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

Southern States Bancshares, Inc

First Quarter 2024 Performance and Operational Highlights

• Net income of $8.1 million, or $0.90 per diluted share

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

• Net interest income of $20.8 million, an increase of $435,000 from the prior quarter

• Net interest margin (“NIM”) of 3.59%, down 10 basis points from the prior quarter

• NIM of 3.60% on a fully-taxable equivalent basis (“NIM - FTE”)⁽¹⁾

• Return on average assets (“ROAA”) of 1.33%; return on average stockholders’ equity (“ROAE”) of 14.87%; and return on average tangible common equity (“ROATCE”)⁽¹⁾ of 16.17%

• Core ROAA⁽¹⁾ of 1.34%; and core ROATCE⁽¹⁾ of 16.19%

• Efficiency ratio of 46.90%

• Linked-quarter loan growth of 17.2% annualized

• Linked-quarter total deposits grew 18.3% annualized

• Linked-quarter total deposits, excluding brokered deposits, grew 7.1% 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., April 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 $8.1 million, or $0.90 diluted earnings per share, for the first quarter of 2024. This compares to net income of $8.9 million, or $0.99 diluted earnings per share, for the fourth quarter of 2023, and net income of $7.7 million, or $0.85 diluted earnings per share, for the first quarter of 2023. The Company reported core net income of $8.1 million, or $0.90 diluted core earnings per share, for the first quarter of 2024. This compares to core net income of $7.3 million, or $0.81 diluted core earnings per share, for the fourth quarter of 2023, and core net income of $7.3 million, or $0.80 diluted core earnings per share, for the first quarter of 2023 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary

Mark Chambers, Chief Executive Officer and President of Southern States, said, “We built on our momentum in 2023 and continued strong lending activity in the first quarter, selectively identifying compelling opportunities while carefully managing risk and maintaining solid credit quality.”

“We grew our total loans by 17.2% annualized from the prior quarter, while our non-performing loans as a percentage of the total portfolio was just 0.18%. Our portfolio is in excellent shape. In addition to loan growth, we grew total non-brokered deposits by 7.1% annualized, and net interest income expanded by 2.1% as we benefited from higher yields on earning assets. While funding expenses remained elevated amid the higher-for-longer interest rate environment, resulting in continued pressure on our net interest margin, the rate of cost increases leveled off during the first quarter, and our NIM remained healthy at 3.59%.”

“With liquidity and capital levels, Southern States is well well-positioned to drive further growth across our footprint, which includes economically dynamic markets throughout Alabama and Georgia. Importantly, our previously announced acquisition of CBB Bancorp, the holding company for Century Bank of Georgia, will further fortify our deposit base and provide an excellent platform for loan growth in new markets. It gives us added confidence in our ability to deliver long-term value for our shareholders.”

Net Interest Income and Net Interest Margin

	Three Months Ended												% Change March 31, 2024 vs.
	March 31, 2024				December 31, 2023				March 31, 2023				December 31, 2023			March 31, 2023
	(Dollars in thousands)
Average interest-earning assets	$	2,336,369			$	2,195,381			$	1,947,957			6.4	%		19.9	%
Net interest income	$	20,839			$	20,404			$	19,546			2.1	%		6.6	%
Net interest margin		3.59	%			3.69	%			4.07	%		(10)bps			(48)bps

Net interest income for the first quarter of 2024 was $20.8 million, an increase of 2.1% from $20.4 million for the fourth quarter of 2023. 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 first quarter of 2023, net interest income increased $1.3 million, or 6.6%. The increase was substantially due to growth, which offset the decline in net interest margin.

Net interest margin for the first quarter of 2024 was 3.59%, compared to 3.69% for the fourth quarter of 2023. 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 first quarter of 2023, net interest margin decreased from 4.07%. The decrease was primarily the result of the rapid 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 March 31, 2024 vs.
	March 31, 2024				December 31, 2023			March 31, 2023				December 31, 2023			March 31, 2023
	(Dollars in thousands)
Service charges on deposit accounts	$	463			$	441		$	450			5.0	%		2.9	%
Swap fees		15				70			(4	)		(78.6)%			(475.0)%
SBA/USDA fees		64				70			134			(8.6)%			(52.2)%
Mortgage origination fees		96				87			100			10.3	%		(4.0)%
Net (loss) gain on securities		(12	)			98			514			(112.2)%			(102.3)%
Other operating income		642				2,352			592			(72.7)%			8.4	%
Total noninterest income	$	1,268			$	3,118		$	1,786			(59.3)%			(29.0)%

Noninterest income for the first quarter of 2024 was $1.3 million, a decrease of 59.3% from $3.1 million for the fourth quarter of 2023. The fourth quarter of 2023 included a $1.9 million fee related to the early payoff of a $12.0 million purchased loan. As this was unusually large and atypical for the Bank, it was recorded as noninterest income instead of interest income, which would have impacted the net interest margin.

Relative to the first quarter of 2023, noninterest income decreased 29.0% from $1.8 million. The decrease was primarily due to a realized net loss on securities during the first quarter of 2024 compared to a net gain on securities during the first quarter of 2023.

Noninterest Expense

	Three Months Ended									% Change March 31, 2024 vs.
	March 31, 2024			December 31, 2023			March 31, 2023			December 31, 2023			March 31, 2023
	(Dollars in thousands)
Salaries and employee benefits	$	6,231		$	5,739		$	6,311		8.6	%		(1.3)%
Equipment and occupancy expenses		689			681			683		1.2	%		0.9	%
Data processing fees		643			639			593		0.6	%		8.4	%
Regulatory assessments		360			355			342		1.4	%		5.3	%
Other operating expenses		2,452			2,303			2,229		6.5	%		10.0	%
Total noninterest expenses	$	10,375		$	9,717		$	10,158		6.8	%		2.1	%

Noninterest expense for the first quarter of 2024 was $10.4 million, an increase of 6.8% from $9.7 million for the fourth quarter of 2023. The increase was primarily due to an increase in salaries and benefits, substantially as a result of higher payroll taxes brought about by incentive expense paid during the first quarter of 2024. In addition, other operating expense increased primarily as a result of the recognition of a $49,000 provision for credit losses on unfunded loan commitments during the first quarter of 2024, compared to a $334,000 credit for credit losses on unfunded loan commitments during the fourth quarter of 2023. These increases were partially offset by net forgery/fraud recoveries and a decrease in legal fees incurred during the first quarter of 2024.

Relative to the first quarter of 2023, noninterest expense increased 2.1% from $10.2 million. The increase was primarily attributable to increases in other operating expense, including marginal increases in insured deposit program expense, provision for credit losses on unfunded commitments and expense associated with a new market tax credit.

Loans and Credit Quality

	Three Months Ended												% Change March 31, 2024 vs.
	March 31, 2024				December 31, 2023				March 31, 2023				December 31, 2023			March 31, 2023
	(Dollars in thousands)
Gross loans	$	1,971,396			$	1,890,677			$	1,650,929			4.3	%		19.4	%
Unearned income		(6,247	)			(6,169	)			(5,614	)		1.3	%		11.3	%
Loans, net of unearned income (“Loans”)		1,965,149				1,884,508				1,645,315			4.3	%		19.4	%
Average loans, net of unearned (“Average loans”)	$	1,916,288			$	1,814,484			$	1,609,564			5.6	%		19.1	%
Nonperforming loans (“NPL”)	$	3,446			$	1,177			$	1,646			192.8	%		109.4	%
Provision for credit losses	$	1,236			$	2,579			$	1,181			(52.1)%			4.7	%
Allowance for credit losses (“ACL”)	$	25,144			$	24,378			$	19,855			3.1	%		26.6	%
Net charge-offs	$	470			$	382			$	197			23.0	%		138.6	%
NPL to gross loans		0.17	%			0.06	%			0.10	%
Net charge-offs to average loans(1)		0.10	%			0.08	%			0.05	%
ACL to loans		1.28	%			1.29	%			1.21	%
(1) Ratio is annualized.

Loans, net of unearned income, were $2.0 billion at March 31, 2024, up $80.6 million from December 31, 2023 and up $319.8 million from March 31, 2023. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.

Nonperforming loans totaled $3.4 million, or 0.17% of gross loans, at March 31, 2024, compared with $1.2 million, or 0.06% of gross loans, at December 31, 2023, and $1.6 million, or 0.10% of gross loans, at March 31, 2023. The $2.3 million net increase in nonperforming loans in the first quarter was primarily attributable to one significant commercial real estate loan and one significant commercial and industrial loan each being placed on nonaccrual status. The $1.8 million net increase in nonperforming loans from March 31, 2023 was primarily attributable to the two significant aforementioned loans. These increases were partially offset by one significant commercial real estate loan being paid off.

The Company recorded a provision for credit losses of $1.2 million for the first quarter of 2024, compared to $2.6 million for the fourth quarter of 2023. Provision in the first quarter of 2024 was based on loan growth, qualitative economic factors and individually analyzed loans.

Net charge-offs for the first quarter of 2024 were $470,000, or 0.10% of average loans on an annualized basis, compared to net charge-offs of $382,000, or 0.08% of average loans on an annualized basis, for the fourth quarter of 2023, and net charge-offs of $197,000, or 0.05% of average loans on an annualized basis, for the first quarter of 2023.

The Company’s allowance for credit losses was 1.28% of total loans and 729.66% of nonperforming loans at March 31, 2024, compared with 1.29% of total loans and 2071.20% of nonperforming loans at December 31, 2023. Allowance for credit losses on unfunded commitments was $1.3 million at March 31, 2024.

Deposits

	Three Months Ended												% Change March 31, 2024 vs.
	March 31, 2024				December 31, 2023				March 31, 2023				December 31, 2023			March 31, 2023
	(Dollars in thousands)
Noninterest-bearing deposits	$	416,704			$	437,959			$	433,833			(4.9)%			(3.9)%
Interest-bearing deposits		1,693,094				1,580,230				1,355,658			7.1	%		24.9	%
Total deposits	$	2,109,798			$	2,018,189			$	1,789,491			4.5	%		17.9	%
Uninsured deposits	$	610,122			$	615,651			$	567,709			(0.9)%			7.5	%
Uninsured deposits to total deposits		28.92	%			30.51	%			31.72	%
Noninterest deposits to total deposits		19.75	%			21.70	%			24.24	%

Total deposits were $2.1 billion at March 31, 2024, up from $2.0 billion at December 31, 2023 and $1.8 billion at March 31, 2023. The $91.6 million increase in total deposits in the first quarter was primarily due to an increase of $112.9 million in interest-bearing deposits, which includes a $60.2 million increase in brokered deposits, partially offset by a $21.3 million decrease in noninterest-bearing deposits. Total brokered deposits were $291.0 million at March 31, 2024.

Capital

	March 31, 2024						December 31, 2023						March 31, 2023
	Company			Bank			Company			Bank			Company			Bank
Tier 1 capital ratio to average assets	8.79	%		11.67	%		8.99	%		12.01	%		8.89	%		12.19	%
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio	9.39	%		12.47	%		9.20	%		12.30	%		9.00	%		12.34	%
Tier 1 capital ratio	9.39	%		12.47	%		9.20	%		12.30	%		9.00	%		12.34	%
Total capital ratio	14.42	%		13.63	%		14.29	%		13.45	%		14.41	%		13.38	%

As of March 31, 2024, total stockholders’ equity was $222.9 million, up from $215.0 million at December 31, 2023. The increase of $7.9 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				Kevin Dobbs
(205) 820-8065				(310) 622-8245
ljoyce@ssbank.bank				ssbankir@finprofiles.com

SELECT FINANCIAL DATA
(Dollars in thousands, except share and per share amounts)
	Three Months Ended
	March 31, 2024				December 31, 2023				March 31, 2023
Results of Operations
Interest income	$	38,736			$	36,172			$	28,699
Interest expense		17,897				15,768				9,153
Net interest income		20,839				20,404				19,546
Provision for credit losses		1,236				2,579				1,181
Net interest income after provision		19,603				17,825				18,365
Noninterest income		1,268				3,118				1,786
Noninterest expense		10,375				9,717				10,158
Income tax expense		2,377				2,330				2,322
Net income	$	8,119			$	8,896			$	7,671
Core net income(1)	$	8,128			$	7,289			$	7,280
Share and Per Share Data
Shares issued and outstanding		8,894,794				8,841,349				8,723,763
Weighted average shares outstanding:
Basic		8,913,477				8,864,734				8,762,450
Diluted		9,043,122				9,021,358				9,044,490
Earnings per share:
Basic	$	0.91			$	1.00			$	0.87
Diluted		0.90				0.99				0.85
Core - diluted(1)		0.90				0.81				0.80
Book value per share		25.06				24.31				21.74
Tangible book value per share(1)		23.07				22.30				19.68
Cash dividends per common share		0.09				0.09				0.09
Performance and Financial Ratios
ROAA		1.33	%			1.53	%			1.51	%
ROAE		14.87	%			17.02	%			16.67	%
Core ROAA(1)		1.34	%			1.26	%			1.44	%
ROATCE(1)		16.17	%			18.62	%			18.45	%
Core ROATCE(1)		16.19	%			15.26	%			17.51	%
NIM		3.59	%			3.69	%			4.07	%
NIM - FTE(1)		3.60	%			3.71	%			4.09	%
Net interest spread		2.63	%			2.73	%			3.33	%
Yield on loans		7.06	%			6.91	%			6.38	%
Yield on interest-earning assets		6.67	%			6.54	%			5.97	%
Cost of interest-bearing liabilities		4.04	%			3.81	%			2.64	%
Cost of funds(2)		3.27	%			3.03	%			2.01	%
Cost of interest-bearing deposits		3.92	%			3.66	%			2.42	%
Cost of total deposits		3.12	%			2.86	%			1.81	%
Noninterest deposits to total deposits		19.75	%			21.70	%			24.24	%
Core deposits to total deposits		81.45	%			83.70	%			88.57	%
Uninsured deposits to total deposits		28.92	%			30.51	%			31.72	%
Total loans to total deposits		93.14	%			93.38	%			91.94	%
Efficiency ratio		46.90	%			41.48	%			48.79	%
Core efficiency ratio(1)		46.90	%			45.78	%			48.79	%

(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
	March 31, 2024				December 31, 2023				March 31, 2023
Financial Condition (ending)
Total loans	$	1,965,149			$	1,884,508			$	1,645,315
Total securities		197,006				198,632				183,197
Total assets		2,510,975				2,446,663				2,135,622
Total noninterest bearing deposits		416,704				437,959				433,833
Total core deposits(1)		1,718,333				1,689,266				1,584,915
Total deposits		2,109,798				2,018,189				1,789,491
Total borrowings		146,773				183,673				131,372
Total liabilities		2,288,094				2,231,699				1,945,959
Total shareholders’ equity		222,881				214,964				189,663
Financial Condition (average)
Total loans	$	1,916,288			$	1,814,484			$	1,609,564
Total securities		208,954				209,074				192,348
Total other interest-earning assets		211,127				171,823				146,045
Total interest-bearing assets		2,336,369				2,195,381				1,947,957
Total assets		2,447,278				2,303,398				2,057,005
Total noninterest-bearing deposits		416,141				420,019				438,735
Total interest-bearing deposits		1,633,307				1,502,348				1,300,632
Total deposits		2,049,448				1,922,367				1,739,367
Total borrowings		148,771				140,790				104,901
Total interest-bearing liabilities		1,782,078				1,643,138				1,405,533
Total shareholders’ equity		219,622				207,324				186,639
Asset Quality
Nonperforming loans	$	3,446			$	1,177			$	1,646
Other real estate owned (“OREO”)	$	33			$	33			$	2,930
Nonperforming assets (“NPA”)	$	3,479			$	1,210			$	4,576
Net charge-offs to average loans(2)		0.10	%			0.08	%			0.05	%
Provision for credit losses to average loans(2)		0.26	%			0.56	%			0.30	%
ACL to loans		1.28	%			1.29	%			1.21	%
ACL to gross loans		1.28	%			1.29	%			1.20	%
ACL to NPL		729.66	%			2071.20	%			1206.26	%
NPL to loans		0.18	%			0.06	%			0.10	%
NPL to gross loans		0.17	%			0.06	%			0.10	%
NPA to gross loans and OREO		0.18	%			0.06	%			0.28	%
NPA to total assets		0.14	%			0.05	%			0.21	%
Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets		8.88	%			8.79	%			8.88	%
Tangible common equity to tangible assets(3)		8.23	%			8.12	%			8.11	%
Tier 1 capital ratio to average assets		8.79	%			8.99	%			8.89	%
Risk-based capital ratios:
CET1 capital ratio		9.39	%			9.20	%			9.00	%
Tier 1 capital ratio		9.39	%			9.20	%			9.00	%
Total capital ratio		14.42	%			14.29	%			14.41	%

(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)
	March 31, 2024				December 31, 2023				March 31, 2023
	(Unaudited)				(Audited)				(Unaudited)
Assets
Cash and due from banks	$	20,470			$	19,710			$	17,245
Interest-bearing deposits in banks		129,917				134,846				99,541
Federal funds sold		86,736				96,095				76,010
Total cash and cash equivalents		237,123				250,651				192,796
Securities available for sale, at fair value		177,379				179,000				163,550
Securities held to maturity, at amortized cost		19,627				19,632				19,647
Other equity securities, at fair value		3,638				3,649				3,806
Restricted equity securities, at cost		5,108				5,684				3,862
Loans held for sale		425				450				2,376
Loans, net of unearned income		1,965,149				1,884,508				1,645,315
Less allowance for credit losses		25,144				24,378				19,855
Loans, net		1,940,005				1,860,130				1,625,460
Premises and equipment, net		26,262				26,426				27,098
Accrued interest receivable		9,561				8,711				7,077
Bank owned life insurance		30,075				29,884				29,350
Annuities		15,939				15,036				15,489
Foreclosed assets		33				33				2,930
Goodwill		16,862				16,862				16,862
Core deposit intangible		817				899				1,144
Other assets		28,121				29,616				24,175
Total assets	$	2,510,975			$	2,446,663			$	2,135,622
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	416,704			$	437,959			$	433,833
Interest-bearing		1,693,094				1,580,230				1,355,658
Total deposits		2,109,798				2,018,189				1,789,491
Other borrowings		7,997				26,994				(16	)
FHLB advances		52,000				70,000				45,000
Subordinated notes		86,776				86,679				86,388
Accrued interest payable		1,805				1,519				844
Other liabilities		29,718				28,318				24,252
Total liabilities		2,288,094				2,231,699				1,945,959
Stockholders' equity:
Common stock		44,746				44,479				43,798
Capital surplus		79,282				78,361				77,053
Retained earnings		109,838				102,523				80,642
Accumulated other comprehensive loss		(8,401	)			(8,379	)			(9,846	)
Unvested restricted stock		(1,030	)			(466	)			(965	)
Vested restricted stock units		(1,554	)			(1,554	)			(1,019	)
Total stockholders' equity		222,881				214,964				189,663
Total liabilities and stockholders' equity	$	2,510,975			$	2,446,663			$	2,135,622

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
	Three Months Ended
	March 31, 2024				December 31, 2023			March 31, 2023
	(Unaudited)				(Unaudited)			(Unaudited)
Interest income:
Loans, including fees	$	33,628			$	31,613		$	25,335
Taxable securities		1,981				1,986			1,383
Nontaxable securities		229				230			291
Other interest and dividends		2,898				2,343			1,690
Total interest income		38,736				36,172			28,699
Interest expense:
Deposits		15,906				13,869			7,768
Other borrowings		1,991				1,899			1,385
Total interest expense		17,897				15,768			9,153
Net interest income		20,839				20,404			19,546
Provision for credit losses		1,236				2,579			1,181
Net interest income after provision for credit losses		19,603				17,825			18,365
Noninterest income:
Service charges on deposit accounts		463				441			450
Swap fees		15				70			(4	)
SBA/USDA fees		64				70			134
Mortgage origination fees		96				87			100
Net (loss) gain on securities		(12	)			98			514
Other operating income		642				2,352			592
Total noninterest income		1,268				3,118			1,786
Noninterest expenses:
Salaries and employee benefits		6,231				5,739			6,311
Equipment and occupancy expenses		689				681			683
Data processing fees		643				639			593
Regulatory assessments		360				355			342
Other operating expenses		2,452				2,303			2,229
Total noninterest expenses		10,375				9,717			10,158
Income before income taxes		10,496				11,226			9,993
Income tax expense		2,377				2,330			2,322
Net income	$	8,119			$	8,896		$	7,671
Basic earnings per share	$	0.91			$	1.00		$	0.87
Diluted earnings per share	$	0.90			$	0.99		$	0.85

AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)
	Three Months Ended
	March 31, 2024										December 31, 2023										March 31, 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)	$	1,916,288			$	33,628		7.06	%		$	1,814,484			$	31,613		6.91	%		$	1,609,564			$	25,335		6.38	%
Taxable securities		163,586				1,981		4.87	%			163,537				1,986		4.82	%			139,516				1,383		4.02	%
Nontaxable securities		45,368				229		2.03	%			45,537				230		2.00	%			52,832				291		2.24	%
Other interest-earnings assets		211,127				2,898		5.52	%			171,823				2,343		5.41	%			146,045				1,690		4.69	%
Total interest-earning assets	$	2,336,369			$	38,736		6.67	%		$	2,195,381			$	36,172		6.54	%		$	1,947,957			$	28,699		5.97	%
Allowance for credit losses		(24,313	)									(22,666	)									(20,493	)
Noninterest-earning assets		135,222										130,683										129,541
Total Assets	$	2,447,278									$	2,303,398									$	2,057,005
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		85,858				26		0.12	%			86,163				23		0.11	%			93,951				20		0.08	%
Savings and money market accounts		902,361				8,804		3.92	%			885,548				8,445		3.78	%			806,001				5,040		2.54	%
Time deposits		645,088				7,076		4.41	%			530,637				5,401		4.04	%			400,680				2,708		2.74	%
FHLB advances		53,121				655		4.96	%			52,076				645		4.92	%			18,578				159		3.47	%
Other borrowings		95,650				1,336		5.62	%			88,714				1,254		5.61	%			86,323				1,226		5.76	%
Total interest-bearing liabilities	$	1,782,078			$	17,897		4.04	%		$	1,643,138			$	15,768		3.81	%		$	1,405,533			$	9,153		2.64	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	416,141									$	420,019									$	438,735
Other liabilities		29,437										32,917										26,098
Total noninterest-bearing liabilities	$	445,578									$	452,936									$	464,833
Stockholders’ Equity		219,622										207,324										186,639
Total Liabilities and Stockholders’ Equity	$	2,447,278									$	2,303,398									$	2,057,005
Net interest income					$	20,839									$	20,404									$	19,546
Net interest spread(2)								2.63	%									2.73	%									3.33	%
Net interest margin(3)								3.59	%									3.69	%									4.07	%
Net interest margin - FTE(4)(5)								3.60	%									3.71	%									4.09	%
Cost of funds(6)								3.27	%									3.03	%									2.01	%
Cost of interest-bearing deposits								3.92	%									3.66	%									2.42	%
Cost of total deposits								3.12	%									2.86	%									1.81	%

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

LOAN COMPOSITION
(Dollars in thousands)
	March 31, 2024							December 31, 2023							March 31, 2023
	Amount				% of gross			Amount				% of gross			Amount				% of gross
Real estate mortgages:
Construction and development	$	252,934			12.8	%		$	242,960			12.9	%		$	227,560			13.8	%
Residential		238,702			12.1	%			224,603			11.9	%			196,923			11.9	%
Commercial		1,182,634			60.0	%			1,144,867			60.5	%			948,251			57.5	%
Commercial and industrial		288,701			14.7	%			269,961			14.3	%			270,825			16.4	%
Consumer and other		8,425			0.4	%			8,286			0.4	%			7,370			0.4	%
Gross loans		1,971,396			100.0	%			1,890,677			100.0	%			1,650,929			100.0	%
Unearned income		(6,247	)						(6,169	)						(5,614	)
Loans, net of unearned income		1,965,149							1,884,508							1,645,315
Allowance for credit losses		(25,144	)						(24,378	)						(19,855	)
Loans, net	$	1,940,005						$	1,860,130						$	1,625,460

DEPOSIT COMPOSITION
(Dollars in thousands)
	March 31, 2024						December 31, 2023						March 31, 2023
	Amount			% of total			Amount			% of total			Amount			% of total
Noninterest-bearing transaction	$	416,704		19.7	%		$	437,959		21.7	%		$	433,833		24.2	%
Interest-bearing transaction		974,079		46.2	%			946,347		46.9	%			877,166		49.0	%
Savings		33,909		1.6	%			35,412		1.7	%			47,742		2.7	%
Time deposits, $250,000 and under		584,658		27.7	%			500,406		24.8	%			366,271		20.5	%
Time deposits, over $250,000		100,448		4.8	%			98,065		4.9	%			64,479		3.6	%
Total deposits	$	2,109,798		100.0	%		$	2,018,189		100.0	%		$	1,789,491		100.0	%

Nonperfoming Assets
(Dollars in thousands)
	March 31, 2024				December 31, 2023				March 31, 2023
Nonaccrual loans	$	3,446			$	1,017			$	1,646
Past due loans 90 days or more and still accruing interest		—				160				—
Total nonperforming loans		3,446				1,177				1,646
OREO		33				33				2,930
Total nonperforming assets	$	3,479			$	1,210			$	4,576
Financial difficulty modification loans– nonaccrual(1)		675				907				805
Financial difficulty modification loans – accruing		1,283				1,095				1,272
Financial difficulty modification loans	$	1,958			$	2,002			$	2,077
Allowance for credit losses	$	25,144			$	24,378			$	19,855
Loans, net of unearned income at the end of the period	$	1,965,149			$	1,884,508			$	1,645,315
Gross loans outstanding at the end of period	$	1,971,396			$	1,890,677			$	1,650,929
Total assets	$	2,510,975			$	2,446,663			$	2,135,622
Allowance for credit losses to nonperforming loans		729.66	%			2071.20	%			1206.26	%
Nonperforming loans to loans, net of unearned income		0.18	%			0.06	%			0.10	%
Nonperforming loans to gross loans		0.17	%			0.06	%			0.10	%
Nonperforming assets to gross loans and OREO		0.18	%			0.06	%			0.28	%
Nonperforming assets to total assets		0.14	%			0.05	%			0.21	%
Nonaccrual loans by category:
Real estate mortgages:
Construction & Development	$	—			$	—			$	64
Residential Mortgages		246				252				267
Commercial Real Estate Mortgages		2,422				765				1,263
Commercial & Industrial		778				—				51
Consumer and other		—				—				1
Total	$	3,446			$	1,017			$	1,646

(1) Financial difficulty modification 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
	March 31, 2024				December 31, 2023				March 31, 2023
Average loans, net of unearned income	$	1,916,288			$	1,814,484			$	1,609,564
Loans, net of unearned income		1,965,149				1,884,508				1,645,315
Gross loans		1,971,396				1,890,677				1,650,929
Allowance for credit losses at beginning of the period		24,378				22,181				20,156
Impact of adoption of ASC 326		—				—				(1,285	)
Charge-offs:
Construction and development		—				—				—
Residential		11				—				—
Commercial		27				—				—
Commercial and industrial		442				424				218
Consumer and other		15				2				6
Total charge-offs		495				426				224
Recoveries:
Construction and development		—				—				—
Residential		8				4				11
Commercial		—				—				—
Commercial and industrial		16				39				14
Consumer and other		1				1				2
Total recoveries		25				44				27
Net charge-offs	$	470			$	382			$	197
Provision for credit losses	$	1,236			$	2,579			$	1,181
Balance at end of the period	$	25,144			$	24,378			$	19,855
Allowance for credit losses on unfunded commitments at beginning of the period	$	1,239			$	1,524			$	—
Impact of adoption of ASC 326		—				—				1,285
Provision (credit) for credit losses on unfunded commitments		49				(285	)			—
Balance at the end of the period	$	1,288			$	1,239			$	1,285
Allowance to loans, net of unearned income		1.28	%			1.29	%			1.21	%
Allowance to gross loans		1.28	%			1.29	%			1.20	%
Net charge-offs to average loans, net of unearned income(1)		0.10	%			0.08	%			0.05	%
Provision for credit losses to average loans, net of unearned income(1)		0.26	%			0.56	%			0.30	%

(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
	March 31, 2024				December 31, 2023				March 31, 2023
Net income	$	8,119			$	8,896			$	7,671
Add: Net OREO gains		—				(154	)			—
Less: Provision fee received on early loan payoff		—				1,863				—
Less: Net (loss) gain on securities		(12	)			98				514
Less: Tax effect		3				(508	)			(123	)
Core net income	$	8,128			$	7,289			$	7,280
Average assets	$	2,447,278			$	2,303,398			$	2,057,005
Core return on average assets		1.34	%			1.26	%			1.44	%
Net income	$	8,119			$	8,896			$	7,671
Add: Net OREO gains		—				(154	)			—
Add: Provision for credit losses		1,236				2,579				1,181
Less: Provision fee received on early loan payoff		—				1,863				—
Less: Net (loss) gain on securities		(12	)			98				514
Add: Income taxes		2,377				2,330				2,322
Pretax pre-provision core net income	$	11,744			$	11,690			$	10,660
Average assets	$	2,447,278			$	2,303,398			$	2,057,005
Pretax pre-provision core return on average assets		1.93	%			2.01	%			2.10	%
Net interest income	$	20,839			$	20,404			$	19,546
Add: Fully-taxable equivalent adjustments(1)		73				99				85
Net interest income - FTE	$	20,912			$	20,503			$	19,631
Net interest margin		3.59	%			3.69	%			4.07	%
Effect of fully-taxable equivalent adjustments(1)		0.01	%			0.02	%			0.02	%
Net interest margin - FTE		3.60	%			3.71	%			4.09	%
Total stockholders' equity	$	222,881			$	214,964			$	189,663
Less: Intangible assets		17,679				17,761				18,006
Tangible common equity	$	205,202			$	197,203			$	171,657
(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
	March 31, 2024				December 31, 2023				March 31, 2023
Core net income	$	8,128			$	7,289			$	7,280
Diluted weighted average shares outstanding		9,043,122				9,021,358				9,044,490
Diluted core earnings per share	$	0.90			$	0.81			$	0.80
Common shares outstanding at year or period end		8,894,794				8,841,349				8,723,763
Tangible book value per share	$	23.07			$	22.30			$	19.68
Total assets at end of period	$	2,510,975			$	2,446,663			$	2,135,622
Less: Intangible assets		17,679				17,761				18,006
Adjusted assets at end of period	$	2,493,296			$	2,428,902			$	2,117,616
Tangible common equity to tangible assets		8.23	%			8.12	%			8.11	%
Total average shareholders equity	$	219,622			$	207,324			$	186,639
Less: Average intangible assets		17,730				17,809				18,055
Average tangible common equity	$	201,892			$	189,515			$	168,584
Net income to common shareholders	$	8,119			$	8,896			$	7,671
Return on average tangible common equity		16.17	%			18.62	%			18.45	%
Average tangible common equity	$	201,892			$	189,515			$	168,584
Core net income	$	8,128			$	7,289			$	7,280
Core return on average tangible common equity		16.19	%			15.26	%			17.51	%
Net interest income	$	20,839			$	20,404			$	19,546
Add: Noninterest income		1,268				3,118				1,786
Less: Provision fee received on early loan payoff		—				1,863				—
Less: Net (loss) gain on securities		(12	)			98				514
Operating revenue	$	22,119			$	21,561			$	20,818
Expenses:
Total noninterest expense	$	10,375			$	9,717			$	10,158
Less: Net OREO gains		—				(154	)			—
Adjusted noninterest expenses	$	10,375			$	9,871			$	10,158
Core efficiency ratio		46.90	%			45.78	%			48.79	%