Southern First Reports Results for First Quarter of 2010

GREENVILLE, SC – April 20, 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 first quarter of 2010 was $18 thousand compared to $487 thousand for the first quarter of 2009.  The lower net income in the 2010 period is primarily due to increases of $650 thousand in the provision for loan losses and $579 thousand in noninterest expenses, which includes FDIC insurance premiums.  Partially offsetting these increased expenses were increases of $320 thousand in net interest income and $156 thousand in noninterest income and a decrease of $284 thousand in income tax expense.  After payment of a dividend to the US Treasury as preferred shareholder, the net loss to common shareholders for the first quarter of 2010 was $322 thousand.
 
“The company’s performance in the first quarter was generally as expected as higher credit costs and FDIC insurance premiums continue to affect our earnings. Our primary focus continues to be managing the risks in our loan portfolio, and we are generally pleased with our progress. Non-performing assets increased slightly for the quarter to 2.21% of total assets. The company’s focus on other strategic goals resulted in an increase in net interest margin and record growth in new client relationships. Total deposits grew at a 19% annualized pace during the first quarter of 2010. Clients are clearly attracted to the unique value and service level of our company,” commented Seaver. During the first three months of 2010, the company opened $27.6 million in new core transaction accounts representing a 223% increase over the same period in 2009.
 
Shareholder’s equity totaled $60.2 million as of March 31, 2010, an increase of 3.8% from the same period in 2009. With a tier 1 leverage ratio of 9.90% and total risk based capital ratio of 12.90%, the company’s capital ratios far exceed the regulatory requirements for a “well capitalized” institution.
 
Nonperforming assets as of March 31, 2010 were $16.5 million, compared to $15.5 million at December 31, 2009.  As a percentage of total assets, nonperforming assets increased to 2.21% from 2.15% at December 31, 2009.  Nonperforming assets consisted of $12.8 million of nonperforming loans and $3.6 million of other real estate owned at March 31, 2010. During the first quarter of 2010, the company recorded $1.2 million in net charge-offs, or 0.86% on an annualized basis and increased its provision for loan losses to $1.4 million compared to $750 thousand during the 2009 period. The company’s reserve for loan losses increased to $7.9 million or 1.36% of loans at March 31, 2010.
 
Our net interest margin was 2.83% for the first quarter of 2010 compared to 2.72% for the same period in 2009. Despite lower yields on earning assets, our net interest margin has increased over the prior year due to the lower rates on our interest-bearing deposits, specifically certificates of deposit.
 
Total assets were $742.8 million at March 31, 2010, a 5.4% increase over total assets of $705.0 million at March 31, 2009. Total loans were $583.9 million as of March 31, 2010, a 3.1% increase over loans at first quarter end in 2009.  Total assets increased 3.3% since December 31, 2009. The modest increase in assets during the first quarter is primarily a result of increases in our cash and investment portfolio of $14.6 million and $9.6 million in loans. In addition, during the first quarter of 2010, our deposits increased $23.5 million.
 
The Company’s book value per common share was $14.27 as of March 31, 2010, while the closing stock price on that day was $8.10 per share.