Southern States Bancshares, Inc. Announces First Quarter 2024 Financial Results
*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 loa*n growth of* *17.2%** annualized**
· *Linked-quarter total deposit**s 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* *%*