South Atlantic Bancshares, Inc. Reports Earnings of $0.57 per Diluted Common Share for the Three Months Ended September 30, 2025

MYRTLE BEACH, S.C., Oct. 23, 2025 /PRNewswire/ -- South Atlantic Bancshares, Inc. ("South Atlantic" or the "Company") (OTCQX: SABK), parent of South Atlantic Bank (the "Bank"), reported consolidated net income of $4.4 million, or $0.57 per diluted common share, for the third quarter of 2025, compared to $3.7 million, or $0.48 per diluted common share, for the second quarter of 2025. The Company reported $11.4 million, or $1.48 per diluted common share, for the nine months ended September 30, 2025, compared to $6.9 million, or $0.90 per diluted common share, for the nine months ended September 30, 2024.

Third Quarter 2025 Financial Highlights:

• Net income totaled $4.4 million for the third quarter of 2025, a quarter over quarter increase of $697.0 thousand or 18.9 percent, and an increase of $1.8 million, or 68.3 percent, over the third quarter of 2024
• Net income totaled $11.4 million for the nine months ended September 30, 2025, a year over year increase of $4.5 million, or 65.6 percent, when compared to net income of $6.9 million for the nine months ended September 30, 2024
• Total assets increased $104.2 million to $1.9 billion during the nine months ended September 30, 2025, an annualized increase of 7.8 percent, from December 31, 2024
• Total loans grew $87.6 million in the nine months ended September 30, 2025, an annualized increase of 8.7 percent over December 31, 2024
• Total deposits grew $128.0 million in the nine months ended September 30, 2025, an annualized increase of 11.7 percent over December 31, 2024
• Tangible book value per share (non-GAAP) increased $1.02, or 6.6 percent during the third quarter to $16.49 as of September 30, 2025

"Our strong third quarter 2025 results reflect the continued strength and momentum of our core banking franchise and disciplined execution across each of our markets," remarked K. Wayne Wicker Chairman and CEO of the Company. "Net income increased 18.9 percent over the second quarter of 2025. Deposit and loan activity remains strong across all our markets, with two of our branch locations maintaining the top deposit market share in their local markets. The modest quarterly decline in deposit balances is primarily attributable to typical seasonal deposit runoff, as well as a reduction in brokered funding quarter over quarter. Loan growth moderated during the third quarter of 2025 due to expected payoffs and the timing of transaction closings. Loan and deposit growth is consistent with our annual expectations and momentum remains strong as we enter the final quarter of 2025, with both deposit and lending pipelines appearing poised to deliver continued growth. We believe our credit quality remains excellent, and credit related risk indicators continue to show favorable trends. While market interest rates remain elevated, we continue to recognize the benefits of gradual interest rate decreases, as our net interest margin increased 19 basis points, cost of funds decreased 4 basis points, and loan yields improved by 12 basis points during the third quarter of 2025. We were pleased to recognize the benefit of a targeted balance sheet restructuring during the second quarter which has strengthened our overall balance sheet position and boosted profitability. We believe the third quarter of 2025 showcased our ability to deliver strong financial performance and reinforced our confidence in strategic momentum as we enter the fourth quarter of 2025."

Earnings Summary

Net interest income increased $3.1 million, or 27.2 percent, to $14.6 million for the three months ended September 30, 2025, when compared to $11.5 million for the three months ended September 30, 2024. The increase in interest income during the three months ended September 30, 2025 compared to the prior year period was primarily driven by a $3.8 million increase in interest income on the Company's loan portfolio due to increased yields and organic loan growth, partially offset by a reduction in interest income of $1.9 million, or 43.3 percent, on the Company's investment portfolio and cash and cash equivalents held with the Federal Reserve Bank of Richmond (the "FRB") and correspondent banks, which was primarily due to a targeted and strategic sale of securities in the second quarter of 2025. The Company recognized a decrease in interest expense of $1.3 million, or 11.1 percent, for the three months ended September 30, 2025 compared to the same period in 2024. The reduction in interest expense during the period was primarily driven by decreases in interest rates on interest bearing deposits, despite deposit growth in interest bearing deposit  balances. Also contributing to the decline in realized interest expense in the period were decreases in interest rates on short-term borrowings as well as lower utilization of short-term borrowings during the period. 

For the nine months ended September 30, 2025, net interest income increased $8.7 million, or 27.2 percent, to $40.8 million when compared to $32.1 million for the nine months ended September 30, 2024. This increase was driven primarily by an increase in interest income of $6.8 million, or 10.6 percent, from $64.4 million for the nine months ended September 30, 2024 to $71.2 million for the nine months ended September 30, 2025, coupled with a decrease in interest expense on deposits and borrowings of $1.9 million, or 5.9 percent, for the nine months ended September 30, 2025 when compared to the same nine month period in 2024.

Noninterest income increased $212.0 thousand, or 13.4 percent, for the three months ended September 30, 2025 compared to the same three-month period in 2024, primarily driven by an increase in secondary mortgage income of $130.0 thousand, or 30.6 percent, as well as an increase in service charges and fees of $26.0 thousand, or 13.3 percent, and an increase in merchant and interchange income of $22.0 thousand, or 3.4 percent, when compared to the same period in 2024. The Company recognized an increase in noninterest expense of $1.4 million, or 15.7 percent, for the three months ended September 30, 2025 when compared to the same three-month period in 2024, primarily driven by an increase in salaries and employee benefits of $761.0 thousand, or 15.0 percent, an increase in data processing and software expense of $236.0 thousand, or 23.1 percent, and an increase of $373.0 thousand, or 21.3 percent, in other noninterest expense.

For the nine months ended September 30, 2025, noninterest income increased $807.0 thousand, or 19.2 percent, when compared to the nine months ended September 30, 2024, primarily from the benefit of increased secondary mortgage income of $469.0 thousand, or 48.6 percent, as well as an increase of $129.0 thousand, or 7.3 percent, in merchant and interchange income, as well as an increase of $94.0 thousand, or 17.9 percent in service charge and fee income. For the nine months ended September 30, 2025, noninterest expense increased $3.5 million, or 13.4 percent, when compared to the nine months ended September 30, 2024, primarily resulting from increases of $1.6 million, or 31.8 percent, in other noninterest expense, including a $322.4 thousand loss on the targeted sale of securities as part of a strategic portfolio restructuring to reinvest proceeds into higher yielding loans, an increase in audit, compliance, and regulatory assessments, as well as increases of $1.1 million, or 7.5 percent, in salaries and employee benefits, an increase of $538.0 thousand, or 18.3 percent in data processing and software, and $259.0 thousand, or 8.0 percent, in occupancy expense and insurance.

Financial Performance
Dollars in Thousands Except Per Share Data

Noninterest Income/Expense
Dollars in Thousands

Balance Sheet Activity

Total assets increased $104.2 million to $1.9 billion as of September 30, 2025, compared to $1.8 billion as of December 31, 2024, an increase of 5.8 percent. The increase in total assets during the nine months ended September 30, 2025 was driven primarily by an increase in the Company's loan portfolio of $87.6 million, or 6.5 percent, and an increase of $28.7 million, or 46.8 percent, in cash and cash equivalents, partially offset by a reduction in investment securities of $11.0 million due to the targeted sale of securities held for investment, the proceeds of which were strategically reinvested into higher yielding loans. 

Total deposits increased $128.0 million, or 8.8 percent, during the nine months ended September 30, 2025, partially offset by the reduction of short-term borrowings held by $40.0 million, or 25.0 percent, during the nine months ended September 30, 2025.

Shareholders' equity totaled $128.6 million as of September 30, 2025, an increase of $14.8 million, or 13.0 percent, from December 31, 2024, primarily driven by $10.7 million in retained earnings during the nine months ended September 30, 2025, which included the declaration and payment of an ordinary cash dividend of $757.0 thousand on the Company's common stock during the first quarter of 2025, as well as a $1.7 million outlay to repurchase common stock during the second quarter of 2025 pursuant to the Company's authorized stock repurchase program. 

The Company reported 7,469,563 total shares of common stock outstanding as of September 30, 2025. The decrease of 102,260 shares of common stock outstanding during the nine months ended September 30, 2025 was due to a share repurchase completed by the Company during the second quarter of 2025 pursuant to the Company's authorized stock repurchase program, partially offset by exercises during the period of stock options granted. Tangible book value increased $2.19 per share, or 15.3 percent, to $16.49 per share as of September 30, 2025, when compared to $14.30 per share as of December 31, 2024, and has increased $2.11 per share, or 14.7 percent, when compared to $14.38 per share as of September 30, 2024.

Balance Sheets
Dollars in Thousands

Net Interest Margin

Net interest margin increased 19 basis points to 3.28 percent for the three months ended September 30, 2025 when compared to the three months ended June 30, 2025. The yield on interest earning assets increased by 13 basis points during the third quarter of 2025 to 5.57 percent from 5.44 percent for the second quarter of 2025, coupled with a decrease in cost of funds of 4 basis points during the third quarter of 2025 to 2.36 percent from 2.40 percent for the second quarter of 2025. 

Net Interest Margin Analysis
 Dollars in Millions

Credit Quality

We continue to see excellent credit quality in our markets through September 30, 2025, with no loans classified as non-accrual, and one loan totaling $14.0 thousand past due greater than 30 days as of September 30, 2025.

The Company recorded a provision for credit losses of $450 thousand during the three months ended September 30, 2025, compared to a provision of $625 thousand for the three months ended June 30, 2025 and a provision of $575 thousand for the three months ended September 30, 2024.

The Company continues to closely monitor credit quality in light of ongoing economic uncertainty. While the Board of Governors of the Federal Reserve System (the "Federal Reserve") has recently initiated a rate-cutting cycle to address signs of labor market weakness, lingering inflation and other macroeconomic concerns remain. These include the potential for renewed inflationary pressures in the U.S. and our market areas, persistent ambiguity surrounding U.S. trade and tariff policies, and the unknown impact of monetary policy on consumer and business behavior across our market areas. As such, additional provisions for credit losses may be necessary in future periods.

Credit Quality Analysis

Performance Ratios

Regulatory Capital Position

The Bank's capital position remains above the regulatory thresholds required to be deemed "well-capitalized," as shown in the table below, with a total risk-based capital ratio of 12.24 percent and leverage ratio of 8.86 percent as of September 30, 2025. The Company currently operates under the Small Bank Holding Company Policy Statement of the Federal Reserve and, therefore, is not currently subject to the Federal Reserve's consolidated capital reporting requirements.

Regulatory Capital Ratios

Liquidity and Interest Rate Risk Management

The Company regularly pledges loans and securities to the FRB and the Federal Home Loan Bank of Atlanta (the "FHLB"), resulting in total net borrowing capacity with the FRB, the FHLB, and correspondent lines of credit of approximately $269.2 million.  Additionally, the Company pledges portions of its investment securities portfolio to secure public funds deposits. 

As part of the Company's ongoing interest rate risk management, the Company has entered into a series of pay-fixed rate, receive-floating cash flow swap transactions ("Pay-Fixed Swap Agreements"). The Pay-Fixed Swap Agreements are designed as an interest rate hedge for matched-term FHLB advances and to hedge the risk of changes in fair value of certain fixed rate loans in the Company's loan portfolio, which converts the hedged loans from a fixed rate to a synthetic floating Secured Overnight Financing Rate (SOFR).  The Pay-Fixed Swap Agreements have a total notional value of $117.5 million, have stratified maturities, and have a weighted average life of less than one and a half years.

About South Atlantic Bancshares, Inc.

South Atlantic Bancshares, Inc. (OTCQX: SABK) is a registered bank holding company based in Myrtle Beach, South Carolina with approximately $1.9 billion in total assets as of September 30, 2025.  The Company's banking subsidiary, South Atlantic Bank, is a full-service financial institution spanning the entire coastal area of South Carolina, and is locally owned, controlled and operated. The Bank operates twelve locations in Myrtle Beach, Carolina Forest, North Myrtle Beach, Murrells Inlet, Pawleys Island, Georgetown, Mount Pleasant, Charleston, Bluffton, Hilton Head Island, Summerville and Beaufort, South Carolina.  The Bank specializes in providing personalized community banking services to individuals, small businesses and corporations. Services include a full range of consumer and commercial banking products, including mortgage, and treasury management, including South Atlantic Bank goMobile, the Bank's mobile banking app. The Bank also offers internet banking, no-fee ATM access, checking, certificates of deposit and money market accounts, merchant services, mortgage loans, remote deposit capture, and more.  For more information, visit www.SouthAtlantic.bank.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains, among other things, certain statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements with references to a future period or statements preceded by, followed by, or that include the words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "project," "outlook" or similar terms or expressions.  These statements are based upon the current beliefs and good faith expectations of the Company's management team and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control). These risks, uncertainties and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences include, but are not limited to: (i) the impact on us or our customers of a decline in general economic conditions, and any regulatory responses thereto; (ii) slower economic growth rates or potential recession in the United States and our market areas; (iii) the impacts related to or resulting from uncertainty in the banking industry as a whole; (iv) increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior; (v) the impact of changes in market interest rates, whether due to a continuation of the  elevated interest rate environment or further reductions in interest rates and a resulting decline in net interest income; (vi) the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas; (vii) the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; (viii) changes in unemployment rates in the United States and our market areas; (ix) adverse changes in customer spending, borrowing and savings habits; (x) declines in commercial real estate values and prices; (xi) a deterioration of the credit rating for the United States long-term sovereign debt or the impact of uncertain or changing political conditions, including federal government shutdowns and uncertainty regarding United States fiscal debt, deficit and budget matters; (xii) cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; (xiii) severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events, including as a result of in the policies of the current U.S. presidential administration or Congress; (xiv) in the impact of tariffs, sanctions and other trade policies of the United States and its global trading counterparts and the resulting impact on the Company and its customers; (xv) competition and market expansion opportunities; (xvi) changes in non-interest expenditures or in the anticipated benefits of such expenditures; (xvii) the receipt of required regulatory approvals; (xviii) changes in tax laws; (xix) the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; (xx) potential costs related to the impacts of climate change; (xxi) current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxii) changes in applicable laws and regulations. These forward-looking statements are based on current information and/or management's good faith belief as to future events. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans, or expectations contemplated by the Company will be achieved. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Any forward-looking statements contained in this press release are made as of the date hereof, and the Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by applicable law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

Information contained herein, other than information as of December 31, 2024, is unaudited.  All financial data should be read in conjunction with the notes to the consolidated financial statements of the Company and the Bank as of and for the fiscal year ended December 31, 2024, as contained in the Company's 2024 Annual Report located on the Company's website.

Available Information

The Company maintains an Internet web site at www.southatlantic.bank/about-us/investor-relations. The Company makes available, free of charge, on its web site the Company's annual meeting materials, annual reports, quarterly earnings reports, and other press releases.  In addition, the OTC Markets Group maintains an Internet site that contains reports, proxy and information statements, and other information regarding the Company (at www.otcmarkets.com/stock/SABK/overview).

The Company routinely posts important information for investors on its web site (under www.southatlantic.bank and, more specifically, under the Investor Relations tab at www.southatlantic.bank/about-us/investor-relations). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under the OTC Markets Group OTCQX Rules for U.S. Banks.  Accordingly, investors should monitor the Company's web site, in addition to following the Company's press releases, OTC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company's web site is not incorporated by reference into, and is not a part of, this press release.

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SOURCE South Atlantic Bank