Southern First Reports Results for 2009
January 19, 2010
GREENVILLE, SC – January 19, 2010 – Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, NA (also doing business as Greenville First Bank), today announced that net income for the fourth quarter 2009 was $152 thousand compared to $369 thousand for the fourth quarter of 2008. The lower net income in the 2009 period is primarily due to an increase of $289 thousand in the provision for loan losses. Net interest income increased approximately the same amount as noninterest expense for the three month period. After payment of a dividend to the US Treasury as preferred shareholder, the net loss to common shareholders for the fourth quarter 2009 was $193 thousand.
Net income for the year ended December 31, 2009 was $1.4 million compared to net income of $1.9 million for the year ended December 31, 2008. Net income decreased $433 thousand from 2008 due primarily to an increase of $1.2 million in the provision for loan losses partially offset by an increase of $922 thousand in net interest income. The $2.7 million increase in noninterest expense for 2009 was partially offset by a $2.2 million increase in noninterest income and a $281 thousand decrease in income tax expense. After payment of a dividend to the US Treasury as preferred shareholder, the net income available to common shareholders for the year ended December 31, 2009 was $265 thousand.
“The economic recession and difficult banking environment continue to negatively impact our company’s earnings,” stated Art Seaver, the company’s CEO. “Despite higher credit costs and absorbing an additional $800 thousand in FDIC insurance premiums, our company generated $1.4 million in earnings during 2009 and made significant progress on our strategic goals of maintaining strong capital ratios, managing credit risk, and growing retail deposits. In addition, the 20% increase in noninterest income, excluding the prior year impairment charge on our Fannie Mae stock, strengthened the core earnings of our company.”
As of December 31, 2009, our shareholders’ equity totaled $59.8 million, a 50.4% increase from $39.8 million at December 31, 2008. The $20.1 million increase is primarily a result of the company’s $17.3 million participation in the TARP Capital Purchase Program and current year earnings. The higher capital levels have resulted in an increase in all regulatory capital ratios. With an average equity-to-assets ratio of 7.85% and a total risk-based capital ratio of 13.6%, the company’s capital ratios far exceed the regulatory requirements for a “well capitalized” institution.
“We have had a very successful year in terms of retail deposit growth,” continued Seaver. “Total deposits increased $24.6 million during 2009 to $494.1 million. During the twelve months ended December 31, 2009, retail deposits increased $77.6 million, or 28.9%. The increase in retail deposits allowed us to reduce our out-of-market deposits by $53.1 million. The significant increase in retail deposits is due to our expanded presence in both the Greenville and Columbia markets with two new branch offices opened in 2008 and our Columbia regional office in August 2009. These new offices have created a strong momentum in new account activity. During 2009 we opened 1,879 new transaction accounts, a 28% increase over transaction accounts opened during 2008.”
Nonperforming assets as of December 31, 2009 were $15.5 million and increased as a percentage of total assets from 1.42% at December 31, 2008 to 2.15% at December 31, 2009. Nonperforming assets consisted of $11.7 million of nonperforming loans and $3.7 million of other real estate owned at December 31, 2009. Our nonperforming loans have been written down to approximately 74% of their original nonperforming balance. During 2009, the company increased its provision for loan losses to $4.3 million compared to $3.2 million during the 2008 period. The company’s reserve for loan losses increased to $7.8 million or 1.35% of loans at December 31, 2009.
Our net interest margin was 2.84% for the year ended 2009 compared to 2.82% for the year ended 2008. Despite lower interest income as a result of additional loans being placed on nonaccrual and an increase in our investment portfolio, which traditionally yields lower earnings, our net interest margin has increased throughout 2009 from 2.62% for the fourth quarter of 2008 to 2.87% for the fourth quarter of 2009. Offsetting the decrease in our earning-asset yields, the rates on our deposits also declined as our certificates of deposit repriced down to the current market rates.
In addition, our noninterest income has increased $310 thousand during 2009 to $1.8 million compared to $1.5 million for the same period in 2008, excluding the 2008 impairment charge. The increase is primarily due to additional income related to loan origination fees, service charges on deposit accounts, and bank owned life insurance.
Total assets were $719.3 million at December 31, 2009, a 3.8% increase over total assets of $693.0 million at December 31, 2008. Total loans were $574.3 million as of December 31, 2009, a 1.4% increase over the same period of 2008. Total assets increased 3.8% since December 31, 2008, primarily resulting from an increase in our cash and investment portfolio of $8.1 million. During the same period, our deposits increased $24.6 million, our borrowings decreased $17.7 million and our shareholders’ equity increased $20.1 million.
The Company’s book value per share was $14.35 as of December 31, 2009, while the closing stock price on that day was $6.60 per share.
