Document

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., January 23, 2023 – 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.”


	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 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.


	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

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.

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.

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.


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		%


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		%


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	%


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	%


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


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		%

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.


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		%


	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	%