Southern BancShares N C : Quarterly Report – June 2023

SOUTHERN BANCSHARES (N.C.), INC.

QUARTERLY REPORT

JUNE 2023

Mission

Founded in 1901, Southern Bank is

1. customer-focusedcommunity bank serving eastern North Carolina and southeastern Virginia. Our mission is to be the bank of preference for consumers and businesses in the markets that we serve.

Genuine concern for the customer is our top priority, striving to create and deliver superior value in the financial services we provide by exceeding the expectations of our customers.

We are dedicated to the communities we serve, both in spirit and support. We provide a progressive and rewarding working environment for our employees that encourages the investment of their time, energy, and talents to the betterment of their communities.

We embrace sound banking philosophies that incorporate dedication to relationships, strong business values, and financial integrity while advocating the maintenance of quality assets and reasonable return on shareholder investment.

Southern Bank is a wholly owned subsidiary of Southern BancShares (N.C.), Inc.

On January 17, 2023, the Company's Board of Directors approved a stock repurchase program that expires on March 31, 2024 and authorizes the repurchase of up to 4,000 shares of the Company's outstanding common stock. The repurchase program stipulates that the aggregate dollar amount paid during any consecutive twelve-monthperiod to repurchase shares of common stock, through open market and privately negotiated transactions, and shares of preferred stock, through privately negotiated transactions, shall not equal or exceed 3% of the Company's consolidated shareholders' equity. The following table indicates the number of shares of each class and the amount paid to repurchase shares during the three- and six-monthperiods ended June 30, 2023.

ADDITIONAL DISCLOSURE - REPURCHASE OF THE COMPANY'S COMMON AND PREFERRED STOCK

June 30, 2023

# Shares Amount Paid

For the Quarter Ended

June 30, 2023

# Shares Amount Paid

Year to Date

June 30,

For the Quarter Ended

Pursuant to Accounting Standards Update 2016-01:Financial Instruments-Overall(Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"),equity investments must be measured at fair value with changes in fair value recognized in net income. For the quarters ended June 30, 2023 and 2022, unrealized gains (losses) on equity investments of $64.3 million and $(3.6) million, respectively were included in noninterest income, and $13.5 million and $(766,000), respectively in deferred tax expense (benefit) were included in income tax expense related to the change in fair value of equity investments. For the six months ended June 30, 2023 and 2022, unrealized gains (losses) on equity investments of $110.7 million and $(37.9) million, respectively were included in noninterest income, and $23.2 million and $(8.0) million, respectively in deferred tax expense (benefit) were included in income tax expense related to the change in fair value of equity investments. While ASU 2016-01has no impact on the book value per common share, the impact on net income is as follows:

ADDITIONAL DISCLOSURE - ACCOUNTING FOR INVESTMENTS IN MARKETABLE EQUITY SECURITIES

Year to Date

June 30,

Southern BancShares (N.C.), Inc. and Subsidiaries		For the Quarter Ended		As of or Year to Date	Percent
Financial Highlights (Unaudited)		June 30,			June 30,	Change
(Dollars in thousands, except per share data)		2023		2022		2023		2022	YTD
SUMMARY BALANCE SHEET
ASSETS					$	115,690	$	195,490	-41%
Cash, due from banks and overnight funds sold
Investments						1,599,280		1,736,328	-8%
Loans less allowance for loan loss of $33,032 and $32,846						2,948,250		2,575,720	14%
Other assets						195,271		196,275	-1%
Total assets					$	4,858,491	$	4,703,813	3%
LIABILITIES
Deposits:
Noninterest-bearing deposits					$	1,385,411	$	1,480,751	-6%
Interest-bearing deposits						2,696,681		2,667,198	1%
Total deposits						4,082,092		4,147,949	-2%
Borrowings						353,781		237,759	49%
Other liabilities						22,176		17,347	28%
Total liabilities						4,458,049		4,403,055	1%
SHAREHOLDERS' EQUITY
Preferred stock						1,728		1,782	-3%
Common stock						389		393	-1%
Surplus						27,043		27,043	0%
Retained earnings						567,062		427,908	33%
Accumulated other comprehensive (loss)						(195,780)		(156,368)	25%
Total shareholders' equity						400,442		300,758	33%
Total liabilities and shareholders' equity					$	4,858,491	$	4,703,813	3%
EARNINGS PERFORMANCE
Interest income	$	42,863	$	33,914	$	82,121	$	66,313	24%
Interest expense		12,759		1,382		22,200		2,551	770%
Net interest income		30,104		32,532		59,921		63,762	-6%
Provision for loan losses		862		2,940		582		3,434	83%
Noninterest income (loss)		71,208		4,252		124,000		(23,074)	637%
Noninterest expense		24,175		23,769		48,751		47,423	3%
Income (loss) before income taxes		76,275		10,075		134,588		(10,169)	1424%
Income tax expense (benefit)		15,483		1,603		27,590		(3,261)	946%
Net income (loss)	$	60,792	$	8,472	$	106,998	$	(6,908)	1649%
Earnings (loss) per share	$	779.28	$	107.06	$	1,370.51	$	(89.04)
Return on average assets		5.08%		0.73%		4.51%		-0.30%
Return on average equity		65.41%		10.40%		63.76%		-3.61%

		2023		2022		2023		2022
Net income (loss) as reported	$	60,792	$	8,472	$	106,998	$	(6,908)
Impact of ASU 2016-01		(50,813)		2,880		(87,475)		29,964
Net income excluding the Impact of ASU 2016-01	$	9,979	$	11,352	$	19,523	$	23,056
Return on average assets excluding the impact of ASU 2016-01		0.83%		0.97%		0.82%		0.99%
Return on average equity excluding the impact of ASU 2016-01		10.74%		13.94%		11.63%		12.06%

Common	150	$	767	199	$	1,004
Series B preferred	1,415		18	1,415		18
Series C preferred	85		1	85		1

Quarterly Report

General Board of Directors

DREW M. COVERT, Chairperson Mount Olive, NC

The Bank's and our Chief Executive Officer and Board Chairperson

JULIAN R. AYCOCK

Fremont, NC

President, Marr's, Inc., (farming operations)

WILLIAM H. BRYAN

Mount Olive, NC

Executive Chairperson, Mount Olive Pickle Company, Inc. (manufacturer of pickle and pepper products)

HOPE H. BRYANT

Raleigh, NC

Vice Chairperson, First Citizens BancShares, Inc.; Corporate Sales Executive, First-Citizens Bank & Trust Company

JOEL K. BUTLER Grimesland, NC

Retired; formerly President, Vidant Health Foundation (health care)

MICHAEL L. CHESTNUTT

Clinton, NC

Owner, Michael L. Chestnutt, CPA, PLLC (public accounting)

OLIVIA B. HOLDING

Raleigh, NC

President and Director, Twin States Farming, Inc.;

President and Director, E&F Properties, Inc.

G. ROUSE IVEY

Mount Olive, NC

Self-employed farmer

J. GREY MORGAN Mount Olive, NC

Retired; formerly the Bank's and our Chief Executive Officer and Board Chairperson

JOHN C. PEGRAM, JR.

Chapel Hill, NC

Retired; formerly the Bank's and our Chief Executive Officer and Board Chairman

THOMAS R. SALLENGER

Wilson, NC

Attorney; general partner, Sallenger Law, LLP (law firm)

MALCOLM R. SULLIVAN, JR.

Goldsboro, NC

Chief Executive Officer of Feelgoodz Holdings NC, LLC

Director Emeritus

M.J. McSORLEY

Rocky Mount, NC

Formerly the Bank's and Our Vice Chairperson, President,

and Chief Executive Officer

June 2023

Southern Bank

Senior Management Team

DREW M. COVERT

Board Chairperson and Chief Executive Officer

L. TAYLOR HARRELL III

President

JERRY C. ALEXANDER

Executive Vice President

Northeast Region

MICHAEL T. BRYANT

Executive Vice President

Legacy Region

EDWARD I. COLTRAIN

Executive Vice President and Chief Operating Officer

W. TRENT DUDLEY

Senior Vice President

Hampton Roads Region

SONDRA F. MCCORQUODALE

Executive Vice President and Chief Digital Officer

VALERIE W. ROBERSON

Senior Vice President and Human Resources Manager

DAVID L. SAULS, JR.

Executive Vice President, Chief Financial Officer,

and Corporate Secretary

W. JASON WAUGHTEL

Executive Vice President

Coastal Region

ROBERT E. WOOD

Executive Vice President and Chief Credit Officer

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Quarterly Report

Local Boards of Directors

Ahoskie

Dr. Joselito S. Almario, William T. Fretwell, James R. Harrell, Jr., Teresa F. Jenkins, Robert N. Riddick, Edgar L. Swain, Jr. Director Emeriti - Howard C. Brown, Joe Henry Jenkins

Belhaven

Gary L. Respess, William M. Tankard, Charles F. Williams

Director Emeritus - Douglas B. Clark

Duplin County

Gregory Millard Bounds, Marion Dean Brown, Jr.,

Ernest Clegg Grady, Jr., J. Garrett Ludlum, G. Haywood Quinn, Jr., John C. Smith, Jr.

Director Emeriti - Richard Harrell, James McGowan, Dr. Mary Wood

Edenton

Ronald J. Andronowitz, Horace Beasley, Charles A. Britton,

Steve Brown, Franklin S. Edmondson III, A. Travis Ellis

Director Emeritus - Dr. Richard Hines, Jr.

Gatesville

Dan M. Askew, George M. Miller

Director Emeritus - Charles Sherwood Eason

Greenville

Dr. Mary Helen Hutchinson, Dr. Lawrence Rouse, Billy Williams

Hampton Roads

Stephen B. Ballard, Michael E. Barney, Richard A. Beskin,

Richard E. Biemiller, Judy Boone, Lisa F. Chandler, Rev. Harold J. Cobb, Jr., Lydia G. Duke, Lindsey Riddle Elliott, Steve C. Frazier,

John L. Gibson, III, Thomas C. Gifford, Michael Goodove,

Robert L. Gutterman, Claus Ihlemann, James J. Izard, II, Karen Jaffe, Thomas G. Johnson, III, Kal Kassir, John Katsias, Michael P. Kellam, Linda S. Laibstain, William A. Lascara, Kirk B. Levy, Gary C. Mah, Charles R. Malbon, Jr., Robert F. Mann, M.D., Paul Michels, Thaddeus J. Nowak, Charles S. Nusbaum, Jeanette L. Ojeda, Chirag Patel, Terry J. Penn, William L. Perkins, II, Donna Phaneuf, Albert H. Poole, Roger L. Porter, John W. Rachels, Louis F. Ryan, Robert L. Schick, Jr., Gary K. Shepherd, W. Kevin Stewart,

Ann K. Sullivan, Anthony M. Thiel, Philip R. Trapani, Jr. Bryan M. Whitehurst, Benjamin J. Willis, III

La Grange

Robert Bland, Henry Edwards, Craig A. Jones, Roger M. Sutton,

G. Lynn Taylor

Mount Olive

James Douglas Best, Carol Gainey Carrere, Ph.D., John T. Davis, Jr., Gregory Eloshway, B. Hain Ficken,Jr., David H. Overman,

Dr. James M. Sasser, Ronald G. Sloan, Robert E. Williams

Murfreesboro

Sylvia F. Anderson, Wayne R. Brown, E. Brock Felton,

John M. Jenkins, Jr., Benjamin S. McLean, Charles L. Revelle, III, John P. Revelle, Jr., Jayne H. Wolfskill

Director Emeritus - Bynum R. Brown

Outer Banks

Jill G. Bennett, Michael C. Casey, Timothy L. Crank,

Jeffrey B. Dowdy, Paddison P. Hudspeth, Theresa "Tess" Judge, Joy E. Lige, Richard B. Mizelle, Jr.

Director Emeritus - Cashar W. Evans, Jr.

June 2023

Roanoke Rapids

Mark D. Dickinson, Paul W. Heaton, Jr., Grady W. "Phil" Hux,

Donald R. Lynch

Sampson County

Steven J. Bass, Dr. Jeffrey G. Bell, Ralph C. Carter, Jr.,

Robert A. Fann

Wilson County

Derrick Creech, Milo L. Gibbs, Jr., Elizabeth Howard, John Lee, James A. Miller, Eldon S. Newton, III, Elizabeth "Beth" Searcy, Ralph M. Smith, Jr., Terri Stutts, Charles A. Thomas,

William H. Vaughan, Jr., Sheila Vick

Director Emeriti - Janet P. Barnes, Willie Williams

Windsor

Ricky Ryan Clough, Crystal Godwin, Carla Rascoe

Director Emeriti - Moses B. Gillam, III, James F. Hoggard, III,

Revonne W. Hoggard, John L. Pierce, Jr., William Pittman, Edward E. Rawls, Joseph S. Roberson

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