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 $500 million mark representing
a 25% annualized growth rate
“We are proud of our company’s
accomplishments during the second quarter as our earnings momentum is clearly
visible,” stated Art Seaver, the company’s CEO. “Our team’s relentless focus on
asset quality and the resulting decrease in credit costs is the primary driver
of our improved performance. Nonperforming assets have declined for the fourth
straight quarter and total year to date credit costs have declined by 35% from
the same period in 2010. While the overall environment remains difficult, our
increase in net interest income, expansion of our margin, and declining credit
costs have significantly improved the performance of our company.”
|
|
Quarter
Ended
|
|
|
June
30,
|
|
March
31,
|
December 31,
|
|
|
|
2011
|
2010
|
|
2011
|
2010
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
Nonperforming assets as a percentage of total assets
|
|
1.73%
|
2.40%
|
|
1.95%
|
2.03%
|
|
Net charge-offs as a percentage of average loans (annualized)
|
|
0.36%
|
1.08%
|
|
0.51%
|
0.86%
|
|
Allowance for loan losses as a percentage of total loans
|
|
1.51%
|
1.44%
|
|
1.45%
|
1.47%
|
|
Allowance for loan losses as a percentage of nonperforming loans
|
|
85.47%
|
67.62%
|
|
76.56%
|
89.92%
|
|
Capital Ratios (1):
|
|
|
|
|
|
|
|
Total risk-based capital ratio
|
|
13.44%
|
12.79%
|
|
13.35%
|
13.41%
|
|
Tier 1 risk-based capital ratio
|
|
12.19%
|
11.54%
|
|
12.10%
|
12.16%
|
|
Leverage ratio
|
|
9.74%
|
9.36%
|
|
9.95%
|
9.82%
|
|
Tangible common equity (2)
|
|
6.07%
|
6.03%
|
|
5.91%
|
6.01%
|
|
Earnings ($ in thousands):
|
|
|
|
|
|
|
|
Net income
|
$
|
628
|
94
|
|
537
|
441
|
|
Net income (loss) to common shareholder
|
|
306
|
(238)
|
|
208
|
108
|
|
Earnings (loss) per common share (4)
|
|
0.09
|
(0.07)
|
|
0.06
|
0.03
|
|
Other ($ in thousands):
|
|
|
|
|
|
|
|
Net interest margin (tax-equivalent)(3)
|
|
3.28%
|
2.79%
|
|
3.18%
|
3.03%
|
|
Retail deposits
|
$
|
505,101
|
430,723
|
|
486,067
|
449,938
|
|
Total assets
|
|
758,102
|
741,391
|
|
760,139
|
736,490
|
|
(1)
June 30, 2011 ratios are preliminary.
|
|
(2)
The tangible common equity ratio is calculated as total equity less preferred
stock divided by total assets.
|
|
(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.
|
|
(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 company’s 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 company’s 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 company’s 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
|
|
|
June
30,
|
2011-2010
|
|
June
30,
|
2011-2010
|
|
|
2011
|
2010
|
%
Change
|
|
2011
|
2010
|
%
Change
|
|
Earnings Summary
|
|
|
|
|
|
|
|
|
|
Interest income
|
$
|
8,887
|
8,942
|
-0.6%
|
|
17,492
|
17,799
|
-1.7%
|
|
Interest expense
|
|
3,085
|
4,045
|
-23.7%
|
|
6,289
|
8,121
|
-22.6%
|
|
Net interest income
|
|
5,802
|
4,897
|
18.5%
|
|
11,203
|
9,678
|
15.8%
|
|
Provision for loan losses
|
|
650
|
2,300
|
-71.7%
|
|
1,375
|
3,700
|
-62.8%
|
|
Noninterest income
|
|
618
|
1,604
|
-61.0%
|
|
1,174
|
2,158
|
-45.6%
|
|
Noninterest expense
|
|
4,855
|
4,130
|
18.1%
|
|
9,322
|
8,122
|
14.8%
|
|
Income before provision for income taxes
|
|
915
|
71
|
1188.7%
|
|
1,680
|
14
|
11900.0%
|
|
Income tax expense (benefit)
|
|
287
|
(23)
|
1347.8%
|
|
515
|
(99)
|
620.2%
|
|
Net income
|
|
628
|
94
|
568.1%
|
|
1,165
|
113
|
931.0%
|
|
Preferred stock dividends
|
|
216
|
216
|
0.0%
|
|
432
|
433
|
-0.2%
|
|
Discount accretion
|
|
106
|
116
|
-8.6%
|
|
219
|
240
|
-8.8%
|
|
Net income (loss) available to common shareholders
|
$
|
306
|
(238)
|
-228.6%
|
|
514
|
(560)
|
191.8%
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares (4)
|
|
3,474
|
3,457
|
0.5%
|
|
3,470
|
3,450
|
0.6%
|
|
Diluted weighted average common shares (4)
|
|
3,554
|
3,457
|
2.8%
|
|
3,550
|
3,450
|
2.9%
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share - Basic (4)
|
$
|
0.09
|
(0.07)
|
-228.6%
|
|
0.15
|
(0.16)
|
191.7%
|
|
Earnings (loss) per common share - Diluted (4)
|
|
0.08
|
(0.07)
|
-214.3%
|
|
0.14
|
(0.16)
|
187.5%
|
|
(4) Common shares and earnings per share for the 2010 period
have been restated to reflect the 10% stock dividend in 2011.
|
|
|
|
|
YTD
|
|
|
|
|
|
June 30,
|
2011-2010
|
|
March 31,
|
December 31,
|
|
|
2011
|
2010
|
% Change
|
|
2011
|
2010
|
|
Balance Sheet Highlights
|
|
|
|
|
|
|
|
|
Assets
|
$
|
758,102
|
741,391
|
2.3%
|
|
760,139
|
736,490
|
|
Investment securities
|
|
93,865
|
94,524
|
-0.7%
|
|
69,184
|
72,853
|
|
Loans
|
|
577,980
|
580,707
|
-0.5%
|
|
579,554
|
572,392
|
|
Allowance for loan losses
|
|
8,719
|
8,352
|
4.4%
|
|
8,388
|
8,386
|
|
Noninterest bearing deposits
|
|
57,737
|
48,000
|
20.3%
|
|
50,421
|
46,815
|
|
Interest bearing deposits
|
|
498,712
|
488,331
|
2.1%
|
|
509,633
|
489,481
|
|
Total deposits
|
|
556,449
|
536,331
|
3.8%
|
|
560,054
|
536,296
|
|
Other borrowings
|
|
122,700
|
126,700
|
-3.2%
|
|
122,700
|
122,700
|
|
Junior subordinated debentures
|
|
13,403
|
13,403
|
0.0%
|
|
13,403
|
13,403
|
|
Shareholders’ equity
|
|
60,755
|
59,919
|
1.4%
|
|
59,796
|
59,216
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Book value per share
|
$
|
13.25
|
12.94
|
2.4%
|
|
12.96
|
12.80
|
|
Stock price:
|
|
|
|
|
|
|
|
|
High
|
|
8.50
|
8.04
|
5.7%
|
|
8.59
|
7.05
|
|
Low
|
|
7.61
|
6.36
|
19.7%
|
|
6.78
|
5.45
|
|
Period end
|
|
8.50
|
6.59
|
29.0%
|
|
7.99
|
6.78
|
|
Other
|
|
|
|
|
|
|
|
|
Return on average assets (5)
|
|
0.31%
|
0.03%
|
933.3%
|
|
0.29%
|
0.12%
|
|
Return on average equity (5)
|
|
3.89%
|
0.37%
|
951.4%
|
|
3.63%
|
1.47%
|
|
Loans to deposits
|
|
103.87%
|
108.27%
|
-4.1%
|
|
103.48%
|
106.73%
|
|
Efficiency ratio (6)
|
|
66.77%
|
75.65%
|
-11.7%
|
|
66.73%
|
69.70%
|
|
Team members
|
|
113
|
111
|
1.8%
|
|
106
|
104
|
|
(5) Annualized based on
quarterly earnings.
|
|
(6) Noninterest
expense divided by the sum of net interest income and noninterest income, excluding
real estate activity and gain on sale of investments.
|
|
|
|
|
|
|
|
|
|
3
Asset Quality Measures - Unaudited
(Dollars in thousands)
|
|
|
|
YTD
|
|
|
|
|
|
June 30,
|
2011-2010
|
|
March
31,
|
December
31,
|
|
|
2011
|
2010
|
Change
|
|
2011
|
2010
|
|
Nonperforming
Assets
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
Real estate
|
$
|
6,479
|
10,291
|
-37.1%
|
|
7,995
|
7,194
|
|
Commercial business
|
|
3,701
|
2,057
|
79.9%
|
|
2,955
|
2,125
|
|
Consumer other
|
|
21
|
4
|
425.0%
|
|
6
|
7
|
|
Total nonperforming loans
|
|
10,201
|
12,352
|
-17.4%
|
|
10,956
|
9,326
|
|
Other
real estate owned
|
|
2,934
|
5,471
|
-46.4%
|
|
3,873
|
5,629
|
|
Total
nonperforming assets
|
$
|
13,135
|
17,823
|
-26.3%
|
|
14,829
|
14,955
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
assets to total assets
|
|
1.73%
|
2.40%
|
-27.9%
|
|
1.95%
|
2.03%
|
|
Nonperforming
assets to total loans
|
|
2.27%
|
3.07%
|
-26.0%
|
|
2.56%
|
2.61%
|
|
Nonperforming
loans to total loans
|
|
1.77%
|
2.13%
|
-17.0%
|
|
1.89%
|
1.63%
|
|
|
|
|
|
|
|
|
|
Loans
past due 30 days and accruing interest
|
$
|
2,365
|
4,857
|
-51.3%
|
|
7,732
|
5,548
|
|
As a percentage of total loans
|
|
0.41%
|
0.84%
|
-51.1%
|
|
1.34%
|
0.96%
|
|
|
Quarter Ended
|
2nd
Qtr
|
|
Six
Months Ended
|
YTD
|
|
|
June 30,
|
2011-2010
|
|
June 30,
|
2011-2010
|
|
|
2011
|
2010
|
Change
|
|
2011
|
2010
|
Change
|
|
Allowance
for Loan Losses
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
$
|
8,388
|
7,937
|
5.7%
|
|
8,386
|
7,760
|
8.1%
|
|
Loans charged-off
|
|
(385)
|
(2,006)
|
-80.8%
|
|
(1,109)
|
(3,229)
|
-65.7%
|
|
Recoveries of loans previously charged-off
|
|
66
|
121
|
-45.5%
|
|
67
|
121
|
-44.6%
|
|
Net loans charged-off
|
|
(319)
|
(1,885)
|
-83.1%
|
|
(1,042)
|
(3,108)
|
-66.5%
|
|
Provision for loan losses
|
|
650
|
2,300
|
-71.7%
|
|
1,375
|
3,700
|
-62.8%
|
|
Balance, end of period
|
$
|
8,719
|
8,352
|
4.4%
|
|
8,719
|
8,352
|
4.4%
|
|
|
|
|
|
|
|
|
|
|
Allowance
for loan losses to gross loans
|
|
1.51%
|
1.44%
|
4.9%
|
|
1.51%
|
1.44%
|
4.9%
|
|
Allowance for loan losses to nonperforming loans
|
|
85.47%
|
67.62%
|
26.4%
|
|
85.47%
|
67.62%
|
26.4%
|
|
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.
4
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 Company’s 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 company’s 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
SEC’s 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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