Second Quarter 2023 Performance and Operational Highlights
- Net income of $8.8 million, or $0.98 per diluted share
- Core net income(1) of $7.1 million, or $0.79 per diluted share(1)
- Net interest income of $19.4 million, a decrease of $114,000 from the prior quarter
- Net interest margin (“NIM”) of 3.73%, down 34 basis points from the prior quarter
- NIM of 3.74% on a fully-taxable equivalent basis (“NIM - FTE”)(1)
- Return on average assets (“ROAA”) of 1.60%; return on average stockholders’ equity (“ROAE”) of 18.15%; and return on average tangible common equity (“ROATCE”)(1) of 20.01%
- Core ROAA(1) of 1.29%; and core ROATCE(1) of 16.13%
- Efficiency ratio of 51.00%
- Linked-quarter loan growth was 17.4% annualized
- Linked-quarter total deposit growth was 30.1% annualized and 20.7% annualized, net of brokered deposits
- Repurchased $405,000 of common stock, representing 19,202 shares at an average price of $21.07 during the quarter
| (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 24, 2023 (GLOBE NEWSWIRE) -- Southern States Bancshares, Inc. ( SSBK) (“Southern States” or the “Company”), the holding company for Southern States Bank, an Alabama state-chartered commercial bank (the “Bank”), today reported net income of $8.8 million, or $0.98 diluted earnings per share, for the second quarter of 2023. This compares to net income of $7.7 million, or $0.85 diluted earnings per share, for the first quarter of 2023, and net income of $5.2 million, or $0.59 diluted earnings per share, for the second quarter of 2022. The Company reported core net income of $7.1 million, or $0.79 diluted core earnings per share, for the second quarter of 2023. This compares to core net income of $7.3 million, or $0.80 diluted core earnings per share, for the first quarter of 2023, and core net income of $5.3 million, or $0.59 diluted core earnings per share, for the second quarter of 2022 (see “Reconciliation of Non-GAAP Financial Measures”).
| CEO Commentary | ||||
| Mark Chambers, Chief Executive Officer and President of Southern States, said, “Our team continued to identify attractive lending opportunities and build deposits across our footprint, prudently growing and delivering strong earnings while maintaining our unwavering focus on risk management and excellent credit quality.’’ | ||||
| “Our total loans grew 4.3% from the prior quarter and 20.0% from the second quarter of 2022. We more than funded our loan growth with an increase in our core deposits as we continued to expand our customer base. Meanwhile, our non-performing loans as a percentage of the overall portfolio totaled just 0.06%, down from both the first quarter and a year earlier. We continue to build upon the momentum we generated over the past several years across some of the most economically resilient markets in the South.’’ | ||||
| “While our funding costs rose during the quarter alongside higher interest rates, impacting our net interest margin, we have robust liquidity and capital levels that give Southern States the financial strength to drive ongoing growth. We are well-positioned to cultivate new business through superior customer service, giving gives us confidence in our ability to deliver long-term value for our shareholders.” | ||||
| Net Interest Income and Net Interest Margin | |||||||||||||||||
| Three Months Ended | % Change June 30, 2023 vs. | ||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2022 | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Average interest-earning assets | $ | 2,091,998 | $ | 1,947,957 | $ | 1,710,022 | 7.4 | % | 22.3 | % | |||||||
| Net interest income | $ | 19,432 | $ | 19,546 | $ | 16,365 | (0.6) | % | 18.7 | % | |||||||
| Net interest margin | 3.73 | % | 4.07 | % | 3.84 | % | (34) | bps | (11) | bps | |||||||
Net interest income for the second quarter of 2023 was $19.4 million, a decrease of 0.6% from $19.5 million for the first quarter of 2023. The decrease was primarily driven by the impact of higher interest rates paid on deposits, which more than offset an increase in the yield on interest-earning assets.
Relative to the second quarter of 2022, net interest income increased $3.1 million, or 18.7%. The increase was partially the result of improvement in the yield on interest-earning assets, which outpaced the rise in costs of deposits and other borrowings. In addition, we benefited from the significant organic growth in interest-earning assets year over year.
Net interest margin for the second quarter of 2023 was 3.73%, compared to 4.07% for the first quarter of 2023. The decrease was primarily due to higher interest rates paid on interest-bearing liabilities, which outpaced the increase in yield on interest-earning assets.
Relative to the second quarter of 2022, net interest margin decreased from 3.84%. The decrease was primarily due to a rapid increase in interest rates, which accelerated cost on interest-bearing liabilities at a faster pace than the yield received on interest-earning assets. A shift from noninterest-bearing deposits to interest-bearing deposits also had a negative impact on net interest margin.
| Noninterest Income | |||||||||||||||||
| Three Months Ended | % Change June 30, 2023 vs. | ||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2022 | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Service charges on deposit accounts | $ | 456 | $ | 450 | $ | 480 | 1.3 | % | (5.0) | % | |||||||
| Swap fees | 173 | (4 | ) | 21 | (4425.0 | % | 723.8 | % | |||||||||
| SBA/USDA fees | 66 | 134 | 93 | (50.7) | % | (29.0) | % | ||||||||||
| Mortgage origination fees | 188 | 100 | 213 | 88.0 | % | (11.7) | % | ||||||||||
| Net gain (loss) on securities | (45 | ) | 514 | (42 | ) | (108.8) | % | 7.1 | % | ||||||||
| Other operating income | 6,024 | 592 | 639 | 917.6 | % | 842.7 | % | ||||||||||
| Total noninterest income | $ | 6,862 | $ | 1,786 | $ | 1,404 | 284.2 | % | 388.7 | % | |||||||
Noninterest income for the second quarter of 2023 was $6.9 million, an increase of 284.2% from $1.8 million for the first quarter of 2023. The second quarter included $5.1 million in employee retention credits (“ERC”) and interest from the Federal government as well as $264,000 in fees related to ERC from a third party.
Relative to the second quarter of 2022, noninterest income increased 388.7% from $1.4 million. The second quarter of 2023 included $5.1 million in ERC and interest from the Federal government as well as $264,000 in fees related to ERC from a third party.
| Noninterest Expense | ||||||||||||||
| Three Months Ended | % Change June 30, 2023 vs. | |||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2022 | ||||||||||
| (Dollars in thousands) | ||||||||||||||
| Salaries and employee benefits | $ | 7,863 | $ | 6,311 | $ | 5,982 | 24.6 | % | 31.4 | % | ||||
| Equipment and occupancy expenses | 694 | 683 | 719 | 1.6 | % | (3.5) | % | |||||||
| Data processing fees | 646 | 593 | 570 | 8.9 | % | 13.3 | % | |||||||
| Regulatory assessments | 180 | 342 | 262 | (47.4) | % | (31.3) | % | |||||||
| Other operating expenses | 4,049 | 2,229 | 2,119 | 81.7 | % | 91.1 | % | |||||||
| Total noninterest expenses | $ | 13,432 | $ | 10,158 | $ | 9,652 | 32.2 | % | 39.2 | % | ||||
Noninterest expense for the second quarter of 2023 was $13.4 million, an increase of 32.2% from $10.2 million for the first quarter of 2023. The increase was primarily attributable to an increase in salaries and benefits, substantially as a result of one-time retirement related expenses of our former CEO in May 2023 and professional fees paid to a third party during the second quarter related to ERC.
Relative to the second quarter of 2022, noninterest expense increased 39.2% from $9.7 million. The increase was primarily attributable to an increase in salaries and benefits, substantially as a result of one-time retirement related expenses of our former CEO in May 2023 and professional fees paid to a third party during the second quarter related to ERC.
| Loans and Credit Quality | |||||||||||||||||
| Three Months Ended | % Change June 30, 2023 vs. | ||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2022 | |||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Gross loans | 1,722,278 | 1,650,929 | 1,435,089 | 4.3 | % | 20.0 | % | ||||||||||
| Unearned income | (5,766 | ) | (5,614 | ) | (4,884 | ) | 2.7 | % | 18.1 | % | |||||||
| Loans, net of unearned income (“Loans”) | $ | 1,716,512 | $ | 1,645,315 | $ | 1,430,205 | 4.3 | % | 20.0 | % | |||||||
| Average loans, net of unearned (“Average loans”) | $ | 1,676,816 | $ | 1,609,564 | $ | 1,359,320 | 4.2 | % | 23.4 | % | |||||||
| Nonperforming loans (“NPL”) | $ | 1,010 | $ | 1,646 | $ | 3,550 | (38.6) | % | (71.5) | % | |||||||
| Provision for credit losses | $ | 1,557 | $ | 1,181 | $ | 1,304 | 31.8 | % | 19.4 | % | |||||||
| Allowance for credit losses (“ACL”) | $ | 21,385 | $ | 19,855 | $ | 16,807 | 7.7 | % | 27.2 | % | |||||||
| Net charge-offs (recoveries) | $ | 27 | $ | 197 | $ | (11 | ) | (86.3) | % | (345.5) | % | ||||||
| NPL to gross loans | 0.06 | % | 0.10 | % | 0.25 | % | |||||||||||
| Net charge-offs (recoveries) to average loans(1) | 0.01 | % | 0.05 | % | 0.00 | % | |||||||||||
| ACL to loans | 1.25 | % | 1.21 | % | 1.18 | % | |||||||||||
| (1) Ratio is annualized. | |||||||||||||||||
Loans, net of unearned income, were $1.7 billion at June 30, 2023, up $71.2 million from March 31, 2023 and up $286.3 million from June 30, 2022. The linked-quarter and year-over-year increases in loans were primarily attributable to new business growth across our footprint.
Nonperforming loans totaled $1.0 million, or 0.06% of gross loans, at June 30, 2023, compared with $1.6 million, or 0.10% of gross loans, at March 31, 2023, and $3.6 million, or 0.25% of gross loans, at June 30, 2022. The $636,000 net decrease in nonperforming loans in the second quarter of 2023 was primarily attributable to a commercial real estate loan that was paid-off. The $2.5 million net decrease in nonperforming loans from June 30, 2022, was primarily attributable to a significant commercial real estate loan being moved back to accruing status, two loans that were charged-off and one loan that was paid-off.
The Company recorded a provision for credit losses of $1.6 million for the second quarter of 2023, compared to $1.2 million for the first quarter of 2023. The increase in provision was primarily due to changes in our qualitative economic factors and modest loan growth for the quarter.
Net charge-offs for the second quarter of 2023 were $27,000, or 0.01% of average loans on an annualized basis, compared to net charge-offs of $197,000, or 0.05% of average loans on an annualized basis, for the first quarter of 2023, and net recoveries of $11,000, or 0.00% of average loans on an annualized basis, for the second quarter of 2022.
The Company’s allowance for credit losses was 1.25% of total loans and 2117.33% of nonperforming loans at June 30, 2023, compared with 1.21% of total loans and 1206.26% of nonperforming loans at March 31, 2023. Allowance for credit losses on unfunded commitments was $1.5 million at June 30, 2023.
| Deposits | |||||||||||||||||
