Southern First Reports Results for Second Quarter 2015

GREENVILLE, SC – Southern First Bancshares, Inc. holding company for Southern First Bank, reported net income available to the common shareholders of $2.6 million, or $0.39 per diluted share for the second quarter of 2015. In comparison, net income available to common shareholders was $1.3 million, or $0.26 per diluted share, for the second quarter of 2014.  For the six months ended June 30, 2015, net income to common shareholders was $4.6 million, or $0.70 per diluted share.  In comparison, net income available to common shareholders for the six months ended June 30, 2014 was $2.4 million, or $0.48 per diluted share.

2015 Second Quarter Highlights

• Net income to common shareholders increased 95% to $2.6 million for Q2 2015 compared to $1.3 million for Q2 2014
• Core deposits increased 23% to $661.5 million at Q2 2015, compared to $536.2 million at Q2 2014
• Gross loans increased 19% to $963.5 million at Q2 2015, compared to $812.8 million at Q2 2014
• Net interest margin improved to 3.73%  for Q2 2015, compared to 3.72% for Q1 2015 and 3.66% for Q2 2014
• Total revenue increased 21% to $11.6 million for Q2 2015, compared to $9.6 million for Q2 2014

“This was an outstanding quarter for Southern First as our team generated impressive results in the areas of earnings, client growth, and efficiency” stated Art Seaver, the Company’s Chief Executive Officer.

Operating Results

Net interest margin for the second quarter of 2015 was 3.73%, compared to 3.72% for the prior quarter, and 3.66% for the second quarter of 2014. During the second quarter of 2015, our average interest-earning assets increased by $134.2 million, while our average interest-bearing liabilities increased by $89.1 million, compared to the second quarter of 2014. In addition, the yield on our interest-earning assets improved by one basis point, and the cost of our interest-bearing liabilities declined by five basis points, as compared to the second quarter of 2014.

Noninterest income was $2.1 million and $1.5 million for the three months ended June 30, 2015 and 2014, respectively.  For the six months ended June 30, 2015 and 2014, noninterest income was $4.3 million and $2.5 million, respectively. The increase in noninterest income during the three and six month periods ended June 30, 2015 relates primarily to increases in loan and mortgage fee income and other income.  A significant portion of our loan fee income relates to income derived from mortgage originations of $1.3 million and $2.5 million for the three and six months ended June 30, 2015, respectively, and $576 thousand and $880 thousand for the three and six months ended June 30, 2014, respectively.

Noninterest expense was $6.6 million and $6.3 million for the three months ended June 30, 2015 and 2014, respectively, and $14.1 million and $12.1 million for the six months ended June 30, 2015 and 2014, respectively.  The increase in noninterest expense during the 2015 periods relates primarily to an increase in salaries and benefits, partially offset by a decrease in other noninterest expense.  In addition, real estate owned expenses increased by $860 thousand during the six months ended June 30, 2015, as compared to the prior year.

During the three months ended June 30, 2015, we recorded total credit costs of $1.1 million, including a $1.0 million provision for loan losses and $93 thousand expenses related to the sale and management of other real estate owned. In addition, net loan charge-offs for the second quarter of 2015 were $314 thousand, or 0.14% of average loans, annualized. During the three months ended June 30, 2014, our total credit costs were $962 thousand, consisting of a $950 thousand provision for loan losses and $12 thousand of expenses related to other real estate owned. Net loan charge-offs for the second quarter of 2014 were $560 thousand, or 0.28% of average loans, annualized. For the six months ended June 30, 2015 and 2014, total credit costs were $2.5 million and $2.0 million, respectively. Our allowance for loan losses was $12.9 million, or 1.34% of loans, at June 30, 2015 which provides approximately 194% coverage of nonaccrual loans, compared to $11.1 million, or 1.37% of loans, and approximately 90% coverage of nonaccrual loans at June 30, 2014.

Nonperforming assets were $9.6 million, or 0.85% of total assets, as of June 30, 2015. Comparatively, nonperforming assets were $10.0 million, or 0.97% of total assets, at December 31, 2014, and $13.6 million, or 1.40% of total assets, at June 30, 2014. Of the $9.6 million in total nonperforming assets as of June 30, 2015, nonperforming loans represent $6.7 million and other real estate owned represents $2.9 million. Classified assets improved to 18% of tier 1 capital plus the allowance for loan losses at June 30, 2015, compared to 26% at June 30, 2014.

Gross loans were $963.5 million, excluding loans held for sale, as of June 30, 2015, compared to $871.4 million at December 31, 2014, and $812.8 million at June 30, 2014.  Of the $92.0 million of loan growth during the first half of 2015, $31.3 million was in the Greenville market, $24.8 million was in the Columbia market, and $35.9 million was in the Charleston market.  Core deposits, which exclude out-of-market deposits and time deposits of $100,000 or more, increased to $661.5 million at June 30, 2015 compared to $585.1 million at December 31, 2014 and $536.2 million at June 30, 2014.  During the first six months of 2015, core deposits grew by $76.4 million with growth of $24.1 million in the Greenville market, $28.2 million in the Columbia market, and $24.1 million in the Charleston market.

Shareholders’ equity totaled $87.7 million as of June 30, 2015, compared to $83.0 million at December 31, 2014, and $71.9 million as of June 30, 2014.  As of June 30, 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 fifth 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.