Exhibit 99.1
FINANCIAL CONTACT: MIKE DOWLING 864-679-9070
MEDIA CONTACT: ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com
Southern First
Reports Results
for Third Quarter of 2011
Greenville, South Carolina, October
25, 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 third quarter of 2011 was $483 thousand compared to $337 thousand for the third
quarter of 2010. After dividends paid to the US Treasury on our preferred
stock, net income available to the common shareholders was $197 thousand
compared to $55 thousand for the third quarter of 2010.
Third Quarter 2011 Highlights
• Third quarter earnings improved to $483 thousand from $337
thousand in prior year
•
Loan balances increased by $13.1 million during third
quarter of 2011
•
Net interest margin increased to 3.36%, an increase for the
fifth consecutive quarter
•
New transaction accounts increased by 32% during the third
quarter compared to the prior year
•
Nonperforming assets improved for the fifth straight quarter
to 1.65% from 2.24% in prior year
“During
the third quarter, our company’s success was evident as we continue to focus on
growing long term client relationships and improving core profitability,”
stated Art Seaver, the company’s CEO. “Loan growth was strong, core deposit growth
was solid, and our net margin was the highest level in over three years.
Nonperforming assets have now declined for the 5th straight quarter
and total credit costs have declined by 19% from the same period in 2010.”
|
|
Quarter
Ended
|
|
|
September
30,
|
|
June
30,
|
December 31,
|
|
|
|
2011
|
2010
|
|
2011
|
2010
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
Nonperforming assets as a percentage of total assets
|
|
1.65%
|
2.24%
|
|
1.73%
|
2.03%
|
|
Net charge-offs as a percentage of average loans (annualized)
|
|
0.62%
|
1.00%
|
|
0.36%
|
0.86%
|
|
Allowance for loan losses as a percentage of total loans
|
|
1.48%
|
1.45%
|
|
1.51%
|
1.47%
|
|
Allowance for loan losses as a percentage of nonperforming loans
|
|
94.94%
|
81.26%
|
|
85.47%
|
89.92%
|
|
Capital Ratios (1):
|
|
|
|
|
|
|
|
Total risk-based capital ratio
|
|
13.69%
|
13.23%
|
|
13.58%
|
13.41%
|
|
Tier 1 risk-based capital ratio
|
|
12.44%
|
11.98%
|
|
12.33%
|
12.16%
|
|
Leverage ratio
|
|
9.84%
|
9.79%
|
|
9.76%
|
9.82%
|
|
Tangible common equity (2)(3)
|
|
5.98%
|
5.90%
|
|
5.84%
|
5.82%
|
|
Earnings ($ in thousands):
|
|
|
|
|
|
|
|
Net income
|
$
|
483
|
337
|
|
628
|
441
|
|
Net income to common shareholder(2)
|
|
197
|
55
|
|
343
|
157
|
|
Earnings per common share (2)(5)
|
|
0.05
|
0.02
|
|
0.10
|
0.05
|
|
Other ($ in thousands):
|
|
|
|
|
|
|
|
Net interest margin (tax-equivalent)(4)
|
|
3.36%
|
3.00%
|
|
3.28%
|
3.03%
|
|
Gross loans
|
$
|
591,055
|
579,848
|
|
577,980
|
572,392
|
|
Retail deposits
|
|
508,851
|
450,313
|
|
505,101
|
449,938
|
|
Total assets
|
|
758,106
|
743,888
|
|
758,102
|
736,490
|
|
(1)
September 30, 2011 ratios are preliminary.
|
|
(2)
Net income to common shareholders and earnings per share for the prior
periods have been restated for a correction of an error.
|
|
(3)
The tangible common equity ratio is calculated as total equity less preferred
stock divided by total assets.
|
|
(4)
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.
|
|
(5) 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 nine
months ended September 30, 2011 was $1.7 million compared to $450 thousand for
the nine months ended September 30, 2010. After dividends paid to the US
Treasury on our preferred stock, net income available to the common
shareholders was $793 thousand for the nine month period in 2011 compared to a net
loss to the common shareholders of $392 thousand for the same period in 2010.
Nonperforming assets
decreased to $12.5 million or 1.65% of total assets as of September 30, 2011. Of
the $12.5 million in total nonperforming assets, nonperforming loans represent
$9.2 million and other real estate owned represents $3.3 million. During the first
nine months of 2011, the company recorded $2.7 million in net charge-offs, or 0.62%
of average loans on an annualized basis.
During the third
quarter of 2011, the company recorded total credit costs of $1.7 million
compared to $1.3 million during the third quarter of 2010. Of the $1.7 million
in credit costs, $1.7 million related to the provision for loan losses while $16
thousand related to losses on the sale of other real estate owned.
Comparatively, the company recorded a loan loss provision of $1.3 million and
expenses related to real estate owned activity of $60 thousand during the same
period in 2010. For the nine months ended September 30, 2011, total credit
costs were $4.1 million consisting of a $3.1 million provision for loan losses
and $1.1 million related to losses on the sale of other real estate owned and
related activity. Total credit costs were $5.0 million during the nine months
ended September 30, 2010 and related primarily to a $5.0 million provision for
loan losses. The company’s allowance for loan losses was $8.8 million, or 1.48%,
of loans at September 30, 2011 which provides approximately 95% coverage of
non-performing loans.
Total loans were
$591.1 million as of September 30, 2011, a $13.1 million increase compared to June
30, 2011 and an $11.2 million increase from September 30, 2010. Total retail
deposits increased $58.5 million to $508.9 million at September 30, 2011
compared to September 30, 2010. The increase in retail funding continued to enable
the company to reduce its wholesale funding by over $46 million during the last
twelve month period. Brokered deposits now represent only 6.0% of total funding
for the bank.
Net interest
margin for the third quarter of 2011 improved to 3.36% from 3.28% for the previous
quarter of 2011 and from 3.00% for the third quarter of 2010. The net interest
margin for the first nine months of 2011 was 3.27% compared to 2.87% for the nine
months ended September 30, 2010.
Noninterest income
was $723 thousand and $147 thousand, respectively, for the three months ended September
30, 2011 and 2010. For the nine months ended September 30, 2011 and 2010,
noninterest income was $1.9 million and $2.3 million, respectively. The
increase in noninterest income during the three month period is related primarily
to a $450 thousand other-than-temporary impairment recorded on an investment
security during the third quarter of 2010. During the nine month period of
2011, noninterest income decreased due primarily to a $1.1 million gain on sale
of investment securities recorded in the second quarter of 2010, partially
offset by a $450 thousand other-than-temporary impairment recorded during the
third quarter of 2010. In addition, our noninterest expense was $4.4 million and
$3.7 million, respectively, for the three months ended September 30, 2011 and
2010. Noninterest expense for the nine month periods ended September 30, 2011
and 2010 was $13.7 million and $11.8 million, respectively. The increase in
noninterest expense during the three and nine month periods related primarily
to increased compensation and benefits expenses and costs associated with
selling and maintaining our other real estate owned.
Shareholders’
equity totaled $61.9 million as of September 30, 2011, a $1.8 million increase from
the same period in 2010. With a tier 1 leverage ratio of 9.84% and total risk
based capital ratio of 13.69%, the company’s capital ratios exceed the
regulatory requirements for a “well capitalized” institution.
During the third
quarter of 2011, the Company determined that it had been accounting for its
preferred stock and related discount accretion in error. All prior period
amounts related to preferred stock, discount accretion, net income (loss) to
common shareholders and earnings (loss) per common share have been restated.
The error was not material to the interim and annual financial statements.
2
Financial
Highlights - Unaudited
(Dollars in thousands, except per
share data)
|
|
Quarter
Ended
|
3rd
Qtr
|
|
Nine
Months Ended
|
YTD
|
|
|
September
30,
|
2011-2010
|
|
September
30,
|
2011-2010
|
|
|
2011
|
2010
|
%
Change
|
|
2011
|
2010
|
%
Change
|
|
Earnings Summary
|
|
|
|
|
|
|
|
|
|
Interest income
|
$
|
8,851
|
8,992
|
-1.6%
|
|
26,343
|
26,791
|
-1.7%
|
|
Interest expense
|
|
2,877
|
3,761
|
-23.5%
|
|
9,166
|
11,882
|
-22.9%
|
|
Net interest income
|
|
5,974
|
5,231
|
14.2%
|
|
17,177
|
14,909
|
15.2%
|
|
Provision for loan losses
|
|
1,670
|
1,275
|
31.0%
|
|
3,045
|
4,975
|
-38.8%
|
|
Noninterest income
|
|
723
|
147
|
391.8%
|
|
1,897
|
2,306
|
-17.7%
|
|
Noninterest expense
|
|
4,352
|
3,656
|
19.0%
|
|
13,674
|
11,778
|
16.1%
|
|
Income before provision for income taxes
|
|
675
|
447
|
51.0%
|
|
2,355
|
462
|
409.7%
|
|
Income tax expense
|
|
192
|
110
|
74.5%
|
|
706
|
12
|
5783.3%
|
|
Net income
|
|
483
|
337
|
43.3%
|
|
1,649
|
450
|
266.4%
|
|
Preferred stock dividends
|
|
216
|
216
|
0.0%
|
|
649
|
649
|
0.0%
|
|
Discount accretion (2)
|
|
70
|
66
|
6.1%
|
|
207
|
193
|
7.3%
|
|
Net income (loss) available to common shareholders (2)
|
$
|
197
|
55
|
258.2%
|
|
793
|
(392)
|
302.3%
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares (5)
|
|
3,474
|
3,457
|
0.5%
|
|
3,471
|
3,452
|
0.6%
|
|
Diluted weighted average common shares (5)
|
|
3,577
|
3,458
|
3.4%
|
|
3,559
|
3,452
|
3.1%
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share - Basic (2)(5)
|
$
|
0.06
|
0.02
|
200.0%
|
|
0.23
|
(0.11)
|
309.1%
|
|
Earnings (loss) per common share - Diluted (2)(5)
|
|
0.05
|
0.02
|
150.0%
|
|
0.22
|
(0.11)
|
300.0%
|
|
(2)
Net income to common shareholders and earnings per share for the prior
periods have been restated for a correction of an error.
|
|
(5) Common shares and earnings per share for the 2010 period
have been restated to reflect the 10% stock dividend in 2011.
|
|
|
|
|
YTD
|
|
|
|
|
|
|
September 30,
|
2011-2010
|
|
June 30,
|
|
December 31,
|
|
|
2011
|
2010
|
% Change
|
|
2011
|
|
2010
|
|
Balance Sheet Highlights
|
|
|
|
|
|
|
|
|
|
Assets
|
$
|
758,106
|
743,888
|
1.9%
|
|
758,102
|
|
736,490
|
|
Investment securities
|
|
89,040
|
92,124
|
-3.3%
|
|
93,865
|
|
72,853
|
|
Loans
|
|
591,055
|
579,848
|
1.9%
|
|
577,980
|
|
572,392
|
|
Allowance for loan losses
|
|
8,751
|
8,411
|
4.0%
|
|
8,719
|
|
8,386
|
|
Noninterest bearing deposits
|
|
61,647
|
49,172
|
25.4%
|
|
57,737
|
|
46,815
|
|
Interest bearing deposits
|
|
493,028
|
493,570
|
-0.1%
|
|
498,712
|
|
489,481
|
|
Total deposits
|
|
554,675
|
542,742
|
2.2%
|
|
556,449
|
|
536,296
|
|
Other borrowings
|
|
122,700
|
122,700
|
0.0%
|
|
122,700
|
|
122,700
|
|
Junior subordinated debentures
|
|
13,403
|
13,403
|
0.0%
|
|
13,403
|
|
13,403
|
|
Shareholders’ equity
|
|
61,868
|
60,106
|
2.9%
|
|
60,755
|
|
59,216
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
Book value per common share (2)
|
$
|
13.05
|
12.68
|
2.9%
|
|
12.75
|
|
12.41
|
|
Stock price:
|
|
|
|
|
|
|
|
|
|
High
|
|
10.43
|
6.59
|
58.3%
|
|
8.50
|
|
7.05
|
|
Low
|
|
6.80
|
5.41
|
25.7%
|
|
7.61
|
|
5.45
|
|
Period end
|
|
6.90
|
6.02
|
14.6%
|
|
8.50
|
|
6.78
|
|
Other
|
|
|
|
|
|
|
|
|
|
Return on average assets (6)
|
|
0.29%
|
0.08%
|
262.5%
|
|
0.31%
|
|
0.12%
|
|
Return on average equity (6)
|
|
3.61%
|
0.99%
|
264.6%
|
|
3.89%
|
|
1.47%
|
|
Loans to deposits
|
|
106.56%
|
106.84%
|
-0.3%
|
|
103.87%
|
|
106.73%
|
|
Efficiency ratio (7)
|
|
66.11%
|
70.74%
|
-6.5%
|
|
66.77%
|
|
69.70%
|
|
Team members
|
|
111
|
111
|
0.0%
|
|
113
|
|
104
|
|
(2)
Net income to common shareholders and earnings per share for the prior
periods have been restated for a correction of an error.
|
|
(6) Annualized based on
quarterly net income.
|
|
(7) 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
|
|
|
|
|
|
September 30,
|
2011-2010
|
|
June
30,
|
December
31,
|
|
|
2011
|
2010
|
Change
|
|
2011
|
2010
|
|
Commercial
|
|
|
|
|
|
|
|
|
Owner occupied RE
|
$
|
983
|
786
|
25.1%
|
|
800
|
1,183
|
|
Non-owner occupied RE
|
|
769
|
5,215
|
-85.3%
|
|
1,423
|
3,311
|
|
Construction
|
|
1,288
|
1,377
|
-6.5%
|
|
1,310
|
1,377
|
|
Commercial business
|
|
1,915
|
1,549
|
23.6%
|
|
2,315
|
1,781
|
|
Consumer
|
|
|
|
|
|
|
|
|
Real estate
|
|
1,134
|
595
|
90.6%
|
|
1,085
|
928
|
|
Home equity
|
|
385
|
324
|
18.8%
|
|
487
|
251
|
|
Construction
|
|
-
|
-
|
-
|
|
-
|
-
|
|
Other
|
|
4
|
7
|
-42.9%
|
|
21
|
7
|
|
Non-accruing troubled debt restructurings
|
|
2,740
|
498
|
450.2%
|
|
2,760
|
488
|
|
Total nonaccrual loans
|
|
9,218
|
10,351
|
-10.9%
|
|
10,201
|
9,326
|
|
Other
real estate owned
|
|
3,262
|
6,334
|
-48.5%
|
|
2,934
|
5,629
|
|
Total
nonperforming assets
|
$
|
12,480
|
16,685
|
-25.2%
|
|
13,135
|
14,955
|
|
Nonperforming
assets as a percentage of:
|
|
|
|
|
|
|
|
|
Total assets
|
|
1.65%
|
2.24%
|
-26.3%
|
|
1.73%
|
2.03%
|
|
Total loans
|
|
2.11%
|
2.88%
|
-26.7%
|
|
2.27%
|
2.61%
|
|
|
|
|
|
|
|
|
|
Loans
over 90 days past due
|
$
|
7,301
|
8,581
|
-14.9%
|
|
7,836
|
6,439
|
|
Accruing
troubled debt restructurings
|
|
3,691
|
-
|
100.0%
|
|
3,691
|
-
|
|
|
Quarter Ended
|
3rd
Qtr
|
|
Nine
Months Ended
|
YTD
|
|
|
September 30,
|
2011-2010
|
|
September 30,
|
2011-2010
|
|
|
2011
|
2010
|
Change
|
|
2011
|
2010
|
Change
|
|
Allowance
for Loan Losses
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
$
|
8,719
|
8,352
|
4.4%
|
|
8,386
|
7,760
|
8.1%
|
|
Loans charged-off
|
|
(1,654)
|
(1,222)
|
35.4%
|
|
(2,763)
|
(4,451)
|
-37.9%
|
|
Recoveries of loans previously charged-off
|
|
16
|
6
|
166.7%
|
|
83
|
127
|
-34.6%
|
|
Net loans charged-off
|
|
(1,638)
|
(1,216)
|
34.7%
|
|
(2,680)
|
(4,324)
|
-38.0%
|
|
Provision for loan losses
|
|
1,670
|
1,275
|
31.0%
|
|
3,045
|
4,975
|
-38.8%
|
|
Balance, end of period
|
$
|
8,751
|
8,411
|
4.0%
|
|
8,751
|
8,411
|
4.0%
|
|
|
|
|
|
|
|
|
|
|
Allowance
for loan losses to gross loans
|
|
1.48%
|
1.45%
|
2.1%
|
|
1.48%
|
1.45%
|
2.1%
|
|
Allowance for loan losses to nonperforming loans
|
|
94.94%
|
81.26%
|
16.8%
|
|
94.94%
|
81.26%
|
16.8%
|
|
Net
charge-offs to average loans (annualized)
|
|
1.11%
|
0.83%
|
33.7%
|
|
0.62%
|
1.00%
|
-38.0%
|
AVERAGE YIELD/RATE - Unaudited
|
|
Quarter
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
2011
|
2010
|
|
2011
|
2010
|
|
|
Yield/Rate(8)
|
|
Yield/Rate(8)
|
|
Interest-earning assets
|
|
|
|
|
|
|
Federal funds sold
|
0.23%
|
0.23%
|
|
0.24%
|
0.22%
|
|
Investment
securities, taxable
|
2.46%
|
2.64%
|
|
2.59%
|
3.25%
|
|
Investment
securities, nontaxable
|
4.82%
|
5.18%
|
|
5.22%
|
5.60%
|
|
Loans
|
5.59%
|
5.69%
|
|
5.69%
|
5.61%
|
|
Total
interest-earning assets
|
4.96%
|
5.13%
|
|
5.00%
|
5.15%
|
|
Interest-bearing liabilities
|
|
|
|
|
|
|
NOW accounts
|
0.95%
|
1.38%
|
|
1.11%
|
1.21%
|
|
Savings & money
market
|
0.78%
|
0.94%
|
|
0.81%
|
1.02%
|
|
Time deposits
|
1.83%
|
2.45%
|
|
1.99%
|
2.53%
|
|
Total
interest-bearing deposits
|
1.34%
|
1.91%
|
|
1.48%
|
2.00%
|
|
|
|
|
|
|
|
|
Note payable and
other borrowings
|
3.68%
|
4.18%
|
|
3.74%
|
4.32%
|
|
Junior subordinated
debentures
|
2.55%
|
2.81%
|
|
2.58%
|
2.65%
|
|
Total
interest-bearing liabilities
|
1.82%
|
2.38%
|
|
1.95%
|
2.51%
|
|
Net interest spread
|
3.14%
|
2.75%
|
|
3.06%
|
2.63%
|
|
Net interest income (tax equivalent) / margin
|
3.36%
|
3.00%
|
|
3.27%
|
2.87%
|
|
(8) Annualized for the respective
three and nine month periods.
|
4
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.
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.
5
