Southern First Reports Results for Third Quarter 2008
October 22, 2008GREENVILLE, SC – October 21, 2008 – 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 nine months ended September 30, 2008 was $1.5 million and operating income was $2.7 million. Operating income increased $200 thousand from $2.5 million during the same period in 2007. Net income for the nine months ended September 30, 2007 was $2.7 million. Included in the third quarter of 2008 was a non-cash impairment charge of $1.8 million on our Fannie Mae (FNMA) preferred stock. Net of taxes, the impairment charge was $1.2 million. Net income for 2007 includes an after-tax gain of $210 thousand related to the sale of the bank’s former main office building which occurred during the first six months of 2007.
The company recorded operating earnings of $1.1 million and a net loss of $127 thousand for the third quarter of 2008, compared to $957 thousand of operating earnings and net income for the third quarter in 2007. Included in the third quarter of 2008 was the after-tax, non-cash impairment charge of $1.2 million on our FNMA preferred stock.
Art Seaver, the company’s CEO, stated that he was pleased with the company’s third quarter performance, especially in light of the challenging economic environment. During the quarter, our company maintained its focus on asset quality with non-performing assets remaining stable at 0.79% of total assets at September 30, 2008. Annualized charge-offs for the first nine months were 0.30%, compared to 0.24% during the first nine months of 2007. In addition, our net interest margin continued to improve in the third quarter, and we experienced solid growth in operating earnings. Our net interest margin was 2.97% for the third quarter of 2008 compared to 2.87% and 2.81% for the second and first quarters of 2008, respectively, and 3.14% for the third quarter of 2007.
Mr. Seaver commented, We are pleased that our net interest margin continues to increase even though it is still lower than the third quarter in 2007. Like most other banks, we experienced a tightening of our net interest margin as the Federal Reserve significantly lowered short-term market rates. We continue to re-position our bank to be able to minimize the financial impact of various changes in market rates.
Total non-performing assets at September 30, 2008 were 0.79% of total assets. Non-performing loans totaled $3.4 million at September 30, 2008 and now represent 0.61% of total loans at September 30, 2008, compared to 0.87% at December 31, 2007 and 0.61% at September 30, 2007. During the second and third quarters our company’s other real estate owned remained at $2.1 million. We believe that these properties are valued appropriately, Mr. Seaver added.
Total assets were virtually unchanged at $696.6 million as of September 30, 2008, compared to $697.9 million as of June 30, 2008. Loans were $561.3 million at September 30, 2008, compared to $546.5 million as of June 30, 2008 and $508.8 million at December 31, 2007. Mr. Seaver added, Although loan demand remains strong, we have chosen to manage our level of growth in loans during the third quarter. Asset growth is not a primary strategy of our company in the current operating environment. Our current strategy is to preserve capital, manage portfolio risk, improve our margins, and continue growing retail deposits. Retail deposits grew to $285.2 million at September 30, 2008, compared to $278.8 million at June 30, 2008, and $257.5 million at December 31, 2007. Total deposits were $477.8 million at September 30, 2008. Mr. Seaver also announced that the Bank opened two additional retail deposit offices in July which have contributed to the growth in retail deposits. We now have four offices in Greenville and two offices in the Columbia market.
The Company’s book value per share was $12.48 as of September 30, 2008, while the closing stock price was $11.40 per share.