EX-99.1 2 exhibit99-1.htm EARNINGS PRESS RELEASE FOR THE PERIOD ENDED DECEMBER 31, 2014

Exhibit 99.1



Southern First Reports Results for Fourth Quarter of 2014

Greenville, South Carolina, January 27, 2015 – Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today reported net income available to the common shareholders of $1.8 million, or $0.30 per diluted share for the fourth quarter of 2014. In comparison, net income available to common shareholders was $1.2 million, or $0.27 per diluted share, for the fourth quarter of 2013. For the twelve months ended December 31, 2014, net income to common shareholders was $5.7 million, or $1.10 per diluted share. In comparison, net income available to common shareholders for the twelve months ended December 31, 2013 was $4.4 million, or $0.98 per diluted share.

2014 Fourth Quarter Highlights
● Net income to common shareholders increased 42% to $1.8 million for Q4 2014 compared to $1.2 million for Q4 2013
● Loan balances increased 18.8% to $871.4 million at Q4 2014, compared to $733.7 million at Q4 2013
● Core deposits increased 21.4% to $585.1 million at Q4 2014, compared to $482.0 million at Q4 2013
● Net interest margin improved to 3.71% for Q4 2014, compared to 3.66% for Q3 2014 and 3.71% for Q4 2013
● Total revenue increased 22.3% to $10.6 million for Q4 2014, compared to $8.6 million for Q4 2013
● Completion of $18.4 million public common stock offering and redemption of remaining $11.2 million preferred stock

Quarter Ended
       December 31        September 30        June 30        March 31        December 31   
2014 2014 2014 2014 2013
Earnings ($ in thousands, except per share data):                                                                                                              
Net income $ 1,983 1,826 1,566 1,250   1,439
Net income available to common shareholders 1,766 1,573 1,313 1,057 1,248
Earnings per common share, diluted 0.30 0.31 0.26 0.22 0.27
Total revenue(1) 10,567 10,051 9,588 8,613 8,637
Net interest margin (tax-equivalent)(2) 3.71% 3.66% 3.66% 3.68% 3.71%
Efficiency ratio(3) 63.93% 60.35% 65.86% 66.98% 66.82%
Balance Sheet ($ in thousands):      
Loans(4) $ 871,446 832,722 812,833 775,770 733,656
Core deposits(5) 585,083 557,417 536,213 519,863 481,967
Total deposits 788,907 772,760   747,369 722,412 680,319
Total assets        1,029,865   1,007,553 967,089 936,884 890,831  
Holding Company Capital Ratios(6):
Total risk-based capital ratio 12.42% 11.88% 11.91% 12.09% 12.22%
Tier 1 risk-based capital ratio 11.17% 10.63% 10.66% 10.84% 10.96%
Leverage ratio 9.52% 8.84% 9.01% 9.24% 9.13%
Common equity tier 1 ratio(7) 9.65% 7.57% 7.61% 7.70% 7.09%
Tangible common equity(8) 8.06% 6.19% 6.27% 6.25% 5.65%
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets 0.97% 1.14% 1.40% 1.07% 1.07%
Net charge-offs as a percentage of average loans(4) (YTD annualized) 0.33% 0.37% 0.28% 0.27% 0.34%
Allowance for loan losses as a percentage of loans(4) 1.35% 1.36% 1.37% 1.38% 1.39%
Allowance for loan losses as a percentage of nonaccrual loans 176.72% 141.99% 90.30% 120.99% 122.50%
(1) Total revenue is the sum of net interest income and noninterest income.
(2) 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.
(3) Noninterest expense divided by the sum of net interest income and noninterest income.
(4) Excludes loans held for sale.
(5) Excludes out of market deposits and time deposits greater than $100,000.
(6) December 31, 2014 ratios are preliminary.
(7) The common equity tier 1 ratio is calculated as the sum of common equity divided by risk-weighted assets.
(8) The tangible common equity ratio is calculated as total equity less preferred stock divided by total assets.

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Operating Results
Net interest margin for the fourth quarter of 2014 was 3.71%, compared to 3.66% for the prior quarter, and 3.71% for the fourth quarter of 2013. During the fourth quarter of 2014, our average interest-earning assets increased by $124.1 million, compared to the fourth quarter of 2013; however, the yield on our interest-earning assets declined by 10 basis points. In comparison, our average interest-bearing liabilities increased by $71.3 million during the fourth quarter of 2014, compared to the fourth quarter of 2013, with the respective cost declining by 9 basis points.

Noninterest income was $1.7 million and $987 thousand for the three months ended December 31, 2014 and 2013, respectively. For the year ended December 31, 2014 and 2013, noninterest income was $5.8 million and $3.8 million, respectively. The increase in noninterest income during the three and twelve month periods ended December 31, 2014 relates primarily to increases in loan fee income and other income, as well as a $230 thousand gain on sale of investment securities which occurred during the second quarter of 2014. A significant portion of our loan fee income relates to income derived from mortgage originations which was $999 thousand and $2.7 million for the three and twelve months ended December 31, 2014, respectively. Comparatively, mortgage origination income was $272 thousand and $1.1 million for the three and twelve months ended December 31, 2013, respectively.

Noninterest expense was $6.8 million and $5.8 million for the three months ended December 31, 2014 and 2013, respectively, and $24.9 million and $21.8 million for the year ended December 31, 2014 and 2013, respectively. The increase in noninterest expense during the 2014 period relates primarily to increases in salaries and benefits, other real estate owned expenses and other noninterest expense.

During the fourth quarter of 2014, we recorded total credit costs of $1.5 million compared to $974 thousand during the fourth quarter of 2013. The $1.5 million in credit costs during the fourth quarter of 2014 related primarily to the $900 thousand provision for loan losses, combined with expenses of $551 thousand related to the sale and management of other real estate owned. In addition, net loan charge-offs for the fourth quarter of 2014 were $453 thousand, or 0.21% of average loans on an annual basis, and related primarily to two commercial and two consumer relationships. Comparatively, the $974 thousand in credit costs during the fourth quarter of 2013 related primarily to the $825 thousand provision for loan losses, combined with $149 thousand of expenses related to the sale and management of other real estate owned. For the year ended December 31, 2014, total credit costs were $4.8 million, consisting of $4.2 million provision for loan losses and expenses of $647 thousand for the sale and management of other real estate owned. For the year ended December 31, 2013, total credit costs were $3.7 million, consisting of $3.5 million provision for loan losses and expenses of $179 thousand from the sale and management of other real estate owned. Our allowance for loan losses was $11.8 million, or 1.35% of loans, at December 31, 2014 which provides approximately 177% coverage of nonaccrual loans, compared to $10.2 million, or 1.39% of loans, and approximately 123% coverage of nonaccrual loans at December 31, 2013.

Nonperforming assets were $10.0 million, or 0.97% of total assets, as of December 31, 2014. Comparatively, nonperforming assets were $11.5 million, or 1.14% of total assets, at September 31, 2014, and $9.5 million, or 1.07% of total assets, at December 31, 2013. Of the $10.0 million in total nonperforming assets as of December 31, 2014, nonperforming loans represent $6.7 million and other real estate owned represents $3.3 million. Classified assets improved to 22% of tier 1 capital plus the allowance for loan losses at December 31, 2014, compared to 30% at December 31, 2013.

Gross loans were $871.4 million, excluding loans held for sale, as of December 31, 2014, compared to $733.7 million at December 31, 2013. Of the $137.8 million of loan growth during 2014, $47.0 million was in the Greenville market, $41.9 million was in the Columbia market, and $48.9 million was in the Charleston market. Core deposits, which exclude out-of-market deposits and time deposits of $100,000 or more, increased to $585.1 million at December 31, 2014 compared to $482.0 million at December 31, 2013. During 2014, core deposits grew by $103.1 million with growth of $58.9 in the Greenville market, $8.2 in the Columbia market, and $36.0 in the Charleston market.

Shareholders’ equity totaled $83.0 million as of December 31, 2014, compared to $65.7 million at December 31, 2013. The $17.3 million increase during 2014 is due primarily to a public common stock offering for net proceeds of $18.4 million, a private placement stock offering for net proceeds of $5.9 million and net income to common shareholders of $5.7 million, partially offset with the redemption of $15.3 million of preferred stock. As of December 12, 2014, we have completed the repurchase of the Series T preferred stock originally issued to the U.S. Department of the Treasury under the TARP Capital Purchase Program. As of December 31, 2014, our capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.

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FINANCIAL HIGHLIGHTS - Unaudited

Quarter Ended 4th Qtr Twelve Months Ended YTD
December 31 2014-2013 December 31 2014-2013
(in thousands, except per share data)        2014        2013        % Change        2014        2013        % Change    
Earnings Summary
Interest income $ 10,560 9,363 12.8% 39,948 36,118 10.6%
Interest expense 1,726 1,714 0.7% 6,908 7,097 (2.7)%  
Net interest income 8,834 7,649 15.5% 33,040 29,021 13.8%
Provision for loan losses 900 825 9.1%   4,175 3,475   20.1%
Noninterest income 1,733 987 75.6% 5,780 3,802 52.0%
Noninterest expense 6,756 5,771 17.1% 24,907 21,812 14.2%
Income before provision for income taxes 2,911 2,040 42.7% 9,738 7,536 29.2%
Income tax expense   928 601   54.4% 3,113   2,416 28.8%
Net income 1,983   1,439 37.8% 6,625 5,120 29.4%
Preferred stock dividends 217 191 13.6% 915 771 18.7%
Redemption of preferred stock - - - - 20 n/m
Net income available to common shareholders $ 1,766 1,248 41.5% 5,710 4,369 30.7%
Basic weighted average common shares 5,587 4,317 29.4% 4,981 4,280 16.4%
Diluted weighted average common shares 5,840 4,551 28.3% 5,201 4,459 16.6%
Earnings per common share – Basic $ 0.32 0.29 10.3% 1.15 1.02 12.7%
Earnings per common share – Diluted 0.30 0.27 11.1% 1.10 0.98 12.2%
 
Quarter Ended 4th Qtr Quarter Ended
December 31 2014-2013 September 30 June 30 March 31
(in thousands, except per share data) 2014 2013 % Change 2014 2014 2014
Balance Sheet Highlights
Assets $ 1,029,865 890,831 15.6% 1,007,553 967,089 936,884
Investment securities 61,546 73,556 (16.3)% 63,391 64,678 74,707
Mortgage loans held for sale 11,765 3,611 225.8% 9,372 7,189 3,028
Loans 871,446 733,656 18.8% 832,722 812,833 775,770
Allowance for loan losses 11,752 10,213 15.1% 11,305 11,103 10,713
Other real estate owned 3,307 1,198 176.0% 3,549 1,277 1,148
       Noninterest bearing deposits 139,904 101,971 37.2% 131,948 123,548 116,363
       Interest bearing deposits 649,003 578,348 12.2% 640,812 623,821 606,049
Total deposits 788,907 680,319 16.0% 772,760 747,369 722,412
Other borrowings 135,200 124,100 8.9% 139,600 127,100 124,100
Junior subordinated debentures 13,403 13,403 - 13,403 13,403 13,403
Tangible common equity 82,992 50,366 64.8% 62,350 60,644 58,533
Preferred stock - 15,299 (100.0)% 11,242 11,242 11,242
Total shareholders’ equity 82,992 65,665 26.4% 73,592 71,886 69,775
Common Stock
Book value per common share $ 13.34 11.66 14.4% 12.91 12.56 12.15
Stock price:
       High 17.99 13.98 28.7% 14.25 13.88 13.94
       Low 13.80 12.81 7.7% 13.50 13.09 13.05
       Period end 17.02 13.28 28.2% 13.94 13.46 13.87
Common shares outstanding 6,219 4,320 44.0% 4,830 4,830 4,818
Other
Return on average assets(9) 0.78% 0.65% 20.0% 0.74% 0.65% 0.56%
Return on average equity(9) 9.46% 8.65% 9.4% 9.86% 8.80% 7.35%
Loans to deposits 110.46% 107.84% 2.4% 107.76% 108.76% 107.39%
Team members 158 140 12.9% 156 151 140
Average Balances ($ in thousands):
Loans(4) $ 852,250 725,776 17.4% 827,986 798,410 753,630
Deposits 770,922 656,063 17.5% 760,465 725,025 688,809
Assets 1,005,563 876,583 14.7% 979,929 942,377 901,642
Equity 83,132 65,992 26.0% 73,506 71,409 69,003
(9)  Annualized based on quarterly net income.

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ASSET QUALITY MEASURES - Unaudited

Quarter Ended
      December 31       September 30       June 30       March 31       December 31
(dollars in thousands) 2014 2014 2014 2014 2013
Nonperforming Assets                                                                                                              
Commercial
       Owner occupied RE $ 322 640 671 1,191 1,199
       Non-owner occupied RE 2,344 2,877 3,686 339 373
       Construction 783 855 849   887 914
       Commercial business 1,408 745 730 542 712
Consumer
       Real estate 457 488 488 528 76
       Home equity 188   188 - - 77
       Construction - - - -   -
       Other 1 3 1 2 3
Nonaccruing troubled debt restructurings 1,147 2,166 5,871 5,365 4,983
Total nonaccrual loans 6,650 7,962 12,296 8,854 8,337
Other real estate owned   3,307 3,549   1,277 1,148 1,198
Total nonperforming assets $ 9,957 11,511 13,573 10,002 9,535
Nonperforming assets as a percentage of:  
       Total assets 0.97% 1.14% 1.40% 1.07% 1.07%
       Total loans 1.14% 1.38% 1.67% 1.29% 1.30%
Accruing troubled debt restructurings $ 8,562 7,216 6,479 7,774 8,045
 
Quarter Ended
December 31 September 30 June 30 March 31 December 31
      2014       2014       2014       2014       2013
Allowance for Loan Losses
Balance, beginning of period $ 11,305 11,103 10,713 10,213 9,816
Loans charged-off (584 ) (1,138 ) (652 )   (512 ) (444 )
Recoveries of loans previously charged-off   131   15 92   12 16
       Net loans charged-off (453 ) (1,123 ) (560 ) (500 ) (428 )
Provision for loan losses   900 1,325 950 1,000 825
Balance, end of period $ 11,752   11,305 11,103 10,713 10,213
Allowance for loan losses to gross loans 1.35% 1.36%   1.37% 1.38%   1.39%
Allowance for loan losses to nonaccrual loans           176.72%           141.99%             90.30%           120.99%           122.50%
Net charge-offs to average loans QTD (annualized) 0.21% 0.54% 0.28% 0.27%   0.23%
 
AVERAGE YIELD/RATE - Unaudited
                               
Quarter Ended
December 31 September 30 June 30 March 31 December 31
      2014       2014       2014       2014       2013
Yield/Rate(10)
Interest-earning assets
Federal funds sold 0.26% 0.26% 0.27% 0.24% 0.25%
Investment securities, taxable 2.57% 2.46% 2.62% 2.88% 2.45%
Investment securities, nontaxable 4.23% 4.12% 4.14% 4.22% 4.18%
Loans(11) 4.67% 4.71% 4.68% 4.75% 4.85%
       Total interest-earning assets 4.43% 4.41% 4.43% 4.49% 4.53%
Interest-bearing liabilities
NOW accounts 0.16% 0.16% 0.14% 0.16% 0.21%
Savings & money market 0.34% 0.33% 0.31%   0.30% 0.30%
Time deposits 0.73% 0.71% 0.73% 0.74% 0.73%
       Total interest-bearing deposits 0.46% 0.45% 0.46% 0.47% 0.47%
Note payable and other borrowings 2.80% 3.06% 3.02% 3.07% 2.87%
Junior subordinated debentures 2.40% 2.40% 2.39% 2.42% 2.40%
       Total interest-bearing liabilities               0.88%                 0.91% 0.93%       0.95%                0.97%
Net interest spread   3.55% 3.50%   3.50% 3.54% 3.56%
Net interest income (tax equivalent) / margin 3.71% 3.66% 3.66% 3.68% 3.71%

(10) Annualized for the respective three month period.
(11) Includes loans held for sale.

  

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NONINTEREST INCOME & EXPENSE - Unaudited

Quarter Ended 4th Qtr Twelve Months Ended YTD
December 31 2014-2013 December 31 2014-2013
(dollars in thousands) 2014       2013       % Change       2014       2013       % Change
Noninterest income
Loan fee income $ 1,039 311 234.1 % 2,854 1,235 131.1 %
Service fees on deposit accounts 234 244 (4.1 )% 923 879 5.0 %
Income from bank owned life insurance 169 160 5.6 % 667 658 1.4 %
Gain on sale of investment securities - - 0.0 % 230 - 100.0 %
Other income 291 272 7.0 % 1,106 1,030 7.4 %
     Total noninterest income $ 1,733 987 75.6 % 5,780 3,802 52.0 %
Noninterest expense
Compensation and benefits $ 3,658 3,198 14.4 % 14,043 12,302 14.2 %
Occupancy 743 850 (12.6 )% 2,978 3,056 (2.6 )%
Real estate owned expenses 551 149    269.8 % 647 179    261.5 %
Data processing and related costs 673 625 7.7 % 2,514 2,406 4.5 %
Insurance 228 205 11.2 % 832 818 1.7 %
Professional fees 228   249   (8.4 )%   952 858 11.0 %
Marketing 184 155 18.7 % 774   731   5.9 %
Other   491 340 44.4 % 2,167 1,462 48.2 %
     Total noninterest expenses $      6,756    5,771 17.1 % 24,907 21,812 14.2 %

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, the sixth largest bank headquartered in South Carolina. Southern First Bancshares has been providing financial services since 1999 and now operates in nine locations in the Greenville, Columbia, and Charleston markets of South Carolina. Southern First Bancshares has assets of approximately $1.0 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.

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 are 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 United States 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.

 

FINANCIAL CONTACT: MIKE DOWLING 864-679-9070
MEDIA CONTACT: ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com

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