Southern First Reports Results For First Quarter 2015

GREENVILLE, SC – Southern First Bancshares, Inc. holding company for Southern First Bank, today reported net income available to the common shareholders of $2.0 million, or $0.31 per diluted share for the first quarter of 2015. In comparison, net income available to common shareholders was $1.1 million, or $0.22 per diluted share, for the first quarter of 2014.

2015 First Quarter Highlights

• Net income to common shareholders increased 92% to $2.0 million for Q1 2015 compared to $1.1 million for Q1 2014
• Core deposits increased 21% to $627.1 million at Q1 2015, compared to $519.9 million at Q1 2014
• Loan balances increased 17% to $909.3 million at Q1 2015, compared to $775.8 million at Q1 2014
• Net interest margin improved to 3.72% for Q1 2015, compared to 3.71% for Q4 2014 and 3.68% for Q1 2014
• Total revenue increased 30% to $11.2 million for Q1 2015, compared to $8.6 million for Q1 2014

“Our team generated strong performance in the first quarter with record earnings of $2.0 million,” stated Art Seaver, the Company’s Chief Executive Officer. “Our focus on core deposits continues to generate impressive results with $42 million in growth in the first quarter of 2015.”

Operating Results

Net interest margin for the first quarter of 2015 was 3.72%, compared to 3.71% for the prior quarter, and 3.68% for the first quarter of 2014.   During the first quarter of 2015, our average interest-earning assets increased by $142.1 million, compared to the first quarter of 2014; however, the yield on our interest-earning assets declined by six basis points.  In comparison, our average interest-bearing liabilities increased by $90.4 million during the first quarter of 2015, compared to the first quarter of 2014, with the respective cost declining by 9 basis points.

Noninterest income was $2.1 million and $969 thousand for the three months ended March 31, 2015 and 2014, respectively.  The increase in noninterest income during the three month period ended March 31, 2015 relates primarily to increases in loan and mortgage fee income and other income, as well as a $259 thousand gain on sale of investment securities which occurred during the first quarter of 2015.  A significant portion of our loan fee income relates to income derived from mortgage originations which was $1.2 million for the three months ended March 31, 2015, compared to mortgage origination income of $304 thousand for the three months ended March 31, 2014.

Noninterest expense was $7.5 million and $5.8 million for the three months ended March 31, 2015 and 2014, respectively.  The increase in noninterest expense during the 2015 period relates primarily to increases in salaries and benefits and other real estate owned expenses.

During the first quarter of 2015, we recorded total credit costs of $1.4 million compared to $1.0 million during the first quarter of 2014.  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 expenses of $763 thousand related to the sale and management of other real estate owned.  In addition, net loan charge-offs for the first quarter of 2015 were $145 thousand, or 0.06% of average loans on an annual basis, and related primarily to two commercial relationships.  Comparatively, the $1.0 million in credit costs during the first quarter of 2014 related primarily to the $1.0 million provision for loan losses, combined with $13 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the first quarter of 2014 were $500 thousand, or 0.27% of average loans on an annual basis, and related primarily to two specific loans. Our allowance for loan losses was $12.2 million, or 1.35% of loans, at March 31, 2015 which provides approximately 188% coverage of nonaccrual loans, compared to $10.7 million, or 1.38% of loans, and approximately 121% coverage of nonaccrual loans at March 31, 2014.

Nonperforming assets were $9.1 million, or 0.85% of total assets, as of March 31, 2015.  Comparatively, nonperforming assets were $10.0 million, or 0.97% of total assets, at December 31, 2014, and $10.0 million, or 1.07% of total assets, at March 31, 2014.  Of the $9.1 million in total nonperforming assets as of March 31, 2015, nonperforming loans represent $6.5 million and other real estate owned represents $2.6 million.  Classified assets improved to 20% of tier 1 capital plus the allowance for loan losses at March 31, 2015, compared to 34% at March 31, 2014

Gross loans were $909.3 million, excluding loans held for sale, as of March 31, 2015, compared to $871.4 million at December 31, 2014, and $775.8 million at March 31, 2014.  Of the $37.9 million of loan growth during 2015, $20.0 million was in the Greenville market, $11.4 million was in the Columbia market, and $6.5 million was in the Charleston market.  Core deposits, which exclude out-of-market deposits and time deposits of $100,000 or more, increased to $627.1 million at March 31, 2015 compared to $585.1 million at December 31, 2014, and $519.9 million at March 31, 2014.  During 2015, core deposits grew by $42.0 million with growth of $29.0 million in the Greenville market, $4.3 million in the Columbia market, and $8.7 million in the Charleston market.

Shareholders’ equity totaled $85.4 million as of March 31, 2015, compared to $83.0 million at December 31, 2014, and $69.8 million as of March 31, 2014.  As of March 31, 2015, 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 sixth 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 $1.1 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.