UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION |
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WASHINGTON, DC 20549 |
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FORM 8-K |
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CURRENT REPORT PURSUANT |
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TO SECTION 13 OR 15(D) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
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Date of report (Date of earliest event reported) July 26,2011 |
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Southern First Bancshares, Inc. |
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(Exact name of registrant as specified in its charter) |
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South Carolina |
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(State or other jurisdiction of incorporation) |
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000-27719 |
58-2459561 |
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(Commission File Number) |
(IRS Employer Identification No.) |
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100 Verdae Boulevard, Suite 100, Greenville, SC |
29606 |
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(Address of principal executive offices) |
(Zip Code) |
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(864) 679-9000 |
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(Registrant's telephone number, including area code) |
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Not Applicable |
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(Former name or former address, if changed since last report) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing |
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obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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ITEM 2.02. Results of Operations and Financial Condition
On July 26, 2011, Southern First Bancshares, Inc., holding company for Southern First Bank, N.A., issued a press release announcing its financial results for the period ended June 30, 2011. A copy of the press release is attached hereto as Exhibit 99.1.
ITEM 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Exhibit
99.1 Earnings Press Release for period ended June 30, 2011.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SOUTHERN FIRST BANCSHARES, INC. |
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July 26, 2011
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EXHIBIT INDEX
Exhibit Number Description
99.1 Earnings Press Release for the period ended June 30, 2011.
Exhibit 99.1
FINANCIAL CONTACT: JUSTIN STRICKLAND 803-223-6410
MEDIA CONTACT: ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com
Southern First Reports Results for Second Quarter of 2011
Greenville, South Carolina, 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 companys accomplishments during the second quarter as our earnings momentum is clearly visible, stated Art Seaver, the companys CEO. Our teams 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.
Quarter Ended |
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June 30, |
March 31, |
December 31, |
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2011 |
2010 |
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2011 |
2010 |
Asset Quality Ratios: |
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Nonperforming assets as a percentage of total assets |
1.73% |
2.40% |
1.95% |
2.03% |
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Net charge-offs as a percentage of average loans (annualized) |
0.36% |
1.08% |
0.51% |
0.86% |
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Allowance for loan losses as a percentage of total loans |
1.51% |
1.44% |
1.45% |
1.47% |
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Allowance for loan losses as a percentage of nonperforming loans |
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85.47% |
67.62% |
76.56% |
89.92% |
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Capital Ratios (1): |
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Total risk-based capital ratio |
13.44% |
12.79% |
13.35% |
13.41% |
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Tier 1 risk-based capital ratio |
12.19% |
11.54% |
12.10% |
12.16% |
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Leverage ratio |
9.74% |
9.36% |
9.95% |
9.82% |
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Tangible common equity (2) |
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6.07% |
6.03% |
5.91% |
6.01% |
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Earnings ($ in thousands): |
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Net income |
$ |
628 |
94 |
537 |
441 |
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Net income (loss) to common shareholder |
306 |
(238) |
208 |
108 |
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Earnings (loss) per common share (4) |
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0.09 |
(0.07) |
0.06 |
0.03 |
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Other ($ in thousands): |
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Net interest margin (tax-equivalent)(3) |
3.28% |
2.79% |
3.18% |
3.03% |
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Retail deposits |
$ |
505,101 |
430,723 |
486,067 |
449,938 |
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Total assets |
758,102 |
741,391 |
760,139 |
736,490 |
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(1) June 30, 2011 ratios are preliminary. |
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(2) The tangible common equity ratio is calculated as total equity less preferred stock divided by total assets. |
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(3) The tax-equivalent adjustment to net interest income adjusts the yield for assets earning tax-exempt income to a comparable yield on a taxable basis. |
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(4) Common shares and earnings per share for the 2010 period have been restated to reflect the 10% stock dividend in 2011. |
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 companys 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 companys 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 companys 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.
2
Financial Highlights - Unaudited
(Dollars in thousands, except per share data)
Quarter Ended |
2nd Qtr |
Six Months Ended |
YTD |
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June 30, |
2011-2010 |
June 30, |
2011-2010 |
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2011 |
2010 |
% Change |
2011 |
2010 |
% Change |
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Earnings Summary |
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Interest income |
$ |
8,887 |
8,942 |
-0.6% |
17,492 |
17,799 |
-1.7% |
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Interest expense |
3,085 |
4,045 |
-23.7% |
6,289 |
8,121 |
-22.6% |
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Net interest income |
5,802 |
4,897 |
18.5% |
11,203 |
9,678 |
15.8% |
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Provision for loan losses |
650 |
2,300 |
-71.7% |
1,375 |
3,700 |
-62.8% |
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Noninterest income |
618 |
1,604 |
-61.0% |
1,174 |
2,158 |
-45.6% |
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Noninterest expense |
4,855 |
4,130 |
18.1% |
9,322 |
8,122 |
14.8% |
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Income before provision for income taxes |
915 |
71 |
1188.7% |
1,680 |
14 |
11900.0% |
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Income tax expense (benefit) |
287 |
(23) |
1347.8% |
515 |
(99) |
620.2% |
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Net income |
628 |
94 |
568.1% |
1,165 |
113 |
931.0% |
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Preferred stock dividends |
216 |
216 |
0.0% |
432 |
433 |
-0.2% |
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Discount accretion |
106 |
116 |
-8.6% |
219 |
240 |
-8.8% |
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Net income (loss) available to common shareholders |
$ |
306 |
(238) |
-228.6% |
514 |
(560) |
191.8% |
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Basic weighted average common shares (4) |
3,474 |
3,457 |
0.5% |
3,470 |
3,450 |
0.6% |
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Diluted weighted average common shares (4) |
3,554 |
3,457 |
2.8% |
3,550 |
3,450 |
2.9% |
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Earnings (loss) per common share - Basic (4) |
$ |
0.09 |
(0.07) |
-228.6% |
0.15 |
(0.16) |
191.7% |
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Earnings (loss) per common share - Diluted (4) |
0.08 |
(0.07) |
-214.3% |
0.14 |
(0.16) |
187.5% |
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(4) Common shares and earnings per share for the 2010 period have been restated to reflect the 10% stock dividend in 2011. |
YTD |
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June 30, |
2011-2010 |
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March 31, |
December 31, |
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2011 |
2010 |
% Change |
2011 |
2010 |
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Balance Sheet Highlights |
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Assets |
$ |
758,102 |
741,391 |
2.3% |
760,139 |
736,490 |
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Investment securities |
93,865 |
94,524 |
-0.7% |
69,184 |
72,853 |
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Loans |
577,980 |
580,707 |
-0.5% |
579,554 |
572,392 |
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Allowance for loan losses |
8,719 |
8,352 |
4.4% |
8,388 |
8,386 |
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Noninterest bearing deposits |
57,737 |
48,000 |
20.3% |
50,421 |
46,815 |
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Interest bearing deposits |
498,712 |
488,331 |
2.1% |
509,633 |
489,481 |
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Total deposits |
556,449 |
536,331 |
3.8% |
560,054 |
536,296 |
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Other borrowings |
122,700 |
126,700 |
-3.2% |
122,700 |
122,700 |
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Junior subordinated debentures |
13,403 |
13,403 |
0.0% |
13,403 |
13,403 |
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Shareholders equity |
60,755 |
59,919 |
1.4% |
59,796 |
59,216 |
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Common Stock |
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Book value per share |
$ |
13.25 |
12.94 |
2.4% |
12.96 |
12.80 |
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Stock price: |
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High |
8.50 |
8.04 |
5.7% |
8.59 |
7.05 |
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Low |
7.61 |
6.36 |
19.7% |
6.78 |
5.45 |
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Period end |
8.50 |
6.59 |
29.0% |
7.99 |
6.78 |
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Other |
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Return on average assets (5) |
0.31% |
0.03% |
933.3% |
0.29% |
0.12% |
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Return on average equity (5) |
3.89% |
0.37% |
951.4% |
3.63% |
1.47% |
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Loans to deposits |
103.87% |
108.27% |
-4.1% |
103.48% |
106.73% |
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Efficiency ratio (6) |
66.77% |
75.65% |
-11.7% |
66.73% |
69.70% |
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Team members |
113 |
111 |
1.8% |
106 |
104 |
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(5) Annualized based on quarterly earnings. |
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(6) Noninterest expense divided by the sum of net interest income and noninterest income, excluding real estate activity and gain on sale of investments. |
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3
Asset Quality Measures - Unaudited
(Dollars in thousands)
YTD |
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June 30, |
2011-2010 |
March 31, |
December 31, |
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2011 |
2010 |
Change |
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2011 |
2010 |
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Nonperforming Assets |
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Loans: |
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Real estate |
$ |
6,479 |
10,291 |
-37.1% |
7,995 |
7,194 |
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Commercial business |
3,701 |
2,057 |
79.9% |
2,955 |
2,125 |
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Consumer other |
21 |
4 |
425.0% |
6 |
7 |
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Total nonperforming loans |
10,201 |
12,352 |
-17.4% |
10,956 |
9,326 |
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Other real estate owned |
2,934 |
5,471 |
-46.4% |
3,873 |
5,629 |
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Total nonperforming assets |
$ |
13,135 |
17,823 |
-26.3% |
14,829 |
14,955 |
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Nonperforming assets to total assets |
1.73% |
2.40% |
-27.9% |
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1.95% |
2.03% |
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Nonperforming assets to total loans |
2.27% |
3.07% |
-26.0% |
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2.56% |
2.61% |
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Nonperforming loans to total loans |
1.77% |
2.13% |
-17.0% |
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1.89% |
1.63% |
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Loans past due 30 days and accruing interest |
$ |
2,365 |
4,857 |
-51.3% |
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7,732 |
5,548 |
As a percentage of total loans |
0.41% |
0.84% |
-51.1% |
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1.34% |
0.96% |
Quarter Ended |
2nd Qtr |
Six Months Ended |
YTD |
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June 30, |
2011-2010 |
June 30, |
2011-2010 |
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2011 |
2010 |
Change |
2011 |
2010 |
Change |
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Allowance for Loan Losses |
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Balance, beginning of period |
$ |
8,388 |
7,937 |
5.7% |
8,386 |
7,760 |
8.1% |
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Loans charged-off |
(385) |
(2,006) |
-80.8% |
(1,109) |
(3,229) |
-65.7% |
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Recoveries of loans previously charged-off |
66 |
121 |
-45.5% |
67 |
121 |
-44.6% |
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Net loans charged-off |
(319) |
(1,885) |
-83.1% |
(1,042) |
(3,108) |
-66.5% |
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Provision for loan losses |
650 |
2,300 |
-71.7% |
1,375 |
3,700 |
-62.8% |
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Balance, end of period |
$ |
8,719 |
8,352 |
4.4% |
8,719 |
8,352 |
4.4% |
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Allowance for loan losses to gross loans |
1.51% |
1.44% |
4.9% |
1.51% |
1.44% |
4.9% |
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Allowance for loan losses to nonperforming loans |
85.47% |
67.62% |
26.4% |
85.47% |
67.62% |
26.4% |
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Net charge-offs to average loans (annualized) |
0.22% |
1.30% |
-83.0% |
0.36% |
1.08% |
-66.7% |
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 7th 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 $758 million and its stock is traded under the symbol SFST in the NASDAQ Global Market. More information can be found at www.southernfirst.com.
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FORWARD-LOOKING STATEMENTS
Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements include but are not limited to (1) statements with respect to our expectations regarding the Companys net interest margin that are not historical facts, and (2) other statements identified by words such as believes, expects, anticipates, estimates, intends, plans, targets, and projects, as well as similar expressions. Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the companys loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in the U.S. legal and regulatory framework; and (5) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the company. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SECs Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
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