Southern First Reports Results for Fourth Quarter of 2010 and Announces 10% Stock Dividend
January 18, 2011
- 4th quarter earnings increase 188%
- Non-performing assets improve to 2.03%
- Margin expansion continues
- New transaction deposit accounts increase 178% over 2009
GREENVILLE, SC – January 18, 2011 – 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 of 2010 was $440 thousand compared to $153 thousand for the fourth quarter of 2009. Net income increased by $287 thousand during the fourth quarter 2010 period due primarily to reduced credit costs compared to the same period in 2009. After dividends paid to the US Treasury on our preferred stock, net income to the common shareholders was $108 thousand as compared to a net loss to the common shareholders for the fourth quarter of 2009 of $193 thousand.
Net income for the year ended December 31, 2010 was $890 thousand compared to net income of $1.4 million for the year ended December 31, 2009. The decrease in net income during 2010 is primarily related to additional credit costs of $1.6 million, including an additional expense of $1.3 million in the provision for loan losses and increased disposal costs of $331 thousand on our other real estate owned. These additional costs were partially offset by a 4.8% increase in net interest income and a 28.7% increase in noninterest income. After the preferred stock dividend payments to the US Treasury, the net loss to the common shareholders was $447 thousand for the year ended December 31, 2010, compared to net income of $265 thousand during the same period in 2009.
“We are excited about the accomplishments of our fourth quarter and continue to build positive momentum heading into 2011,” stated Art Seaver, the company’s CEO. “Based on this momentum, we are pleased to announce a 10% stock dividend for our shareholders and believe that this will improve the overall liquidity of their investment in SFST.” Shareholders of record on January 28, 2011 will receive the additional shares on February 14, 2011, with fractional shares paid in cash. The earnings per share and book value per share amounts for all periods presented have been adjusted to reflect the 10% stock dividend.
“Our primary accomplishments for the quarter include a significant increase in quarterly income, continued improvement in non-performing assets, and substantial growth in core deposit accounts,” added Seaver. “Reducing credit costs and attracting new clients have been the focus of our company during 2010, and this focus has produced impressive results. Non-performing assets declined again this quarter and now represent only 2.03% of total assets. We are very proud of our bank’s low non-performing asset ratio as FDIC data reported that NPA’s for South Carolina banks averaged 5.36% for the 3rd quarter of 2010.”
Nonperforming assets decreased to $15.0 million or 2.03% of total assets as of December 31, 2010. Of the $15.0 million in nonperforming assets, nonperforming loans represent $9.3 million and other real estate owned represents $5.6 million of total nonperforming assets. During the year ended 2010, the company recorded $5.0 million in net charge-offs, or 0.86% of average loans on an annualized basis. Comparatively, the company’s 0.86% charge-off ratio represents one of the lowest ratios of banks in South Carolina and is well below the 1.98% charge-off average for South Carolina banks as reported in 3rd quarter 2010 FDIC data. During 2010, the company increased its provision for loan losses to $5.6 million compared to $4.3 million during the 2009 period. The company’s reserve for loan losses remained at $8.4 million or 1.47% of loans at December 31, 2010. The company’s $8.4 million loan loss reserve provides approximately 90% coverage of non-performing loans.
Total retail deposits increased $103.7 million to $449.9 million at December 31, 2010 compared to December 31, 2009. This increase in retail funding enabled the company to reduce its wholesale funding by over $81 million during the last twelve month period. Brokered deposits now represent only 11.7% of total funding for the bank. “The investments in infrastructure in both our Greenville and Columbia markets have resulted in record new client relationships,” commented Seaver. “Clients continue to respond to our unique ClientFIRST level of service and continue to choose Southern First as their primary bank.” During 2010, the company opened $79.5 million in new transaction accounts representing a 178% increase over the same twelve month period in 2009.
Net interest margin for the fourth quarter of 2010 improved to 3.03% from 2.84% for the twelve months ended December 31, 2009. Despite the higher levels of liquidity, improved loan yields and lower deposit and borrowing costs have begun to develop a positive trend in the company’s net interest margin. “The improvement in our margin is a direct result of the pricing discipline on both sides of our balance sheet,” noted Seaver. “We believe the margin momentum should continue as we have material re-pricing opportunities on over $105 million in CD’s over the next six months.”
Shareholders’ equity totaled $59.2 million as of December 31, 2010, a $625 thousand decrease from the same period in 2009. With a tier 1 leverage ratio of 9.82% and total risk based capital ratio of 13.41%, the company’s capital ratios far exceed the regulatory requirements for a “well capitalized” institution.
Total assets were $736.5 million at December 31, 2010, a 2.4% increase over total assets of $719.3 million at December 31, 2009. Total loans were $564.0 million as of December 31, 2010, a slight decrease compared to December 31, 2009. The modest increase in assets during the twelve months ended December 31, 2010 is primarily a result of an increase in cash of $41.8 million, partially offset by a $21.8 million decrease in investment securities. In addition, during 2010, our total deposits increased $42.2 million.
The Company’s book value per common share was $12.80 as of December 31, 2010, while the closing stock price on that day was $7.46 per share, or $6.78 when adjusted for the 10% stock dividend.
***For summary of consolidated financial data and figures, see the attached pdf.
