity	197,249			189,663			167,947			197,249			167,947

Financial Condition (average)
Total loans	$	1,676,816		$	1,609,564		$	1,359,320		$	1,643,376		$	1,319,090
Total securities	196,731			192,348			178,527			194,552			170,151
Total other interest-earning assets	218,451			146,045			172,175			182,447			207,990
Total interest-bearing assets	2,091,998			1,947,957			1,710,022			2,020,375			1,697,231
Total assets	2,200,843			2,057,005			1,821,437			2,129,328			1,804,321
Total noninterest-bearing deposits	438,987			438,735			502,728			438,862			508,560
Total interest-bearing deposits	1,412,047			1,300,632			1,059,362			1,356,648			1,041,728
Total deposits	1,851,034			1,739,367			1,562,090			1,795,510			1,550,288
Total borrowings	131,411			104,901			72,066			118,229			65,506
Total interest-bearing liabilities	1,543,458			1,405,533			1,131,428			1,474,877			1,107,234
Total shareholders’ equity	193,516			186,639			170,038			190,096			173,621

Asset Quality
Nonperforming loans	$	1,010		$	1,646		$	3,550		$	1,010		$	3,550
Other real estate owned (“OREO”)	$	2,870		$	2,930		$	2,930		$	2,870		$	2,930
Nonperforming assets (“NPA”)	$	3,880		$	4,576		$	6,480		$	3,880		$	6,480
Net charge-offs (recovery) to average loans(2)	0.01		%	0.05		%	—		%	0.03		%	0.01		%
Provision for credit losses to average loans(2)	0.37		%	0.30		%	0.38		%	0.34		%	0.31		%
ACL to loans	1.25		%	1.21		%	1.18		%	1.25		%	1.18		%
ACL to gross loans	1.24		%	1.20		%	1.17		%	1.24		%	1.17		%
ACL to NPL	2117.33		%	1206.26		%	473.44		%	2117.33		%	473.44		%
NPL to loans	0.06		%	0.10		%	0.25		%	0.06		%	0.25		%
NPL to gross loans	0.06		%	0.10		%	0.25		%	0.06		%	0.25		%
NPA to gross loans and OREO	0.22		%	0.28		%	0.45		%	0.22		%	0.45		%
NPA to total assets	0.17		%	0.21		%	0.34		%	0.17		%	0.34		%

Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets	8.66		%	8.88		%	8.83		%	8.66		%	8.83		%
Tangible common equity to tangible assets(3)	7.94		%	8.11		%	7.95		%	7.94		%	7.95		%
Tier 1 capital ratio to average assets	8.70		%	8.89		%	8.78		%	8.70		%	8.78		%
Risk-based capital ratios:
CET1 capital ratio	9.11		%	9.00		%	8.92		%	9.11		%	8.92		%
Tier 1 capital ratio	9.11		%	9.00		%	8.92		%	9.11		%	8.92		%
Total capital ratio	14.42		%	14.41		%	12.58		%	14.42		%	12.58		%

(1) We define core deposits as total deposits excluding brokered deposits and time deposits greater than $250,000.

(2) Ratio is annualized.

(3) 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
(Dollars in thousands)

	June 30, 2023		March 31, 2023		December 31, 2022		June 30, 2022
	(Unaudited)		(Unaudited)		(Audited)		(Unaudited)

Assets
Cash and due from banks	$	21,299	$	17,245	$	15,260	$	22,167
Interest-bearing deposits in banks	159,818		99,541		90,198		95,156
Federal funds sold	84,812		76,010		63,041		73,024
Total cash and cash equivalents	265,929		192,796		168,499		190,347

Securities available for sale, at fair value	163,075		163,550		155,544		151,749
Securities held to maturity, at amortized cost	19,642		19,647		19,652		19,662
Other equity securities, at fair value	3,762		3,806		4,444		6,958
Restricted equity securities, at cost	3,862		3,862		3,134		2,825
Loans held for sale	1,589		2,376		1,047		2,709

Loans, net of unearned income	1,716,512		1,645,315		1,587,164		1,430,205
Less allowance for credit losses	21,385		19,855		20,156		16,807
Loans, net	1,695,127		1,625,460		1,567,008		1,413,398

Premises and equipment, net	26,957		27,098		27,345		28,467
Accrued interest receivable	7,372		7,077		6,963		4,839
Bank owned life insurance	29,521		29,350		29,186		29,509
Annuities	15,359		15,489		15,478		15,540
Foreclosed assets	2,870		2,930		2,930		2,930
Goodwill	16,862		16,862		16,862		16,862
Core deposit intangible	1,062		1,144		1,226		1,368
Other assets	24,814		24,175		25,886		15,332

Total assets	$	2,277,803	$	2,135,622	$	2,045,204	$	1,902,495

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	449,433	$	433,832	$	460,977	$	512,598
Interest-bearing	1,474,478		1,355,659		1,259,766		1,132,348
Total deposits	1,923,911		1,789,491		1,720,743		1,644,946

Other borrowings	(13)		(16)		(19)		—
FHLB advances	45,000		45,000		31,000		25,000
Subordinated notes	86,485		86,388		86,314		47,013
Accrued interest payable	1,063		844		584		88
Other liabilities	24,108		24,252		24,863		17,501

Total liabilities	2,080,554		1,945,959		1,863,485		1,734,548

Stockholders' equity:
Common stock	43,830		43,798		43,714		43,458
Capital surplus	77,101		77,053		76,785		75,597
Retained earnings	88,603		80,642		73,764		58,039
Accumulated other comprehensive loss	(10,799)		(9,846)		(11,048)		(8,439)
Unvested restricted stock	(709)		(965)		(477)		(708)
Vested restricted stock units	(777)		(1,019)		(1,019)		—

Total stockholders' equity	197,249		189,663		181,719		167,947

Total liabilities and stockholders' equity	$	2,277,803	$	2,135,622	$	2,045,204	$	1,902,495


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

	Three Months Ended						Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Interest income:
Loans, including fees	$	27,630	$	25,335	$	16,265	$	52,965	$	31,031
Taxable securities	1,641		1,383		788		3,024		1,407
Nontaxable securities	228		291		309		519		608
Other interest and dividends	2,686		1,690		390		4,376		578
Total interest income	32,185		28,699		17,752		60,884		33,624

Interest expense:
Deposits	10,998		7,768		889		18,766		1,762
Other borrowings	1,755		1,385		498		3,140		843
Total interest expense	12,753		9,153		1,387		21,906		2,605

Net interest income	19,432		19,546		16,365		38,978		31,019
Provision for credit losses	1,557		1,181		1,304		2,738		2,004
Net interest income after provision for credit losses	17,875		18,365		15,061		36,240		29,015

Noninterest income:
Service charges on deposit accounts	456		450		480		906		925
Swap fees	173		(4)		21		169		36
SBA/USDA fees	66		134		93		200		481
Mortgage origination fees	188		100		213		288		499
Net gain (loss) on securities	(45)		514		(42)		469		(403)
Other operating income	6,024		592		639		6,616		1,199
Total noninterest income	6,862		1,786		1,404		8,648		2,737

Noninterest expenses:
Salaries and employee benefits	7,863		6,311		5,982		14,174		11,707
Equipment and occupancy expenses	694		683		719		1,377		1,424
Data processing fees	646		593		570		1,239		1,134
Regulatory assessments	180		342		262		522		525
Other operating expenses	4,049		2,229		2,119		6,278		4,152
Total noninterest expenses	13,432		10,158		9,652		23,590		18,942

Income before income taxes	11,305		9,993		6,813		21,298		12,810

Income tax expense	2,549		2,322		1,590		4,871		3,030

Net income	$	8,756	$	7,671	$	5,223	$	16,427	$	9,780

Basic earnings per share	$	1.00	$	0.87	$	0.60	$	1.87	$	1.11

Diluted earnings per share	$	0.98	$	0.85	$	0.59	$	1.82	$	1.09


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

	Three Months Ended
	June 30, 2023						March 31, 2023						June 30, 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)	$	1,676,816	$	27,630	6.61	%	$	1,609,564	$	25,335	6.38	%	$	1,359,320	$	16,265	4.80	%
Taxable securities	151,107		1,641		4.36	%	139,516		1,383		4.02	%	121,677		788		2.60	%
Nontaxable securities	45,624		228		2.00	%	52,832		291		2.24	%	56,850		309		2.18	%
Other interest-earnings assets	218,451		2,686		4.93	%	146,045		1,690		4.69	%	172,175		390		0.91	%
Total interest-earning assets	$	2,091,998	$	32,185	6.17	%	$	1,947,957	$	28,699	5.97	%	$	1,710,022	$	17,752	4.16	%
Allowance for credit losses	(20,154)						(20,493)						(15,815)
Noninterest-earning assets	128,999						129,541						127,230
Total Assets	$	2,200,843					$	2,057,005					$	1,821,437

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts	92,245		20		0.09	%	93,951		20		0.08	%	114,743		27		0.09	%
Savings and money market accounts	845,742		6,872		3.26	%	806,001		5,040		2.54	%	735,845		625		0.34	%
Time deposits	474,060		4,106		3.47	%	400,680		2,708		2.74	%	208,774		237		0.46	%
FHLB advances	45,000		529		4.72	%	18,578		159		3.47	%	25,000		21		0.33	%
Other borrowings	86,411		1,226		5.69	%	86,323		1,226		5.76	%	47,066		477		4.07	%
Total interest-bearing liabilities	$	1,543,458	$	12,753	3.31	%	$	1,405,533	$	9,153	2.64	%	$	1,131,428	$	1,387	0.49	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	438,987					$	438,735					$	502,728
Other liabilities	24,882						26,098						17,243
Total noninterest-bearing liabilities	463,869						464,833						519,971
Stockholders’ Equity	193,516						186,639						170,038
Total Liabilities and Stockholders’ Equity	$	2,200,843					$	2,057,005					$	1,821,437

Net interest income			$	19,432					$	19,546					$	16,365
Net interest spread(2)					2.86	%					3.33	%					3.67	%
Net interest margin(3)					3.73	%					4.07	%					3.84	%
Net interest margin - FTE(4)(5)					3.74	%					4.09	%					3.86	%
Cost of funds(6)					2.58	%					2.01	%					0.34	%
Cost of interest-bearing deposits					3.12	%					2.42	%					0.34	%
Cost of total deposits					2.38	%					1.81	%					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.

(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.

(6)Includes total interest-bearing liabilities and noninterest deposits.


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

	Six Months Ended
	June 30, 2023						June 30, 2022
	Average Balance		Interest		Yield/Rate		Average Balance		Interest		Yield/Rate
Assets:
Interest-earning assets:
Loans, net of unearned income(1)	$	1,643,376	$	52,965	6.50	%	$	1,319,090	$	31,031	4.74	%
Taxable securities	145,344		3,024		4.20	%	114,289		1,407		2.48	%
Nontaxable securities	49,208		519		2.13	%	55,862		608		2.19	%
Other interest-earnings assets	182,447		4,376		4.84	%	207,990		578		0.56	%
Total interest-earning assets	$	2,020,375	$	60,884	6.08	%	$	1,697,231	$	33,624	4.00	%
Allowance for credit losses	(20,315)						(15,430)
Noninterest-earning assets	129,268						122,520
Total Assets	$	2,129,328					$	1,804,321

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts	93,093		40		0.09	%	112,874		53		0.09	%
Savings and money market accounts	825,982		11,911		2.91	%	705,841		1,217		0.35	%
Time deposits	437,573		6,815		3.14	%	223,013		492		0.45	%
FHLB advances	31,862		688		4.35	%	25,472		43		0.34	%
Other borrowings	86,367		2,452		5.73	%	40,034		800		4.03	%
Total interest-bearing liabilities	$	1,474,877	$	21,906	3.00	%	$	1,107,234	$	2,605	0.47	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	438,862					$	508,560
Other liabilities	25,493						14,906
Total noninterest-bearing liabilities	$	464,355					$	523,466
Stockholders’ Equity	190,096						173,621
Total Liabilities and Stockholders’ Equity	$	2,129,328					$	1,804,321

Net interest income			$	38,978					$	31,019
Net interest spread(2)					3.08	%					3.53	%
Net interest margin(3)					3.89	%					3.69	%
Net interest margin - FTE(4)(5)					3.90	%					3.70	%
Cost of funds(6)					2.31	%					0.33	%
Cost of interest-bearing deposits					2.79	%					0.34	%
Cost of total deposits					2.11	%					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.

(5)Refer to “Reconciliation of Non-GAAP Financial Measures”.

(6)Includes total interest-bearing liabilities and noninterest deposits.


LOAN COMPOSITION
(Dollars in thousands)

	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
	Amount		% of gross		Amount		% of gross		Amount		% of gross		Amount		% of gross

Real estate mortgages:
Construction and development	$	228,236	13.3	%	$	227,560	13.8	%	$	255,736	16.1	%	$	185,164	12.9	%
Residential	214,897		12.5	%	196,923		11.9	%	167,891		10.5	%	153,275		10.7	%
Commercial	1,011,815		58.7	%	948,251		57.5	%	904,872		56.8	%	867,815		60.4	%
Commercial and industrial	259,195		15.0	%	270,825		16.4	%	256,553		16.1	%	219,284		15.3	%
Consumer and other	8,135		0.5	%	7,370		0.4	%	7,655		0.5	%	9,551		0.7	%
Gross loans	1,722,278		100.0	%	1,650,929		100.0	%	1,592,707		100.0	%	1,435,089		100.0	%
Unearned income	(5,766)				(5,614)				(5,543)				(4,884)
Loans, net of unearned income	1,716,512				1,645,315				1,587,164				1,430,205
Allowance for credit losses	(21,385)				(19,855)				(20,156)				(16,807)
Loans, net	$	1,695,127			$	1,625,460			$	1,567,008			$	1,413,398


DEPOSIT COMPOSITION
(Dollars in thousands)

	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
	Amount		% of total		Amount		% of total		Amount		% of total		Amount		% of total


Noninterest-bearing transaction	$	449,433	23.3	%	$	433,833	24.2	%	$	460,977	26.8	%	$	512,598	31.2	%
Interest-bearing transaction	922,835		48.0	%	877,166		49.0	%	837,127		48.6	%	836,230		50.8	%
Savings	41,574		2.2	%	47,742		2.7	%	49,235		2.9	%	67,583		4.1	%
Time deposits, $250,000 and under	438,228		22.8	%	366,271		20.5	%	307,145		17.8	%	188,682		11.5	%
Time deposits, over $250,000	71,841		3.7	%	64,479		3.6	%	66,259		3.9	%	39,853		2.4	%
Total deposits	$	1,923,911	100.0	%	$	1,789,491	100.0	%	$	1,720,743	100.0	%	$	1,644,946	100.0	%


Nonperfoming Assets
(Dollars in thousands)

	June 30, 2023			March 31, 2023			December 31, 2022			June 30, 2022


Nonaccrual loans	$	1,010		$	1,646		$	2,245		$	3,550
Past due loans 90 days or more and still accruing interest	—			—			—			—
Total nonperforming loans	1,010			1,646			2,245			3,550
OREO	2,870			2,930			2,930			2,930

Total nonperforming assets	$	3,880		$	4,576		$	5,175		$	6,480

Troubled debt restructured loans – nonaccrual(1)	724			805			832			676
Troubled debt restructured loans – accruing	1,328			1,272			1,292			1,323
Total troubled debt restructured loans	$	2,052		$	2,077		$	2,124		$	1,999

Allowance for credit losses	$	21,385		$	19,855		$	20,156		$	16,807
Loans, net of unearned income at the end of the period	$	1,716,512		$	1,645,315		$	1,587,164		$	1,430,205
Gross loans outstanding at the end of period	$	1,722,278		$	1,650,929		$	1,592,707		$	1,435,089
Total assets	$	2,277,803		$	2,135,622		$	2,045,204		$	1,902,495
Allowance for credit losses to nonperforming loans	2117.33		%	1206.26		%	897.82		%	473.44		%
Nonperforming loans to loans, net of unearned income	0.06		%	0.10		%	0.14		%	0.25		%
Nonperforming loans to gross loans	0.06		%	0.10		%	0.14		%	0.25		%
Nonperforming assets to gross loans and OREO	0.22		%	0.28		%	0.32		%	0.45		%
Nonperforming assets to total assets	0.17		%	0.21		%	0.25		%	0.34		%

Nonaccrual loans by category:
Real estate mortgages:
Construction & Development	$	33		$	64		$	67		$	73
Residential Mortgages	297			267			565			563
Commercial Real Estate Mortgages	671			1,263			1,278			2,135
Commercial & Industrial	9			51			312			768
Consumer and other	—			1			23			11
Total	$	1,010		$	1,646		$	2,245		$	3,550

(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 Credit Losses
(Dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Average loans, net of unearned income	$	1,676,816	$	1,609,564	$	1,359,320	$	1,643,376	$	1,319,090
Loans, net of unearned income	$	1,716,512	$	1,645,315	$	1,430,205	$	1,716,512	$	1,430,205
Gross loans	$	1,722,278	$	1,650,929	$	1,435,089	$	1,722,278	$	1,435,089
Allowance for credit losses at beginning of the period	$	19,855	$	20,156	$	15,492	$	20,156	$	14,844
Impact of adoption of ASC 326	$	—	$	(1,285)	$	—	$	(1,285)	$	—
Charge-offs:
Construction and development	—		—		7		—		66
Residential	—		—		—		—		7
Commercial	—		—		—		—		—
Commercial and industrial	44		218		—		262		—
Consumer and other	—		6		1		6		7
Total charge-offs	44		224		8		268		80
Recoveries:
Construction and development	—		—		—		—		—
Residential	17		11		18		28		35
Commercial	—		—		—		—		—
Commercial and industrial	—		14		—		14		—
Consumer and other	—		2		1		2		4
Total recoveries	17		27