Southern First results for the first quarter of 2019

Southern First Bancshares, Inc., holding company for Southern First Bank, today reported net income available to common shareholders of $6.0 million, or $0.78 per diluted share, for the first quarter of 2019. In comparison, net income available to common shareholders was $5.2 million, or $0.67 per diluted share, for the first quarter of 2018.

2019 First Quarter Highlights
• Net income available to common shareholders increased 15% to $6.0 million for Q1 2019 compared to $5.2 million for Q1 2018
• Total loans increased 19% to $1.73 billion at Q1 2019, compared to $1.46 billion at Q1 2018
• Total deposits increased 16% to $1.76 billion at Q1 2019, compared to $1.52 billion at Q1 2018
• Core deposits increased 14% to $1.53 billion at Q1 2019, compared to $1.34 billion at Q1 2018
• Total revenue increased 14% to $18.8 million at Q1 2019, compared to $16.5 million at Q1 2018
• Efficiency ratio was 56.6% for Q1 2019, compared to 55.9% for Q1 2018

“I am proud to report a great start to the new year with record earnings of $6 million for the first quarter and core deposit growth in excess of $90 million for the quarter,” stated Art Seaver, the Company’s Chief Executive Officer. “Our team is intent on serving our clients and providing a unique client experience, as evidenced by the growth in new client relationships and retail deposits as well as excellent production by our mortgage team.”

Operating Results
Net interest margin for the first quarter of 2019 was 3.52%, compared to 3.59% for the prior quarter and 3.63% for the first quarter of 2018. During the first quarter of 2019, our average interest-earning assets increased by $252.4 million, compared to the first quarter of 2018, while the yield on our interest-earning assets increased by 37 basis points. In comparison, our average interest-bearing liabilities increased by $184.5 million during the first quarter of 2019, compared to the first quarter of 2018, with the respective cost increasing by 64 basis points.

Noninterest income was $3.0 million and $2.4 million for the three months ended March 31, 2019 and 2018, respectively. The increase in noninterest income during the three-month period ended March 31, 2019 relates primarily to an increase in mortgage banking revenue during the first quarter of 2019 as well as an increase in ATM and debit card income. Mortgage banking revenue comprises a significant portion of our noninterest income and totaled $1.9 million and $1.3 million for the three months ended March 31, 2019 and 2018, respectively.

Noninterest expense was $10.6 million and $9.2 million for the three months ended March 31, 2019 and 2018, respectively. The increase in noninterest expense during the three-month period ended March 31, 2019 was driven primarily by increases in compensation and benefits, occupancy, data processing and related costs, and other noninterest expenses. Included in noninterest expense are mortgage banking expenses of $1.1 million and $964 thousand for the three months ended March 31, 2019 and 2018, respectively.

During the three months ended March 31, 2019, we recorded total credit costs of $301 thousand, primarily related to a $300 thousand provision for loan losses. In addition, we had net charge-offs for the first quarter of 2019 of $11 thousand. During the three months ended March 31, 2018, our total credit costs were $506 thousand, including a $500 thousand provision for loan losses and $6 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the first quarter of 2018 were $171 thousand, or 0.05% of average loans, annualized. Our allowance for loan losses was $16.1 million, or 0.93% of loans, at March 31, 2019 which provides approximately 265% coverage of nonaccrual loans, compared to $15.9 million, or 1.09% of loans, and approximately 218% coverage of nonaccrual loans at March 31, 2018.

Nonperforming assets were $6.0 million, or 0.30% of total assets, as of March 31, 2019. Comparatively, nonperforming assets were $7.5 million, or 0.43% of total assets, at March 31, 2018. Of the $6.0 million in total nonperforming assets as of March 31, 2019, nonperforming loans represented the entire balance with no other real estate owned. Classified assets improved to 8% of tier 1 capital plus the allowance for loan losses at March 31, 2019, compared to 9% at March 31, 2018.

Gross loans were $1.7 billion, excluding mortgage loans held for sale, as of March 31, 2019, compared to $1.5 billion at March 31, 2018. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $1.5 billion at March 31, 2019 compared to $1.3 billion at March 31, 2018.

Shareholders’ equity totaled $181.2 million as of March 31, 2019, compared to $173.9 million at December 31, 2018, and $154.7 million at March 31, 2018. As of March 31, 2019, the Bank’s 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 13 locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as the Triangle and Triad regions of North Carolina and Atlanta, Georgia. Southern First Bancshares has assets of approximately $2.0 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.

***For summary of consolidated financial data and figures, see the attached PDF.