SOUTHERN FIRST REPORTS RESULTS FOR 2017

Greenville, South Carolina, January 23, 2018 – Southern First Bancshares, Inc. (NASDAQ: SFST) holding company for Southern First Bank, today reported net income available to common shareholders of $2.1 million, or $0.27 per diluted share, for the fourth quarter of 2017. In comparison, net income available to common shareholders was $3.3 million, or $0.49 per diluted share, for the fourth quarter of 2016. For the year ended December 31, 2017, net income to common shareholders was $13.0 million, or $1.76 per diluted share, compared to net income to common shareholders of $13.0 million, or $1.94 per diluted share for the year ended December 31, 2016.  Included in net income available to common shareholders for the 2017 periods, is $2.4 million, or $0.32 per diluted share, of income tax expense related to the revaluation of our deferred tax asset as a result of the Tax Cuts and Jobs Act (“Tax Act”). Excluding the deferred tax adjustment, net income was $4.5 million and $15.5 million, or $0.59 and $2.10 per diluted share, for the three and twelve months ended December 31, 2017.

2017 Fourth Quarter Highlights

  • Net income to common shareholders of $2.1 million for Q4 2017, compared to $3.3 million for Q4 2016
  • Total loans increased 19% to $1.39 billion at Q4 2017, compared to $1.16 billion at Q4 2016
  • Total deposits increased 27% to $1.38 billion at Q4 2017, compared to $1.09 billion at Q4 2016
  • Efficiency ratio improved to 54.6% for Q4 2017, compared to 59.6% for Q4 2016
  • Deferred tax asset adjustment of $2.44 million due to new federal corporate tax rate of 21%

“I am proud of our Southern First team and our accomplishments in 2017 as we report record growth in both loans and deposits for the year,” stated Art Seaver, the company’s Chief Executive Officer. “We have made tremendous progress in building client relationships and telling our story through our expansion to the Atlanta region and relocation of our Raleigh office to its permanent location. We are heading into the new year with significant momentum throughout our company.”

Operating Results

Net interest margin for the fourth quarter of 2017 was 3.59%, compared to 3.63% for the fourth quarter of 2016. During the fourth quarter of 2017, our average interest-earning assets increased by $262.6 million, compared to the fourth quarter of 2016, while the yield on our interest-earning assets remained stable. In comparison, our average interest-bearing liabilities increased by $176.1 million during the fourth quarter of 2017, compared to the fourth quarter of 2016, while the cost of these liabilities increased by seven basis points. The increase in the cost of our interest-bearing liabilities drove the four basis point decrease in the net interest margin for the 2017 period as compared to 2016.

Noninterest income was $2.2 million and $2.1 million for the three months ended December 31, 2017 and 2016, respectively.  For the year ended December 30, 2017 and 2016, noninterest income was $9.3 million and $10.8 million, respectively. The decrease in noninterest income during the twelve-month period ended December 31, 2017 relates primarily to a decrease in mortgage banking revenue during the 2017 periods, combined with a $431 thousand gain on sale of investment securities in the first quarter of 2016. Specifically, mortgage banking revenue was $1.1 million and $5.2 million for the three and twelve months ended December 31, 2017, respectively, and $1.2 million and $6.8 million for the three and twelve months ended December 31, 2016, respectively.

Noninterest expense was $8.6 million and $8.0 million for the three months ended December 31, 2017 and 2016, respectively, and $34.6 million and $31.2 million for the twelve months ended December 31, 2017 and 2016, respectively.  The increase in noninterest expense during the three- and twelve-month periods ended December 31, 2017 relates primarily to increases in compensation and benefits, occupancy, and outside service and data processing costs, partially offset by a decrease in real estate owned expenses. Included in noninterest expense are mortgage banking expenses of $884 thousand and $3.7 million for the three and twelve months ended December 31, 2017, respectively, and $980 thousand and $4.5 million for the three and twelve months ended December 31, 2016, respectively.

During the three months ended December 31, 2017, we recorded total credit costs of $690 thousand, including a $500 thousand provision for loan losses and $190 thousand of expenses related to the sale and management of other real estate owned. In addition, we had net charge-offs for the fourth quarter of 2017 of $556 thousand, or 0.17% of average loans, annualized.  During the three months ended December 31, 2016, our total credit costs were $765 thousand, including a $275 thousand provision for loan losses and $490 thousand of expenses related to the sale and management of other real estate owned. Net loan recoveries for the fourth quarter of 2016 were $102 thousand. For the year ended December 31, 2017 and 2016, total credit costs were $2.2 million and $3.5 million, respectively. Our allowance for loan losses was $15.5 million, or 1.12% of loans, at December 31, 2017, which provides approximately 213% coverage of nonaccrual loans, compared to $14.9 million, or 1.28% of loans, and approximately 271% coverage of nonaccrual loans at December 31, 2016.

Nonperforming assets were $7.5 million, or 0.46% of total assets, as of December 31, 2017. Comparatively, nonperforming assets were $6.1 million, or 0.46% of total assets, at December 31, 2016. Of the $7.5 million in total nonperforming assets as of December 31, 2017, nonperforming loans represent $7.3 million and other real estate owned represents $242 thousand. Classified assets improved to 10% of tier 1 capital plus the allowance for loan losses at December 31, 2017, compared to 13% at December 31, 2016.

Gross loans were $1.4 billion, excluding mortgage loans held for sale, as of December 31, 2017, compared to $1.2 billion at December 31, 2016.  Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, increased to $1.2 billion at December 31, 2017 compared to $937.5 million at December 31, 2016. 

Shareholders’ equity totaled $149.7 million as of December 31, 2017, compared to $109.9 million at December 31, 2016. As of December 31, 2017, 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’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 11 locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as Raleigh, North Carolina and Atlanta, Georgia.  Southern First Bancshares has consolidated assets of approximately $1.6 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.

Financial Contact: Mike Dowling | 864-679-9070

Media Contact: Art Seaver | 864-679-9010

Website: www.southernfirst.com