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Greenville, South Carolina, July 25, 2017 – Southern First Bancshares, Inc. (NASDAQ: SFST) holding company for Southern First Bank, today reported net income available to the common shareholders of $3.6 million, or $0.49 per diluted share, for the second quarter of 2017. In comparison, net income available to common shareholders was $3.3 million, or $0.49 per diluted share, for the second quarter of 2016. For the six months ended June 30, 2017, net income to common shareholders was $6.7 million, or $0.95 per diluted share. In comparison, net income to common shareholders for the six months ended June 30, 2016 was $6.3 million, or $0.94 per diluted share.
2017 Second Quarter Highlights
“The investments in infrastructure are bearing fruit as we generated record growth in deposits, loans and reported quarterly income of $3.6 million during the second quarter,” stated Art Seaver, the company’s Chief Executive Officer. “We are excited as we continue to recruit additional talent with new bankers joining our Atlanta, Charleston and Columbia teams.”
Operating Results
Net interest margin for the second quarter of 2017 was 3.49%, compared to 3.61% for the prior quarter and 3.62% for the second quarter of 2016. During the second quarter of 2017, our average interest-earning assets increased by $250.3 million, compared to the second quarter of 2016, while the yield on our interest-earning assets decreased by nine basis points. A contributing factor to the decrease in yield on our interest-earning assets was a $62.6 million increase in federal funds sold which traditionally yield a much lower rate than loans or investments. In comparison, our average interest-bearing liabilities increased by $169.1 million during the second quarter of 2017, compared to the second quarter of 2016, with the respective cost increasing by eight basis points.
Noninterest income was $2.6 million and $3.1 million for the three months ended June 30, 2017 and 2016, respectively. For the six months ended June 30, 2017 and 2016, noninterest income was $4.6 million and $5.7 million, respectively. The decrease in noninterest income during the three and six-month periods ended June 30, 2017 relates primarily to a decrease in mortgage banking revenue during the 2017 periods, combined with a gain on sale of investment securities in the first quarter of 2016. Specifically, mortgage banking revenue was $1.6 million and $2.7 million for the three and six months ended June 30, 2017, respectively, and $2.2 million and $3.7 million for the three and six months ended June 30, 2016, respectively.
Noninterest expense was $8.8 million and $7.9 million for the three months ended June 30, 2017 and 2016, respectively, and $17.1 million and $15.4 million for the six months ended June 30, 2017 and 2016, respectively. The increase in noninterest expense during the three and six-month periods ended June 30, 2017 relates primarily to increases in compensation and benefits, occupancy, data processing and related costs and professional fees, partially offset by a decrease in real estate owned expenses. Included in noninterest expense are mortgage banking expenses of $1.0 million and $1.9 million for the three and six months ended June 30, 2017, respectively, and $1.3 million and $2.2 million for the three and six months ended June 30, 2016, respectively.
During the three months ended June 30, 2017, we recorded total credit costs of $497 thousand, including a $500 thousand provision for loan losses and a net $3 thousand gain related to the sale and management of other real estate owned. In addition, we had net charge-offs for the second quarter of 2017 of $343 thousand, or 0.11% of average loans, annualized. During the three months ended June 30, 2016, our total credit costs were $934 thousand, including $575 thousand provision for loan losses and $359 thousand expenses related to the sale and management of other real estate owned. Net loan charge-offs for the second quarter of 2016 were $156 thousand, or 0.06% of average loans on an annual basis. For the six months ended June 30, 2017 and 2016, total credit costs were $1.0 million and $1.8 million, respectively. Our allowance for loan losses was $15.4 million, or 1.19% of loans, at June 30, 2017, which provides approximately 294% coverage of nonaccrual loans, compared to $14.3 million, or 1.34% of loans, and approximately 251% coverage of nonaccrual loans at June 30, 2016.
Nonperforming assets were $5.7 million, or 0.37% of total assets, as of June 30, 2017. Comparatively, nonperforming assets were $7.7 million, or 0.59% of total assets, at June 30, 2016. Of the $5.7 million in total nonperforming assets as of June 30, 2017, nonperforming loans represent $5.3 million and other real estate owned represents $428 thousand. Classified assets improved to 10% of tier 1 capital plus the allowance for loan losses at June 30, 2017, compared to 16% at June 30, 2016.
Gross loans were $1.30 billion, excluding mortgage loans held for sale, as of June 30, 2017, compared to $1.07 billion at June 30, 2016. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $1.09 billion at June 30, 2017 compared to $900.7 million at June, 2016.
Shareholders’ equity totaled $142.7 million as of June 30, 2017, compared to $109.9 million at December 30, 2016, and $102.4 million at June 30, 2016. As of June 30, 2017, our capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.
On May 2, 2017, we issued a total of 805,000 shares of our common stock at $32.75 per share in a public offering. Proceeds from the offering were used to improve our capital structure, including to repay our former $10 million holding company line of credit, to fund future organic growth, and for working capital and other general corporate purposes.
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 ten locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as Raleigh, North Carolina. Southern First Bancshares has assets of approximately $1.54 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
Financial Contact: Mike Dowling | 864-679-9070
Media Contact: Art Seaver | 864-679-9010
Website: www.southernfirst.com