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   

ANNISTON, Ala., July 24, 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 $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”).

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 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 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, 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.

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.

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.

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.

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.

(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.

(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.

(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.

(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.

(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.