Southern First reports results for first quarter of 2018

Greenville, SC – Southern First Bancshares, Inc. holding company for Southern First Bank, today reported net income available to common shareholders of $5.2 million, or $0.67 per diluted share, for the first quarter of 2018. In comparison, net income available to common shareholders was $3.1 million, or $0.46 per diluted share, for the first quarter of 2017.

2018 First Quarter Highlights

• Net income to common shareholders increased 68% to $5.2 million for Q1 2018 compared to $3.1 million for Q1 2017
• Total loans increased 20% to $1.46 billion at Q1 2018, compared to $1.22 billion at Q1 2017
• Total deposits increased 26% to $1.52 billion at Q1 2018, compared to $1.21 billion at Q1 2017
• Efficiency ratio improved to 55.9% for Q1 2018, compared to 61.2% for Q1 2017
• Added banking talent in Raleigh, Columbia, and Atlanta markets
• Entering the Greensboro/Triad region of North Carolina with a team of three new bankers

“The first quarter of 2018 was simply outstanding as the Southern First team generated record earnings of $5.2 million. Our performance was highlighted by strong growth in new client relationships and retail deposits as well as excellent production by our mortgage team,” stated Art Seaver, the Company’s Chief Executive Officer. “We continue to add experienced bankers to our team, and we are excited to announce our expansion into the Greensboro, North Carolina market.”

Operating Results

Net interest margin for the first quarter of 2018 was 3.63%, compared to 3.59% for the prior quarter and 3.61% for the first quarter of 2017. During the first quarter of 2018, our average interest-earning assets increased by $259.0 million, compared to the first quarter of 2017, while the yield on our interest-earning assets increased by ten basis points. In comparison, our average interest-bearing liabilities increased by $182.2 million during the first quarter of 2018, compared to the first quarter of 2017, with the respective cost increasing by twelve basis points.

Noninterest income was $2.4 million and $2.1 million for the three months ended March 31, 2018 and 2017, respectively. The increase in noninterest income during the three-month period ended March 31, 2018 relates primarily to an increase in mortgage banking revenue during the first quarter of 2018 as well as increases in income derived from bank owned life insurance and ATM/debit card income which is included in other income. Specifically, mortgage banking revenue was $1.3 million and $1.1 million for the three months ended March 31, 2018 and 2017, respectively.

Noninterest expense was $9.2 million and $8.4 million for the three months ended March 31, 2018 and 2017, respectively. The increase in noninterest expense during the three-month period ended March 31, 2018 relates primarily to increases in compensation and benefits, occupancy, and professional fees, partially offset by a decrease in other noninterest expenses. Included in noninterest expense are mortgage banking expenses of $964 thousand and $849 thousand for the three months ended March 31, 2018 and 2017, respectively.

During the first quarter of 2018, we recorded total credit costs of $506 thousand, including a $500 thousand provision for loan losses and $6 thousand of expenses related to the sale and management of other real estate owned. In addition, we had net charge-offs for the first quarter of 2018 of $171 thousand, or 0.05% of average loans, annualized. During the first quarter of 2017, our total credit costs were $513 thousand, including a $500 thousand provision for loan losses and $13 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the first quarter of 2017 were $68 thousand, or 0.02% of average loans on an annual basis. Our allowance for loan losses was $15.9 million, or 1.09% of loans, at March 31, 2018 which provides approximately 218% coverage of nonaccrual loans, compared to $15.3 million, or 1.25% of loans, and approximately 247% coverage of nonaccrual loans at March 31, 2017.

Nonperforming assets were $7.5 million, or 0.43% of total assets, as of March 31, 2018. Comparatively, nonperforming assets were $6.8 million, or 0.47% of total assets, at March 31, 2017. Of the $7.5 million in total nonperforming assets as of March 31, 2018, nonperforming loans represent $7.3 million and other real estate owned represents $242 thousand. Classified assets improved to 9% of tier 1 capital plus the allowance for loan losses at March 31, 2018, compared to 12% at March 31, 2017.

Gross loans were $1.5 billion, excluding mortgage loans held for sale, as of March 31, 2018, compared to $1.2 billion at March 31, 2017. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $1.3 billion at March 31, 2018 compared to $1.0 billion at March 31, 2017.

Shareholders’ equity totaled $154.7 million as of March 31, 2018, compared to $149.7 million at December 31, 2017, and $113.6 million at March 31, 2017. As of March 31, 2018, 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’s wholly-owned subsidiary, Southern First Bank, is the third largest bank headquartered in South Carolina. Southern First Bancshares has been providing financial services since 1999 and now operates in 12 locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as Raleigh, North Carolina and Atlanta, Georgia. Southern First Bancshares has assets of approximately $1.7 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.