EX-99.1 2 exhibit99-1.htm EARNINGS PRESS RELEASE FOR THE PERIOD ENDED MARCH 31, 2015

Exhibit 99.1


Southern First Reports Results for First Quarter of 2015

Greenville, South Carolina, April 28, 2015 – Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today reported net income available to the common shareholders of $2.0 million, or $0.31 per diluted share for the first quarter of 2015. In comparison, net income available to common shareholders was $1.1 million, or $0.22 per diluted share, for the first quarter of 2014.

2015 First Quarter Highlights
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Net income to common shareholders increased 92% to $2.0 million for Q1 2015 compared to $1.1 million for Q1 2014

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Core deposits increased 21% to $627.1 million at Q1 2015, compared to $519.9 million at Q1 2014

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Loan balances increased 17% to $909.3 million at Q1 2015, compared to $775.8 million at Q1 2014

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Net interest margin improved to 3.72% for Q1 2015, compared to 3.71% for Q4 2014 and 3.68% for Q1 2014

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Total revenue increased 30% to $11.2 million for Q1 2015, compared to $8.6 million for Q1 2014

“Our team generated strong performance in the first quarter with record earnings of $2.0 million,” stated Art Seaver, the Company’s Chief Executive Officer. “Our focus on core deposits continues to generate impressive results with $42 million in growth in the first quarter of 2015.”

Quarter Ended
    March 31     December 31     September 30     June 30     March 31
2015 2014 2014 2014 2014
Earnings ($ in thousands, except per share data):
Net income $ 2,028 1,983 1,826 1,566 1,250
Net income available to common shareholders 2,028 1,766 1,573 1,313 1,057
Earnings per common share, diluted 0.31 0.30 0.31 0.26 0.22
Total revenue(1)   11,211 10,567 10,051 9,588 8,613
Net interest margin (tax-equivalent)(2) 3.72% 3.71%   3.66% 3.66% 3.68%
Efficiency ratio(3) 66.55% 63.93% 60.35% 65.86% 66.98%
Balance Sheet ($ in thousands):
Loans(4) $ 909,321   871,446 832,722 812,833 775,770
Core deposits(5) 627,131 585,083 557,417 536,213 519,863
Total deposits 850,310 788,907 772,760 747,369 722,412
Total assets      1,072,637 1,029,865 1,007,553 967,089 936,884
Holding Company Capital Ratios(6):
Total risk-based capital ratio 12.24% 12.42% 11.88% 11.91% 12.09%
Tier 1 risk-based capital ratio 10.99% 11.17% 10.63% 10.66% 10.84%
Leverage ratio 9.35% 9.52% 8.84% 9.01% 9.24%
Common equity tier 1 ratio(7) 9.53% 9.65% 7.57% 7.61% 7.70%
Tangible common equity(8) 7.96% 8.06% 6.19% 6.27% 6.25%
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets 0.85% 0.97% 1.14% 1.40% 1.07%
Net charge-offs as a percentage of average loans(4) (YTD    
annualized) 0.06% 0.33% 0.37% 0.28% 0.27%
Allowance for loan losses as a percentage of loans(4) 1.35% 1.35% 1.36% 1.37% 1.38%
Allowance for loan losses as a percentage of nonaccrual loans 187.61% 176.72% 141.99% 90.30% 120.99%
(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) March 31, 2015 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 first quarter of 2015 was 3.72%, compared to 3.71% for the prior quarter, and 3.68% for the first quarter of 2014. During the first quarter of 2015, our average interest-earning assets increased by $142.1 million, compared to the first quarter of 2014; however, the yield on our interest-earning assets declined by six basis points. In comparison, our average interest-bearing liabilities increased by $90.4 million during the first quarter of 2015, compared to the first quarter of 2014, with the respective cost declining by 9 basis points.

Noninterest income was $2.1 million and $969 thousand for the three months ended March 31, 2015 and 2014, respectively. The increase in noninterest income during the three month period ended March 31, 2015 relates primarily to increases in loan and mortgage fee income and other income, as well as a $259 thousand gain on sale of investment securities which occurred during the first quarter of 2015. A significant portion of our loan fee income relates to income derived from mortgage originations which was $1.2 million for the three months ended March 31, 2015, compared to mortgage origination income of $304 thousand for the three months ended March 31, 2014.

Noninterest expense was $7.5 million and $5.8 million for the three months ended March 31, 2015 and 2014, respectively. The increase in noninterest expense during the 2015 period relates primarily to increases in salaries and benefits and other real estate owned expenses.

During the first quarter of 2015, we recorded total credit costs of $1.4 million compared to $1.0 million during the first quarter of 2014. The $1.4 million in credit costs during the first quarter of 2015 related primarily to the $625 thousand provision for loan losses, combined with expenses of $763 thousand related to the sale and management of other real estate owned. In addition, net loan charge-offs for the first quarter of 2015 were $145 thousand, or 0.06% of average loans on an annual basis, and related primarily to two commercial relationships. Comparatively, the $1.0 million in credit costs during the first quarter of 2014 related primarily to the $1.0 million provision for loan losses, combined with $13 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the first quarter of 2014 were $500 thousand, or 0.27% of average loans on an annual basis, and related primarily to two specific loans. Our allowance for loan losses was $12.2 million, or 1.35% of loans, at March 31, 2015 which provides approximately 188% coverage of nonaccrual loans, compared to $10.7 million, or 1.38% of loans, and approximately 121% coverage of nonaccrual loans at March 31, 2014.

Nonperforming assets were $9.1 million, or 0.85% of total assets, as of March 31, 2015. Comparatively, nonperforming assets were $10.0 million, or 0.97% of total assets, at December 31, 2014, and $10.0 million, or 1.07% of total assets, at March 31, 2014. Of the $9.1 million in total nonperforming assets as of March 31, 2015, nonperforming loans represent $6.5 million and other real estate owned represents $2.6 million. Classified assets improved to 20% of tier 1 capital plus the allowance for loan losses at March 31, 2015, compared to 34% at March 31, 2014.

Gross loans were $909.3 million, excluding loans held for sale, as of March 31, 2015, compared to $871.4 million at December 31, 2014, and $775.8 million at March 31, 2014. Of the $37.9 million of loan growth during 2015, $20.0 million was in the Greenville market, $11.4 million was in the Columbia market, and $6.5 million was in the Charleston market. Core deposits, which exclude out-of-market deposits and time deposits of $100,000 or more, increased to $627.1 million at March 31, 2015 compared to $585.1 million at December 31, 2014, and $519.9 million at March 31, 2014. During 2015, core deposits grew by $42.0 million with growth of $29.0 million in the Greenville market, $4.3 million in the Columbia market, and $8.7 million in the Charleston market.

Shareholders’ equity totaled $85.4 million as of March 31, 2015, compared to $83.0 million at December 31, 2014, and $69.8 million as of March 31, 2014. As of March 31, 2015, our capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.

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FINANCIAL HIGHLIGHTS - Unaudited

Quarter Ended 1st Qtr Quarter Ended
March 31 2015-2014 December 31 September 30 June 30
(in thousands, except per share data)    2015    2014    % Change    2014    2014    2014
Earnings Summary
Interest income $ 10,801 9,344 15.6 % 10,560 10,253 9,790
Interest expense 1,731 1,700 1.8 % 1,726 1,762 1,720
Net interest income 9,070 7,644 18.7 % 8,834 8,491 8,070
Provision for loan losses 625 1,000 (37.5 )% 900 1,325 950
Noninterest income 2,141 969 120.9 % 1,733 1,560 1,518
Noninterest expense 7,461 5,769 29.3 % 6,756 6,066 6,315
Income before provision for income taxes 3,125 1,844 69.5 % 2,911 2,660 2,323
Income tax expense 1,097 594 84.7 % 928 834 757
Net income 2,028 1,250 62.2 % 1,983 1,826 1,566
Preferred stock dividends - 193   (100.0 )% 217 253 253
Redemption of preferred stock - - - - - -
Net income available to common shareholders $ 2,028 1,057 91.9 % 1,766 1,573 1,313
 
Basic weighted average common shares 6,225 4,610 35.0 % 5,587 4,830 4,763
Diluted weighted average common shares 6,515 4,877 33.6 % 5,840 5,046 5,037
 
Earnings per common share – Basic $ 0.33 0.23 43.5 % 0.32 0.33 0.28
Earnings per common share – Diluted 0.31 0.22 40.9 % 0.30 0.31 0.26
 
Quarter Ended 1st Qtr Quarter Ended
March 31 2015-2014 December 31 September 30 June 30
(in thousands, except per share data) 2015 2014 % Change 2014 2014 2014
Balance Sheet Highlights
Assets $ 1,072,637 936,884 14.5 % 1,029,865 1,007,553 967,089
Investment securities 54,033 74,707 (27.7 )% 61,546 63,391 64,678
Mortgage loans held for sale 14,844 3,028 390.2 % 11,765 9,372 7,189
Loans 909,321 775,770 17.2 % 871,446 832,722 812,833
Allowance for loan losses 12,241 10,713 14.3 % 11,752 11,305 11,103
Other real estate owned 2,570 1,148 123.9 % 3,307 3,549 1,277
     Noninterest bearing deposits 152,589 116,363 31.1 % 139,904 131,948 123,548
     Interest bearing deposits 697,721 606,049 15.1 % 649,003 640,812 623,821
Total deposits 850,310 722,412 17.7 % 788,907 772,760 747,369
Other borrowings 115,200 124,100 (7.2 )% 135,200 139,600 127,100
Junior subordinated debentures 13,403 13,403 - 13,403 13,403 13,403
Tangible common equity 85,353 58,533 45.8 % 82,992 62,350 60,644
Preferred stock - 11,242 (100.0 )% - 11,242 11,242
Total shareholders’ equity 85,353 69,775 22.3 % 82,992 73,592 71,886
Common Stock
Book value per common share $ 13.70 12.15 12.8 % 13.34 12.91 12.56
Stock price:
     High 18.60 13.94 33.4 % 17.99 14.25 13.88
     Low 15.78 13.05 20.9 % 13.80 13.50 13.09
     Period end 17.00 13.87 22.6 % 17.02 13.94 13.46
Common shares outstanding 6,231 4,818 29.3 % 6,219 4,830 4,830
Other
Return on average assets(9) 0.78% 0.56% 39.3 % 0.78% 0.74% 0.65%
Return on average equity(9) 9.67% 7.35% 31.6 % 9.46% 9.86% 8.80%
Loans to deposits 106.94% 107.39% (0.4 )% 110.46% 107.76% 108.76%
Team members 162 140 15.7 % 158 156 151
Average Balances ($ in thousands):
Loans(4) $ 891,481 753,630 18.3 % 852,250 827,986 798,410
Deposits 818,275 688,809 18.8 % 770,922 760,465 725,025
Assets   1,049,049 901,642 16.3 % 1,005,563 979,929 942,377
Equity 85,088 69,003 23.3 % 83,132 73,506 71,409
(9)  Annualized based on quarterly net income.

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ASSET QUALITY MEASURES - Unaudited
 
Quarter Ended
March 31 December 31 September 30 June 30 March 31
(dollars in thousands)     2015     2014     2014        2014     2014
Nonperforming Assets
Commercial
     Owner occupied RE $      280 322 640 671 1,191
     Non-owner occupied RE 3,167 2,344 2,877 3,686 339
     Construction - 783 855 849 887
     Commercial business 1,130 1,408 745 730 542
Consumer
     Real estate 457 457 488 488 528
     Home equity 188 188 188 - -
     Construction - - - - -
     Other 2 1 3 1 2
Nonaccruing troubled debt restructurings 1,301 1,147 2,166 5,871 5,365
Total nonaccrual loans 6,525 6,650 7,962     12,296 8,854
Other real estate owned 2,570 3,307 3,549 1,277 1,148
Total nonperforming assets $ 9,095 9,957           11,511 13,573       10,002
Nonperforming assets as a percentage of:  
     Total assets 0.85% 0.97% 1.14% 1.40% 1.07%
     Total loans 1.00%      1.14% 1.38% 1.67% 1.29%
Accruing troubled debt restructurings $ 8,336 8,562 7,216 6,479 7,774

Quarter Ended
March 31 December 31 September 30 June 30 March 31
    2015     2014     2014     2014     2014
Allowance for Loan Losses
Balance, beginning of period $  11,752 11,305 11,103 10,713 10,213
Loans charged-off (145 ) (584 ) (1,138 ) (652 ) (512 )
Recoveries of loans previously charged-off 9 131 15 92 12
     Net loans charged-off (136 ) (453 ) (1,123 ) (560 ) (500 )
Provision for loan losses 625 900 1,325 950 1,000
Balance, end of period $ 12,241 11,752 11,305 11,103 10,713
Allowance for loan losses to gross loans 1.35 % 1.35 % 1.36 % 1.37 % 1.38 %
Allowance for loan losses to nonaccrual loans 187.61 % 176.72 % 141.99 % 90.30 % 120.99 %
Net charge-offs to average loans QTD (annualized) 0.06 % 0.21 % 0.54 % 0.28 % 0.27 %

AVERAGE YIELD/RATE - Unaudited
 
Quarter Ended
March 31 December 31 September 30 June 30 March 31
      2015       2014       2014       2014       2014
Yield/Rate(10)
Interest-earning assets
Federal funds sold      0.29% 0.26% 0.26%      0.27%      0.24%
Investment securities, taxable 2.61% 2.57% 2.46% 2.62% 2.88%
Investment securities, nontaxable 4.35% 4.23% 4.12% 4.14% 4.22%
Loans(11) 4.67% 4.67% 4.71% 4.68% 4.75%
     Total interest-earning assets 4.43% 4.43% 4.41% 4.43% 4.49%
Interest-bearing liabilities
NOW accounts 0.18% 0.16% 0.16% 0.14% 0.16%
Savings & money market 0.35% 0.34% 0.33% 0.31% 0.30%
Time deposits 0.72% 0.73% 0.71% 0.73% 0.74%
     Total interest-bearing deposits 0.46% 0.46% 0.45% 0.46% 0.47%
Note payable and other borrowings 2.87% 2.80% 3.06% 3.02% 3.07%
Junior subordinated debentures 2.42% 2.40% 2.40% 2.39% 2.42%
     Total interest-bearing liabilities 0.86% 0.88% 0.91% 0.93% 0.95%
Net interest spread 3.57% 3.55% 3.50% 3.50% 3.54%
Net interest income (tax equivalent) / margin 3.72% 3.71% 3.66% 3.66% 3.68%
(10)   Annualized for the respective three month period.
(11) Includes loans held for sale.

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NONINTEREST INCOME & EXPENSE - Unaudited
 
Quarter Ended 1st Qtr Quarter Ended
March 31 2015-2014 December 31 September 30 June 30
(dollars in thousands)       2015       2014       % Change       2014       2014       2014
Noninterest income
Loan and mortgage fee income $      1,196 342 249.7 % 1,039 861 613
Service fees on deposit accounts 227 213 6.6 % 234 244 231
Income from bank owned life insurance 166 162 2.5 % 169 169 167
Gain on sale of investment securities 259 - 100.0 % - - 230
Other income 293 252 16.3 % 291 286 277
     Total noninterest income $ 2,141 969 120.9 % 1,733 1,560 1,518
  
Noninterest expense
Compensation and benefits $ 4,277 3,410 25.4 % 3,658 3,459        3,514
Occupancy 737 727 1.4 % 743 777 730
Real estate owned activity 763 13 5769.2 % 551 71 12
Data processing and related costs 585 594 (1.5 )% 673 625 622
Insurance 202 192 5.2 % 228 209 203
Professional fees 233 223 4.5 % 228 207 294
Marketing 238 201 18.4 % 184 193 197
Other 426 409 4.2 % 491 525 743
     Total noninterest expenses $ 7,461 5,769 29.3 % 6,756 6,066 6,315

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 $1.1 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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