Fourth Quarter 2022 Performance and Operational Highlights

• Net income of $10.6 million, or $1.18 per diluted share
  
  
• Core net income⁽¹⁾ of $8.1 million, or $0.90 per diluted share⁽¹⁾
  
  
• Net interest income of $20.9 million, an increase of $1.4 million from the prior quarter
  
  
• Net interest margin (“NIM”) of 4.38%, up 23 basis points from the prior quarter
  
  
• NIM of 4.39% on a fully-taxable equivalent basis (“NIM - FTE”)⁽¹⁾
  
  
• Return on average assets (“ROAA”) of 2.11%; return on average stockholders’ equity (“ROAE”) of 23.77%; and return on average tangible common equity (“ROATCE”)⁽¹⁾ of 26.49%
  
  
• Core ROAA⁽¹⁾ of 1.61%; and core ROATCE⁽¹⁾ of 20.21%
  
  
• Efficiency ratio of 40.81%, an improvement from 48.94% for the prior quarter
  
  
• Linked-quarter loan growth was 18.1% annualized⁽²⁾
  
  
• Linked-quarter deposit growth was 4.6% annualized⁽²⁾
  
  
• Completed the sale of two branches resulting in a $2.4 million net gain

^{(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) The sale of two branches on October 1, 2022 resulted in a $7.3 million reduction in loans and a $66.0 million reduction in deposits. The growth percentages are net of the accounts sold.}

ANNISTON, Ala., Jan. 23, 2023 (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 $10.6 million, or $1.18 diluted earnings per share, for the fourth quarter of 2022. This compares to net income of $6.7 million, or $0.75 diluted earnings per share, for the third quarter of 2022, and net income of $4.1 million, or $0.44 diluted earnings per share, for the fourth quarter of 2021. The Company reported core net income of $8.1 million, or $0.90 diluted core earnings per share, for the fourth quarter of 2022. This compares to core net income of $6.8 million, or $0.77 diluted core earnings per share, for the third quarter of 2022, and core net income of $4.3 million, or $0.47 diluted core earnings per share, for the fourth quarter of 2021 (see “Reconciliation of Non-GAAP Financial Measures”).

CEO Commentary

Stephen Whatley, Chairman and Chief Executive Officer of Southern States, said, “We are very pleased with our fourth-quarter and full-year results. Our talented bankers identified compelling opportunities throughout 2022, driving strong new business development. At the same time, we maintained underwriting discipline and excellent credit quality.” “We grew loans by 18.1% annualized in the fourth quarter and 27.7% for the full year, culminating a year of robust production across our economically dynamic markets. This growth, combined with an increased net interest margin, fueled the expansion of our fourth-quarter net interest income, which increased by 7.5% from the prior quarter and by 48.2% from the fourth quarter of 2021.” Mr. Whatley continued. “While our markets are healthy and our clients are cautiously optimistic, we are mindful of the slowing economic environment heading into 2023 and the lagging impact of rising interest rates on deposit costs. Our long-term commitment to prudent, selective lending and proactive expense management give us confidence in our ability to navigate the changing landscape and continue to drive strong risk-adjusted returns for our shareholders.”   “To that end, during the fourth quarter, we completed the sale of two branches as part of an ongoing effort to optimize our physical footprint. The branch sales resulted in a net gain of $2.4 million.”

Net Interest Income and Net Interest Margin

	Three Months Ended												% Change December 31, 2022 vs.
	December 31, 2022				September 30, 2022				December 31, 2021				September 30, 2022			December 31, 2021
	(Dollars in thousands)
Average interest-earning assets	$	1,893,069			$	1,859,104			$	1,519,490			1.8	%		24.6	%
Net interest income	$	20,884			$	19,435			$	14,096			7.5	%		48.2	%
Net interest margin		4.38	%			4.15	%			3.68	%		23	bps		70	bps

Net interest income for the fourth quarter of 2022 was $20.9 million, an increase of 7.5% from $19.4 million for the third quarter of 2022. The increase was primarily attributable to growth, accompanied by an increase in net interest margin.

Relative to the fourth quarter of 2021, net interest income increased $6.8 million, or 48.2%. The increase was substantially the result of growth, accompanied by an increase in net interest margin.

Net interest margin for the fourth quarter of 2022 was 4.38%, compared to 4.15% for the third quarter of 2022. The increase was primarily due to the Company’s asset sensitive balance sheet as rates increased.

Relative to the fourth quarter of 2021, net interest margin increased from 3.68%. The increase was primarily due to the Company’s asset sensitive balance sheet as rates increased, coupled with the deployment of excess liquidity.

Noninterest Income

	Three Months Ended												% Change December 31, 2022 vs.
	December 31, 2022				September 30, 2022				December 31, 2021				September 30, 2022			December 31, 2021
	(Dollars in thousands)
Service charges on deposit accounts	$	431			$	508			$	428			(15.2	)%		0.7	%
Swap fees		2				11				(6	)		(81.8	)%		(133.3	)%
SBA/USDA fees		70				95				533			(26.3	)%		(86.9	)%
Mortgage origination fees		98				218				269			(55.0	)%		(63.6	)%
Net gain (loss) on securities		(86	)			(143	)			(40	)		(39.9	)%		115.0	%
Other operating income		4,088				650				567			528.9	%		621.0	%
Total noninterest income	$	4,603			$	1,339			$	1,751			243.8	%		162.9	%

Noninterest income for the fourth quarter of 2022 was $4.6 million, an increase of 243.8% from $1.3 million for the third quarter of 2022. The fourth quarter 2022 results included a $2.6 million gain on the sale of two branches and a bank owned life insurance ("BOLI") benefit claim of $774,000. This decrease was partially offset by a decrease in mortgage fees.

Relative to the fourth quarter of 2021, noninterest income increased 162.9% from $1.8 million. The fourth quarter 2022 results included a $2.6 million gain on the sale of two branches and a BOLI benefit claim of $774,000. This increase was partially offset by a decrease in SBA/USDA fees and mortgage fees during the fourth quarter of 2022.

Noninterest Expense

	Three Months Ended												% Change December 31, 2022 vs.
	December 31, 2022				September 30, 2022				December 31, 2021				September 30, 2022			December 31, 2021
	(Dollars in thousands)
Salaries and employee benefits	$	6,738			$	6,152			$	5,563			9.5	%		21.1	%
Equipment and occupancy expenses		730				764				943			(4.5	)%		(22.6	)%
Data processing fees		711				599				563			18.7	%		26.3	%
Regulatory assessments		165				235				263			(29.8	)%		(37.3	)%
Other operating expenses		2,092				2,487				2,280			(15.9	)%		(8.2	)%
Total noninterest expenses	$	10,436			$	10,237			$	9,612			1.9	%		8.6	%

Noninterest expense for the fourth quarter of 2022 was $10.4 million, an increase of 1.9% from $10.2 million for the third quarter of 2022. The increase was primarily attributable to an increase in salaries and benefits as a result of expense related to the issuance of restricted stock units in a deferred compensation plan. Also included in the fourth quarter of 2022 was $200,000 in expenses associated with the sale of the branches. The increase was partially offset by a decrease in fraud losses as a portion was recovered in the fourth quarter of 2022.

Relative to the fourth quarter of 2021, noninterest expense increased 8.6% from $9.6 million. The increase was primarily attributable to an increase in salaries and benefits as a result of additional incentive accruals based on operating results along with expense related to the issuance of restricted stock units in a deferred compensation plan.

Loans and Credit Quality

	Three Months Ended												% Change December 31, 2022 vs.
	December 31, 2022				September 30, 2022				December 31, 2021				September 30, 2022			December 31, 2021
	(Dollars in thousands)
Core loans	$	1,592,707			$	1,530,129			$	1,244,914			4.1	%		27.9	%
PPP loans		—				—				9,203			—	%		NM
Gross loans		1,592,707				1,530,129				1,254,117			4.1	%		27.0	%
Unearned income		(5,543	)			(5,139	)			(3,817	)		7.9	%		45.2	%
Loans, net of unearned income (“Loans”)	$	1,587,164			$	1,524,990			$	1,250,300			4.1	%		26.9	%
Average loans, net of unearned (“Average loans”)	$	1,563,255			$	1,480,735			$	1,191,688			5.6	%		31.2	%
Nonperforming loans (“NPL”)	$	2,245			$	3,950			$	1,972			(43.2	)%		13.8	%
Provision for loan losses	$	1,938			$	1,663			$	732			16.5	%		164.8	%
Allowance for loan losses (“ALLL”)	$	20,156			$	18,423			$	14,844			9.4	%		35.8	%
Net charge-offs (recoveries)	$	205			$	47			$	(15	)		336.2	%		(1466.7	)%
NPL to gross loans		0.14	%			0.26	%			0.16	%
Net charge-offs (recoveries) to average loans(1)		0.05	%			—	%			—	%
ALLL to loans		1.27	%			1.21	%			1.19	%
(1) Ratio is annualized.
NM = Not meaningful

Loans, net of unearned income were $1.6 billion at December 31, 2022, up $62.2 million from September 30, 2022 and up $336.9 million from December 31, 2021. The linked-quarter increase in loans was primarily attributable to growth across our footprint.

Nonperforming loans totaled $2.2 million, or 0.14% of gross loans, at December 31, 2022, compared with $4.0 million, or 0.26% of gross loans, at September 30, 2022, and $2.0 million, or 0.16% of gross loans, at December 31, 2021. The $1.7 million net decrease in nonperforming loans in the fourth quarter was primarily attributable to one commercial real estate loan that was moved back to accruing status. The $273,000 net increase in nonperforming loans from December 31, 2021 was primarily attributable to loans being added and removed from nonaccrual status, none of which were significant.

The Company recorded a provision for loan losses of $1.9 million for the fourth quarter of 2022, compared to $1.7 million for the third quarter of 2022. The provision was primarily due to changes in our qualitative economic factors.

Net charge-offs for the fourth quarter of 2022 were $205,000, or 0.05% of average loans, compared to net charge-offs of $47,000, or 0.00% of average loans, for the third quarter of 2022, and net recoveries of $15,000, or 0.00% of average loans, for the fourth quarter of 2021.

The Company’s allowance for loan losses was 1.27% of total loans and 897.82% of nonperforming loans at December 31, 2022, compared with 1.21% of total loans and 466.41% of nonperforming loans at September 30, 2022.

Deposits

 

	Three Months Ended												% Change December 31, 2022 vs.
	December 31, 2022				September 30, 2022				December 31, 2021				September 30, 2022			December 31, 2021
	(Dollars in thousands)
Noninterest-bearing deposits	$	460,977			$	499,613			$	541,546			(7.7	)%		(14.9	)%
Interest-bearing deposits		1,259,766				1,267,479				1,014,905			(0.6	)%		24.1	%
Total deposits	$	1,720,743			$	1,767,092			$	1,556,451			(2.6	)%		10.6	%

Total deposits were $1.7 billion at December 31, 2022, compared with $1.8 billion at September 30, 2022 and $1.6 billion at December 31, 2021. The $46.3 million decrease in total deposits in the fourth quarter was substantially due to the sale of two branches in October, which resulted in a $66.0 million reduction in total deposits. Excluding the sale, total deposits had a net increase of $19.7 million due to a $43.7 million increase in interest-bearing account balances that more than offset a decrease of $24.0 million in noninterest-bearing deposits.

Capital

	December 31, 2022						September 30, 2022						December 31, 2021
	Company			Bank			Company			Bank			Company			Bank
Tier 1 capital ratio to average assets	8.82	%		12.17	%		8.44	%		11.49	%		9.74	%		10.44	%
Risk-based capital ratios:
Common equity tier 1 (“CET1”) capital ratio	8.82	%		12.17	%		8.73	%		11.89	%		10.35	%		11.09	%
Tier 1 capital ratio	8.82	%		12.17	%		8.73	%		11.89	%		10.35	%		11.09	%
Total capital ratio	14.29	%		13.18	%		12.26	%		12.87	%		11.33	%		12.07	%

As of December 31, 2022, total stockholders’ equity was $181.7 million, compared with $170.3 million at September 30, 2022. The increase of $11.4 million was substantially due to strong 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 the inflationary environment, the COVID-19 pandemic and governmental responses. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and in other SEC filings 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 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
(In thousands, except share and per share amounts)
	Three Months Ended												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
Results of Operations
Interest income	$	26,706			$	22,520			$	15,171			$	82,850			$	57,777
Interest expense		5,822				3,085				1,075				11,512				4,864
Net interest income		20,884				19,435				14,096				71,338				52,913
Provision for loan losses		1,938				1,663				732				5,605				2,982
Net interest income after provision		18,946				17,772				13,364				65,733				49,931
Noninterest income		4,603				1,339				1,751				8,677				10,803
Noninterest expense		10,436				10,237				9,612				39,614				36,435
Income tax expense(1)		2,521				2,174				1,445				7,725				5,732
Net income	$	10,592			$	6,700			$	4,058			$	27,071			$	18,567
Core net income(2)	$	8,081			$	6,806			$	4,256			$	24,975			$	15,956
Share and Per Share Data
Shares issued and outstanding		8,706,920				8,705,920				9,012,857				8,706,920				9,012,857
Weighted average shares outstanding:
Basic		8,707,026				8,693,745				9,012,857				8,774,860				8,198,188
Diluted		8,932,585				8,871,116				9,125,872				8,949,669				8,316,536
Earnings per share:
Basic	$	1.22			$	0.77			$	0.45			$	3.08			$	2.26
Diluted	$	1.18			$	0.75			$	0.44			$	3.02			$	2.23
Core - diluted(2)	$	0.90			$	0.77			$	0.47			$	2.79			$	1.92
Book value per share	$	20.87			$	19.56			$	19.66			$	20.87			$	19.66
Tangible book value per share(2)	$	18.79			$	17.48			$	17.62			$	18.79			$	17.62
Cash dividends declared	$	0.09			$	0.09			$	0.09			$	0.36			$	0.36
Performance and Financial Ratios
ROAA		2.11	%			1.35	%			0.99	%			1.43	%			1.23	%
ROAE		23.77	%			15.42	%			9.15	%			15.55	%			11.80	%
Core ROAA(2)		1.61	%			1.37	%			1.04	%			1.32	%			1.06	%
ROATCE(2)		26.49	%			17.24	%			10.22	%			17.37	%			13.38	%
Core ROATCE(2)		20.21	%			17.51	%			10.72	%			16.02	%			11.50	%
NIM		4.38	%			4.15	%			3.68	%			3.99	%			3.78	%
NIM - FTE(2)		4.39	%			4.17	%			3.70	%			4.01	%			3.80	%
Net interest spread		3.84	%			3.86	%			3.54	%			3.68	%			3.63	%
Yield on loans		6.05	%			5.37	%			4.75	%			5.27	%			4.89	%
Yield on interest-bearing assets		5.60	%			4.81	%			3.96	%			4.64	%			4.13	%
Cost of interest-bearing liabilities		1.76	%			0.95	%			0.42	%			0.96	%			0.50	%
Cost of funds(3)		1.29	%			0.69	%			0.30	%			0.68	%			0.36	%
Cost of interest-bearing deposits		1.52	%			0.82	%			0.39	%			0.79	%			0.47	%
Cost of total deposits		1.09	%			0.58	%			0.27	%			0.55	%			0.33	%
Noninterest deposits to total deposits		26.79	%			28.27	%			34.79	%			26.79	%			34.79	%
Total loans to total deposits		92.24	%			86.30	%			80.33	%			92.24	%			80.33	%
Efficiency ratio		40.81	%			48.94	%			60.50	%			49.12	%			57.13	%
Core efficiency ratio(2)		45.98	%			48.94	%			59.07	%			50.97	%			60.13	%

^{(1) Three months ended and year ended December 31, 2022 include a $540,000 investment tax credit.
(2) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(3) Includes total interest-bearing liabilities and noninterest deposits.}

SELECT FINANCIAL DATA
(In thousands)
	Three Months Ended												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
Financial Condition (ending)
Total loans	$	1,587,164			$	1,524,990			$	1,250,300			$	1,587,164			$	1,250,300
Total securities		175,196				170,375				151,844				175,196				151,844
Total assets		2,044,866				2,052,725				1,782,592				2,044,866				1,782,592
Total noninterest bearing deposits		460,977				499,613				541,546				460,977				541,546
Total deposits		1,720,743				1,767,092				1,556,451				1,720,743				1,556,451
Total borrowings		117,295				93,020				38,448				117,295				38,448
Total liabilities		1,863,147				1,882,400				1,605,394				1,863,147				1,605,394
Total shareholders’ equity	$	181,719			$	170,325			$	177,198			$	181,719			$	177,198
Financial Condition (average)
Total loans	$	1,563,255			$	1,480,735			$	1,191,688			$	1,421,376			$	1,118,386
Total securities		188,765				185,670				140,201				178,755				122,425
Other interest-earning assets		141,049				192,699				187,601				187,263				158,243
Total interest-bearing assets		1,893,069				1,859,104				1,519,490				1,787,394				1,399,054
Total assets		1,994,087				1,966,556				1,628,804				1,893,044				1,510,114
Noninterest-bearing deposits		477,301				491,917				439,142				496,486				378,868
Interest-bearing deposits		1,216,492				1,207,797				965,457				1,127,637				922,870
Total deposits		1,693,793				1,699,714				1,404,599				1,624,123				1,301,738
Total borrowings		99,111				75,039				38,448				76,379				41,733
Total interest-bearing liabilities		1,315,603				1,282,836				1,003,905				1,204,016				964,603
Total shareholders’ equity	$	176,769			$	172,402			$	175,913			$	174,107			$	157,277
Asset Quality
Nonperforming loans	$	2,245			$	3,950			$	1,972			$	2,245			$	1,972
Other real estate owned (“OREO”)	$	2,930			$	2,930			$	2,930			$	2,930			$	2,930
Nonperforming assets (“NPA”)	$	5,175			$	6,880			$	4,902			$	5,175			$	4,902
Net charge-offs (recovery) to average loans(1)		0.05	%			—	%			—	%			0.02	%			—	%
Provision for loan losses to average loans(1)		0.49	%			0.45	%			0.24	%			0.39	%			0.27	%
ALLL to loans		1.27	%			1.21	%			1.19	%			1.27	%			1.19	%
ALLL to gross loans		1.27	%			1.20	%			1.18	%			1.27	%			1.18	%
ALLL to NPL		897.82	%			466.41	%			752.74	%			897.82	%			752.74	%
NPL to loans		0.14	%			0.26	%			0.16	%			0.14	%			0.16	%
NPL to gross loans		0.14	%			0.26	%			0.16	%			0.14	%			0.16	%
NPA to gross loans and OREO		0.32	%			0.45	%			0.39	%			0.32	%			0.39	%
NPA to total assets		0.25	%			0.34	%			0.27	%			0.25	%			0.27	%
Regulatory and Other Capital Ratios
Total shareholders’ equity to total assets		8.89	%			8.30	%			9.94	%			8.89	%			9.94	%
Tangible common equity to tangible assets(2)		8.07	%			7.48	%			9.00	%			8.07	%			9.00	%
Tier 1 capital ratio to average assets		8.82	%			8.44	%			9.74	%			8.82	%			9.74	%
Risk-based capital ratios:
CET1 capital ratio		8.82	%			8.73	%			10.35	%			8.82	%			10.35	%
Tier 1 capital ratio		8.82	%			8.73	%			10.35	%			8.82	%			10.35	%
Total capital ratio		14.29	%			12.26	%			11.33	%			14.29	%			11.33	%

^{(1) Ratio is annualized.
(2) 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
(In thousands)
	December 31, 2022 (Unaudited)				September 30, 2022 (Unaudited)				December 31, 2021 (Audited)
Assets
Cash and due from banks	$	15,260			$	17,394			$	6,397
Interest-bearing deposits in banks		90,198				165,637				203,537
Federal funds sold		63,041				63,031				74,022
Total cash and cash equivalents		168,499				246,062				283,956
Securities available for sale, at fair value		155,544				150,718				132,172
Securities held to maturity, at amortized cost		19,652				19,657				19,672
Other equity securities, at fair value		5,243				5,694				9,232
Restricted equity securities, at cost		3,134				2,791				2,600
Loans held for sale		1,047				1,643				2,400
Loans, net of unearned income		1,587,164				1,524,990				1,250,300
Less allowance for loan losses		20,156				18,423				14,844
Loans, net		1,567,008				1,506,567				1,235,456
Premises and equipment, net		27,345				28,585				27,044
Accrued interest receivable		6,963				5,699				4,170
Bank owned life insurance		29,186				29,677				22,201
Annuities		15,478				15,564				12,888
Foreclosed assets		2,930				2,930				2,930
Goodwill		16,862				16,862				16,862
Core deposit intangible		1,226				1,302				1,500
Other assets		24,749				18,974				9,509
Total assets	$	2,044,866			$	2,052,725			$	1,782,592
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	460,977			$	499,613			$	541,546
Interest-bearing		1,259,766				1,267,479				1,014,905
Total deposits		1,720,743				1,767,092				1,556,451
Other borrowings		(19	)			19,978				12,498
FHLB advances		31,000				26,000				25,950
Subordinated notes		86,314				47,042				—
Accrued interest payable		584				359				132
Other liabilities		24,525				21,929				10,363
Total liabilities		1,863,147				1,882,400				1,605,394
Stockholders' equity:
Common stock		43,714				43,529				45,064
Capital surplus		76,785				75,835				80,640
Retained earnings		73,764				63,956				49,858
Accumulated other comprehensive income (loss)		(11,048	)			(12,403	)			2,113
Unvested restricted stock		(477	)			(592	)			(477	)
Vested restricted stock units		(1,019	)			—				—
Total stockholders' equity		181,719				170,325				177,198
Total liabilities and stockholders' equity	$	2,044,866			$	2,052,725			$	1,782,592

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
	Three Months Ended												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
	(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Audited)
Interest income:
Loans, including fees	$	23,853			$	20,052			$	14,280			$	74,936			$	54,709
Taxable securities		1,206				1,010				459				3,622				1,593
Nontaxable securities		322				323				294				1,253				1,023
Other interest and dividends		1,325				1,135				138				3,039				452
Total interest income		26,706				22,520				15,171				82,850				57,777
Interest expense:
Deposits		4,655				2,489				955				8,906				4,310
Other borrowings		1,167				596				120				2,606				554
Total interest expense		5,822				3,085				1,075				11,512				4,864
Net interest income		20,884				19,435				14,096				71,338				52,913
Provision for loan losses		1,938				1,663				732				5,605				2,982
Net interest income after provision for loan losses		18,946				17,772				13,364				65,733				49,931
Noninterest income:
Service charges on deposit accounts		431				508				428				1,863				1,528
Swap fees		2				11				(6	)			49				931
SBA/USDA fees		70				95				533				646				3,968
Mortgage origination fees		98				218				269				815				1,465
Net gain (loss) on securities		(86	)			(143	)			(40	)			(632	)			(57	)
Other operating income		4,088				650				567				5,936				2,968
Total noninterest income		4,603				1,339				1,751				8,677				10,803
Noninterest expenses:
Salaries and employee benefits		6,738				6,152				5,563				24,597				21,667
Equipment and occupancy expenses		730				764				943				2,918				3,640
Data processing fees		711				599				563				2,444				2,128
Regulatory assessments		165				235				263				925				952
Other operating expenses		2,092				2,487				2,280				8,730				8,048
Total noninterest expenses		10,436				10,237				9,612				39,614				36,435
Income before income taxes		13,113				8,874				5,503				34,796				24,299
Income tax expense		2,521				2,174				1,445				7,725				5,732
Net income	$	10,592			$	6,700			$	4,058			$	27,071			$	18,567
Basic earnings per share	$	1.22			$	0.77			$	0.45			$	3.08			$	2.26
Diluted earnings per share	$	1.18			$	0.75			$	0.44			$	3.02			$	2.23

AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)
	Three Months Ended
	December 31, 2022											September 30, 2022											December 31, 2021
	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)	$	1,563,255			$	23,853			6.05	%		$	1,480,735			$	20,052			5.37	%		$	1,191,688			$	14,280			4.75	%
Taxable securities		132,222				1,206			3.62	%			128,932				1,010			3.11	%			86,292				459			2.11	%
Nontaxable securities		56,543				322			2.26	%			56,738				323			2.26	%			53,909				294			2.16	%
Other interest-earnings assets		141,049				1,325			3.73	%			192,699				1,135			2.34	%			187,601				138			0.29	%
Total interest-earning assets	$	1,893,069			$	26,706			5.60	%		$	1,859,104			$	22,520			4.81	%		$	1,519,490			$	15,171			3.96	%
Allowance for loan losses		(19,374	)										(17,250	)										(14,421	)
Noninterest-earning assets		120,392											124,702											123,735
Total Assets	$	1,994,087										$	1,966,556										$	1,628,804
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		98,978				22			0.09	%			114,517				26			0.09	%			101,863				25			0.10	%
Savings and money market accounts		794,692				3,126			1.56	%			811,349				1,644			0.80	%			599,948				625			0.41	%
Time deposits		322,822				1,507			1.85	%			281,931				819			1.15	%			263,646				305			0.46	%
FHLB advances		22,739				147			2.56	%			27,380				102			1.47	%			25,950				22			0.34	%
Other borrowings		76,372				1,020			5.30	%			47,659				494			4.12	%			12,498				98			3.11	%
Total interest-bearing liabilities	$	1,315,603			$	5,822			1.76	%		$	1,282,836			$	3,085			0.95	%		$	1,003,905			$	1,075			0.42	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	477,301										$	491,917										$	439,142
Other liabilities		24,414											19,401											9,844
Total noninterest-bearing liabilities	$	501,715										$	511,318										$	448,986
Stockholders’ Equity		176,769											172,402											175,913
Total Liabilities and Stockholders’ Equity	$	1,994,087										$	1,966,556										$	1,628,804
Net interest income					$	20,884										$	19,435										$	14,096
Net interest spread(2)									3.84	%										3.86	%										3.54	%
Net interest margin(3)									4.38	%										4.15	%										3.68	%
Net interest margin - FTE(4)(5)									4.39	%										4.17	%										3.70	%
Cost of funds(6)									1.29	%										0.69	%										0.30	%
Cost of interest-bearing deposits									1.52	%										0.82	%										0.39	%
Cost of total deposits									1.09	%										0.58	%										0.27	%

^{(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 for the three months ended December 31, 2022 and September 30, 2022 and a 23.5% tax rate for the three months ended December 31, 2021.
(5)   Refer to “Reconciliation of Non-GAAP Financial Measures”.
(6)   Includes total interest-bearing liabilities and noninterest deposits.}

AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
(Dollars in thousands)
	Year Ended December 31,
		2022											2021
	Average Balance				Interest				Yield/ Rate			Average Balance				Interest				Yield/ Rate
Assets:
Interest-earning assets:
Loans, net of unearned income(1)	$	1,421,376			$	74,936			5.27	%		$	1,118,386			$	54,709			4.89	%
Taxable securities		122,500				3,622			2.96	%			77,281				1,593			2.06	%
Nontaxable securities		56,255				1,253			2.23	%			45,144				1,023			2.27	%
Other interest-earnings assets		187,263				3,039			1.62	%			158,243				452			0.29	%
Total interest-earning assets	$	1,787,394			$	82,850			4.64	%		$	1,399,054			$	57,777			4.13	%
Allowance for loan losses		(16,883	)										(13,276	)
Noninterest-earning assets		122,533											124,336
Total Assets	$	1,893,044										$	1,510,114
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing transaction accounts		109,786				100			0.09	%			96,503				91			0.09	%
Savings and money market accounts		754,830				5,988			0.79	%			527,484				2,680			0.51	%
Time deposits		263,021				2,818			1.07	%			298,883				1,539			0.51	%
FHLB advances		25,264				291			1.15	%			30,636				143			0.47	%
Other borrowings		51,115				2,315			4.53	%			11,097				411			3.72	%
Total interest-bearing liabilities	$	1,204,016			$	11,512			0.96	%		$	964,603			$	4,864			0.50	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits	$	496,486										$	378,868
Other liabilities		18,435											9,366
Total noninterest-bearing liabilities	$	514,921										$	388,234
Stockholders’ Equity		174,107											157,277
Total Liabilities and Stockholders’ Equity	$	1,893,044										$	1,510,114
Net interest income					$	71,338										$	52,913
Net interest spread(2)									3.68	%										3.63	%
Net interest margin(3)									3.99	%										3.78	%
Net interest margin - FTE(4)(5)									4.01	%										3.80	%
Cost of funds(6)									0.68	%										0.36	%
Cost of interest-bearing deposits									0.79	%										0.47	%
Cost of total deposits									0.55	%										0.33	%

^{(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 for the year ended ended December 31, 2022 and a 23.5% tax rate for the year ended December 31, 2021.
(5)   Refer to “Reconciliation of Non-GAAP Financial Measures”.
(6)   Includes total interest-bearing liabilities and noninterest deposits.}

LOAN COMPOSITION
(Dollars in thousands)
	December 31, 2022							September 30, 2022							December 31, 2021
	Amount				% of gross			Amount				% of gross			Amount				% of gross
Real estate mortgages:
Construction and development	$	255,736			16.1	%		$	222,159			14.5	%		$	174,480			13.9	%
Residential		167,891			10.5	%			164,296			10.7	%			147,490			11.8	%
Commercial		904,872			56.8	%			889,942			58.2	%			716,541			57.1	%
Commercial and industrial		256,553			16.1	%			243,577			15.9	%			197,694			15.8	%
PPP loans		—			—	%			—			—	%			9,203			0.7	%
Consumer and other		7,655			0.5	%			10,155			0.7	%			8,709			0.7	%
Gross loans		1,592,707			100.0	%			1,530,129			100.0	%			1,254,117			100.0	%
Unearned income		(5,543	)						(5,139	)						(3,817	)
Loans, net of unearned income		1,587,164							1,524,990							1,250,300
Allowance for loan losses		(20,156	)						(18,423	)						(14,844	)
Loans, net	$	1,567,008						$	1,506,567						$	1,235,456

DEPOSIT COMPOSITION
(Dollars in thousands)
	December 31, 2022							September 30, 2022							December 31, 2021
	Amount				% of total			Amount				% of total			Amount				% of total
Noninterest-bearing transaction	$	460,977			26.8	%		$	499,613			28.3	%		$	541,546			34.8	%
Interest-bearing transaction		837,127			48.6	%			855,350			48.4	%			704,326			45.3	%
Savings		49,235			2.9	%			78,687			4.5	%			56,715			3.6	%
Time deposits, $250,000 and under		307,145			17.8	%			266,491			15.0	%			224,556			14.4	%
Time deposits, over $250,000		66,259			3.9	%			66,951			3.8	%			29,308			1.9	%
Total deposits	$	1,720,743			100.0	%		$	1,767,092			100.0	%		$	1,556,451			100.0	%

Nonperfoming Assets
(Dollars in thousands)
	December 31, 2022				September 30, 2022				December 31, 2021
Nonaccrual loans	$	2,245			$	3,950			$	1,478
Past due loans 90 days or more and still accruing interest		—				—				494
Total nonperforming loans		2,245				3,950				1,972
OREO		2,930				2,930				2,930
Total nonperforming assets	$	5,175			$	6,880			$	4,902
Troubled debt restructured loans – nonaccrual(1)		832				1,011				940
Troubled debt restructured loans - accruing		1,292				1,307				1,072
Total troubled debt restructured loans	$	2,124			$	2,318			$	2,012
Allowance for loan losses	$	20,156			$	18,423			$	14,844
Loans, net of unearned income at the end of the period	$	1,587,164			$	1,524,990			$	1,250,300
Gross loans outstanding at the end of period	$	1,592,707			$	1,530,129			$	1,254,117
Total assets	$	2,044,866			$	2,052,725			$	1,782,592
Allowance for loan losses to nonperforming loans		897.82	%			466.41	%			752.74	%
Nonperforming loans to loans, net of unearned income		0.14	%			0.26	%			0.16	%
Nonperforming loans to gross loans		0.14	%			0.26	%			0.16	%
Nonperforming assets to gross loans and OREO		0.32	%			0.45	%			0.39	%
Nonperforming assets to total assets		0.25	%			0.34	%			0.27	%
Nonaccrual loans by category:
Real estate mortgages:
Construction & Development	$	67			$	70			$	346
Residential Mortgages		565				550				167
Commercial Real Estate Mortgages		1,278				2,888				674
Commercial & Industrial		312				434				285
Consumer and other		23				8				6
Total	$	2,245			$	3,950			$	1,478

^{(1) Troubled debt restructured 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 Loan Losses
(Dollars in thousands)
	Three Months Ended												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
Average loans, net of unearned income	$	1,563,255			$	1,480,735			$	1,191,688			$	1,421,376			$	1,118,386
Loans, net of unearned income	$	1,587,164			$	1,524,990			$	1,250,300			$	1,587,164			$	1,250,300
Gross loans	$	1,592,707			$	1,530,129			$	1,254,117			$	1,592,707			$	1,254,117
Allowance for loan losses at beginning of the period	$	18,423			$	16,807			$	14,097			$	14,844			$	11,859
Charge-offs:
Construction and development		—				—				—				66				—
Residential		—				—				—				7				44
Commercial		—				—				—				—				—
Commercial and industrial		210				269				—				479				—
Consumer and other		18				1				—				26				2
Total charge-offs		228				270				—				578				46
Recoveries:
Construction and development		—				—				—				—				—
Residential		4				11				13				50				25
Commercial		—				—				—				—				—
Commercial and industrial		1				204				1				205				15
Consumer and other		18				8				1				30				9
Total recoveries		23				223				15				285				49
Net charge-offs (recoveries)	$	205			$	47			$	(15	)		$	293			$	(3	)
Provision for loan losses	$	1,938			$	1,663			$	732			$	5,605			$	2,982
Balance at end of period	$	20,156			$	18,423			$	14,844			$	20,156			$	14,844
Allowance to loans, net of unearned income		1.27	%			1.21	%			1.19	%			1.27	%			1.19	%
Allowance to gross loans		1.27	%			1.20	%			1.18	%			1.27	%			1.18	%
Net charge-offs (recoveries) to average loans, net of unearned income(1)		0.05	%			—	%			—	%			0.02	%			—	%
Provision for loan losses to average loans, net of unearned income(1)		0.49	%			0.45	%			0.24	%			0.39	%			0.27	%

^{(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												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
Net income	$	10,592			$	6,700			$	4,058			$	27,071			$	18,567
Add: Net OREO gains		—				—				227				—				219
Less: Gain on sale of USDA loan		—				—				—				—				2,806
Less: Net gain on sale of branches		2,372				—				—				2,372				—
Less: BOLI benefit claim		774				—				—				774				742
Less: Loss on securities		(86	)			(143	)			(40	)			(632	)			(57	)
Less: Tax effect		(549	)			37				69				(418	)			(661	)
Core net income	$	8,081			$	6,806			$	4,256			$	24,975			$	15,956
Average assets	$	1,994,087			$	1,966,556			$	1,628,804			$	1,893,044			$	1,510,114
Core return on average assets		1.61	%			1.37	%			1.04	%			1.32	%			1.06	%
Net income	$	10,592			$	6,700			$	4,058			$	27,071			$	18,567
Add: Net OREO gains		—				—				227				—				219
Add: Provision		1,938				1,663				732				5,605				2,982
Less: Gain on sale of USDA loan		—				—				—				—				2,806
Less: Net gain on sale of branches		2,372				—				—				2,372				—
Less: BOLI benefit claim		774				—				—				774				742
Less: Loss on securities		(86	)			(143	)			(40	)			(632	)			(57	)
Add: Income taxes		2,521				2,174				1,445				7,725				5,732
Pretax pre-provision core net income	$	11,991			$	10,680			$	6,502			$	37,887			$	24,009
Average assets	$	1,994,087			$	1,966,556			$	1,628,804			$	1,893,044			$	1,510,114
Pretax pre-provision core return on average assets		2.39	%			2.15	%			1.58	%			2.00	%			1.59	%
Net interest income	$	20,884			$	19,435			$	14,096			$	71,338			$	52,913
Add: Fully-taxable equivalent adjustments(1)		84				86				77				335				276
Net interest income - FTE	$	20,968			$	19,521			$	14,173			$	71,673			$	53,189
Net interest margin		4.38	%			4.15	%			3.68	%			3.99	%			3.78	%
Effect of fully-taxable equivalent adjustments(1)		0.01	%			0.02	%			0.02	%			0.02	%			0.02	%
Net interest margin - FTE		4.39	%			4.17	%			3.70	%			4.01	%			3.80	%
Total stockholders' equity	$	181,719			$	170,325			$	177,198			$	181,719			$	177,198
Less: Intangible assets		18,088				18,164				18,362				18,088				18,362
Tangible common equity	$	163,631			$	152,161			$	158,836			$	163,631			$	158,836
1) Assumes a 24.0% tax rate for the three months ended December 31, 2022 and September 30, 2022 and a 23.5% tax rate for the three months ended December 31, 2021. Assumes a 24.0% tax rate for the year ended December 31, 2022 and a 23.5% tax rate for the year ended December 31, 2021.
Reconciliation of Non-GAAP Financial Measures
(Dollars in thousands, except share and per share amounts
	Three Months Ended												Year Ended December 31,
	December 31, 2022				September 30, 2022				December 31, 2021					2022				2021
Core net income	$	8,081			$	6,806			$	4,256			$	24,975			$	15,956
Diluted weighted average shares outstanding		8,932,585				8,871,116				9,125,872				8,949,669				8,316,536
Diluted core earnings per share	$	0.90			$	0.77			$	0.47			$	2.79			$	1.92
Common shares outstanding at year or period end		8,706,920				8,705,920				9,012,857				8,706,920				9,012,857
Tangible book value per share	$	18.79			$	17.48			$	17.62			$	18.79			$	17.62
Total assets at end of period	$	2,044,866			$	2,052,725			$	1,782,592			$	2,044,866			$	1,782,592
Less: Intangible assets		18,088				18,164				18,362				18,088				18,362
Adjusted assets at end of period	$	2,026,778			$	2,034,561			$	1,764,230			$	2,026,778			$	1,764,230
Tangible common equity to tangible assets		8.07	%			7.48	%			9.00	%			8.07	%			9.00	%
Total average shareholders equity	$	176,769			$	172,402			$	175,913			$	174,107			$	157,277
Less: Average intangible assets		18,134				18,203				18,402				18,236				18,501
Average tangible common equity	$	158,635			$	154,199			$	157,511			$	155,871			$	138,776
Net income to common shareholders	$	10,592			$	6,700			$	4,058			$	27,071			$	18,567
Return on average tangible common equity		26.49	%			17.24	%			10.22	%			17.37	%			13.38	%
Average tangible common equity	$	158,635			$	154,199			$	157,511			$	155,871			$	138,776
Core net income	$	8,081			$	6,806			$	4,256			$	24,975			$	15,956
Core return on average tangible common equity		20.21	%			17.51	%			10.72	%			16.02	%			11.50	%
Net interest income	$	20,884			$	19,435			$	14,096			$	71,338			$	52,913
Add: Noninterest income		4,603				1,339				1,751				8,677				10,803
Less: Gain on sale of USDA loan		—				—				—				—				2,806
Less: Gain on sale of branches		2,600				—				—				2,600				—
Less: BOLI benefit claim		774				—				—				774				742
Less: Loss on securities		(86	)			(143	)			(40	)			(632	)			(57	)
Operating revenue	$	22,199			$	20,917			$	15,887			$	77,273			$	60,225
Expenses:
Total noninterest expense	$	10,436			$	10,237			$	9,612			$	39,614			$	36,435
Less: Net OREO gains		—				—				227				—				219
Less: Loss on sale of branches		228				—				—				228				—
Adjusted noninterest expenses	$	10,208			$	10,237			$	9,385			$	39,386			$	36,216
Core efficiency ratio		45.98	%			48.94	%			59.07	%			50.97	%			60.13	%