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

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

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”).

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 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 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, 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.

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.

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.

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

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

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

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

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

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

^{(1) 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.}