Southern States Bancshares, Inc. Announces Third Quarter 2024 Financial Results
Third Quarter 2024 Performance and Operational Highlights
Net income of $7.4 million, or $0.76 per diluted share
Core net income(1) of $8.7 million, or $0.89 per diluted share(1)
Core pretax pre-provision net income(1) of $13.8 million
Net interest income of $24.2 million, an increase of $2.7 million from the prior quarter
Net interest margin ("NIM") of 3.65%, up 9 basis points from the prior quarter
NIM of 3.66% on a fully-taxable equivalent basis ("NIM - FTE")(1)
Return on average assets ("ROAA") of 1.05%; return on average stockholders' equity ("ROAE") of 11.89%; and return on average tangible common equity ("ROATCE")(1) of 13.35%
Core ROAA(1) of 1.24%; and core ROATCE(1) of 15.74%
Efficiency ratio of 52.79%; and core efficiency ratio of 46.96%
Linked-quarter loans grew 36.3% annualized; and legacy loans grew 10.3% annualized
Linked-quarter total deposits grew 44.8% annualized
Linked-quarter total deposits, excluding brokered deposits, grew 71.5% annualized; and legacy total deposits, excluding brokered deposits grew 9.6% 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., Oct. 21, 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 $7.4 million, or $0.76 diluted earnings per share, for the third quarter of 2024. This compares to net income of $8.2 million, or $0.90 diluted earnings per share, for the second quarter of 2024, and net income of $6.6 million, or $0.73 diluted earnings per share, for the third quarter of 2023. The Company reported core net income of $8.7 million, or $0.89 diluted core earnings per share, for the third quarter of 2024. This compares to core net income of $9.1 million, or $1.00 diluted core earnings per share, for the second quarter of 2024, and core net income of $9.6 million, or $1.06 diluted core earnings per share, for the third quarter of 2023 (see "Reconciliation of Non-GAAP Financial Measures").
CEO Commentary
Mark Chambers, Chief Executive Officer and President of Southern States said, "The top highlight of our third quarter was the completion of the CBB Bancorp acquisition on August 1 as planned. I want to welcome our new colleagues who contributed to a seamless integration between two organizations that share a common culture. Our combination with Century Bank has strengthened our platform to drive loan and deposit growth across growing and attractive Georgia markets."
"Net interest income for the third quarter increased more than 12.4% to $24.2 million for the quarter largely reflecting the contribution from Century Bank. Net interest margin also increased 9 basis points to 3.65% from 3.56% quarter-over-quarter, which further reflects Century Bank's contribution."
"Finally, we were pleased to be recognized in Piper Sandler's Sm-All Stars: Class of 2024 for the third year in a row. The Sm-All Stars' objective is to identify the top performing U.S. small-cap banks and thrifts based on growth, profitability, credit quality, and capital strength. Our objective is to run a highly efficient bank, consistently deliver the highest level of customer satisfaction and increase value for our shareholders."
Net Interest Income and Net Interest Margin
Three Months Ended
% Change September 30, 2024 vs.
September 30,2024
June 30,2024
September 30,2023
June 30,2024
September 30,2023
(Dollars in thousands)
Average interest-earning assets
$
2,645,388
$
2,440,425
$
2,175,103
8.4
%
21.6
%
Net interest income
$
24,246
$
21,579
$
20,731
12.4
%
17.0
%
Net interest margin
3.65
%
3.56
%
3.78
%
9 bps
(13) bps
Net interest income for the third quarter of 2024 was $24.2 million, an increase of 12.4% from $21.6 million in the second quarter of 2024. The increase was substantially due to the acquisition of Century Bank.
Relative to the third quarter of 2023, net interest income increased $3.5 million, or 17.0%. The increase was mainly driven by significant growth, partially as a result of the acquisition of Century Bank, which offset the decline in net interest margin.
Net interest margin for the third quarter of 2024 was 3.65%, compared to 3.56% for the second quarter of 2024. The increase was primarily due to a slight increase in the yield on interest-earning assets, coupled with a decrease in the cost of interest-bearing deposits. The acquisition of Century Bank had a positive impact and helped lift the margin for third quarter of 2024.
Relative to the third quarter of 2023, net interest margin decreased from 3.78%. 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. The acquisition of Century Bank resulted in a positive impact to the net interest margin, effectively helping to reduce the cost of interest-bearing liabilities.
Noninterest Income
Three Months Ended
% Change September 30, 2024 vs.
September 30,2024
June 30,2024
September 30,2023
June 30,2024
September 30,2023
(Dollars in thousands)
Service charges on deposit accounts
$
532
$
462
$
442
15.2
%
20.4
%
Swap (expense) fees
(9
)
4
453
325.0
%
102.0
%
SBA/USDA fees
179
58
74
208.6
%
141.9
%
Mortgage origination fees
112
92
158
21.7
%
(29.1
)%
Net gain (loss) on securities
75
20
(12
)
275.0
%
725.0
%
Employee retention credit and related revenue ("ERC")
—
—
(5,100
)
N/A
N/A
Other operating income
868
732
1,091
18.6
%
(20.4
)%
Total noninterest income
$
1,757
$
1,368
$
(2,894
)
28.4
%
160.7
%
Noninterest income for the third quarter of 2024 was $1.8 million, an increase of 28.4% from $1.4 million in the second quarter of 2024. The acquisition of Century Bank on July 31, 2024 resulted in additional noninterest income during the third quarter of 2024. Apart from the acquisition, the increase was also due to increased SBA/USDA fees primarily resulting from the sales of loans during the third quarter of 2024, along with a larger realized net gain on securities during the third quarter of 2024 compared to the second quarter of 2023.
Relative to the third quarter of 2023, noninterest income increased 160.7% from a noninterest net expense of $2.9 million. The third quarter of 2023 included a $5.1 million payment to the Internal Revenue Service ("IRS") for the return of the ERC, which was received during the second quarter of 2023. The IRS revised eligibility guidelines during the third quarter of 2023, and the Company applied for the Voluntary Disclosure Program and removed this from income and recorded a payable. The acquisition of Century Bank on July 31, 2024 resulted in additional noninterest income during the third quarter of 2024. The increase was partially offset by a decline in swap fees during the third quarter of 2024, substantially as a result of the Company not participating in any swap transactions.
Noninterest Expense
Three Months Ended
% Change September 30, 2024 vs.
September 30,2024
June 30,2024
September 30,2023
June 30,2024
September 30,2023
(Dollars in thousands)
Salaries and employee benefits
$
6,876
$
6,112
$
5,752
12.5
%
19.5
%
Equipment and occupancy expenses
814
667
718
22.0
%
13.4
%
Data processing fees
781
686
650
13.8
%
20.2
%
Regulatory assessments
414
375
322
10.4
%
28.6
%
Professional fees related to ERC
—
—
(1,243
)
N/A
N/A
Merger-related expenses
1,511
—
—
N/A
N/A
Other operating expenses
3,291
3,571
2,370
(7.8
)%
38.9
%
Total noninterest expenses
$
13,687
$
11,411
$
8,569
19.9
%
59.7
%
Noninterest expense for the third quarter of 2024 was $13.7 million, an increase of 19.9% from $11.4 million in the second quarter of 2024. The acquisition of Century Bank on July 31, 2024 resulted in merger-related expenses of $1.5 million, of which $961,000 was not deductible for taxes. Also there were additional noninterest expenses related to Century Bank during the third quarter of 2024, primarily in salaries and employee benefits. The acquisition also gave rise to a $106,000 increase in amortization expense associated with the core deposit intangible. Also included in the third quarter of 2024 was approximately $250,000 in expenses associated with calling brokered deposits and collection expenses related to a problem loan.
Relative to the third quarter of 2023, noninterest expense increased 59.7% from $8.6 million. The acquisition of Century Bank on July 31, 2024 resulted in merger-related expenses of $1.5 million, along with additional noninterest expense during the third quarter of 2024. Salaries and employee benefits increased as a result of the acquisition and from a legacy standpoint. The third quarter of 2023 included a $1.2 million refund of professional fees related to the aforementioned return of ERC.
Loans and Credit Quality
Three Months Ended
% Change September 30, 2024 vs.
September 30,2024
June 30,2024
September 30,2023
June 30,2024
September 30,2023
(Dollars in thousands)
Gross loans
$
2,205,747
$
2,021,877
$
1,779,846
9.1
%
23.9
%
Unearned income
(6,536
)
(6,443
)
(5,698
)
1.4
%
14.7
%
Loans, net of unearned income ("Loans")
2,199,211
2,015,434
1,774,148
9.1
%
24.0
%
Average loans, net of unearned ("Average loans")
$
2,134,318
$
1,987,533
$
1,740,582
7.4
%
22.6
%
Nonperforming loans ("NPL")
$
7,868
$
3,784
$
1,082
107.9
%
627.2
%
Provision for credit losses
$
2,583
$
1,067
$
773
142.1
%
234.2
%
Allowance for credit losses ("ACL")
$
28,061
$
25,828
$
22,181
8.6
%
26.5
%
Net charge-offs (recoveries)
$
350
$
383
$
(23
)
(8.6
)%
1621.7
%
NPL to gross loans
0.36
%
0.19
%
0.06
%
Net charge-offs (recoveries) to average loans(1)
0.07
%
0.08
%
(0.01
)%
ACL to loans
1.28
%
1.28
%
1.25
%
(1) Ratio is annualized.
Loans, net of unearned income, were $2.2 billion at September 30, 2024, up $183.8 million from June 30, 2024 and up $425.1 million from September 30, 2023. The acquisition of Century Bank resulted in additional loans of $131.7 million at September 30, 2024. Apart from the acquired loans, the linked-quarter increase in loans was primarily attributable to new business growth across our footprint.
Nonperforming loans totaled $7.9 million, or 0.36% of gross loans, at September 30, 2024, compared with $3.8 million, or 0.19% of gross loans, at June 30, 2024, and $1.1 million, or 0.06% of gross loans, at September 30, 2023. The $4.1 million net increase in nonperforming loans in the third quarter of 2024 was primarily attributable to a significant commercial and industrial loan that was added to nonaccrual status and partially offset by a commercial and industrial loan that was charged-off. The $6.8 million net increase in nonperforming loans from September 30, 2023, was primarily attributable to one significant commercial and industrial loan, another less significant commercial and industrial loan and one commercial real estate loan that were added to nonaccrual status. Significant collection efforts have been made on the large commercial and industrial loan and no loss is anticipated.
The Company recorded a provision for credit losses of $2.6 million for the third quarter of 2024, compared to $1.1 million for the second quarter of 2024. Provision in the third quarter of 2024 included a "Day 2" $1.7 million provision as a result of the acquisition as well as additional provisions based on growth.
Net charge-offs for the third quarter of 2024 were $350,000, or 0.07% of average loans on an annualized basis, compared to net charge-offs of $383,000, or 0.08% of average loans on an annualized basis, for the second quarter of 2024, and net recoveries of $23,000, or (0.01)% of average loans on an annualized basis, for the third quarter of 2023. The charge-offs recorded during the second and third quarters of 2024 were substantially related to a purchased pool of consumer loans for which the borrower filed for bankruptcy. The loan was fully charged-off as of September 30, 2024.
The Company's allowance for credit losses was 1.28% of total loans and 356.65% of nonperforming loans at September 30, 2024, compared with 1.28% of total loans and 682.56% of nonperforming loans at June 30, 2024. Allowance for credit losses on unfunded commitments was $1.4 million at September 30, 2024.
Deposits
Three Months Ended
% Change September 30, 2024 vs.
September 30,2024
June 30,2024
September 30,2023
June 30,2024
September 30,2023
(Dollars in thousands)
Noninterest-bearing deposits
$
546,282
$
416,068
$
418,125
31.3
%
30.7
%
Interest-bearing deposits
1,874,264
1,759,610
1,498,276
6.5
%
25.1
%
Total deposits
$
2,420,546
$
2,175,678
$
1,916,401
11.3
%
26.3
%
Uninsured deposits
$
964,528
$
645,283
$
568,323
49.5
%
69.7
%
Uninsured deposits to total deposits
39.85
%
29.66
%
29.66
%
Noninterest deposits to total deposits
22.57
%
19.12
%
21.82
%
Total deposits were $2.4 billion at September 30, 2024, up from $2.2 billion at June 30, 2024 and $1.9 billion at September 30, 2023. The $244.9 million increase in total deposits in the third quarter was due to an increase of $130.2 million in noninterest-bearing deposits and a $114.7 million increase in interest-bearing deposits. The acquisition of Century Bank resulted in additional deposits of $304.4 million at September 30, 2024, or $183.4 million in interest-bearing deposits, none of which were brokered deposits, and $121.0 million in noninterest-bearing deposits. Total brokered deposits were $194.2 million at September 30, 2024, compared to $288.3 million at June 30, 2024. The Company used cash from the acquisition of Century Bank to call $52.3 million of brokered deposits, while another $41.9 million matured and were repaid.
Capital
September 30,2024
June 30,2024
September 30,2023
Company
Bank
Company
Bank
Company
Bank
Tier 1 capital ratio to average assets
8.64
%
11.48
%
8.72
%
11.52
%
8.70
%
11.71
%
Risk-based capital ratios:
Common equity tier 1 ("CET1") capital ratio
9.36
%
12.43
%
9.54
%
12.61
%
9.32
%
12.55
%
Tier 1 capital ratio
9.36
%
12.43
%
9.54
%
12.61
%
9.32
%
12.55
%
Total capital ratio
14.18
%
13.59
%
14.50
%
13.77
%
14.60
%
13.67
%
As of September 30, 2024, total stockholders' equity was $271.4 million, up from $230.6 million at June 30, 2024. The increase of $40.8 million was substantially due to the issuance of $31.5 million in common stock for the acquisition of Century Bank.
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 15 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. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the dates made, we cannot give any assurance that such expectations will prove correct and actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 under the section entitled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors". Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.
These statements are often, but not always, made through the use of words or phrases such as "may," "can," "should," "could," "to be," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "likely," "anticipate," "seek," "estimate," "intend," "plan," "target," "project," "would" and "outlook," or the negative version of those words or other similar words or phrases of a future or forward-looking nature. Forward-looking statements appear in a number of places in this press release and may include statements about our acquisition of Century Bank of Georgia, business strategy and prospects for growth, operations, ability to pay dividends, competition, regulation and general economic conditions.
Contact Information
Lynn Joyce
Margaret Boyce
(205) 820-8065
(310) 622-8247
SELECT FINANCIAL DATA
(Dollars in thousands, except share and per share amounts)
Three Months Ended
Nine Months Ended
September 30,2024
June 30,2024
September 30,2023
September 30,2024
September 30,2023
Results of Operations
Interest income
$
45,068
$
41,007
$
35,204
$
124,811
$
96,088
Interest expense
20,822
19,428
14,473
58,147
36,379
Net interest income
24,246
21,579
20,731
66,664
59,709
Provision for credit losses
2,583
1,067
773
4,885
3,511
Net interest income after provision
21,663
20,512
19,958
61,779
56,198
Noninterest income
1,757
1,368
(2,894
)
4,393
5,755
Noninterest expense
13,687
11,411
8,569
35,473
32,159
Income tax expense
2,380
2,271
1,866
7,029
6,738
Net income
$
7,353
$
8,198
$
6,629
$
23,670
$
23,056
Core net income(1)
$
8,675
$
9,058
$
9,563
$
25,862
$
23,901
Share and Per Share Data
Shares issued and outstanding
9,882,350
8,908,130
8,834,168
9,882,350
8,834,168
Weighted average shares outstanding:
Basic
9,608,868
8,957,608
8,846,018
9,161,622
8,791,007
Diluted
9,725,884
9,070,568
9,040,687
9,297,778
9,016,603
Earnings per share:
Basic
$
0.76
$
0.91
$
0.75
$
2.58
$
2.62
Diluted
0.76
0.90
0.73
2.54
2.56
Core - diluted(1)
0.89
1.00
1.06
2.78
2.65
Book value per share
27.46
25.88
22.86
27.46
22.86
Tangible book value per share(1)
23.38
23.91
20.84
23.38
20.84
Cash dividends per common share
0.09
0.09
0.09
0.27
0.27
Performance and Financial Ratios
ROAA
1.05
%
1.29
%
1.15
%
1.22
%
1.41
%
ROAE
11.89
%
14.55
%
12.96
%
13.70
%
15.85
%
Core ROAA(1)
1.24
%
1.43
%
1.66
%
1.33
%
1.47
%
ROATCE(1)
13.35
%
15.79
%
14.21
%
15.05
%
17.47
%
Core ROATCE(1)
15.74
%
17.44
%
20.50
%
16.45
%
18.11
%
NIM
3.65
%
3.56
%
3.78
%
3.60
%
3.85
%
NIM - FTE(1)
3.66
%
3.57
%
3.79
%
3.61
%
3.87
%
Net interest spread
2.66
%
2.59
%
2.84
%
2.63
%
3.00
%
Yield on loans
7.21
%
7.17
%
6.86
%
7.15
%
6.62
%
Yield on interest-earning assets
6.78
%
6.76
%
6.42
%
6.74
%
6.20
%
Cost of interest-bearing liabilities
4.12
%
4.17
%
3.58
%
4.11
%
3.20
%
Cost of funds(2)
3.31
%
3.41
%
2.80
%
3.33
%
2.48
%
Cost of interest-bearing deposits
4.03
%
4.07
%
3.43
%
4.01
%
3.02
%
Cost of total deposits
3.19
%
3.27
%
2.63
%
3.20
%
2.29
%
Noninterest deposits to total deposits
22.57
%
19.12
%
21.82
%
22.57
%
21.82
%
Core deposits to total deposits
86.30
%
81.78
%
86.58
%
86.30
%
86.58
%
Uninsured deposits to total deposits
39.85
%
29.66
%
29.66
%
39.85
%
29.66
%
Total loans to total deposits
90.86
%
92.63
%
92.58
%
90.86
%
92.58
%
Efficiency ratio
52.79
%
49.78
%
48.01
%
49.98
%
49.47
%
Core efficiency ratio(1)
46.96
%
44.75
%
42.79
%
46.23
%
47.06
%
(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
Nine Months Ended
September 30,2024
June 30,2024
September 30,2023
September 30,2024
September 30,2023
Financial Condition (ending)
Total loans
$
2,199,211
$
2,015,434
$
1,774,148
$
2,199,211
$
1,774,148
Total securities
217,692
204,131
189,496
217,692
189,496
Total assets
2,841,440
2,572,011
2,296,527
2,841,440
2,296,527
Total noninterest-bearing deposits
546,282
416,068
418,125
546,282
418,125
Total core deposits(1)
2,088,993
1,779,253
1,659,291
2,088,993
1,659,291
Total deposits
2,420,546
2,175,678
1,916,401
2,420,546
1,916,401
Total borrowings
121,083
136,873
146,573
121,083
146,573
Total liabilities
2,570,070
2,341,430
2,094,603
2,570,070
2,094,603
Total shareholders' equity
271,370
230,581
201,924
271,370
201,924
Financial Condition (average)
Total loans
$
2,134,318
$
1,987,533
$
1,740,582
$
2,013,157
$
1,676,134
Total securities
223,750
210,678
201,830
214,494
197,005
Total other interest-earning assets
287,320
242,214
232,691
247,035
199,379
Total interest-earning assets
2,645,388
2,440,425
2,175,103
2,474,686
2,072,518
Total assets
2,777,215
2,553,010
2,282,217
2,593,175
2,180,851
Total noninterest-bearing deposits
490,450
420,885
448,616
442,667
442,149
Total interest-bearing deposits
1,874,861
1,729,682
1,472,024
1,746,420
1,395,529
Total deposits
2,365,311
2,150,567
1,920,640
2,189,087
1,837,678
Total borrowings
134,035
143,189
129,882
141,970
122,156
Total interest-bearing liabilities
2,008,896
1,872,871
1,601,906
1,888,390
1,517,685
Total shareholders' equity
246,081
226,527
202,955
230,799
194,430
Asset Quality
Nonperforming loans
$
7,868
$
3,784
$
1,082
$
7,868
$
1,082
Other real estate owned ("OREO")
$
33
$
33
$
2,903
$
33
$
2,903
Nonperforming assets ("NPA")
$
7,901
$
3,817
$
3,985
$
7,901
$
3,985
Net charge-offs to average loans(2)
0.07
%
0.08
%
(0.01
)%
0.08
%
0.02
%
Provision for credit losses to average loans(2)
0.48
%
0.22
%
0.18
%
0.32
%
0.28
%
ACL to loans
1.28
%
1.28
%
1.25
%
1.28
%
1.25
%
ACL to gross loans
1.27
%
1.28
%
1.25
%
1.27
%
1.25
%
ACL to NPL
356.65
%
682.56
%
2050.00
%
356.65
%
2050.00
%
NPL to loans
0.36
%
0.19
%
0.06
%
0.36
%
0.06
%
NPL to gross loans
0.36
%
0.19
