Southern First reports results for first quarter of 2017

Southern First Bancshares, Inc. holding company for Southern First Bank, today reported net income available to the common shareholders of $3.1 million, or $0.46 per diluted share, for the first quarter of 2017. In comparison, net income available to common shareholders was $3.0 million, or $0.45 per diluted share, for the first quarter of 2016.

2017 First Quarter Highlights

• Net income to common shareholders increased 4% to $3.1 million for Q1 2017 compared to $3.0 million for Q1 2016
• Gross loans increased 17% to $1.22 billion at Q1 2017, compared to $1.04 billion at Q1 2016
• Total deposits increased 21% to $1.21 billion at Q1 2017, compared to $1.00 billion at Q1 2016
• Core deposits increased 17% to $1.00 billion for Q1 2017, compared to $854 million for Q1 2016
• Key bankers added to our Columbia and Charleston teams and our first bankers added in the Atlanta market

“I am proud of our team as we generated record core deposit growth of over $63 million,” stated Art Seaver, the Company’s Chief Executive Officer. “With our first quarter loan growth of $55 million, we are seeing strong momentum in adding new client relationships. We are also excited as we added new members to our Columbia and Charleston teams as well as our first key bankers in the Atlanta market.”

Operating Results

Net interest margin for the first quarter of 2017 was 3.61%, compared to 3.63% for the prior quarter and 3.64% for the first quarter of 2016. During the first quarter of 2017, our average interest-earning assets increased by $163.9 million, compared to the first quarter of 2016, while the yield on our interest-earning assets decreased by one basis point. In comparison, our average interest-bearing liabilities increased by $96.7 million during the first quarter of 2017, compared to the first quarter of 2016, with the respective cost increasing by six basis points.

Noninterest income was $2.1 million and $2.6 million for the three months ended March 31, 2017 and 2016, respectively. The decrease in noninterest income during the three-month period ended March 31, 2017 relates primarily to a decrease in mortgage banking revenue during the first quarter of 2017 and gain on sale of investment securities of $307 thousand in the first quarter of 2016. Specifically, mortgage banking revenue was $1.1 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively.

Noninterest expense was $8.4 million and $7.5 million for the three months ended March 31, 2017 and 2016, respectively. The increase in noninterest expense during the three-month period ended March 31, 2017 relates primarily to increases in compensation and benefits, occupancy, outside services and data processing costs and other noninterest expenses, partially offset by a decrease in real estate owned expenses. Included in noninterest expense are mortgage banking expenses of $849 thousand and $902 thousand for the three months ended March 31, 2017 and 2016, respectively.

During the first quarter of 2017, we recorded total credit costs of $513 thousand, including a $500 thousand provision for loan losses and $13 thousand expenses related to the sale and management of other real estate owned. In addition, we had net charge-offs for the first quarter of 2017 of $68 thousand, or 0.02% of average loans, annualized. During the first quarter of 2016, our total credit costs were $910 thousand, including a $625 thousand provision for loan losses and $285 thousand expenses related to the sale and management of other real estate owned. 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. Our allowance for loan losses was $15.3 million, or 1.25% of loans, at March 31, 2017 which provides approximately 247% coverage of nonaccrual loans, compared to $13.9 million, or 1.34% of loans, and approximately 225% coverage of nonaccrual loans at March 31, 2016.

Nonperforming assets were $6.8 million, or 0.47% of total assets, as of March 31, 2017. Comparatively, nonperforming assets were $8.5 million, or 0.68% of total assets, at March 31, 2016. Of the $6.8 million in total nonperforming assets as of March 31, 2017, nonperforming loans represent $6.2 million and other real estate owned represents $669 thousand. Classified assets improved to 12% of tier 1 capital plus the allowance for loan losses at March 31, 2017, compared to 15% at March 31, 2016.

Gross loans were $1.219 billion, excluding mortgage loans held for sale, as of March 31, 2017, compared to $1.039 billion at March 31, 2016. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $1.001 billion at March 31, 2017 compared to $853.6 million at March 31, 2016.

Shareholders’ equity totaled $113.6 million as of March 31, 2017, compared to $109.9 million at December 31, 2016, and $98.3 million at March 31, 2016. As of March 31, 2017, 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 ten locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as Raleigh, North Carolina. Southern First Bancshares has assets of approximately $1.5 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.