10-K: Southern States Bancshares Reports Annual Results, Completes Century Bank Acquisition

Southern States Bancshares, Inc. announces its 2024 financial results, highlighting a net income increase and the completion of the Century Bank acquisition.

Summary

• Southern States Bancshares, Inc. reported a net income of $34.9 million for the year ended December 31, 2024, compared to $32.0 million in 2023.
• The company's Return on Average Assets (ROAA) was 1.31% and Return on Average Equity (ROAE) was 14.39% for 2024.
• Basic earnings per common share increased to $3.72 in 2024 from $3.63 in 2023.
• Net interest income rose by $11.6 million, a 14.5% increase year-over-year.
• Loans, net of unearned income, increased by $342.1 million to $2.2 billion.
• Deposits grew by $393.1 million to $2.4 billion, with non-brokered deposits increasing by $474.0 million.
• The company completed its acquisition of Century Bank on July 31, 2024, expanding its presence in Georgia.
• Net interest margin was 3.61% for the year ended December 31, 2024, compared to 3.81% for the year ended December 31, 2023.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with increased net income and growth in key areas, but also acknowledges challenges such as decreasing net interest margin and increasing expenses.

Positives

• Net interest income increased by $11.6 million due to loan growth and higher average loan yields.
• The acquisition of Century Bank expanded the company's presence in the Georgia market.
• The company's deposit base grew significantly, particularly in non-brokered deposits.
• The company's capital ratios remain strong, exceeding regulatory requirements.

Negatives

• Net interest margin decreased from 3.81% to 3.61%.
• Noninterest income decreased by $1.5 million due to a one-time fee in the prior year and lower swap fees.
• Noninterest expense increased by $6.7 million due to higher operating expenses and merger-related costs.
• There was a wire fraud loss of $1.2 million incurred during the year ended December 31, 2024.

Risks

• The company's profitability is vulnerable to interest rate fluctuations.
• The business is concentrated in specific geographic markets, making it susceptible to regional economic conditions.
• A decline in credit quality could lead to losses.
• The allowance for credit losses may not be adequate.
• Cybersecurity risks could disrupt operations and expose the company to liability.

Future Outlook

The company's future performance depends on various factors, including economic conditions, interest rate movements, and regulatory changes, which are difficult to predict.

Management Comments

• Management believes that the allowance for estimated credit losses is adequate to absorb probable losses on existing loans.
• Management strives to conduct its business in a manner that enhances its reputation.
• Management regularly reviews and updates Southern States internal controls and procedures that are designed to manage the various risks in Southern States business.

Industry Context

The banking and financial services industries are undergoing rapid technological changes, with frequent introductions of new technology-driven products and services.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• A comprehensive analysis would require benchmarking against peer institutions in terms of ROAA, ROAE, net interest margin, and efficiency ratio.
• Specific comparisons to companies like First Horizon, Truist, or Regions Financial would provide valuable context.

Legal Proceedings

• Southern States and Southern States Bank are parties to various legal proceedings in the ordinary course of their respective businesses, including proceedings to collect loans or enforce security interests.

Related Party Transactions

• In the ordinary course of business, the Company conducts transactions with its directors and executive officers, including companies in which such directors and executive officers have a beneficial interest.
• Deposits from related parties held by the Company at December 31, 2024 and 2023 totaled $12,494 and $11,446, respectively.
• Changes in related party loans for the years ended December 31, 2024 and 2023 are as follows: December 31, 2024 2023 Balance, beginning of year $ 13,614 $ 5,691 Additions for new directors 8,025 Advances 5,106 2,999 Repayments (5,498) (3,101) Balance, end of year $ 13,222 $ 13,614

Stakeholder Impact

• The company's performance impacts shareholders through earnings and dividends.
• Employees are affected by compensation, benefits, and training programs.
• Customers benefit from the company's banking products and services.
• The company's activities contribute to the economic health of its communities.

Next Steps

• The company will continue to monitor its liquidity position to ensure it can meet cash flow requirements.
• The company will continue to evaluate the new CRA rule and its effects on operations going forward.
• The company will continue to evaluate the new Open Banking Rule and its effects on operations going forward.

Key Dates