Southern First Reports Results for Second Quarter of 2011

GREENVILLE, SC – July 26, 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 second quarter of 2011 was $628 thousand compared to $94 thousand for the second quarter of 2010.  After dividends paid to the US Treasury on our preferred stock, net income available to the common shareholders was $306 thousand as compared to a net loss available to the common shareholders for the second quarter of 2010 of $238 thousand.

Second Quarter 2011 Highlights

·         Second Quarter earnings improved to $628 thousand from $94 thousand in prior year

·         Nonperforming assets improved for the fourth straight quarter to 1.73% from 2.40% in prior year

·         Annualized net charge-offs of 0.36% for 2011 compared to 1.08% for 2010

·         Net interest margin increased to 3.28%, an increase for the fourth consecutive quarter

·         Total retail deposits surpass $500 million mark representing a 25% annualized growth rate

“We are proud of our company’s accomplishments during the second quarter as our earnings momentum is clearly visible,” stated Art Seaver, the company’s CEO. “Our team’s relentless focus on asset quality and the resulting decrease in credit costs is the primary driver of our improved performance. Nonperforming assets have declined for the fourth straight quarter and total year to date credit costs have declined by 35% from the same period in 2010. While the overall environment remains difficult, our increase in net interest income, expansion of our margin, and declining credit costs have significantly improved the performance of our company.”

Net income for the six months ended June 30, 2011 was $1.2 million compared to $113 thousand for the six months ended June 30, 2010.  After dividends paid to the US Treasury on our preferred stock, net income available to the common shareholders was $514 thousand for the six month period in 2011 compared to a net loss available to the common shareholders of $560 thousand for the same period in 2010.

Nonperforming assets decreased to $13.1 million or 1.73% of total assets as of June 30, 2011.  Of the $13.1 million in total nonperforming assets, nonperforming loans represent $10.2 million and other real estate owned represents $2.9 million.  During the first six months of 2011, the company recorded $1.0 million in net charge-offs, or 0.36% of average loans on an annualized basis.

During the second quarter of 2011, the company recorded total credit costs of $1.2 million compared to $2.3 million during the second quarter of 2010.  Of the $1.2 million in credit costs, $650 thousand related to the provision for loan losses while $548 thousand related to losses on the sale of other real estate owned.  Comparatively, the company recorded a loan loss provision of $2.3 million and expenses related to real estate owned activity of $19 thousand during the same period in 2010.  For the six months ended June 30, 2011, total credit costs were $2.4 million consisting of a $1.4 million provision for loan losses and $1.0 million related to losses on the sale of other real estate owned and related activity.  Total credit costs were $3.7 million during the six months ended June 30, 2010 and related primarily to a $3.7 million provision for loan losses.  The company’s reserve for loan losses was $8.7 million, or 1.51%, of loans at June 30, 2011 which provides approximately 85% coverage of non-performing loans. 

Total retail deposits increased $74.4 million to $505.1 million at June 30, 2011 compared to June 30, 2010.  The increase in retail funding continued to enable the company to reduce its wholesale funding by over $54 million during the last twelve month period. Brokered deposits now represent only 6.8% of total funding for the bank. 

Net interest margin for the second quarter of 2011 improved to 3.28% from 3.18% for the first quarter of 2011 and from 2.79% for the second quarter of 2010.  The net interest margin for the first six months of 2011 was 3.23% compared to 2.81% for the six months ended June 30, 2010.

Noninterest income was $618 thousand and $1.6 million, respectively, for the three months ended June 30, 2011 and 2010.  For the six months ended June 30, 2011 and 2010, noninterest income was $1.2 million and $2.2 million, respectively.  The decreases in noninterest income for the three and six month periods related primarily to a $1.1 million gain on sale of investment securities during the second quarter of 2010.  In addition, our noninterest expense was $4.9 million and $4.1 million, respectively, for the three months ended June 30, 2011 and 2010.  Noninterest expense for the six month periods ended June 30, 2011 and 2010 was $9.3 million and $8.1 million, respectively.  The increase in noninterest expense during the three and six month periods related primarily to increased costs associated with selling and maintaining our other real estate owned.

Shareholders’ equity totaled $60.8 million as of June 30, 2011, an $836 thousand increase from the same period in 2010. With a tier 1 leverage ratio of 9.74% and total risk based capital ratio of 13.44%, the company’s capital ratios exceed the regulatory requirements for a “well capitalized” institution.

Total assets were $758.1 million at June 30, 2011, a 2.3% increase over total assets of $741.4 million at June 30, 2010. Total loans were $578.0 million as of June 30, 2011, a slight decrease compared to June 30, 2010.  The modest increase in assets during the twelve months ended June 30, 2011 is primarily a result of an increase in cash of $24.4 million, partially offset by decreases of $2.7 million in loans and $2.6 million in other real estate owned. 

The company’s book value per common share was $13.25 as of June 30, 2011, while the closing stock price on that day as reported on The NASDAQ Global Market was $8.50 per share.

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, N.A., the 8th largest bank headquartered in South Carolina; which also does business as Greenville First Bank, N.A. in Greenville County.  Since 1999 Southern First Bancshares has been providing financial services and now operates in 6 locations in the Greenville and Columbia markets of South Carolina.  Southern First Bancshares has assets of approximately $760 million and its stock is traded under the symbol SFST in the NASDAQ Global Market.  More information can be found at www.southernfirst.com.