Southern States Bancshares, Inc. Announces Second Quarter 2024 Financial Results

Southern States Bancshares, Inc

Mon, Jul 22, 2024, 1:00 PM17 min read

In this article:

Second Quarter 2024 Performance and Operational Highlights

Net income of $8.2 million, or $0.90 per diluted share
Core net income⁽¹⁾ of $9.1 million, or $1.00 per diluted share⁽¹⁾
Net interest income of $21.6 million, an increase of $740,000 from the prior quarter
Net interest margin (“NIM”) of 3.56%, down 3 basis points from the prior quarter
NIM of 3.57% on a fully-taxable equivalent basis (“NIM - FTE”)⁽¹⁾
Return on average assets (“ROAA”) of 1.29%; return on average stockholders’ equity (“ROAE”) of 14.55%; and return on average tangible common equity (“ROATCE”)(1) of 15.79%
Core ROAA⁽¹⁾ of 1.43%; and core ROATCE⁽¹⁾ of 17.44%
Efficiency ratio of 49.78%; and core efficiency ratio of 44.75%
Linked-quarter loans grew 10.3% annualized
Linked-quarter total deposits grew 12.6% annualized
Linked-quarter total deposits, excluding brokered deposits, grew 15.2% annualized

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

ANNISTON, Ala., July 22, 2024 (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 $8.2 million, or $0.90 diluted earnings per share, for the second quarter of 2024. This compares to net income of $8.1 million, or $0.90 diluted earnings per share, for the first quarter of 2024, and net income of $8.8 million, or $0.98 diluted earnings per share, for the second quarter of 2023. The Company reported core net income of $9.1 million, or $1.00 diluted core earnings per share, for the second quarter of 2024. This compares to core net income of $8.1 million, or $0.90 diluted core earnings per share, for the first quarter of 2024, and core net income of $7.1 million, or $0.79 diluted core earnings per share, for the second quarter of 2023 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary

Mark Chambers, Chief Executive Officer and President of Southern States said, “We generated consistent growth in the second quarter with continued progress in business development adding high-quality loans and core deposits. We are seeing well-balanced loan growth across all our major areas of lending. Our total loan growth of 10.3% (annualized from the prior quarter) and total deposit growth of 12.6% reflected our ability to perform well through economic cycles.”
“We continue to be a high-performing bank with strong profitability metrics including ROATCE of 15.79%. Effective expense management resulted in our second highest core efficiency ratio of 44.75%.”
“Consistent with our prudent approach to risk management, we have a strong and durable foundation with high levels of capital reserves and strong credit quality. The addition of CBB Bancorp, which we expect to close on August 1, will strengthen our platform, drive loan and deposit growth, and expand our franchise in growing and attractive Georgia markets. Our two organizations are culturally aligned with a ‘Customer First’ mindset and we are excited to realize all the synergies that will benefit our customers, employees, shareholders, and the communities we serve.”

Net Interest Income and Net Interest Margin

	Three Months Ended									% Change June 30, 2024 vs.
	June 30, 2024			March 31, 2024			June 30, 2023			March 31, 2024		June 30, 2023
	(Dollars in thousands)

Average interest-earning assets	$	2,440,425		$	2,336,369		$	2,091,998		4.5	%	16.7	%
Net interest income	$	21,579		$	20,839		$	19,432		3.6	%	11.0	%
Net interest margin		3.56	%		3.59	%		3.73	%	(3)	bps	(17)	bps

Net interest income for the second quarter of 2024 was $21.6 million, an increase of 3.6% from $20.8 million in the first quarter of 2024. The increase was primarily driven by a higher yield on interest-earning assets resulting from growth at higher interest rates, which more than offset a higher cost of interest-bearing deposits due to both higher interest rates and competition.

Relative to the second quarter of 2023, net interest income increased $2.1 million, or 11.0%. The increase was mainly driven by growth, which offset the slight decline in net interest margin.

Net interest margin for the second quarter of 2024 was 3.56%, compared to 3.59% for the first quarter of 2024. The decrease was primarily due to an increase in the cost of interest-bearing deposits, which was greater than the increase in the yield on interest-earning assets.

Relative to the second quarter of 2023, net interest margin decreased from 3.73%. The decrease was primarily the result of the increase in interest rates, which accelerated the cost of interest-bearing liabilities at a greater 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

	Three Months Ended								% Change June 30, 2024 vs.
	June 30, 2024		March 31, 2024			June 30, 2023			March 31, 2024		June 30, 2023
	(Dollars in thousands)

Service charges on deposit accounts	$	462	$	463		$	456		(0.2	)%	1.3	%
Swap fees		4		15			173		(73.3	)%	(97.7	)%
SBA/USDA fees		58		64			66		(9.4	)%	(12.1	)%
Mortgage origination fees		92		96			188		(4.2	)%	(51.1	)%
Net gain (loss) on securities		20		(12	)		(45	)	(266.7	)%	(144.4	)%
Employee retention credit and related revenue (“ERC”)		—		—			5,100		N/A		N/A
Other operating income		732		642			924		14.0	%	(20.8	)%
Total noninterest income	$	1,368	$	1,268		$	6,862		7.9	%	(80.1	)%

Noninterest income for the second quarter of 2024 was $1.4 million, an increase of 7.9% from $1.3 million in the first quarter of 2024. The increase primarily reflected the purchase of additional bank owned life insurance (“BOLI”) that resulted in increased BOLI income, a realized net gain on securities during the second quarter of 2024 compared to a net loss on securities during the first quarter of 2024, and an increase in interchange fees.

Relative to the second quarter of 2023, noninterest income decreased 80.1% from $6.9 million. In the second quarter of 2023, the Company received $5.1 million in ERC from the Internal Revenue Service (“IRS”), which was subsequently returned in the third quarter of 2023 as a result of revised IRS eligibility guidelines. Other operating income decreased as a result of the Company receiving less nonrecurring income from a third party during the second quarter of 2024. In addition, there was a decline in swap fees during the second quarter of 2024, substantially as a result of the Company not participating in any swap transactions.

Noninterest Expense

	Three Months Ended						% Change June 30, 2024 vs.
	June 30, 2024		March 31, 2024		June 30, 2023		March 31, 2024		June 30, 2023
	(Dollars in thousands)

Salaries and employee benefits	$	6,112	$	6,231	$	7,863	(1.9	)%	(22.3	)%
Equipment and occupancy expenses		667		689		694	(3.2	)%	(3.9	)%
Data processing fees		686		643		646	6.7	%	6.2	%
Regulatory assessments		375		360		180	4.2	%	108.3	%
Professional fees related to ERC		—		—		1,243	N/A		N/A
Other operating expenses		3,571		2,452		2,806	45.6	%	27.3	%
Total noninterest expenses	$	11,411	$	10,375	$	13,432	10.0	%	(15.0	)%

Noninterest expense for the second quarter of 2024 was $11.4 million, an increase of 10.0% from $10.4 million in the first quarter of 2024. The second quarter of 2024 included a $1.2 million wire fraud loss. This was not a systematic issue with systems, only a procedural incident. The increase was partially offset by a reduction in salaries and benefits during the second quarter of 2024, substantially due to higher payroll taxes and 401k matching brought about by incentive expense paid during the first quarter of 2024.

Relative to the second quarter of 2023, noninterest expense decreased 15.0% from $13.4 million. The decrease was primarily attributable to a decrease in salaries and benefits, substantially as a result of one-time retirement-related expenses of $1.6 million paid to our former CEO in May 2023 and professional fees paid to a third party during the second quarter of 2023 related to ERC, which were subsequently refunded during the third quarter of 2023. These decreases were significantly offset by the wire fraud loss the Company incurred during the second quarter of 2024. As previously mentioned, this was not a systematic issue with systems, only a procedural incident.

Loans and Credit Quality

	Three Months Ended									% Change June 30, 2024 vs.
	June 30, 2024			March 31, 2024			June 30, 2023			March 31, 2024		June 30, 2023
	(Dollars in thousands)

Gross loans	$	2,021,877		$	1,971,396		$	1,722,278		2.6	%	17.4	%
Unearned income		(6,443	)		(6,247	)		(5,766	)	3.1	%	11.7	%
Loans, net of unearned income (“Loans”)		2,015,434			1,965,149			1,716,512		2.6	%	17.4	%
Average loans, net of unearned (“Average loans”)	$	1,987,533		$	1,916,288		$	1,676,816		3.7	%	18.5	%

Nonperforming loans (“NPL”)	$	3,784		$	3,446		$	1,010		9.8	%	274.7	%
Provision for credit losses	$	1,067		$	1,236		$	1,557		(13.7	)%	(31.5	)%
Allowance for credit losses (“ACL”)	$	25,828		$	25,144		$	21,385		2.7	%	20.8	%
Net charge-offs	$	383		$	470		$	27		(18.5	)%	1318.5	%
NPL to gross loans		0.19	%		0.17	%		0.06	%
Net charge-offs to average loans⁽¹⁾		0.08	%		0.10	%		0.01	%
ACL to loans		1.28	%		1.28	%		1.25	%

^{(1) Ratio is annualized.}

Loans, net of unearned income, were $2.0 billion at June 30, 2024, up $50.3 million from March 31, 2024 and up $298.9 million from June 30, 2023. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.

Nonperforming loans totaled $3.8 million, or 0.19% of gross loans, at June 30, 2024, compared with $3.4 million, or 0.17% of gross loans, at March 31, 2024, and $1.0 million, or 0.06% of gross loans, at June 30, 2023. The $338,000 net increase in nonperforming loans in the second quarter of 2024 was primarily attributable to a commercial and industrial loan that was added to nonaccrual status and partially offset by a commercial and industrial loan that was charged-off. The $2.8 million net increase in nonperforming loans from June 30, 2023, was primarily attributable to a significant commercial real estate loan and two commercial and industrial loans that were added to nonaccrual status.

The Company recorded a provision for credit losses of $1.1 million for the second quarter of 2024, compared to $1.2 million for the first quarter of 2024. Provision in the second quarter of 2024 was based primarily on loan growth along with qualitative economic factors and individually analyzed loans.

Net charge-offs for the second quarter of 2024 were $383,000, or 0.08% of average loans on an annualized basis, compared to net charge-offs of $470,000, or 0.10% of average loans on an annualized basis, for the first quarter of 2024, and net charge-offs of $27,000, or 0.01% of average loans on an annualized basis, for the second quarter of 2023. The charge-offs recorded during the the first and second quarters of 2024 were substantially related to the charge-off of approximately 70% of a purchased pool of consumer loans, as the borrower has filed for bankruptcy. This was a conservative approach based on uncertainty.

The Company’s allowance for credit losses was 1.28% of total loans and 682.56% of nonperforming loans at June 30, 2024, compared with 1.28% of total loans and 729.66% of nonperforming loans at March 31, 2024. Allowance for credit losses on unfunded commitments was $1.2 million at June 30, 2024.

Deposits

	Three Months Ended									% Change June 30, 2024 vs.
	June 30, 2024			March 31, 2024			June 30, 2023			March 31, 2024		June 30, 2023
	(Dollars in thousands)

Noninterest-bearing deposits	$	416,068		$	416,704		$	449,433		(0.2	)%	(7.4	)%
Interest-bearing deposits		1,759,610			1,693,094			1,474,478		3.9	%	19.3	%
Total deposits	$	2,175,678		$	2,109,798		$	1,923,911		3.1	%	13.1	%

Uninsured deposits	$	645,283		$	610,122		$	553,084		5.8	%	16.7	%
Uninsured deposits to total deposits		29.66	%		28.92	%		28.75	%
Noninterest deposits to total deposits		19.12	%		19.75	%		23.36	%

Total deposits were $2.2 billion at June 30, 2024, up from $2.1 billion at March 31, 2024 and $1.9 billion at June 30, 2023. The $65.9 million increase in total deposits in the second quarter was primarily due to an increase of $66.5 million in interest-bearing deposits, which included a $2.7 million decrease in brokered deposits, partially offset by a $636,000 decrease in noninterest-bearing deposits. Total brokered deposits were $288.3 million at June 30, 2024, compared to 291.0 million at March 31, 2024.

Capital

	June 30, 2024				March 31, 2024				June 30, 2023
	Company		Bank		Company		Bank		Company		Bank

Tier 1 capital ratio to average assets	8.72	%	11.52	%	8.79	%	11.67	%	8.70	%	11.82	%
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio	9.54	%	12.61	%	9.39	%	12.47	%	9.11	%	12.37	%
Tier 1 capital ratio	9.54	%	12.61	%	9.39	%	12.47	%	9.11	%	12.37	%
Total capital ratio	14.50	%	13.77	%	14.42	%	13.63	%	14.42	%	13.47	%

As of June 30, 2024, total stockholders’ equity was $230.6 million, up from $222.9 million at March 31, 2024. The increase of $7.7 million was substantially due to earnings growth.

About Southern States Bancshares, Inc.

Headquartered in Anniston, Alabama, Southern States Bancshares, Inc. is a bank holding company that operates primarily through its wholly-owned subsidiary, Southern States Bank. The Bank is a full service community banking institution, which offers an array of deposit, loan and other banking-related products and services to businesses and individuals in its communities. The Bank operates 13 branches in Alabama and Georgia and two loan production offices in Atlanta.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which reflect our current expectations and beliefs with respect to, among other things, future events and our financial performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. This may be especially true given recent events and trends in the banking industry and the inflationary environment. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the dates made, we cannot give any assurance that such expectations will prove correct and actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 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 our acquisition of Century Bank of Georgia, business strategy and prospects for growth, operations, ability to pay dividends, competition, regulation and general economic conditions.

Contact Information

Lynn Joyce				Margaret Boyce
(205) 820-8065				(310) 622-8247
ljoyce@ssbank.bank				ssbankir@finprofiles.com

SELECT FINANCIAL DATA
(Dollars in thousands, except share and per share amounts)

	Three Months Ended									Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Results of Operations
Interest income	$	41,007		$	38,736		$	32,185		$	79,743		$	60,884
Interest expense		19,428			17,897			12,753			37,325			21,906
Net interest income		21,579			20,839			19,432			42,418			38,978
Provision for credit losses		1,067			1,236			1,557			2,303			2,738
Net interest income after provision		20,512			19,603			17,875			40,115			36,240
Noninterest income		1,368			1,268			6,862			2,636			8,648
Noninterest expense		11,411			10,375			13,432			21,786			23,590
Income tax expense		2,271			2,377			2,549			4,648			4,871
Net income	$	8,198		$	8,119		$	8,756		$	16,317		$	16,427
Core net income⁽¹⁾	$	9,058		$	8,128		$	7,058		$	17,186		$	14,339

Share and Per Share Data
Shares issued and outstanding		8,908,130			8,894,794			8,738,814			8,908,130			8,738,814
Weighted average shares outstanding:
Basic		8,957,608			8,913,477			8,763,635			8,935,542			8,763,046
Diluted		9,070,568			9,043,122			8,950,847			9,062,548			9,001,600
Earnings per share:
Basic	$	0.91		$	0.91		$	1.00		$	1.82		$	1.87
Diluted		0.90			0.90			0.98			1.80			1.82
Core - diluted⁽¹⁾		1.00			0.90			0.79			1.90			1.59
Book value per share		25.88			25.06			22.57			25.88			22.57
Tangible book value per share⁽¹⁾		23.91			23.07			20.52			23.91			20.52
Cash dividends per common share		0.09			0.09			0.09			0.18			0.18

Performance and Financial Ratios
ROAA		1.29	%		1.33	%		1.60	%		1.31	%		1.56	%
ROAE		14.55	%		14.87	%		18.15	%		14.71	%		17.43	%
Core ROAA⁽¹⁾		1.43	%		1.34	%		1.29	%		1.38	%		1.36	%
ROATCE⁽¹⁾		15.79	%		16.17	%		20.01	%		15.98	%		19.25	%
Core ROATCE⁽¹⁾		17.44	%		16.19	%		16.13	%		16.83	%		16.80	%
NIM		3.56	%		3.59	%		3.73	%		3.57	%		3.89	%
NIM - FTE⁽¹⁾		3.57	%		3.60	%		3.74	%		3.58	%		3.90	%
Net interest spread		2.59	%		2.63	%		2.86	%		2.60	%		3.08	%
Yield on loans		7.17	%		7.06	%		6.61	%		7.11	%		6.50	%
Yield on interest-earning assets		6.76	%		6.67	%		6.17	%		6.71	%		6.08	%
Cost of interest-bearing liabilities		4.17	%		4.04	%		3.31	%		4.11	%		3.00	%
Cost of funds⁽²⁾		3.41	%		3.27	%		2.58	%		3.34	%		2.31	%
Cost of interest-bearing deposits		4.07	%		3.92	%		3.12	%		4.00	%		2.79	%
Cost of total deposits		3.27	%		3.12	%		2.38	%		3.20	%		2.11	%
Noninterest deposits to total deposits		19.12	%		19.75	%		23.36	%		19.12	%		23.36	%
Core deposits to total deposits		81.78	%		81.45	%		86.43	%		81.78	%		86.43	%
Uninsured deposits to total deposits		29.66	%		28.92	%		28.75	%		29.66	%		28.75	%
Total loans to total deposits		92.63	%		93.14	%		89.22	%		92.63	%		89.22	%
Efficiency ratio		49.78	%		46.90	%		51.00	%		48.36	%		50.02	%
Core efficiency ratio⁽¹⁾		44.75	%		46.90	%		49.96	%		45.81	%		49.38	%

^{(1) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.}
^{(2) Includes total interest-bearing liabilities and noninterest deposits.}

SELECT FINANCIAL DATA
(Dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Financial Condition (ending)
Total loans	$	2,015,434		$	1,965,149		$	1,716,512		$	2,015,434		$	1,716,512
Total securities		204,131			197,006			182,717			204,131			182,717
Total assets		2,572,011			2,510,975			2,277,803			2,572,011			2,277,803
Total noninterest-bearing deposits		416,068			416,704			449,433			416,068			449,433
Total core deposits⁽¹⁾		1,779,253			1,718,333			1,662,855			1,779,253			1,662,855
Total deposits		2,175,678			2,109,798			1,923,911			2,175,678			1,923,911
Total borrowings		136,873			146,773			131,472			136,873			131,472
Total liabilities		2,341,430			2,288,094			2,080,553			2,341,430			2,080,553
Total shareholders’ equity		230,581			222,881			197,250			230,581			197,250

Financial Condition (average)
Total loans	$	1,987,533		$	1,916,288		$	1,676,816		$	1,951,910		$	1,643,376
Total securities		210,678			208,954			196,731			209,816			194,552
Total other interest-earning assets		242,214			211,127			218,451			226,671			182,447
Total interest-earning assets		2,440,425			2,336,369			2,091,998			2,388,397			2,020,375
Total assets		2,553,010			2,447,278			2,200,843			2,500,144			2,129,328
Total noninterest-bearing deposits		420,885			416,141			438,987			418,513			438,862
Total interest-bearing deposits		1,729,682			1,633,307			1,412,047			1,681,494			1,356,648
Total deposits		2,150,567			2,049,448			1,851,034			2,100,007			1,795,510
Total borrowings		143,189			148,771			131,411			145,980			118,229
Total interest-bearing liabilities		1,872,871			1,782,078			1,543,458			1,827,474			1,474,877
Total shareholders’ equity		226,527			219,622			193,516			223,075			190,096

Asset Quality
Nonperforming loans	$	3,784		$	3,446		$	1,010		$	3,784		$	1,010
Other real estate owned (“OREO”)	$	33		$	33		$	2,870		$	33		$	2,870
Nonperforming assets (“NPA”)	$	3,817		$	3,479		$	3,880		$	3,817		$	3,880
Net charge-offs to average loans⁽²⁾		0.08	%		0.10	%		0.01	%		0.09	%		0.03	%
Provision for credit losses to average loans⁽²⁾		0.22	%		0.26	%		0.37	%		0.24	%		0.34	%
ACL to loans		1.28	%		1.28	%		1.25	%		1.28	%		1.25	%
ACL to gross loans		1.28	%		1.28	%		1.24	%		1.28	%		1.24	%
ACL to NPL		682.56	%		729.66	%		2117.33	%		682.56	%		2117.33	%
NPL to loans		0.19	%		0.18	%		0.06	%		0.19	%		0.06	%
NPL to gross loans		0.19	%		0.17	%		0.06	%		0.19	%		0.06	%
NPA to gross loans and OREO		0.19	%		0.18	%		0.22	%		0.19	%		0.22	%
NPA to total assets		0.15	%		0.14	%		0.17	%		0.15	%		0.17	%

Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets		8.97	%		8.88	%		8.66	%		8.97	%		8.66	%
Tangible common equity to tangible assets⁽³⁾		8.34	%		8.23	%		7.94	%		8.34	%		7.94	%
Tier 1 capital ratio to average assets		8.72	%		8.79	%		8.70	%		8.72	%		8.70	%
Risk-based capital ratios:
CET1 capital ratio		9.54	%		9.39	%		9.11	%		9.51	%		9.11	%
Tier 1 capital ratio		9.54	%		9.39	%		9.11	%		9.51	%		9.11	%
Total capital ratio		14.50	%		14.42	%		14.42	%		14.45	%		14.42	%

^{(1) We define core deposits as total deposits excluding brokered deposits and time deposits greater than $250,000.}
^{(2) Ratio is annualized.}
^{(3) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.}

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)

	June 30, 2024			March 31, 2024			December 31, 2023			June 30, 2023
	(Unaudited)			(Unaudited)			(Audited)			(Unaudited)

Assets
Cash and due from banks	$	21,598		$	20,470		$	19,710		$	21,299
Interest-bearing deposits in banks		140,440			129,917			134,846			159,818
Federal funds sold		76,334			86,736			96,095			84,812
Total cash and cash equivalents		238,372			237,123			250,651			265,929

Securities available for sale, at fair value		184,510			177,379			179,000			163,075
Securities held to maturity, at amortized cost		19,621			19,627			19,632			19,642
Other equity securities, at fair value		3,658			3,638			3,649			3,762
Restricted equity securities, at cost		4,633			5,108			5,684			3,862
Loans held for sale		1,716			425			450			1,589

Loans, net of unearned income		2,015,434			1,965,149			1,884,508			1,716,512
Less allowance for credit losses		25,828			25,144			24,378			21,385
Loans, net		1,989,606			1,940,005			1,860,130			1,695,127

Premises and equipment, net		26,192			26,262			26,426			26,957
Accrued interest receivable		9,654			9,561			8,711			7,372
Bank owned life insurance		33,000			30,075			29,884			29,521
Annuities		15,918			15,939			15,036			15,359
Foreclosed assets		33			33			33			2,870
Goodwill		16,862			16,862			16,862			16,862
Core deposit intangible		735			817			899			1,062
Other assets		27,501			28,121			29,616			24,814

Total assets	$	2,572,011		$	2,510,975		$	2,446,663		$	2,277,803

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	416,068		$	416,704		$	437,959		$	449,433
Interest-bearing		1,759,610			1,693,094			1,580,230			1,474,478
Total deposits		2,175,678			2,109,798			2,018,189			1,923,911

Other borrowings		8,000			7,997			26,994			(13	)
FHLB advances		42,000			52,000			70,000			45,000
Subordinated notes		86,873			86,776			86,679			86,485
Accrued interest payable		2,024			1,805			1,519			1,063
Other liabilities		26,855			29,718			28,318			24,107

Total liabilities		2,341,430			2,288,094			2,231,699			2,080,553

Stockholders' equity:
Common stock		44,813			44,746			44,479			43,831
Capital surplus		79,248			79,282			78,361			77,101
Retained earnings		117,233			109,838			102,523			88,603
Accumulated other comprehensive loss		(8,333	)		(8,401	)		(8,379	)		(10,799	)
Unvested restricted stock		(826	)		(1,030	)		(466	)		(709	)
Vested restricted stock units		(1,554	)		(1,554	)		(1,554	)		(777	)

Total stockholders' equity		230,581			222,881			214,964			197,250

Total liabilities and stockholders' equity	$	2,572,011		$	2,510,975		$	2,446,663		$	2,277,803

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

	Three Months Ended								Six Months Ended
	June 30, 2024		March 31, 2024			June 30, 2023			June 30, 2024		June 30, 2023
	(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Interest income:
Loans, including fees	$	35,421	$	33,628		$	27,630		$	69,049	$	52,965
Taxable securities		2,039		1,981			1,641			4,020		3,024
Nontaxable securities		231		229			228			460		519
Other interest and dividends		3,316		2,898			2,686			6,214		4,376
Total interest income		41,007		38,736			32,185			79,743		60,884

Interest expense:
Deposits		17,511		15,906			10,998			33,417		18,766
Other borrowings		1,917		1,991			1,755			3,908		3,140
Total interest expense		19,428		17,897			12,753			37,325		21,906

Net interest income		21,579		20,839			19,432			42,418		38,978
Provision for credit losses		1,067		1,236			1,557			2,303		2,738
Net interest income after provision for credit losses		20,512		19,603			17,875			40,115		36,240

Noninterest income:
Service charges on deposit accounts		462		463			456			925		906
Swap fees		4		15			173			19		169
SBA/USDA fees		58		64			66			122		200
Mortgage origination fees		92		96			188			188		288
Net gain (loss) on securities		20		(12	)		(45	)		8		469
Employee retention credit and related revenue		—		—			5,100			—		5,100
Other operating income		732		642			924			1,374		1,516
Total noninterest income		1,368		1,268			6,862			2,636		8,648

Noninterest expenses:
Salaries and employee benefits		6,112		6,231			7,863			12,343		14,174
Equipment and occupancy expenses		667		689			694			1,356		1,377
Data processing fees		686		643			646			1,329		1,239
Regulatory assessments		375		360			180			735		522
Professional fees related to ERC		—		—			1,243			—		1,243
Other operating expenses		3,571		2,452			2,806			6,023		5,035
Total noninterest expenses		11,411		10,375			13,432			21,786		23,590

Income before income taxes		10,469		10,496			11,305			20,965		21,298

Income tax expense		2,271		2,377			2,549			4,648		4,871

Net income	$	8,198	$	8,119		$	8,756		$	16,317	$	16,427

Basic earnings per share	$	0.91	$	0.91		$	1.00		$	1.82	$	1.87

Diluted earnings per share	$	0.90	$	0.90		$	0.98		$	1.80	$	1.82

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

	Three Months Ended
	June 30, 2024							March 31, 2024							June 30, 2023
	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⁾	$	1,987,533		$	35,421	7.17	%	$	1,916,288		$	33,628	7.06	%	$	1,676,816		$	27,630	6.61	%
Taxable securities		165,141			2,039	4.97	%		163,586			1,981	4.87	%		151,107			1,641	4.36	%
Nontaxable securities		45,537			231	2.04	%		45,368			229	2.03	%		45,624			228	2.00	%
Other interest-earnings assets		242,214			3,316	5.51	%		211,127			2,898	5.52	%		218,451			2,686	4.93	%
Total interest-earning assets	$	2,440,425		$	41,007	6.76	%	$	2,336,369		$	38,736	6.67	%	$	2,091,998		$	32,185	6.17	%
Allowance for credit losses		(25,332	)						(24,313	)						(20,154	)
Noninterest-earning assets		137,917							135,222							128,999
Total Assets	$	2,553,010						$	2,447,278						$	2,200,843

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		85,976			21	0.10	%		85,858			26	0.12	%		92,245			20	0.09	%
Savings and money market accounts		929,930			9,229	3.99	%		902,361			8,804	3.92	%		845,742			6,872	3.26	%
Time deposits		713,776			8,261	4.65	%		645,088			7,076	4.41	%		474,060			4,106	3.47	%
FHLB advances		48,374			596	4.96	%		53,121			655	4.96	%		45,000			529	4.72	%
Other borrowings		94,815			1,321	5.60	%		95,650			1,336	5.62	%		86,411			1,226	5.69	%
Total interest-bearing liabilities	$	1,872,871		$	19,428	4.17	%	$	1,782,078		$	17,897	4.04	%	$	1,543,458		$	12,753	3.31	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	420,885						$	416,141						$	438,987
Other liabilities		32,727							29,437							24,882
Total noninterest-bearing liabilities	$	453,612						$	445,578						$	463,869
Stockholders’ Equity		226,527							219,622							193,516
Total Liabilities and Stockholders’ Equity	$	2,553,010						$	2,447,278						$	2,200,843

Net interest income				$	21,579						$	20,839						$	19,432
Net interest spread⁽²⁾						2.59	%						2.63	%						2.86	%
Net interest margin⁽³⁾						3.56	%						3.59	%						3.73	%
Net interest margin - FTE⁽⁴⁾⁽⁵⁾						3.57	%						3.60	%						3.74	%
Cost of funds⁽⁶⁾						3.41	%						3.27	%						2.58	%
Cost of interest-bearing deposits						4.07	%						3.92	%						3.12	%
Cost of total deposits						3.27	%						3.12	%						2.38	%

^{(1) Includes nonaccrual loans.}
^{(2) Net interest spread is the difference between interest rates earned on interest-earning assets and interest rates paid on interest-bearing liabilities.}
^{(3) Net interest margin is a ratio of net interest income to average interest-earning assets for the same period.}
^{(4) Net interest margin - FTE is a ratio of fully-taxable equivalent net interest income to average interest-earning assets for the same period. It assumes a 24.0% tax rate.}
^{(5) Refer to “Reconciliation of Non-GAAP Financial Measures”.}
^{(6) Includes total interest-bearing liabilities and noninterest deposits.}

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

	Six Months Ended
	June 30, 2024							June 30, 2023
	Average Balance			Interest		Yield/Rate		Average Balance			Interest		Yield/Rate
Assets:
Interest-earning assets:
Loans, net of unearned income⁽¹⁾	$	1,951,910		$	69,049	7.11	%	$	1,643,376		$	52,965	6.50	%
Taxable securities		164,363			4,020	4.92	%		145,344			3,024	4.20	%
Nontaxable securities		45,453			460	2.04	%		49,208			519	2.13	%
Other interest-earnings assets		226,671			6,214	5.51	%		182,447			4,376	4.84	%
Total interest-earning assets	$	2,388,397		$	79,743	6.71	%	$	2,020,375		$	60,884	6.08	%
Allowance for credit losses		(24,822	)						(20,315	)
Noninterest-earning assets		136,569							129,268
Total Assets	$	2,500,144						$	2,129,328

Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		85,917			48	0.11	%		93,093			40	0.09	%
Savings and money market accounts		916,145			18,032	3.96	%		825,982			11,911	2.91	%
Time deposits		679,432			15,337	4.54	%		437,573			6,815	3.14	%
FHLB advances		50,747			1,251	4.96	%		31,862			688	4.35	%
Other borrowings		95,233			2,657	5.61	%		86,367			2,452	5.73	%
Total interest-bearing liabilities	$	1,827,474		$	37,325	4.11	%	$	1,474,877		$	21,906	3.00	%

Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	418,513						$	438,862
Other liabilities		31,082							25,493
Total noninterest-bearing liabilities	$	449,595						$	464,355
Stockholders’ Equity		223,075							190,096
Total Liabilities and Stockholders’ Equity	$	2,500,144						$	2,129,328

Net interest income				$	42,418						$	38,978
Net interest spread⁽²⁾						2.60	%						3.08	%
Net interest margin⁽³⁾						3.57	%						3.89	%
Net interest margin - FTE⁽⁴⁾⁽⁵⁾						3.58	%						3.90	%
Cost of funds⁽⁶⁾						3.34	%						2.31	%
Cost of interest-bearing deposits						4.00	%						2.79	%
Cost of total deposits						3.20	%						2.11	%

LOAN COMPOSITION
(Dollars in thousands)

	June 30, 2024					March 31, 2024					December 31, 2023					June 30, 2023
	Amount			% of gross		Amount			% of gross		Amount			% of gross		Amount			% of gross

Real estate mortgages:
Construction and development	$	242,573		12.0	%	$	252,934		12.8	%	$	242,960		12.9	%	$	228,236		13.3	%
Residential		249,498		12.3	%		238,702		12.1	%		224,603		11.9	%		214,897		12.5	%
Commercial		1,222,739		60.5	%		1,182,634		60.0	%		1,144,867		60.5	%		1,011,815		58.7	%
Commercial and industrial		297,501		14.7	%		288,701		14.7	%		269,961		14.3	%		259,195		15.0	%
Consumer and other		9,566		0.5	%		8,425		0.4	%		8,286		0.4	%		8,135		0.5	%
Gross loans		2,021,877		100.0	%		1,971,396		100.0	%		1,890,677		100.0	%		1,722,278		100.0	%
Unearned income		(6,443	)				(6,247	)				(6,169	)				(5,766	)
Loans, net of unearned income		2,015,434					1,965,149					1,884,508					1,716,512
Allowance for credit losses		(25,828	)				(25,144	)				(24,378	)				(21,385	)
Loans, net	$	1,989,606				$	1,940,005				$	1,860,130				$	1,695,127

DEPOSIT COMPOSITION
(Dollars in thousands)

	June 30, 2024				March 31, 2024				December 31, 2023				June 30, 2023
	Amount		% of total		Amount		% of total		Amount		% of total		Amount		% of total


Noninterest-bearing transaction	$	416,068	19.1	%	$	416,704	19.7	%	$	437,959	21.7	%	$	449,433	23.3	%
Interest-bearing transaction		1,006,687	46.3	%		974,079	46.2	%		946,347	46.9	%		922,835	48.0	%
Savings		32,527	1.5	%		33,909	1.6	%		35,412	1.7	%		41,574	2.2	%
Time deposits, $250,000 and under		612,299	28.1	%		584,658	27.7	%		500,406	24.8	%		438,228	22.8	%
Time deposits, over $250,000		108,097	5.0	%		100,448	4.8	%		98,065	4.9	%		71,841	3.7	%
Total deposits	$	2,175,678	100.0	%	$	2,109,798	100.0	%	$	2,018,189	100.0	%	$	1,923,911	100.0	%

Nonperforming Assets
(Dollars in thousands)

	June 30, 2024			March 31, 2024			December 31, 2023			June 30, 2023


Nonaccrual loans	$	3,784		$	3,446		$	1,017		$	1,010
Past due loans 90 days or more and still accruing interest		—			—			160			—
Total nonperforming loans		3,784			3,446			1,177			1,010
OREO		33			33			33			2,870
Total nonperforming assets	$	3,817		$	3,479		$	1,210		$	3,880

Financial difficulty modification loans – nonaccrual⁽¹⁾		647			675			907			724
Financial difficulty modification loans – accruing		1,093			1,283			1,095			1,328
Financial difficulty modification loans	$	1,740		$	1,958		$	2,002		$	2,052

Allowance for credit losses	$	25,828		$	25,144		$	24,378		$	21,385
Loans, net of unearned income at the end of the period	$	2,015,434		$	1,965,149		$	1,884,508		$	1,716,512
Gross loans outstanding at the end of period	$	2,021,877		$	1,971,396		$	1,890,677		$	1,722,278
Total assets	$	2,572,011		$	2,510,975		$	2,446,663		$	2,277,803
Allowance for credit losses to nonperforming loans		682.56	%		729.66	%		2071.20	%		2117.33	%
Nonperforming loans to loans, net of unearned income		0.19	%		0.18	%		0.06	%		0.06	%
Nonperforming loans to gross loans		0.19	%		0.17	%		0.06	%		0.06	%
Nonperforming assets to gross loans and OREO		0.19	%		0.18	%		0.06	%		0.22	%
Nonperforming assets to total assets		0.15	%		0.14	%		0.05	%		0.17	%

Nonaccrual loans by category:
Real estate mortgages:
Construction & Development	$	—		$	—		$	—		$	33
Residential Mortgages		393			246			252			297
Commercial Real Estate Mortgages		2,182			2,422			765			671
Commercial & Industrial		1,209			778			—			9
Consumer and other		—			—			—			—
Total	$	3,784		$	3,446		$	1,017		$	1,010

^{(1) Financial difficulty modifications loans are excluded from nonperforming loans unless they otherwise meet the definition of nonaccrual loans or are more than 90 days past due.}

Allowance for Credit Losses
(Dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Average loans, net of unearned income	$	1,987,533		$	1,916,288		$	1,676,816		$	1,951,910		$	1,643,376
Loans, net of unearned income		2,015,434			1,965,149			1,716,512			2,015,434			1,716,512
Gross loans		2,021,877			1,971,396			1,722,278			2,021,877			1,722,278
Allowance for credit losses at beginning of the period		25,144			24,378			19,855			24,378			20,156
Impact of adoption of ASC 326		—			—			—			—			(1,285	)
Charge-offs:
Construction and development		—			—			—			—			—
Residential		—			11			—			11			—
Commercial		11			27			—			38			—
Commercial and industrial		384			442			44			826			262
Consumer and other		10			15			—			25			6
Total charge-offs		405			495			44			900			268
Recoveries:
Construction and development		—			—			—			—			—
Residential		6			8			17			14			28
Commercial		—			—			—			—			—
Commercial and industrial		15			16			—			31			14
Consumer and other		1			1			—			2			2
Total recoveries		22			25			17			47			44
Net charge-offs	$	383		$	470		$	27		$	853		$	224

Provision for credit losses	$	1,067		$	1,236		$	1,557		$	2,303		$	2,738
Balance at end of the period	$	25,828		$	25,144		$	21,385		$	25,828		$	21,385

Allowance for credit losses on unfunded commitments at beginning of the period	$	1,288		$	1,239		$	1,285		$	1,239		$	—
Impact of adoption of ASC 326		—			—			—			—			1,285
(Credit) provision for credit losses on unfunded commitments		(82	)		49			210			(33	)		210
Balance at the end of the period	$	1,206		$	1,288		$	1,495		$	1,206		$	1,495

Allowance to loans, net of unearned income		1.28	%		1.28	%		1.25	%		1.28	%		1.25	%
Allowance to gross loans		1.28	%		1.28	%		1.24	%		1.28	%		1.24	%
Net charge-offs to average loans, net of unearned income⁽¹⁾		0.08	%		0.10	%		0.01	%		0.09	%		0.03	%
Provision for credit losses to average loans, net of unearned income⁽¹⁾		0.22	%		0.26	%		0.37	%		0.24	%		0.34	%

^{(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)

	Three Months Ended									Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Net income	$	8,198		$	8,119		$	8,756		$	16,317		$	16,427
Add: One-time retirement related expenses		—			—			1,571			—			1,571
Add: Professional fees related to ERC		—			—			1,243			—			1,243
Add: Wire fraud loss		1,155			—			—			1,155			—
Add: Net OREO (gain) loss		(3	)		—			7			(3	)		7
Less: Employee retention related revenue		—			—			5,100			—			5,100
Less: Net gain (loss) on securities		20			(12	)		(45	)		8			469
Less: Tax effect		272			3			(536	)		275			(660	)
*Core net income*	$	*9,058*		$	*8,128*		$	*7,058*		$	*17,186*		$	*14,339*
Average assets	$	2,553,010		$	2,447,278		$	2,200,843		$	2,500,144		$	2,129,328
*Core return on average assets*		*1.43*	%		*1.34*	%		*1.29*	%		*1.38*	%		*1.36*	%

Net income	$	8,198		$	8,119		$	8,756		$	16,317		$	16,427
Add: One-time retirement related expenses		—			—			1,571			—			1,571
Add: Professional fees related to ERC		—			—			1,243			—			1,243
Add: Wire fraud loss		1,155			—			—			1,155			—
Add: Net OREO (gain) loss		(3	)		—			7			(3	)		7
Add: Provision		1,067			1,236			1,557			2,303			2,738
Less: Employee retention related revenue		—			—			5,100			—			5,100
Less: Net gain (loss) on securities		20			(12	)		(45	)		8			469
Add: Income taxes		2,271			2,377			2,549			4,648			4,871
*Pretax pre-provision core net income*	$	*12,668*		$	*11,744*		$	*10,628*		$	*24,412*		$	*21,288*
Average assets	$	2,553,010		$	2,447,278		$	2,200,843		$	2,500,144		$	2,129,328
*Pretax pre-provision core return on average assets*		*2.00*	%		*1.93*	%		*1.94*	%		*1.96*	%		*2.02*	%

Net interest income	$	21,579		$	20,839		$	19,432		$	42,418		$	38,978
Add: Fully-taxable equivalent adjustments⁽¹⁾		73			73			65			146			143
*Net interest income - FTE*	$	*21,652*		$	*20,912*		$	*19,497*		$	*42,564*		$	*39,121*

Net interest margin		3.56	%		3.59	%		3.73	%		3.57	%		3.89	%
Effect of fully-taxable equivalent adjustments⁽¹⁾		0.01	%		0.01	%		0.01	%		0.01	%		0.01	%
*Net interest margin - FTE*		*3.57*	%		*3.60*	%		*3.74*	%		*3.58*	%		*3.90*	%

Total stockholders' equity	$	230,581		$	222,881		$	197,250		$	230,581		$	197,250
Less: Intangible assets		17,597			17,679			17,924			17,597			17,924
*Tangible common equity*	$	*212,984*		$	*205,202*		$	*179,326*		$	*212,984*		$	*179,326*

^{(1) Assumes a 24.0% tax rate.}

Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts)

	Three Months Ended									Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Core net income	$	9,058		$	8,128		$	7,058		$	17,186		$	14,339
Diluted weighted average shares outstanding		9,070,568			9,043,122			8,950,847			9,062,548			9,001,600
*Diluted core earnings per share*	$	*1.00*		$	*0.90*		$	*0.79*		$	*1.90*		$	*1.59*

Common shares outstanding at year or period end		8,908,130			8,894,794			8,738,814			8,908,130			8,738,814
*Tangible book value per share*	$	*23.91*		$	*23.07*		$	*20.52*		$	*23.91*		$	*20.52*

Total assets at end of period	$	2,572,011		$	2,510,975		$	2,277,803		$	2,572,011		$	2,277,803
Less: Intangible assets		17,597			17,679			17,924			17,597			17,924
Adjusted assets at end of period	$	2,554,414		$	2,493,296		$	2,259,879		$	2,554,414		$	2,259,879
*Tangible common equity to tangible assets*		*8.34*	%		*8.23*	%		*7.94*	%		*8.34*	%		*7.94*	%

Total average shareholders equity	$	226,527		$	219,622		$	193,516		$	223,075		$	190,096
Less: Average intangible assets		17,646			17,730			17,974			17,688			18,014
Average tangible common equity	$	208,881		$	201,892		$	175,542		$	205,387		$	172,082
Net income to common shareholders	$	8,198		$	8,119		$	8,756		$	16,317		$	16,427
*Return on average tangible common equity*		*15.79*	%		*16.17*	%		*20.01*	%		*15.98*	%		*19.25*	%
Average tangible common equity	$	208,881		$	201,892		$	175,542		$	205,387		$	172,082
Core net income	$	9,058		$	8,128		$	7,058		$	17,186		$	14,339
*Core return on average tangible common equity*		*17.44*	%		*16.19*	%		*16.13*	%		*16.83*	%		*16.80*	%

Net interest income	$	21,579		$	20,839		$	19,432		$	42,418		$	38,978
Add: Noninterest income		1,368			1,268			6,862			2,636			8,648
Less: Employee retention related revenue		—			—			5,100			—			5,100
Less: Net gain (loss) on securities		20			(12	)		(45	)		8			469
Operating revenue	$	22,927		$	22,119		$	21,239		$	45,046		$	42,057

Expenses:
Total noninterest expense	$	11,411		$	10,375		$	13,432		$	21,786		$	23,590
Less: One-time retirement related expenses		—			—			1,571			—			1,571
Less: Professional fees related to ERC		—			—			1,243			—			1,243
Less: Wire fraud loss		1,155			—			—			1,155			—
Less: Net OREO (gain) loss		(3	)		—			7			(3	)		7
Adjusted noninterest expenses	$	10,259		$	10,375		$	10,611		$	20,634		$	20,769
*Core efficiency ratio*		*44.75*	%		*46.90*	%		*49.96*	%		*45.81*	%		*49.38*	%

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Southern States Bancshares, Inc. Announces Second Quarter 2024 Financial Results