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Southern States Bancshares, Inc. Announces Fourth Quarter 2022 Financial Results

SSBK

Fourth Quarter 2022 Performance and Operational Highlights

  • Net income of $10.6 million, or $1.18 per diluted share

  • Core net income(1) of $8.1 million, or $0.90 per diluted share(1)

  • Net interest income of $20.9 million, an increase of $1.4 million from the prior quarter

  • Net interest margin (“NIM”) of 4.38%, up 23 basis points from the prior quarter

  • NIM of 4.39% on a fully-taxable equivalent basis (“NIM - FTE”)(1)

  • Return on average assets (“ROAA”) of 2.11%; return on average stockholders’ equity (“ROAE”) of 23.77%; and return on average tangible common equity (“ROATCE”)(1) of 26.49%

  • Core ROAA(1) of 1.61%; and core ROATCE(1) of 20.21%

  • Efficiency ratio of 40.81%, an improvement from 48.94% for the prior quarter

  • Linked-quarter loan growth was 18.1% annualized(2)

  • Linked-quarter deposit growth was 4.6% annualized(2)

  • Completed the sale of two branches resulting in a $2.4 million net gain

(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) The sale of two branches on October 1, 2022 resulted in a $7.3 million reduction in loans and a $66.0 million reduction in deposits. The growth percentages are net of the accounts sold.

ANNISTON, Ala., Jan. 23, 2023 (GLOBE NEWSWIRE) -- 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 $10.6 million, or $1.18 diluted earnings per share, for the fourth quarter of 2022. This compares to net income of $6.7 million, or $0.75 diluted earnings per share, for the third quarter of 2022, and net income of $4.1 million, or $0.44 diluted earnings per share, for the fourth quarter of 2021. The Company reported core net income of $8.1 million, or $0.90 diluted core earnings per share, for the fourth quarter of 2022. This compares to core net income of $6.8 million, or $0.77 diluted core earnings per share, for the third quarter of 2022, and core net income of $4.3 million, or $0.47 diluted core earnings per share, for the fourth quarter of 2021 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary
Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “We are very pleased with our fourth-quarter and full-year results. Our talented bankers identified compelling opportunities throughout 2022, driving strong new business development. At the same time, we maintained underwriting discipline and excellent credit quality.”

“We grew loans by 18.1% annualized in the fourth quarter and 27.7% for the full year, culminating a year of robust production across our economically dynamic markets. This growth, combined with an increased net interest margin, fueled the expansion of our fourth-quarter net interest income, which increased by 7.5% from the prior quarter and by 48.2% from the fourth quarter of 2021.”

Mr. Whatley continued. “While our markets are healthy and our clients are cautiously optimistic, we are mindful of the slowing economic environment heading into 2023 and the lagging impact of rising interest rates on deposit costs. Our long-term commitment to prudent, selective lending and proactive expense management give us confidence in our ability to navigate the changing landscape and continue to drive strong risk-adjusted returns for our shareholders.”

“To that end, during the fourth quarter, we completed the sale of two branches as part of an ongoing effort to optimize our physical footprint. The branch sales resulted in a net gain of $2.4 million.”


Net Interest Income and Net Interest Margin

Three Months Ended % Change December 31, 2022 vs.
December 31,
2022
September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
(Dollars in thousands)
Average interest-earning assets $ 1,893,069 $ 1,859,104 $ 1,519,490 1.8 % 24.6 %
Net interest income $ 20,884 $ 19,435 $ 14,096 7.5 % 48.2 %
Net interest margin 4.38 % 4.15 % 3.68 % 23 bps 70 bps

Net interest income for the fourth quarter of 2022 was $20.9 million, an increase of 7.5% from $19.4 million for the third quarter of 2022. The increase was primarily attributable to growth, accompanied by an increase in net interest margin.

Relative to the fourth quarter of 2021, net interest income increased $6.8 million, or 48.2%. The increase was substantially the result of growth, accompanied by an increase in net interest margin.

Net interest margin for the fourth quarter of 2022 was 4.38%, compared to 4.15% for the third quarter of 2022. The increase was primarily due to the Company’s asset sensitive balance sheet as rates increased.

Relative to the fourth quarter of 2021, net interest margin increased from 3.68%. The increase was primarily due to the Company’s asset sensitive balance sheet as rates increased, coupled with the deployment of excess liquidity.

Noninterest Income

Three Months Ended % Change December 31, 2022 vs.
December 31,
2022
September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
(Dollars in thousands)
Service charges on deposit accounts $ 431 $ 508 $ 428 (15.2 )% 0.7 %
Swap fees 2 11 (6 ) (81.8 )% (133.3 )%
SBA/USDA fees 70 95 533 (26.3 )% (86.9 )%
Mortgage origination fees 98 218 269 (55.0 )% (63.6 )%
Net gain (loss) on securities (86 ) (143 ) (40 ) (39.9 )% 115.0 %
Other operating income 4,088 650 567 528.9 % 621.0 %
Total noninterest income $ 4,603 $ 1,339 $ 1,751 243.8 % 162.9 %

Noninterest income for the fourth quarter of 2022 was $4.6 million, an increase of 243.8% from $1.3 million for the third 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. This decrease was partially offset by a decrease in mortgage fees.

Relative to the fourth quarter of 2021, noninterest income increased 162.9% from $1.8 million. The fourth quarter 2022 results included a $2.6 million gain on the sale of two branches and a BOLI benefit claim of $774,000. This increase was partially offset by a decrease in SBA/USDA fees and mortgage fees during the fourth quarter of 2022.

Noninterest Expense

Three Months Ended % Change December 31, 2022 vs.
December 31,
2022
September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
(Dollars in thousands)
Salaries and employee benefits $ 6,738 $ 6,152 $ 5,563 9.5 % 21.1 %
Equipment and occupancy expenses 730 764 943 (4.5 )% (22.6 )%
Data processing fees 711 599 563 18.7 % 26.3 %
Regulatory assessments 165 235 263 (29.8 )% (37.3 )%
Other operating expenses 2,092 2,487 2,280 (15.9 )% (8.2 )%
Total noninterest expenses $ 10,436 $ 10,237 $ 9,612 1.9 % 8.6 %

Noninterest expense for the fourth quarter of 2022 was $10.4 million, an increase of 1.9% from $10.2 million for the third quarter of 2022. The increase was primarily attributable to an increase in salaries and benefits as a result of expense related to the issuance of restricted stock units in a deferred compensation plan. Also included in the fourth quarter of 2022 was $200,000 in expenses associated with the sale of the branches. The increase was partially offset by a decrease in fraud losses as a portion was recovered in the fourth quarter of 2022.

Relative to the fourth quarter of 2021, noninterest expense increased 8.6% from $9.6 million. The increase was primarily attributable to an increase in salaries and benefits as a result of additional incentive accruals based on operating results along with expense related to the issuance of restricted stock units in a deferred compensation plan.

Loans and Credit Quality

Three Months Ended % Change December 31, 2022 vs.
December 31,
2022
September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
(Dollars in thousands)
Core loans $ 1,592,707 $ 1,530,129 $ 1,244,914 4.1 % 27.9 %
PPP loans 9,203 % NM
Gross loans 1,592,707 1,530,129 1,254,117 4.1 % 27.0 %
Unearned income (5,543 ) (5,139 ) (3,817 ) 7.9 % 45.2 %
Loans, net of unearned income (“Loans”) $ 1,587,164 $ 1,524,990 $ 1,250,300 4.1 % 26.9 %
Average loans, net of unearned (“Average loans”) $ 1,563,255 $ 1,480,735 $ 1,191,688 5.6 % 31.2 %
Nonperforming loans (“NPL”) $ 2,245 $ 3,950 $ 1,972 (43.2 )% 13.8 %
Provision for loan losses $ 1,938 $ 1,663 $ 732 16.5 % 164.8 %
Allowance for loan losses (“ALLL”) $ 20,156 $ 18,423 $ 14,844 9.4 % 35.8 %
Net charge-offs (recoveries) $ 205 $ 47 $ (15 ) 336.2 % (1466.7 )%
NPL to gross loans 0.14 % 0.26 % 0.16 %
Net charge-offs (recoveries) to average loans(1) 0.05 % % %
ALLL to loans 1.27 % 1.21 % 1.19 %
(1) Ratio is annualized.
NM = Not meaningful

Loans, net of unearned income were $1.6 billion at December 31, 2022, up $62.2 million from September 30, 2022 and up $336.9 million from December 31, 2021. The linked-quarter increase in loans was primarily attributable to growth across our footprint.

Nonperforming loans totaled $2.2 million, or 0.14% of gross loans, at December 31, 2022, compared with $4.0 million, or 0.26% of gross loans, at September 30, 2022, and $2.0 million, or 0.16% of gross loans, at December 31, 2021. The $1.7 million net decrease in nonperforming loans in the fourth quarter was primarily attributable to one commercial real estate loan that was moved back to accruing status. The $273,000 net increase in nonperforming loans from December 31, 2021 was primarily attributable to loans being added and removed from nonaccrual status, none of which were significant.

The Company recorded a provision for loan losses of $1.9 million for the fourth quarter of 2022, compared to $1.7 million for the third quarter of 2022. The provision was primarily due to changes in our qualitative economic factors.

Net charge-offs for the fourth quarter of 2022 were $205,000, or 0.05% of average loans, compared to net charge-offs of $47,000, or 0.00% of average loans, for the third quarter of 2022, and net recoveries of $15,000, or 0.00% of average loans, for the fourth quarter of 2021.

The Company’s allowance for loan losses was 1.27% of total loans and 897.82% of nonperforming loans at December 31, 2022, compared with 1.21% of total loans and 466.41% of nonperforming loans at September 30, 2022.

Deposits


Three Months Ended % Change December 31, 2022 vs.
December 31,
2022
September 30,
2022
December 31,
2021
September 30,
2022
December 31,
2021
(Dollars in thousands)
Noninterest-bearing deposits $ 460,977 $ 499,613 $ 541,546 (7.7 )% (14.9 )%
Interest-bearing deposits 1,259,766 1,267,479 1,014,905 (0.6 )% 24.1 %
Total deposits $ 1,720,743 $ 1,767,092 $ 1,556,451 (2.6 )% 10.6 %

Total deposits were $1.7 billion at December 31, 2022, compared with $1.8 billion at September 30, 2022 and $1.6 billion at December 31, 2021. The $46.3 million decrease in total deposits in the fourth quarter was substantially due to the sale of two branches in October, which resulted in a $66.0 million reduction in total deposits. Excluding the sale, total deposits had a net increase of $19.7 million due to a $43.7 million increase in interest-bearing account balances that more than offset a decrease of $24.0 million in noninterest-bearing deposits.

Capital

December 31,
2022
September 30,
2022
December 31,
2021
Company Bank Company Bank Company Bank
Tier 1 capital ratio to average assets 8.82 % 12.17 % 8.44 % 11.49 % 9.74 % 10.44 %
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio 8.82 % 12.17 % 8.73 % 11.89 % 10.35 % 11.09 %
Tier 1 capital ratio 8.82 % 12.17 % 8.73 % 11.89 % 10.35 % 11.09 %
Total capital ratio 14.29 % 13.18 % 12.26 % 12.87 % 11.33 % 12.07 %

As of December 31, 2022, total stockholders’ equity was $181.7 million, compared with $170.3 million at September 30, 2022. The increase of $11.4 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 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and in other SEC filings 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 Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
Results of Operations
Interest income $ 26,706 $ 22,520 $ 15,171 $ 82,850 $ 57,777
Interest expense 5,822 3,085 1,075 11,512 4,864
Net interest income 20,884 19,435 14,096 71,338 52,913
Provision for loan losses 1,938 1,663 732 5,605 2,982
Net interest income after provision 18,946 17,772 13,364 65,733 49,931
Noninterest income 4,603 1,339 1,751 8,677 10,803
Noninterest expense 10,436 10,237 9,612 39,614 36,435
Income tax expense(1) 2,521 2,174 1,445 7,725 5,732
Net income $ 10,592 $ 6,700 $ 4,058 $ 27,071 $ 18,567
Core net income(2) $ 8,081 $ 6,806 $ 4,256 $ 24,975 $ 15,956
Share and Per Share Data
Shares issued and outstanding 8,706,920 8,705,920 9,012,857 8,706,920 9,012,857
Weighted average shares outstanding:
Basic 8,707,026 8,693,745 9,012,857 8,774,860 8,198,188
Diluted 8,932,585 8,871,116 9,125,872 8,949,669 8,316,536
Earnings per share:
Basic $ 1.22 $ 0.77 $ 0.45 $ 3.08 $ 2.26
Diluted $ 1.18 $ 0.75 $ 0.44 $ 3.02 $ 2.23
Core - diluted(2) $ 0.90 $ 0.77 $ 0.47 $ 2.79 $ 1.92
Book value per share $ 20.87 $ 19.56 $ 19.66 $ 20.87 $ 19.66
Tangible book value per share(2) $ 18.79 $ 17.48 $ 17.62 $ 18.79 $ 17.62
Cash dividends declared $ 0.09 $ 0.09 $ 0.09 $ 0.36 $ 0.36
Performance and Financial Ratios
ROAA 2.11 % 1.35 % 0.99 % 1.43 % 1.23 %
ROAE 23.77 % 15.42 % 9.15 % 15.55 % 11.80 %
Core ROAA(2) 1.61 % 1.37 % 1.04 % 1.32 % 1.06 %
ROATCE(2) 26.49 % 17.24 % 10.22 % 17.37 % 13.38 %
Core ROATCE(2) 20.21 % 17.51 % 10.72 % 16.02 % 11.50 %
NIM 4.38 % 4.15 % 3.68 % 3.99 % 3.78 %
NIM - FTE(2) 4.39 % 4.17 % 3.70 % 4.01 % 3.80 %
Net interest spread 3.84 % 3.86 % 3.54 % 3.68 % 3.63 %
Yield on loans 6.05 % 5.37 % 4.75 % 5.27 % 4.89 %
Yield on interest-bearing assets 5.60 % 4.81 % 3.96 % 4.64 % 4.13 %
Cost of interest-bearing liabilities 1.76 % 0.95 % 0.42 % 0.96 % 0.50 %
Cost of funds(3) 1.29 % 0.69 % 0.30 % 0.68 % 0.36 %
Cost of interest-bearing deposits 1.52 % 0.82 % 0.39 % 0.79 % 0.47 %
Cost of total deposits 1.09 % 0.58 % 0.27 % 0.55 % 0.33 %
Noninterest deposits to total deposits 26.79 % 28.27 % 34.79 % 26.79 % 34.79 %
Total loans to total deposits 92.24 % 86.30 % 80.33 % 92.24 % 80.33 %
Efficiency ratio 40.81 % 48.94 % 60.50 % 49.12 % 57.13 %
Core efficiency ratio(2) 45.98 % 48.94 % 59.07 % 50.97 % 60.13 %

(1) Three months ended and year ended December 31, 2022 include 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 Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
Financial Condition (ending)
Total loans $ 1,587,164 $ 1,524,990 $ 1,250,300 $ 1,587,164 $ 1,250,300
Total securities 175,196 170,375 151,844 175,196 151,844
Total assets 2,044,866 2,052,725 1,782,592 2,044,866 1,782,592
Total noninterest bearing deposits 460,977 499,613 541,546 460,977 541,546
Total deposits 1,720,743 1,767,092 1,556,451 1,720,743 1,556,451
Total borrowings 117,295 93,020 38,448 117,295 38,448
Total liabilities 1,863,147 1,882,400 1,605,394 1,863,147 1,605,394
Total shareholders’ equity $ 181,719 $ 170,325 $ 177,198 $ 181,719 $ 177,198
Financial Condition (average)
Total loans $ 1,563,255 $ 1,480,735 $ 1,191,688 $ 1,421,376 $ 1,118,386
Total securities 188,765 185,670 140,201 178,755 122,425
Other interest-earning assets 141,049 192,699 187,601 187,263 158,243
Total interest-bearing assets 1,893,069 1,859,104 1,519,490 1,787,394 1,399,054
Total assets 1,994,087 1,966,556 1,628,804 1,893,044 1,510,114
Noninterest-bearing deposits 477,301 491,917 439,142 496,486 378,868
Interest-bearing deposits 1,216,492 1,207,797 965,457 1,127,637 922,870
Total deposits 1,693,793 1,699,714 1,404,599 1,624,123 1,301,738
Total borrowings 99,111 75,039 38,448 76,379 41,733
Total interest-bearing liabilities 1,315,603 1,282,836 1,003,905 1,204,016 964,603
Total shareholders’ equity $ 176,769 $ 172,402 $ 175,913 $ 174,107 $ 157,277
Asset Quality
Nonperforming loans $ 2,245 $ 3,950 $ 1,972 $ 2,245 $ 1,972
Other real estate owned (“OREO”) $ 2,930 $ 2,930 $ 2,930 $ 2,930 $ 2,930
Nonperforming assets (“NPA”) $ 5,175 $ 6,880 $ 4,902 $ 5,175 $ 4,902
Net charge-offs (recovery) to average loans(1) 0.05 % % % 0.02 % %
Provision for loan losses to average loans(1) 0.49 % 0.45 % 0.24 % 0.39 % 0.27 %
ALLL to loans 1.27 % 1.21 % 1.19 % 1.27 % 1.19 %
ALLL to gross loans 1.27 % 1.20 % 1.18 % 1.27 % 1.18 %
ALLL to NPL 897.82 % 466.41 % 752.74 % 897.82 % 752.74 %
NPL to loans 0.14 % 0.26 % 0.16 % 0.14 % 0.16 %
NPL to gross loans 0.14 % 0.26 % 0.16 % 0.14 % 0.16 %
NPA to gross loans and OREO 0.32 % 0.45 % 0.39 % 0.32 % 0.39 %
NPA to total assets 0.25 % 0.34 % 0.27 % 0.25 % 0.27 %
Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets 8.89 % 8.30 % 9.94 % 8.89 % 9.94 %
Tangible common equity to tangible assets(2) 8.07 % 7.48 % 9.00 % 8.07 % 9.00 %
Tier 1 capital ratio to average assets 8.82 % 8.44 % 9.74 % 8.82 % 9.74 %
Risk-based capital ratios:
CET1 capital ratio 8.82 % 8.73 % 10.35 % 8.82 % 10.35 %
Tier 1 capital ratio 8.82 % 8.73 % 10.35 % 8.82 % 10.35 %
Total capital ratio 14.29 % 12.26 % 11.33 % 14.29 % 11.33 %

(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)
December 31, 2022
(Unaudited)
September 30, 2022
(Unaudited)
December 31, 2021
(Audited)
Assets
Cash and due from banks $ 15,260 $ 17,394 $ 6,397
Interest-bearing deposits in banks 90,198 165,637 203,537
Federal funds sold 63,041 63,031 74,022
Total cash and cash equivalents 168,499 246,062 283,956
Securities available for sale, at fair value 155,544 150,718 132,172
Securities held to maturity, at amortized cost 19,652 19,657 19,672
Other equity securities, at fair value 5,243 5,694 9,232
Restricted equity securities, at cost 3,134 2,791 2,600
Loans held for sale 1,047 1,643 2,400
Loans, net of unearned income 1,587,164 1,524,990 1,250,300
Less allowance for loan losses 20,156 18,423 14,844
Loans, net 1,567,008 1,506,567 1,235,456
Premises and equipment, net 27,345 28,585 27,044
Accrued interest receivable 6,963 5,699 4,170
Bank owned life insurance 29,186 29,677 22,201
Annuities 15,478 15,564 12,888
Foreclosed assets 2,930 2,930 2,930
Goodwill 16,862 16,862 16,862
Core deposit intangible 1,226 1,302 1,500
Other assets 24,749 18,974 9,509
Total assets $ 2,044,866 $ 2,052,725 $ 1,782,592
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 460,977 $ 499,613 $ 541,546
Interest-bearing 1,259,766 1,267,479 1,014,905
Total deposits 1,720,743 1,767,092 1,556,451
Other borrowings (19 ) 19,978 12,498
FHLB advances 31,000 26,000 25,950
Subordinated notes 86,314 47,042
Accrued interest payable 584 359 132
Other liabilities 24,525 21,929 10,363
Total liabilities 1,863,147 1,882,400 1,605,394
Stockholders' equity:
Common stock 43,714 43,529 45,064
Capital surplus 76,785 75,835 80,640
Retained earnings 73,764 63,956 49,858
Accumulated other comprehensive income (loss) (11,048 ) (12,403 ) 2,113
Unvested restricted stock (477 ) (592 ) (477 )
Vested restricted stock units (1,019 )
Total stockholders' equity 181,719 170,325 177,198
Total liabilities and stockholders' equity $ 2,044,866 $ 2,052,725 $ 1,782,592



CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Interest income:
Loans, including fees $ 23,853 $ 20,052 $ 14,280 $ 74,936 $ 54,709
Taxable securities 1,206 1,010 459 3,622 1,593
Nontaxable securities 322 323 294 1,253 1,023
Other interest and dividends 1,325 1,135 138 3,039 452
Total interest income 26,706 22,520 15,171 82,850 57,777
Interest expense:
Deposits 4,655 2,489 955 8,906 4,310
Other borrowings 1,167 596 120 2,606 554
Total interest expense 5,822 3,085 1,075 11,512 4,864
Net interest income 20,884 19,435 14,096 71,338 52,913
Provision for loan losses 1,938 1,663 732 5,605 2,982
Net interest income after provision for loan losses 18,946 17,772 13,364 65,733 49,931
Noninterest income:
Service charges on deposit accounts 431 508 428 1,863 1,528
Swap fees 2 11 (6 ) 49 931
SBA/USDA fees 70 95 533 646 3,968
Mortgage origination fees 98 218 269 815 1,465
Net gain (loss) on securities (86 ) (143 ) (40 ) (632 ) (57 )
Other operating income 4,088 650 567 5,936 2,968
Total noninterest income 4,603 1,339 1,751 8,677 10,803
Noninterest expenses:
Salaries and employee benefits 6,738 6,152 5,563 24,597 21,667
Equipment and occupancy expenses 730 764 943 2,918 3,640
Data processing fees 711 599 563 2,444 2,128
Regulatory assessments 165 235 263 925 952
Other operating expenses 2,092 2,487 2,280 8,730 8,048
Total noninterest expenses 10,436 10,237 9,612 39,614 36,435
Income before income taxes 13,113 8,874 5,503 34,796 24,299
Income tax expense 2,521 2,174 1,445 7,725 5,732
Net income $ 10,592 $ 6,700 $ 4,058 $ 27,071 $ 18,567
Basic earnings per share $ 1.22 $ 0.77 $ 0.45 $ 3.08 $ 2.26
Diluted earnings per share $ 1.18 $ 0.75 $ 0.44 $ 3.02 $ 2.23



AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)
Three Months Ended
December 31, 2022 September 30, 2022 December 31, 2021
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) $ 1,563,255 $ 23,853 6.05 % $ 1,480,735 $ 20,052 5.37 % $ 1,191,688 $ 14,280 4.75 %
Taxable securities 132,222 1,206 3.62 % 128,932 1,010 3.11 % 86,292 459 2.11 %
Nontaxable securities 56,543 322 2.26 % 56,738 323 2.26 % 53,909 294 2.16 %
Other interest-earnings assets 141,049 1,325 3.73 % 192,699 1,135 2.34 % 187,601 138 0.29 %
Total interest-earning assets $ 1,893,069 $ 26,706 5.60 % $ 1,859,104 $ 22,520 4.81 % $ 1,519,490 $ 15,171 3.96 %
Allowance for loan losses (19,374 ) (17,250 ) (14,421 )
Noninterest-earning assets 120,392 124,702 123,735
Total Assets $ 1,994,087 $ 1,966,556 $ 1,628,804
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts 98,978 22 0.09 % 114,517 26 0.09 % 101,863 25 0.10 %
Savings and money market accounts 794,692 3,126 1.56 % 811,349 1,644 0.80 % 599,948 625 0.41 %
Time deposits 322,822 1,507 1.85 % 281,931 819 1.15 % 263,646 305 0.46 %
FHLB advances 22,739 147 2.56 % 27,380 102 1.47 % 25,950 22 0.34 %
Other borrowings 76,372 1,020 5.30 % 47,659 494 4.12 % 12,498 98 3.11 %
Total interest-bearing liabilities $ 1,315,603 $ 5,822 1.76 % $ 1,282,836 $ 3,085 0.95 % $ 1,003,905 $ 1,075 0.42 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits $ 477,301 $ 491,917 $ 439,142
Other liabilities 24,414 19,401 9,844
Total noninterest-bearing liabilities $ 501,715 $ 511,318 $ 448,986
Stockholders’ Equity 176,769 172,402 175,913
Total Liabilities and Stockholders’ Equity $ 1,994,087 $ 1,966,556 $ 1,628,804
Net interest income $ 20,884 $ 19,435 $ 14,096
Net interest spread(2) 3.84 % 3.86 % 3.54 %
Net interest margin(3) 4.38 % 4.15 % 3.68 %
Net interest margin - FTE(4)(5) 4.39 % 4.17 % 3.70 %
Cost of funds(6) 1.29 % 0.69 % 0.30 %
Cost of interest-bearing deposits 1.52 % 0.82 % 0.39 %
Cost of total deposits 1.09 % 0.58 % 0.27 %

(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 December 31, 2022 and September 30, 2022 and a 23.5% tax rate for the three months ended December 31, 2021.
(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)
Year Ended December 31,
2022 2021
Average
Balance
Interest Yield/
Rate
Average
Balance
Interest Yield/
Rate
Assets:
Interest-earning assets:
Loans, net of unearned income(1) $ 1,421,376 $ 74,936 5.27 % $ 1,118,386 $ 54,709 4.89 %
Taxable securities 122,500 3,622 2.96 % 77,281 1,593 2.06 %
Nontaxable securities 56,255 1,253 2.23 % 45,144 1,023 2.27 %
Other interest-earnings assets 187,263 3,039 1.62 % 158,243 452 0.29 %
Total interest-earning assets $ 1,787,394 $ 82,850 4.64 % $ 1,399,054 $ 57,777 4.13 %
Allowance for loan losses (16,883 ) (13,276 )
Noninterest-earning assets 122,533 124,336
Total Assets $ 1,893,044 $ 1,510,114
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts 109,786 100 0.09 % 96,503 91 0.09 %
Savings and money market accounts 754,830 5,988 0.79 % 527,484 2,680 0.51 %
Time deposits 263,021 2,818 1.07 % 298,883 1,539 0.51 %
FHLB advances 25,264 291 1.15 % 30,636 143 0.47 %
Other borrowings 51,115 2,315 4.53 % 11,097 411 3.72 %
Total interest-bearing liabilities $ 1,204,016 $ 11,512 0.96 % $ 964,603 $ 4,864 0.50 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits $ 496,486 $ 378,868
Other liabilities 18,435 9,366
Total noninterest-bearing liabilities $ 514,921 $ 388,234
Stockholders’ Equity 174,107 157,277
Total Liabilities and Stockholders’ Equity $ 1,893,044 $ 1,510,114
Net interest income $ 71,338 $ 52,913
Net interest spread(2) 3.68 % 3.63 %
Net interest margin(3) 3.99 % 3.78 %
Net interest margin - FTE(4)(5) 4.01 % 3.80 %
Cost of funds(6) 0.68 % 0.36 %
Cost of interest-bearing deposits 0.79 % 0.47 %
Cost of total deposits 0.55 % 0.33 %

(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 year ended ended December 31, 2022 and a 23.5% tax rate for the year ended December 31, 2021.
(5) Refer to “Reconciliation of Non-GAAP Financial Measures”.
(6) Includes total interest-bearing liabilities and noninterest deposits.



LOAN COMPOSITION
(Dollars in thousands)
December 31, 2022 September 30, 2022 December 31, 2021
Amount % of gross Amount % of gross Amount % of gross
Real estate mortgages:
Construction and development $ 255,736 16.1 % $ 222,159 14.5 % $ 174,480 13.9 %
Residential 167,891 10.5 % 164,296 10.7 % 147,490 11.8 %
Commercial 904,872 56.8 % 889,942 58.2 % 716,541 57.1 %
Commercial and industrial 256,553 16.1 % 243,577 15.9 % 197,694 15.8 %
PPP loans % % 9,203 0.7 %
Consumer and other 7,655 0.5 % 10,155 0.7 % 8,709 0.7 %
Gross loans 1,592,707 100.0 % 1,530,129 100.0 % 1,254,117 100.0 %
Unearned income (5,543 ) (5,139 ) (3,817 )
Loans, net of unearned income 1,587,164 1,524,990 1,250,300
Allowance for loan losses (20,156 ) (18,423 ) (14,844 )
Loans, net $ 1,567,008 $ 1,506,567 $ 1,235,456


DEPOSIT COMPOSITION
(Dollars in thousands)
December 31, 2022 September 30, 2022 December 31, 2021
Amount % of total Amount % of total Amount % of total
Noninterest-bearing transaction $ 460,977 26.8 % $ 499,613 28.3 % $ 541,546 34.8 %
Interest-bearing transaction 837,127 48.6 % 855,350 48.4 % 704,326 45.3 %
Savings 49,235 2.9 % 78,687 4.5 % 56,715 3.6 %
Time deposits, $250,000 and under 307,145 17.8 % 266,491 15.0 % 224,556 14.4 %
Time deposits, over $250,000 66,259 3.9 % 66,951 3.8 % 29,308 1.9 %
Total deposits $ 1,720,743 100.0 % $ 1,767,092 100.0 % $ 1,556,451 100.0 %



Nonperfoming Assets
(Dollars in thousands)
December 31,
2022
September 30,
2022
December 31,
2021
Nonaccrual loans $ 2,245 $ 3,950 $ 1,478
Past due loans 90 days or more and still accruing interest 494
Total nonperforming loans 2,245 3,950 1,972
OREO 2,930 2,930 2,930
Total nonperforming assets $ 5,175 $ 6,880 $ 4,902
Troubled debt restructured loans – nonaccrual(1) 832 1,011 940
Troubled debt restructured loans - accruing 1,292 1,307 1,072
Total troubled debt restructured loans $ 2,124 $ 2,318 $ 2,012
Allowance for loan losses $ 20,156 $ 18,423 $ 14,844
Loans, net of unearned income at the end of the period $ 1,587,164 $ 1,524,990 $ 1,250,300
Gross loans outstanding at the end of period $ 1,592,707 $ 1,530,129 $ 1,254,117
Total assets $ 2,044,866 $ 2,052,725 $ 1,782,592
Allowance for loan losses to nonperforming loans 897.82 % 466.41 % 752.74 %
Nonperforming loans to loans, net of unearned income 0.14 % 0.26 % 0.16 %
Nonperforming loans to gross loans 0.14 % 0.26 % 0.16 %
Nonperforming assets to gross loans and OREO 0.32 % 0.45 % 0.39 %
Nonperforming assets to total assets 0.25 % 0.34 % 0.27 %
Nonaccrual loans by category:
Real estate mortgages:
Construction & Development $ 67 $ 70 $ 346
Residential Mortgages 565 550 167
Commercial Real Estate Mortgages 1,278 2,888 674
Commercial & Industrial 312 434 285
Consumer and other 23 8 6
Total $ 2,245 $ 3,950 $ 1,478

(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 Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
Average loans, net of unearned income $ 1,563,255 $ 1,480,735 $ 1,191,688 $ 1,421,376 $ 1,118,386
Loans, net of unearned income $ 1,587,164 $ 1,524,990 $ 1,250,300 $ 1,587,164 $ 1,250,300
Gross loans $ 1,592,707 $ 1,530,129 $ 1,254,117 $ 1,592,707 $ 1,254,117
Allowance for loan losses at beginning of the period $ 18,423 $ 16,807 $ 14,097 $ 14,844 $ 11,859
Charge-offs:
Construction and development 66
Residential 7 44
Commercial
Commercial and industrial 210 269 479
Consumer and other 18 1 26 2
Total charge-offs 228 270 578 46
Recoveries:
Construction and development
Residential 4 11 13 50 25
Commercial
Commercial and industrial 1 204 1 205 15
Consumer and other 18 8 1 30 9
Total recoveries 23 223 15 285 49
Net charge-offs (recoveries) $ 205 $ 47 $ (15 ) $ 293 $ (3 )
Provision for loan losses $ 1,938 $ 1,663 $ 732 $ 5,605 $ 2,982
Balance at end of period $ 20,156 $ 18,423 $ 14,844 $ 20,156 $ 14,844
Allowance to loans, net of unearned income 1.27 % 1.21 % 1.19 % 1.27 % 1.19 %
Allowance to gross loans 1.27 % 1.20 % 1.18 % 1.27 % 1.18 %
Net charge-offs (recoveries) to average loans, net of unearned income(1) 0.05 % % % 0.02 % %
Provision for loan losses to average loans, net of unearned income(1) 0.49 % 0.45 % 0.24 % 0.39 % 0.27 %

(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 Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
Net income $ 10,592 $ 6,700 $ 4,058 $ 27,071 $ 18,567
Add: Net OREO gains 227 219
Less: Gain on sale of USDA loan 2,806
Less: Net gain on sale of branches 2,372 2,372
Less: BOLI benefit claim 774 774 742
Less: Loss on securities (86 ) (143 ) (40 ) (632 ) (57 )
Less: Tax effect (549 ) 37 69 (418 ) (661 )
Core net income $ 8,081 $ 6,806 $ 4,256 $ 24,975 $ 15,956
Average assets $ 1,994,087 $ 1,966,556 $ 1,628,804 $ 1,893,044 $ 1,510,114
Core return on average assets 1.61 % 1.37 % 1.04 % 1.32 % 1.06 %
Net income $ 10,592 $ 6,700 $ 4,058 $ 27,071 $ 18,567
Add: Net OREO gains 227 219
Add: Provision 1,938 1,663 732 5,605 2,982
Less: Gain on sale of USDA loan 2,806
Less: Net gain on sale of branches 2,372 2,372
Less: BOLI benefit claim 774 774 742
Less: Loss on securities (86 ) (143 ) (40 ) (632 ) (57 )
Add: Income taxes 2,521 2,174 1,445 7,725 5,732
Pretax pre-provision core net income $ 11,991 $ 10,680 $ 6,502 $ 37,887 $ 24,009
Average assets $ 1,994,087 $ 1,966,556 $ 1,628,804 $ 1,893,044 $ 1,510,114
Pretax pre-provision core return on average assets 2.39 % 2.15 % 1.58 % 2.00 % 1.59 %
Net interest income $ 20,884 $ 19,435 $ 14,096 $ 71,338 $ 52,913
Add: Fully-taxable equivalent adjustments(1) 84 86 77 335 276
Net interest income - FTE $ 20,968 $ 19,521 $ 14,173 $ 71,673 $ 53,189
Net interest margin 4.38 % 4.15 % 3.68 % 3.99 % 3.78 %
Effect of fully-taxable equivalent adjustments(1) 0.01 % 0.02 % 0.02 % 0.02 % 0.02 %
Net interest margin - FTE 4.39 % 4.17 % 3.70 % 4.01 % 3.80 %
Total stockholders' equity $ 181,719 $ 170,325 $ 177,198 $ 181,719 $ 177,198
Less: Intangible assets 18,088 18,164 18,362 18,088 18,362
Tangible common equity $ 163,631 $ 152,161 $ 158,836 $ 163,631 $ 158,836
1) Assumes a 24.0% tax rate for the three months ended December 31, 2022 and September 30, 2022 and a 23.5% tax rate for the three months ended December 31, 2021. Assumes a 24.0% tax rate for the year ended December 31, 2022 and a 23.5% tax rate for the year ended December 31, 2021.
Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts
Three Months Ended Year Ended December 31,
December 31,
2022
September 30,
2022
December 31,
2021
2022 2021
Core net income $ 8,081 $ 6,8