EX-99.1 2 a3q23earningsrelease.htm EX-99.1 Document

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SOUTHERN STATES
 BANCSHARES, INC.
615 Quintard Avenue / Anniston, AL 36201 / (256) 241-1092
Southern States Bancshares, Inc. Announces Third Quarter 2023 Financial Results
Third Quarter 2023 Performance and Operational Highlights
•Core net income(1) of $9.6 million, or $1.06 per diluted share(1)
•Net income of $6.6 million, or $0.73 per diluted share
•Net interest income of $20.7 million, an increase of $1.3 million from the prior quarter
•Net interest margin (“NIM”) of 3.78%, up 5 basis points from the prior quarter
•NIM of 3.79% on a fully-taxable equivalent basis (“NIM - FTE”)(1)
•Return on average assets (“ROAA”) of 1.15%; return on average stockholders’ equity (“ROAE”) of 12.96%; and return on average tangible common equity (“ROATCE”)(1) of 14.21%
•Core ROAA(1) of 1.66%; and core ROATCE(1) of 20.50%
•Efficiency ratio of 48.01%; and core efficiency ratio of 42.79%
•Linked-quarter loan growth was 13.3% annualized
•Linked-quarter total deposits declined 1.5% annualized, primarily due to a reduction in brokered deposits
•Linked-quarter total deposits, excluding brokered deposits, increased 4.2% annualized from the prior quarter
(1) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
ANNISTON, Ala., October 23, 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 $6.6 million, or $0.73 diluted earnings per share, for the third quarter of 2023. This compares to net income of $8.8 million, or $0.98 diluted earnings per share, for the second quarter of 2023, and net income of $6.7 million, or $0.75 diluted earnings per share, for the third quarter of 2022. The Company reported core net income of $9.6 million, or $1.06 diluted core earnings per share, for the third quarter of 2023. This compares to core net income of $7.1 million, or $0.79 diluted core earnings per share, for the second quarter of 2023, and core net income of $6.8 million, or $0.77 diluted core earnings per share, for the third quarter of 2022 (see “Reconciliation of Non-GAAP Financial Measures”).




CEO Commentary
Mark Chambers, Chief Executive Officer and President of Southern States, said, “Our business development teams continued to identify compelling opportunities in the third quarter, driving annualized sequential loan growth of 13.3% and maintaining the strong momentum we’ve generated over the past two years as we meet steady loan demand across our economically dynamic footprint.”
“Our growth positioned the bank to capitalize on higher rates, with increased yields on earning assets driving a nearly 7% gain in net interest income from the second quarter and from a year earlier, bolstering our core earnings. As we pursue new business, we remain committed to diligent underwriting and robust credit quality. Our non-performing loans as a percentage of the overall loan portfolio totaled just 0.06%, consistent with the prior quarter.”
“Importantly, we continue to fund our loan growth with a healthy deposit franchise. Our funding costs did increase during the third quarter to remain competitive in terms of price amid higher rates to keep our total deposit levels relatively stable. However, this was more than offset by our loan growth and gains in yields, and our net interest margin expanded by 5 basis points in the quarter as a result.”

During the second quarter of 2023, the Company received a $5.1 million employee retention credit (“ERC”). The second quarter of 2023 included the $5.1 million ERC in noninterest income, and also included $1.2 million in noninterest expense for professional fees paid by the Company in obtaining the ERC. After reviewing the revised IRS guidelines pertaining to ERC issued during the third quarter, the Company determined to return the full $5.1 million ERC to the IRS and has recorded a payable. The Company will also receive a refund of all professional fees totaling $1.2 million related to ERC. Accordingly, the third quarter of 2023 reflects a $5.1 million reduction in noninterest income and a $1.2 million reduction in noninterest expense related to the return of the ERC. This was deemed a change in circumstance between the second and third quarters of 2023. The following table for the three months ended June 30, 2023 and the three months ended September 30, 2023 eliminates the effect of the ERC. There is no impact on the nine months ended September 30, 2023.

Results excluding ERC
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2023
Results of Operations
Interest income$35,204 $32,185 $96,088 
Interest expense14,473 12,753 36,379 
Net interest income20,731 19,432 59,709 
Provision for credit losses773 1,557 3,511 
Net interest income after provision19,958 17,875 56,198 
Noninterest income2,206 1,762 5,755 
Noninterest expense9,812 12,189 32,159 
Income tax expense2,843 1,572 6,738 
Net income$9,509 $5,876 $23,056 
Per Share Data
Earnings per share:
  Basic$1.07 $0.67 $2.62 
  Diluted$1.05 $0.66 $2.56 
Performance and Financial Ratios
ROAA1.65 %1.07 %1.41 %
ROAE18.59 %12.18 %15.85 %
Efficiency ratio42.76 %57.39 %49.47 %




Net Interest Income and Net Interest Margin
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Three Months Ended
% Change September 30, 2023 vs.
September 30,
2023		June 30,
2023		September 30,
2022		June 30,
2023		September 30,
2022
(Dollars in thousands)
Average interest-earning assets$2,175,103 $2,091,998 $1,859,104 4.0 %17.0 %
Net interest income$20,731 $19,432 $19,435 6.7 %6.7 %
Net interest margin3.78 %3.73 %4.15 %5  bps(37) bps
Net interest income for the third quarter of 2023 was $20.7 million, an increase of 6.7% from $19.4 million for the second quarter of 2023. The increase was primarily driven by the impact of a higher yield on interest-earning assets due to both growth and higher interest rates, which more than offset a higher cost of interest-bearing deposits primarily due to rising interest rates.

Relative to the third quarter of 2022, net interest income increased $1.3 million, or 6.7%. The increase was primarily the result of a sharp improvement in the yield on interest-earning assets due to both year over year growth and higher interest rates, which outpaced the accelerated rise in costs on interest-bearing liabilities due to a rapid rise in interest rates, coupled with growth in interest-bearing liabilities. A portion of the growth in interest-bearing deposits is due to migration from noninterest-bearing into interest-bearing deposits.

Net interest margin for the third quarter of 2023 was 3.78%, compared to 3.73% for the second quarter of 2023. The increase was primarily due to an increase in the average balance and yield on interest-earning assets, which outpaced the combined effect of higher average balances and cost of interest-bearing deposits.

Relative to the third quarter of 2022, net interest margin decreased from 4.15%. The decrease was primarily due to a rapid increase in interest rates, which accelerated the cost on interest-bearing liabilities at a faster pace than the yield received on interest-earning assets. A shift from noninterest-bearing deposits into interest-bearing deposits also had a negative impact on net interest margin.

Noninterest Income
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Three Months Ended
% Change September 30, 2023 vs.
September 30,
2023		June 30,
2023		September 30,
2022		June 30,
2023		September 30,
2022
(Dollars in thousands)
Service charges on deposit accounts$442 $456 $508 (3.1)%(13.0)%
Swap fees453 173 11 161.8 %4018.2 %
SBA/USDA fees74 66 95 12.1 %(22.1)%
Mortgage origination fees158 188 218 (16.0)%(27.5)%
Net loss on securities
(12)(45)(143)(73.3)%(91.6)%
Employee retention credit and related revenue(5,100)5,100 — N/AN/A
Other operating income1,091 924 650 18.1 %67.8 %
   Total noninterest income$(2,894)$6,862 $1,339 (142.2)%(316.1)%
Noninterest income for the third quarter of 2023 was reported as a $2.9 million net expense, compared to noninterest income of $6.9 million for the second quarter of 2023. The change in ERC eligibility between the second and third quarters of 2023 is substantially the reason for the significant variation. This decrease was partially offset by a $280,000 increase in swap fees during the third quarter of 2023.






Relative to the third quarter of 2022, noninterest income decreased 316.1% from $1.3 million. The decrease was substantially due to the aforementioned return of ERC. This decrease was partially offset by a $280,000 increase in swap fees during the third quarter of 2023 and $132,000 in dividend income realized on equity securities.

Noninterest Expense
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Three Months Ended
% Change September 30, 2023 vs.
September 30,
2023		June 30,
2023		September 30,
2022		June 30,
2023		September 30,
2022
(Dollars in thousands)
Salaries and employee benefits$5,752 $7,863 $6,152 (26.8)%(6.5)%
Equipment and occupancy expenses718 694 764 3.5 %(6.0)%
Data processing fees650 646 599 0.6 %8.5 %
Regulatory assessments322 180 235 78.9 %37.0 %
Professional fees related to ERC(1,243)1,243 — N/AN/A
Other operating expenses2,370 2,806 2,487 (15.5)%(4.7)%
   Total noninterest expenses$8,569 $13,432 $10,237 (36.2)%(16.3)%
Noninterest expense for the third quarter of 2023 was $8.6 million, a decrease of 36.2% from $13.4 million for the second quarter of 2023. The decrease was substantially attributable to a decrease in salaries and benefits as a result of significantly less retirement expenses during the third quarter of 2023, in addition to several open positions. Additionally, the change in ERC eligibility resulted in a $1.2 million refund of professional fees related to the ERC. Provision for unfunded loan commitments decreased $181,000 during the third quarter of 2023.

Relative to the third quarter of 2022, noninterest expense decreased 16.3% from $10.2 million. The decrease was substantially due to the aforementioned refund of professional fees related to the ERC, a decrease in salaries and benefits as a result of a reduction in employees and a net reduction in forgery/fraud losses during the third quarter of 2023.

Loans and Credit Quality
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Three Months Ended
% Change September 30, 2023 vs.
September 30,
2023		June 30,
2023		September 30,
2022		June 30,
2023		September 30,
2022
(Dollars in thousands)
Gross loans1,779,846 1,722,278 1,530,129 3.3 %16.3 %
Unearned income(5,698)(5,766)(5,139)(1.2)%10.9 %
Loans, net of unearned income (“Loans”)$1,774,148 $1,716,512 $1,524,990 3.4 %16.3 %
Average loans, net of unearned (“Average loans”)$1,740,582 $1,676,816 $1,480,735 3.8 %17.5 %
Nonperforming loans (“NPL”)$1,082 $1,010 $3,950 7.1 %(72.6)%
Provision for credit losses$773 $1,557 $1,663 (50.4)%(53.5)%
Allowance for credit losses (“ACL”)$22,181 $21,385 $18,423 3.7 %20.4 %
Net charge-offs (recoveries)$(23)$27 $47 (185.2)%(148.9)%
NPL to gross loans0.06 %0.06 %0.26 %
Net charge-offs (recoveries) to average loans(1)
(0.01)%0.01 %0.01 %
ACL to loans1.25 %1.25 %1.21 %
(1) Ratio is annualized.



Loans, net of unearned income, were $1.8 billion at September 30, 2023, up $57.6 million from June 30, 2023 and up $249.2 million from September 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 $1.1 million, or 0.06% of gross loans, at September 30, 2023, compared with $1.0 million, or 0.06% of gross loans, at June 30, 2023, and $4.0 million, or 0.26% of gross loans, at September 30, 2022. The $72,000 net increase in nonperforming loans in the third quarter of 2023 was primarily attributable to a commercial real estate loan that was added to nonaccrual status and partially offset by a commercial real estate loan that moved back to accruing status. The $2.9 million net decrease in nonperforming loans from September 30, 2022, was primarily attributable to a significant commercial real estate loan being moved back to accruing status, two loans that were paid-off and one loan that was charged-off.

The Company recorded a provision for credit losses of $773,000 for the third quarter of 2023, compared to $1.6 million for the second quarter of 2023. Provision in the second quarter of 2023 was based on increases for qualitative economic factors as well as loan growth, whereas provision in the third quarter of 2023 was based solely on loan growth. The Company expects future provisions to be based on loan growth, unless credit issues arise.

Net recoveries for the third quarter of 2023 were $23,000, or (0.01)% of average loans on an annualized basis, compared to net charge-offs of $27,000, or 0.01% of average loans on an annualized basis, for the second quarter of 2023, and net charge-offs of $47,000, or 0.01% of average loans on an annualized basis, for the third quarter of 2022.

The Company’s allowance for credit losses was 1.25% of total loans and 2050.00% of nonperforming loans at September 30, 2023, compared with 1.25% of total loans and 2117.33% of nonperforming loans at June 30, 2023. Allowance for credit losses on unfunded commitments was $1.5 million at September 30, 2023.

Deposits
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Three Months Ended
% Change September 30, 2023 vs.
September 30,
2023		June 30,
2023		September 30,
2022		June 30,
2023		September 30,
2022
(Dollars in thousands)
Noninterest-bearing deposits$418,125 $449,433 $499,613 (7.0)%(16.3)%
Interest-bearing deposits1,498,276 1,474,478 1,267,479 1.6 %18.2 %
   Total deposits$1,916,401 $1,923,911 $1,767,092 (0.4)%8.4 %
Uninsured deposits$568,323 $553,084 $707,371 2.8 %(19.7)%
Uninsured deposits to total deposits29.66 %28.75 %40.03 %
Noninterest deposits to total deposits21.82 %23.36 %28.27 %

Total deposits were $1.9 billion at September 30, 2023, down slightly from June 30, 2023 and up from $1.8 billion at September 30, 2022. The $7.5 million decrease in total deposits in the third quarter was primarily related to a reduction in brokered deposits of $25.9 million, partially offset by an $18.4 million increase in customer deposits. Total brokered deposits were $168.3 million at September 30, 2023.










Capital
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September 30,
2023		June 30,
2023		September 30,
2022
CompanyBankCompanyBankCompanyBank
Tier 1 capital ratio to average assets8.70 %11.71 %8.70 %11.82 %8.44 %11.49 %
Risk-based capital ratios:
  Common equity tier 1 (“CET1”) capital ratio9.32 %12.55 %9.11 %12.37 %8.73 %11.89 %
  Tier 1 capital ratio9.32 %12.55 %9.11 %12.37 %8.73 %11.89 %
  Total capital ratio14.60 %13.67 %14.42 %13.47 %12.26 %12.87 %
As of September 30, 2023, total stockholders’ equity was $201.9 million, up from $197.3 million at June 30, 2023. The increase of $4.7 million was substantially due to earnings growth, partially offset by an increase in accumulated other comprehensive loss resulting from changes in the value of the available for sale securities portfolio.



































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 JoyceKevin Dobbs
(205) 820-8065(310) 622-8245
ljoyce@ssbank.bankssbankir@finprofiles.com



SELECT FINANCIAL DATA
(Dollars in thousands, except share and per share amounts)
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30,
2022
Results of Operations
Interest income$35,204 $32,185 $22,520 $96,088 $56,144 
Interest expense14,473 12,753 3,085 36,379 5,690 
Net interest income20,731 19,432 19,435 59,709 50,454 
Provision for credit losses773 1,557 1,663 3,511 3,667 
Net interest income after provision19,958 17,875 17,772 56,198 46,787 
Noninterest income(2,894)6,862 1,339 5,755 4,074 
Noninterest expense8,569 13,432 10,237 32,159 29,178 
Income tax expense1,866 2,549 2,174 6,738 5,204 
Net income$6,629 $8,756 $6,700 $23,056 $16,479 
Core net income(1)
$9,563 $7,058 $6,806 $23,901 $16,883 
Share and Per Share Data
Shares issued and outstanding8,834,168 8,738,814 8,705,920 8,834,168 8,705,920 
Weighted average shares outstanding:
  Basic8,846,018 8,763,635 8,693,745 8,791,007 8,797,720 
  Diluted9,040,687 8,950,847 8,871,116 9,016,603 8,952,600 
Earnings per share:
  Basic$0.75 $1.00 $0.77 $2.62 $1.87 
  Diluted$0.73 $0.98 $0.75 $2.56 $1.84 
  Core - diluted(1)
$1.06 $0.79 $0.77 $2.65 $1.89 
Book value per share$22.86 $22.57 $19.56 $22.86 $19.56 
Tangible book value per share(1)
$20.84 $20.52 $17.48 $20.84 $17.48 
Cash dividends per common share$0.09 $0.09 $0.09 $0.27 $0.27 
Performance and Financial Ratios
ROAA1.15 %1.60 %1.35 %1.41 %1.19 %
ROAE12.96 %18.15 %15.42 %15.85 %12.72 %
Core ROAA(1)
1.66 %1.29 %1.37 %1.47 %1.21 %
ROATCE(1)
14.21 %20.01 %17.24 %17.47 %14.22 %
Core ROATCE(1)
20.50 %16.13 %17.51 %18.11 %14.57 %
NIM 3.78 %3.73 %4.15 %3.85 %3.85 %
NIM - FTE(2)
3.79 %3.74 %4.17 %3.87 %3.87 %
Net interest spread2.84 %2.86 %3.86 %3.00 %3.64 %
Yield on loans6.86 %6.61 %5.37 %6.62 %4.97 %
Yield on interest-earning assets6.42 %6.17 %4.81 %6.20 %4.29 %
Cost of interest-bearing liabilities3.58 %3.31 %0.95 %3.20 %0.65 %
Cost of funds(2)
2.80 %2.58 %0.69 %2.48 %0.46 %
Cost of interest-bearing deposits3.43 %3.12 %0.82 %3.02 %0.52 %
Cost of total deposits2.63 %2.38 %0.58 %2.29 %0.36 %
Noninterest deposits to total deposits21.82 %23.36 %28.27 %21.82 %28.27 %
Core deposits to total deposits86.58 %86.18 %92.17 %86.58 %92.17 %
Uninsured deposits to total deposits29.66 %28.75 %40.03 %29.66 %40.03 %
Total loans to total deposits92.58 %89.22 %86.30 %92.58 %86.30 %
Efficiency ratio48.01 %51.00 %48.94 %49.47 %52.98 %
Core efficiency ratio(1)
42.79 %49.96 %48.94 %47.06 %52.98 %
(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)
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30,
2022
Financial Condition (ending)
Total loans$1,774,148 $1,716,512 $1,524,990 $1,774,148 $1,524,990 
Total securities189,496 182,717 170,375 189,496 170,375 
Total assets2,296,527 2,277,803 2,052,725 2,296,527 2,052,725 
Total noninterest bearing deposits418,125 449,433 499,613 418,125 499,613 
Total core deposits(1)
1,659,291 1,657,961 1,628,660 1,659,291 1,628,660 
Total deposits1,916,401 1,923,911 1,767,092 1,916,401 1,767,092 
Total borrowings146,573 131,472 93,020 146,573 93,020 
Total liabilities2,094,603 2,080,553 1,882,400 2,094,603 1,882,400 
Total shareholders’ equity201,924 197,250 170,325 201,924 170,325 
Financial Condition (average)
Total loans$1,740,582 $1,676,816 $1,480,735 $1,676,134 $1,373,564 
Total securities201,830 196,731 185,670 197,005 175,381 
Total other interest-earning assets232,691 218,451 192,699 199,379 202,837 
Total interest-bearing assets2,175,103 2,091,998 1,859,104 2,072,518 1,751,782 
Total assets2,282,217 2,200,843 1,966,556 2,180,851 1,858,993 
Total noninterest-bearing deposits448,616 438,987 491,917 442,149 502,951 
Total interest-bearing deposits1,472,024 1,412,047 1,207,797 1,395,529 1,097,693 
Total deposits1,920,640 1,851,034 1,699,714 1,837,678 1,600,644 
Total borrowings129,882 131,411 75,039 122,156 68,719 
Total interest-bearing liabilities1,601,906 1,543,458 1,282,836 1,517,685 1,166,412 
Total shareholders’ equity202,955 193,516 172,402 194,430 173,210 
Asset Quality
Nonperforming loans$1,082 $1,010 $3,950 $1,082 $3,950 
Other real estate owned (“OREO”)$2,903 $2,870 $2,930 $2,903 $2,930 
Nonperforming assets (“NPA”)$3,985 $3,880 $6,880 $3,985 $6,880 
Net charge-offs (recovery) to average loans(2)
(0.01)%0.01 %0.01 %0.02 %0.01 %
Provision for credit losses to average loans(2)
0.18 %0.37 %0.45 %0.28 %0.36 %
ACL to loans1.25 %1.25 %1.21 %1.25 %1.21 %
ACL to gross loans1.25 %1.24 %1.20 %1.25 %1.20 %
ACL to NPL2050.00 %2117.33 %466.41 %2050.00 %466.41 %
NPL to loans0.06 %0.06 %0.26 %0.06 %0.26 %
NPL to gross loans0.06 %0.06 %0.26 %0.06 %0.26 %
NPA to gross loans and OREO0.22 %0.22 %0.45 %0.22 %0.45 %
NPA to total assets0.17 %0.17 %0.34 %0.17 %0.34 %
Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets8.79 %8.66 %8.30 %8.79 %8.30 %
Tangible common equity to tangible assets(3)
8.08 %7.94 %7.48 %8.08 %7.48 %
Tier 1 capital ratio to average assets8.70 %8.70 %8.44 %8.70 %8.44 %
Risk-based capital ratios:
  CET1 capital ratio9.32 %9.11 %8.73 %9.32 %8.73 %
  Tier 1 capital ratio9.32 %9.11 %8.73 %9.32 %8.73 %
  Total capital ratio14.60 %14.42 %12.26 %14.60 %12.26 %
(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)
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September 30,
2023		June 30,
2023		December 31,
2022		September 30,
2022
(Unaudited)(Unaudited)(Audited)(Unaudited)
Assets
Cash and due from banks$31,047 $21,299 $15,260 $17,394 
Interest-bearing deposits in banks103,646 159,818 90,198 165,637 
Federal funds sold81,487 84,812 63,041 63,031 
Total cash and cash equivalents216,180 265,929 168,499 246,062 
Securities available for sale, at fair value169,859 163,075 155,544 150,718 
Securities held to maturity, at amortized cost19,637 19,642 19,652 19,657 
Other equity securities, at fair value3,654 3,762 4,444 5,694 
Restricted equity securities, at cost4,971 3,862 3,134 2,791 
Loans held for sale1,799 1,589 1,047 1,643 
Loans, net of unearned income1,774,148 1,716,512 1,587,164 1,524,990 
Less allowance for credit losses22,181 21,385 20,156 18,423 
Loans, net1,751,967 1,695,127 1,567,008 1,506,567 
Premises and equipment, net26,694 26,957 27,345 28,585 
Accrued interest receivable8,321 7,372 6,963 5,699 
Bank owned life insurance29,697 29,521 29,186 29,677 
Annuities15,266 15,359 15,478 15,564 
Foreclosed assets2,903 2,870 2,930 2,930 
Goodwill16,862 16,862 16,862 16,862 
Core deposit intangible981 1,062 1,226 1,302 
Other assets27,736 24,814 25,886 18,974 
Total assets$2,296,527 $2,277,803 $2,045,204 $2,052,725 
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing$418,125 $449,433 $460,977 $499,613 
Interest-bearing1,498,276 1,474,478 1,259,766 1,267,479 
Total deposits1,916,401 1,923,911 1,720,743 1,767,092 
Other borrowings4,991 (13)(19)19,978 
FHLB advances55,000 45,000 31,000 26,000 
Subordinated notes86,582 86,485 86,314 47,042 
Accrued interest payable1,280 1,063 584 359 
Other liabilities30,349 24,107 24,863 21,929 
Total liabilities2,094,603 2,080,553 1,863,485 1,882,400 
Stockholders' equity:
Common stock44,307 43,831 43,714 43,529 
Capital surplus77,671 77,101 76,785 75,835 
Retained earnings94,429 88,603 73,764 63,956 
Accumulated other comprehensive loss(13,126)(10,799)(11,048)(12,403)
Unvested restricted stock(580)(709)(477)(592)
Vested restricted stock units(777)(777)(1,019)— 
Total stockholders' equity201,924 197,250 181,719 170,325 
Total liabilities and stockholders' equity$2,296,527 $2,277,803 $2,045,204 $2,052,725 


    CONSOLIDATED STATEMENTS OF INCOME
   (Dollars in thousands, except per share amounts)
logo.jpg
Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30,
2022
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Interest income:
Loans, including fees$30,084 $27,630 $20,052 $83,049 $51,083 
Taxable securities1,796 1,641 1,010 4,819 2,417 
Nontaxable securities227 228 323 747 931 
Other interest and dividends3,097 2,686 1,135 7,473 1,713 
Total interest income35,204 32,185 22,520 96,088 56,144 
Interest expense:
Deposits12,732 10,998 2,489 31,498 4,251 
Other borrowings1,741 1,755 596 4,881 1,439 
Total interest expense14,473 12,753 3,085 36,379 5,690 
Net interest income20,731 19,432 19,435 59,709 50,454 
Provision for credit losses773 1,557 1,663 3,511 3,667 
Net interest income after provision for credit losses19,958 17,875 17,772 56,198 46,787 
Noninterest income:
Service charges on deposit accounts442 456 508 1,348 1,433 
Swap fees453 173 11 622 48 
SBA/USDA fees74 66 95 274 575 
Mortgage origination fees158 188 218 446 717 
Net (loss) gain on securities
(12)(45)(143)457 (546)
Employee retention credit and related revenue(5,100)5,100 — — — 
Other operating income1,091 924 650 2,608 1,847 
Total noninterest income(2,894)6,862 1,339 5,755 4,074 
Noninterest expenses:
Salaries and employee benefits5,752 7,863 6,152 19,926 17,859 
Equipment and occupancy expenses718 694 764 2,095 2,188 
Data processing fees650 646 599 1,889 1,733 
Regulatory assessments322 180 235 844 760 
     Professional fees related to ERC(1,243)1,243 — — — 
     Other operating expenses2,370 2,806 2,487 7,405 6,638 
Total noninterest expenses8,569 13,432 10,237 32,159 29,178 
Income before income taxes8,495 11,305 8,874 29,794 21,683 
Income tax expense1,866 2,549 2,174 6,738 5,204 
Net income$6,629 $8,756 $6,700 $23,056 $16,479 
Basic earnings per share$0.75 $1.00 $0.77 $2.62 $1.87 
Diluted earnings per share$0.73 $0.98 $0.75 $2.56 $1.84 





AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)
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Three Months Ended
September 30,
2023		June 30,
2023		September 30,
2022
Average
Balance		InterestYield/RateAverage
Balance		InterestYield/RateAverage
Balance		InterestYield/Rate
Assets:
Interest-earning assets:
Loans, net of unearned income(1)
$1,740,582 $30,084 6.86 %$1,676,816 $27,630 6.61 %$1,480,735 $20,052 5.37 %
Taxable securities156,364 1,796 4.56 %151,107 1,641 4.36 %128,932 1,010 3.11 %
Nontaxable securities45,466 227 1.98 %45,624 228 2.00 %56,738 323 2.26 %
Other interest-earnings assets232,691 3,097 5.28 %218,451 2,686 4.93 %192,699 1,135 2.34 %
Total interest-earning assets$2,175,103 $35,204 6.42 %$2,091,998 $32,185 6.17 %$1,859,104 $22,520 4.81 %
Allowance for credit losses(21,606)(20,154)(17,250)
Noninterest-earning assets128,720 128,999 124,702 
Total Assets$2,282,217 $2,200,843 $1,966,556 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts88,668 20 0.09 %92,245 20 0.09 %114,517 26 0.09 %
Savings and money market accounts867,066 7,767 3.55 %845,742 6,872 3.26 %811,349 1,644 0.80 %
Time deposits516,290 4,945 3.80 %474,060 4,106 3.47 %281,931 819 1.15 %
FHLB advances43,261 514 4.72 %45,000 529 4.72 %27,380 102 1.47 %
Other borrowings86,621 1,227 5.62 %86,411 1,226 5.69 %47,659 494 4.12 %
Total interest-bearing liabilities$1,601,906 $14,473 3.58 %$1,543,458 $12,753 3.31 %$1,282,836 $3,085 0.95 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits$448,616 $438,987 $491,917 
Other liabilities28,740 24,882 19,401 
Total noninterest-bearing liabilities477,356 463,869 511,318 
Stockholders’ Equity202,955 193,516 172,402 
Total Liabilities and Stockholders’ Equity$2,282,217 $2,200,843 $1,966,556 
Net interest income$20,731 $19,432 $19,435 
Net interest spread(2)
2.84 %2.86 %3.86 %
Net interest margin(3)
3.78 %3.73 %4.15 %
Net interest margin - FTE(4)(5)
3.79 %3.74 %4.17 %
Cost of funds(6)
2.80 %2.58 %0.69 %
Cost of interest-bearing deposits3.43 %3.12 %0.82 %
Cost of total deposits2.63 %2.38 %0.58 %
(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)
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Nine Months Ended
September 30,
2023		September 30,
2022
Average
Balance		InterestYield/RateAverage
Balance		InterestYield/Rate
Assets:
Interest-earning assets:
Loans, net of unearned income(1)
$1,676,134 $83,049 6.62 %$1,373,564 $51,083 4.97 %
Taxable securities149,058 4,819 4.32 %119,224 2,417 2.71 %
Nontaxable securities47,947 747 2.08 %56,157 931 2.22 %
Other interest-earnings assets199,379 7,473 5.01 %202,837 1,713 1.13 %
Total interest-earning assets$2,072,518 $96,088 6.20 %$1,751,782 $56,144 4.29 %
Allowance for credit losses(20,750)(16,044)
Noninterest-earning assets129,083 123,255 
Total Assets$2,180,851 $1,858,993 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts91,602 59 0.09 %113,427 78 0.09 %
Savings and money market accounts839,827 19,679 3.13 %741,397 2,862 0.52 %
Time deposits464,100 11,760 3.39 %242,869 1,311 0.72 %
FHLB advances35,703 1,202 4.50 %26,115 144 0.74 %
Other borrowings86,453 3,679 5.69 %42,604 1,295 4.06 %
Total interest-bearing liabilities$1,517,685 $36,379 3.20 %$1,166,412 $5,690 0.65 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits$442,149 $502,951 
Other liabilities26,587 16,420 
Total noninterest-bearing liabilities$468,736 $519,371 
Stockholders’ Equity194,430 173,210 
Total Liabilities and Stockholders’ Equity$2,180,851 $1,858,993 
Net interest income$59,709 $50,454 
Net interest spread(2)
3.00 %3.64 %
Net interest margin(3)
3.85 %3.85 %
Net interest margin - FTE(4)(5)
3.87 %3.87 %
Cost of funds(6)
2.48 %0.46 %
Cost of interest-bearing deposits3.02 %0.52 %
Cost of total deposits2.29 %0.36 %
(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)
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September 30,
2023		June 30,
2023		December 31,
2022		September 30,
2022
Amount% of grossAmount% of grossAmount% of grossAmount% of gross
Real estate mortgages:
Construction and development$229,188 12.9 %$228,236 13.3 %$255,736 16.1 %$222,159 14.5 %
Residential224,499 12.6 %214,897 12.5 %167,891 10.5 %164,296 10.7 %
Commercial1,049,545 59.0 %1,011,815 58.7 %904,872 56.8 %889,942 58.2 %
Commercial and industrial268,283 15.0 %259,195 15.0 %256,553 16.1 %243,577 15.9 %
Consumer and other8,331 0.5 %8,135 0.5 %7,655 0.5 %10,155 0.7 %
   Gross loans1,779,846 100.0 %1,722,278 100.0 %1,592,707 100.0 %1,530,129 100.0 %
Unearned income(5,698)(5,766)(5,543)(5,139)
   Loans, net of unearned income1,774,148 1,716,512 1,587,164 1,524,990 
Allowance for credit losses(22,181)(21,385)(20,156)(18,423)
     Loans, net$1,751,967 $1,695,127 $1,567,008 $1,506,567 


DEPOSIT COMPOSITION
(Dollars in thousands)
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September 30,
2023		June 30,
2023		December 31,
2022		September 30,
2022
Amount% of totalAmount% of totalAmount% of totalAmount% of total
Noninterest-bearing transaction$418,125 21.8 %$449,433 23.3 %$460,977 26.8 %$499,613 28.3 %
Interest-bearing transaction934,383 48.8 %922,835 48.0 %837,127 48.6 %855,350 48.4 %
Savings38,518 2.0 %41,574 2.2 %49,235 2.9 %78,687 4.5 %
Time deposits, $250,000 and under436,613 22.8 %438,228 22.8 %307,145 17.8 %266,491 15.0 %
Time deposits, over $250,00088,762 4.6 %71,841 3.7 %66,259 3.9 %66,951 3.8 %
     Total deposits$1,916,401 100.0 %$1,923,911 100.0 %$1,720,743 100.0 %$1,767,092 100.0 %



Nonperfoming Assets
(Dollars in thousands)
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September 30,
2023		June 30,
2023		December 31,
2022		September 30,
2022
Nonaccrual loans$1,082 $1,010 $2,245 $3,950 
Past due loans 90 days or more and still accruing interest— — — — 
Total nonperforming loans1,082 1,010 2,245 3,950 
OREO2,903 2,870 2,930 2,930 
Total nonperforming assets$3,985 $3,880 $5,175 $6,880 
Troubled debt restructured loans – nonaccrual(1)
970 724 832 1,011 
Troubled debt restructured loans – accruing1,052 1,328 1,292 1,307 
Total troubled debt restructured loans$2,022 $2,052 $2,124 $2,318 
Allowance for credit losses$22,181 $21,385 $20,156 $18,423 
Loans, net of unearned income at the end of the period$1,774,148 $1,716,512 $1,587,164 $1,524,990 
Gross loans outstanding at the end of period$1,779,846 $1,722,278 $1,592,707 $1,530,129 
Total assets$2,296,527 $2,277,803 $2,045,204 $2,052,725 
Allowance for credit losses to nonperforming loans2050.00 %2117.33 %897.82 %466.41 %
Nonperforming loans to loans, net of unearned income0.06 %0.06 %0.14 %0.26 %
Nonperforming loans to gross loans0.06 %0.06 %0.14 %0.26 %
Nonperforming assets to gross loans and OREO0.22 %0.22 %0.32 %0.45 %
Nonperforming assets to total assets0.17 %0.17 %0.25 %0.34 %
Nonaccrual loans by category:
Real estate mortgages:
Construction & Development$— $33 $67 $70 
Residential Mortgages289 297 565 550 
Commercial Real Estate Mortgages785 671 1,278 2,888 
Commercial & Industrial8 9 312 434 
Consumer and other— — 23 8 
         Total$1,082 $1,010 $2,245 $3,950 

(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)
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30, 2022
Average loans, net of unearned income$1,740,582 $1,676,816 $1,480,735 $1,676,134 $1,373,564 
Loans, net of unearned income$1,774,148 $1,716,512 $1,524,990 $1,774,148 $1,524,990 
Gross loans$1,779,846 $1,722,278 $1,530,129 $1,779,846 $1,530,129 
Allowance for credit losses at beginning of the period$21,385 $19,855 $16,807 $20,156 $14,844 
Impact of adoption of ASC 326$— $— $— $(1,285)$— 
Charge-offs:
Construction and development3 — — 3 66 
Residential— — — — 7 
Commercial— — — — — 
Commercial and industrial— 44 269 262 269 
Consumer and other— — 1 6 8 
Total charge-offs3 44 270 271 350 
Recoveries:
Construction and development— — — — — 
Residential10 17 11 38 46 
Commercial— — — — — 
Commercial and industrial— — 204 14 204 
Consumer and other16 — 8 18 12 
Total recoveries26 17 223 70 262 
Net charge-offs (recoveries)$(23)$27 $47 $201 $88 
Provision for credit losses$773 $1,557 $1,663 $3,511 $3,667 
Balance at end of the period$22,181 $21,385 $18,423 $22,181 $18,423 
Allowance for credit losses on unfunded commitments at beginning of the period$1,495 $1,285 $— $— $— 
Impact of adoption of ASC 326— — — 1,285 — 
Provision for credit losses on unfunded commitments29 210 — 239 — 
Balance at the end of the period$1,524 $1,495 $— $1,524 $— 
Allowance to loans, net of unearned income1.25 %1.25 %1.21 %1.25 %1.21 %
Allowance to gross loans1.25 %1.24 %1.20 %1.25 %1.20 %
Net charge-offs (recoveries) to average loans, net of unearned income(1)
(0.01)%0.01 %0.01 %0.02 %0.01 %
Provision for credit losses to average loans, net of unearned income(1)
0.18 %0.37 %0.45 %0.28 %0.36 %
(1) Ratio is annualized.





Reconciliation of Non-GAAP Financial Measures
Noninterest Expense
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)
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30,
2022
Net income$6,629 $8,756 $6,700 $23,056 $16,479 
Add: One-time retirement related expenses— 1,571 — 1,571 — 
Add: Professional fees related to ERC(1,243)1,243 — — — 
Add: Net OREO (losses) gains(9)7 — (2)— 
Less: Employee retention related revenue(5,100)5,100 — — — 
Less: (Loss) gain on securities(12)(45)(143)457 (546)
Less: Tax effect926 (536)37 267 142 
Core net income$9,563 $7,058 $6,806 $23,901 $16,883 
Average assets$2,282,217 $2,200,843 $1,966,556 $2,180,851 $1,858,993 
Core return on average assets1.66 %1.29 %1.37 %1.47 %1.21 %
Net income$6,629 $8,756 $6,700 $23,056 $16,479 
Add: One-time retirement related expenses— 1,571 — 1,571 — 
Add: Professional fees related to ERC(1,243)1,243 — — — 
Add: Net OREO (losses) gains(9)7 — (2)— 
Add: Provision773 1,557 1,663 3,511 3,667 
Less: Employee retention related revenue(5,100)5,100 — — — 
Less: (Loss) gain on securities(12)(45)(143)457 (546)
Add: Income taxes1,866 2,549 2,174 6,738 5,204 
Pretax pre-provision core net income$13,128 $10,628 $10,680 $34,417 $25,896 
Average assets$2,282,217 $2,200,843 $1,966,556 $2,180,851 $1,858,993 
Pretax pre-provision core return on average assets2.28 %1.94 %2.15 %2.11 %1.86 %
Net interest income$20,731 $19,432 $19,435 $59,709 $50,454 
Add: Fully-taxable equivalent adjustments(1)
70 65 86 213 251 
Net interest income - FTE$20,801 $19,497 $19,521 $59,922 $50,705 
Net interest margin3.78 %3.73 %4.15 %3.85 %3.85 %
Effect of fully-taxable equivalent adjustments(1)
0.01 %0.01 %0.02 %0.02 %0.02 %
Net interest margin - FTE3.79 %3.74 %4.17 %3.87 %3.87 %
Total stockholders' equity$201,924 $197,250 $170,325 $201,924 $170,325 
Less: Intangible assets17,843 17,924 18,164 17,843 18,164 
Tangible common equity$184,081 $179,326 $152,161 $184,081 $152,161 
(1) Assumes a 24.0% tax rate.


Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts)
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Three Months EndedNine Months Ended
September 30,
2023		June 30,
2023		September 30,
2022		September 30,
2023		September 30,
2022
Core net income$9,563 $7,058 $6,806 $23,901 $16,883 
Diluted weighted average shares outstanding9,040,687 8,950,847 8,871,116 9,016,603 8,952,600 
Diluted core earnings per share$1.06 $0.79 $0.77 $2.65 $1.89 
Common shares outstanding at year or period end8,834,168 8,738,814 8,705,920 8,834,168 8,705,920 
Tangible book value per share$20.84 $20.52 $17.48 $20.84 $17.48 
Total assets at end of period$2,296,527 $2,277,803 $2,052,725 $2,296,527 $2,052,725 
Less: Intangible assets17,843 17,924 18,164 17,843 18,164 
Adjusted assets at end of period$2,278,684 $2,259,879 $2,034,561 $2,278,684 $2,034,561 
Tangible common equity to tangible assets8.08 %7.94 %7.48 %8.08 %7.48 %
Total average shareholders equity$202,955 $193,516 $172,402 $194,430 $173,210 
Less: Average intangible assets17,893 17,974 18,203 17,973 18,270 
Average tangible common equity$185,062 $175,542 $154,199 $176,457 $154,940 
Net income to common shareholders$6,629 $8,756 $6,700 $23,056 $16,479 
Return on average tangible common equity14.21 %20.01 %17.24 %17.47 %14.22 %
Average tangible common equity$185,062 $175,542 $154,199 $176,457 $154,940 
Core net income$9,563 $7,058 $6,806 $23,901 $16,883 
Core return on average tangible common equity20.50 %16.13 %17.51 %18.11 %14.57 %
Net interest income$20,731 $19,432 $19,435 $59,709 $50,454 
Add: Noninterest income(2,894)6,862 1,339 5,755 4,074 
Less: Employee retention related revenue(5,100)5,100 — — — 
Less: (Loss) gain on securities(12)(45)(143)457 (546)
Operating revenue$22,949 $21,239 $20,917 $65,007 $55,074 
Expenses:
Total noninterest expense$8,569 $13,432 $10,237 $32,159 $29,178 
Less: One-time retirement related expenses— 1,571 — 1,571 — 
Less: Professional fees related to ERC(1,243)1,243 — — — 
Less: Net OREO (losses) gains(9)7 — (2)— 
Adjusted noninterest expenses$9,821 $10,611 $10,237 $30,590 $29,178 
Core efficiency ratio42.79 %49.96 %48.94 %47.06 %52.98 %