Southern First reports results for first quarter 2015
May 2, 2016
Southern First Bancshares, Inc. holding company for Southern First Bank, today reported net income available to the common shareholders of $3.0 million, or $0.45 per diluted share for the first quarter of 2016. In comparison, net income available to common shareholders was $2.0 million, or $0.31 per diluted share, for the first quarter of 2015.
2016 First Quarter Highlights
• Net income to common shareholders increased 48% to $3.0 million for Q1 2016 compared to $2.0 million for Q1 2015
• Core deposits increased 21% to $853.6 million at Q1 2016, compared to $707.6 million at Q1 2015
• Gross loans increased 14% to $1.0 billion at Q1 2016, compared to $909.3 million at Q1 2015
• Total revenue increased 15% to $12.9 million for Q1 2016, compared to $11.2 million for Q1 2015
• Return on average assets increased to 1.00% for Q1 2016, compared to 0.78% for Q1 2015
“I’m proud of our Southern First team for their performance during the first quarter of 2016 as we generated over $3 million in quarterly earnings. We continue to see strong growth in new client relationships and excellent momentum from our mortgage team,” stated Art Seaver, the Company’s Chief Executive Officer.
Operating Results
Net interest margin for the first quarter of 2016 was 3.64%, compared to 3.48% for the prior quarter, and 3.72% for the first quarter of 2015. During the first quarter of 2016, our average interest-earning assets increased by $153.1 million, compared to the first quarter of 2015; however, the yield on our interest-earning assets declined by eight basis points. In comparison, our average interest-bearing liabilities increased by $104.2 million during the first quarter of 2016, compared to the first quarter of 2015, with the respective cost increasing by two basis points. While our 2016 net interest margin declined by eight basis points from the first quarter of 2015 due primarily to lower yields on our interest-earning assets, the 16 basis point increase in net interest margin from the fourth quarter of 2015 was driven by an 18 basis point increase in yield on our interest-earning assets due to a $43.3 million decline in our average federal funds balances during the first quarter of 2016.
Noninterest income was $2.6 million and $2.1 million for the three months ended March 31, 2016 and 2015, respectively. The increase in noninterest income during the three month period ended March 31, 2016 relates primarily to increases in loan and mortgage fee income and other income, as well as an increase in gain on sale of investment securities. A significant portion of our loan fee income relates to income derived from mortgage originations which was 95% and 97% of total loan and mortgage fee income for the three months ended March 31, 2016 and 2015, respectively.
Noninterest expense was $7.5 million for both three-month periods ended March 31, 2016 and 2015. The slight increase in noninterest expense during the 2016 period relates primarily to increases in salaries and benefits and occupancy expenses, partially offset by a reduction in other real estate owned expenses.
During the first quarter of 2016, we recorded total credit costs of $910 thousand compared to $1.4 million during the first quarter of 2015. The $910 thousand in credit costs during the first quarter of 2016 related primarily to the $625 thousand provision for loan losses, combined with expenses of $285 thousand related to the sale and management of other real estate owned. In addition, net loan charge-offs for the first quarter of 2016 were $356 thousand, or 0.14% of average loans on an annual basis, and related primarily to two commercial and one consumer relationships. Comparatively, the $1.4 million in credit costs during the first quarter of 2015 related primarily to the $625 thousand provision for loan losses, combined with $763 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the first quarter of 2015 were $136 thousand, or 0.06% of average loans on an annual basis, and related primarily to two commercial relationships. Our allowance for loan losses was $13.9 million, or 1.34% of loans, at March 31, 2016 which provides approximately 225% coverage of nonaccrual loans, compared to $12.2 million, or 1.35% of loans, and approximately 188% coverage of nonaccrual loans at March 31, 2015.
Nonperforming assets were $8.5 million, or 0.68% of total assets, as of March 31, 2016. Comparatively, nonperforming assets were $9.1 million, or 0.75% of total assets, at December 31, 2015, and $9.1 million, or 0.85% of total assets, at March 31, 2015. Of the $8.5 million in total nonperforming assets as of March 31, 2016, nonperforming loans represent $6.2 million and other real estate owned represents $2.3 million. Classified assets improved to 15% of tier 1 capital plus the allowance for loan losses at March 31, 2016, compared to 20% at March 31, 2015.
Gross loans were $1.039 billion, excluding loans held for sale, at March 31, 2016, compared to $1.005 billion at December 31, 2015, and $909.3 million at March 31, 2015. Of the $33.9 million of loan growth during the first quarter of 2016, $9.0 million was in the Greenville market, $3.4 million was in the Columbia market, and $21.5 million was in the Charleston market. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $853.6 million at March 31, 2016 compared to $840.2 million at December 31, 2015, and $707.7 million at March 31, 2015. During the first quarter of 2016, core deposits grew by $13.4 million with growth of $4.3 million in the Greenville market and $11.2 million in the Charleston market, partially offset by a slight decline of $2.1 million in the Columbia market.
Shareholders’ equity totaled $98.3 million as of March 31, 2016, compared to $94.2 million at December 31, 2015, and $85.4 million as of March 31, 2015. As of March 31, 2016, our capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.
About Southern First Bancshares
Southern First Bancshares, Inc., Greenville, South Carolina is a registered bank holding company incorporated under the laws of South Carolina. The Company consists of Southern First Bank, the third largest bank headquartered in South Carolina. Southern First Bancshares has been providing financial services since 1999 and now operates in nine locations in the Greenville, Columbia, and Charleston markets of South Carolina. Southern First Bancshares has assets of approximately $1.2 billion and its common stock is traded in the NASDAQ Global Market under the symbol “SFST.” More information can be found at www.southernfirst.com.
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