8-K
SOUTHERN FIRST BANCSHARES INC (SFST)
| UNITED STATES |
|---|
| SECURITIES AND EXCHANGE COMMISSION |
| WASHINGTON, DC 20549 |
| FORM 8-K |
| CURRENT REPORT PURSUANT |
| TO SECTION 13 OR 15(D) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
Date of report (Date of earliest event reported) April 25, 2023
| Southern First Bancshares, Inc. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| South Carolina | ||
| --- | --- | |
| (State or other jurisdiction of incorporation) | ||
| 000-27719 | 58-2459561 | |
| --- | --- | --- |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 6Verdae Boulevard, Greenville, SC | 29607 | |
| (Address of principal executive offices) | (Zip Code) | |
| (864) 679-9000 | ||
| --- | --- | |
| (Registrant's telephone number, including area code) | ||
| 100Verdae Boulevard, Suite 100, Greenville, SC | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to<br> Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the<br> Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b)<br> under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c)<br> under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | SFST | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. Results of Operations and FinancialCondition.
On April 25, 2023, Southern First Bancshares, Inc., holding company for Southern First Bank, issued a press release announcing its financial results for the period ended March 31, 2023. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 7.01 Regulation FD Disclosure.
A copy of a slide presentation also highlighting Southern First Bancshares, Inc. financial results for the period ended March 31, 2023 is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slide presentation also will be available on our website, www.southernfirst.com, under the “Investor Relations” section.
ITEM 9.01. Financial Statements and Exhibits.
| (d) Exhibits | The following exhibit index lists the exhibits that are either filed or furnished with the Current Report on Form 8-K. |
|---|
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Earnings Press Release for period ended March 31, 2023. |
| 99.2 | Slide Presentation. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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.
| SOUTHERN FIRST BANCSHARES, INC. | ||
|---|---|---|
| By: | /s/ D. Andrew Borrmann | |
| Name: | D. Andrew Borrmann | |
| Title: | Chief Financial Officer | |
| April 25, 2023 |
Exhibit 99.1
Southern First Reports Results for First Quarter 2023
Greenville,South Carolina, April 25, 2023 – Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today announced its financial results for the three-month period ended March 31, 2023.
“While the current interest rate environment continues to be challenging in terms of margin and earnings, we are excited about the outstanding retail deposit growth and record number of client accounts opened during the first quarter of 2023,” stated Art Seaver, the Company’s Chief Executive Officer. “We continue to enjoy strong momentum in attracting new clients and recruiting great bankers, which will have a lasting impact on the performance of our Company.”
2023 First Quarter Highlights
| · | Net income was $2.7 million and diluted earnings per common share were $0.33 for Q1 2023 | ||||
|---|---|---|---|---|---|
| · | Total deposits increased 27% to $3.4 billion at Q1 2023, compared to $2.7 billion at Q1 2022 | ||||
| --- | --- | ||||
| · | Total loans increased 28% to $3.4 billion at Q1 2023, compared to $2.7 billion at Q1 2022 | ||||
| --- | --- | ||||
| · | Book value per common share increased to $37.16 at Q1 2023, or 6%, over Q1 2022 | ||||
| --- | --- | ||||
| · | Record number of new account openings during Q1 2023 | ||||
| --- | --- | ||||
| Quarter Ended | |||||
| --- | --- | --- | --- | --- | --- |
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| 2023 | 2022 | 2022 | 2022 | 2022 | |
| Earnings<br> ( in thousands, except per share data): | |||||
| Net<br> income available to common shareholders | 2,703 | 5,492 | 8,413 | 7,240 | 7,970 |
| Earnings<br> per common share, diluted | 0.33 | 0.68 | 1.05 | 0.90 | 0.98 |
| Total<br> revenue(1) | 22,468 | 25,826 | 28,134 | 27,149 | 26,091 |
| Net<br> interest margin (tax-equivalent)(2) | 2.36% | 2.88% | 3.19% | 3.35% | 3.37% |
| Return<br> on average assets(3) | 0.30% | 0.63% | 1.00% | 0.92% | 1.10% |
| Return<br> on average equity(3) | 3.67% | 7.44% | 11.57% | 10.31% | 11.60% |
| Efficiency<br> ratio(4) | 76.12% | 63.55% | 57.03% | 58.16% | 56.28% |
| Noninterest<br> expense to average assets (3) | 1.89% | 1.87% | 1.92% | 2.02% | 2.03% |
| Balance<br> Sheet ( in thousands): | |||||
| Total<br> loans(5) | 3,417,945 | 3,273,363 | 3,030,027 | 2,845,205 | 2,660,675 |
| Total<br> deposits | 3,426,774 | 3,133,864 | 3,001,452 | 2,870,158 | 2,708,174 |
| Core<br> deposits(6) | 2,946,567 | 2,759,112 | 2,723,592 | 2,588,283 | 2,541,113 |
| Total<br> assets | 3,938,140 | 3,691,981 | 3,439,669 | 3,287,663 | 3,073,234 |
| Book<br> value per common share | 37.16 | 36.76 | 35.99 | 35.39 | 34.90 |
| Loans<br> to deposits | 99.74% | 104.45% | 100.95% | 99.13% | 98.25% |
| Holding<br> Company Capital Ratios(7): | |||||
| Total<br> risk-based capital ratio | 12.67% | 12.91% | 13.58% | 13.97% | 14.37% |
| Tier<br> 1 risk-based capital ratio | 10.66% | 10.88% | 11.49% | 11.83% | 12.18% |
| Leverage<br> ratio | 8.77% | 9.17% | 9.44% | 9.71% | 10.12% |
| Common<br> equity tier 1 ratio(8) | 10.23% | 10.44% | 11.02% | 11.33% | 11.65% |
| Tangible<br> common equity(9) | 7.60% | 7.98% | 8.37% | 8.60% | 9.06% |
| Asset<br> Quality Ratios: | |||||
| Nonperforming<br> assets/ total assets | 0.12% | 0.07% | 0.08% | 0.09% | 0.15% |
| Classified<br> assets/tier one capital plus allowance for credit losses | 5.10% | 4.71% | 5.24% | 7.29% | 7.83% |
| Loans<br> 30 days or more past due/ loans(5) | 0.11% | 0.11% | 0.07% | 0.10% | 0.13% |
| Net<br> charge-offs (recoveries)/average loans(5) (YTD annualized) | 0.01% | (0.05%) | (0.06%) | 0.02% | 0.00% |
| Allowance<br> for credit losses/loans(5) | 1.18% | 1.18% | 1.20% | 1.20% | 1.24% |
| Allowance<br> for credit losses/nonaccrual loans | 854.33% | 1,470.74% | 1,388.87% | 1,166.70% | 726.88% |
All values are in US Dollars.
[Footnotes to table located on page 6]
1
income statements – Unaudited
| Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| March 31 | Dec 31 | Sept 30 | June 30 | Mar 31 | ||
| (in<br> thousands, except per share data) | 2023 | 2022 | 2022 | 2022 | 2022 | |
| Interest income | ||||||
| Loans | $ | 36,748 | 33,939 | 29,752 | 26,610 | 23,931 |
| Investment<br> securities | 613 | 562 | 506 | 448 | 474 | |
| Federal<br> funds sold | 969 | 525 | 676 | 180 | 59 | |
| Total<br> interest income | 38,330 | 35,026 | 30,934 | 27,238 | 24,464 | |
| Interest expense | ||||||
| Deposits | 17,179 | 10,329 | 5,021 | 1,844 | 908 | |
| Borrowings | 727 | 578 | 459 | 510 | 392 | |
| Total<br>interest expense | 17,906 | 10,907 | 5,480 | 2,354 | 1,300 | |
| Net interest<br> income | 20,424 | 24,119 | 25,454 | 24,884 | 23,164 | |
| Provision<br> for credit losses | 1,825 | 2,325 | 950 | 1,775 | 1,105 | |
| Net<br> interest income after provision for credit losses | 18,599 | 21,794 | 24,504 | 23,109 | 22,059 | |
| Noninterest income | ||||||
| Mortgage banking<br> income | 622 | 291 | 1,230 | 1,184 | 1,494 | |
| Service fees<br> on deposit accounts | 325 | 316 | 318 | 327 | 303 | |
| ATM and debit<br> card income | 555 | 558 | 542 | 548 | 514 | |
| Income from<br> bank owned life insurance | 332 | 344 | 315 | 315 | 315 | |
| Loss on disposal<br> of fixed assets | - | - | - | (394) | - | |
| Other<br> income | 210 | 198 | 275 | 285 | 301 | |
| Total<br>noninterest income | 2,044 | 1,707 | 2,680 | 2,265 | 2,927 | |
| Noninterest expense | ||||||
| Compensation<br> and benefits | 10,356 | 9,576 | 9,843 | 9,915 | 9,456 | |
| Occupancy | 2,457 | 2,666 | 2,442 | 2,219 | 1,778 | |
| Outside service<br> and data processing costs | 1,629 | 1,521 | 1,529 | 1,528 | 1,533 | |
| Insurance | 689 | 551 | 507 | 367 | 260 | |
| Professional<br> fees | 660 | 788 | 555 | 693 | 599 | |
| Marketing | 366 | 282 | 338 | 329 | 269 | |
| Other | 947 | 1,029 | 832 | 737 | 790 | |
| Total<br>noninterest expenses | 17,104 | 16,413 | 16,046 | 15,788 | 14,685 | |
| Income before<br> provision for income taxes | 3,539 | 7,088 | 11,138 | 9,586 | 10,301 | |
| Income<br> tax expense | 836 | 1,596 | 2,725 | 2,346 | 2,331 | |
| Net income available to common shareholders | $ | 2,703 | 5,492 | 8,413 | 7,240 | 7,970 |
| Earnings per<br> common share – Basic | $ | 0.34 | 0.69 | 1.06 | 0.91 | 1.00 |
| Earnings per<br> common share – Diluted | 0.33 | 0.68 | 1.04 | 0.90 | 0.98 | |
| Basic weighted<br> average common shares | 8,026 | 7,971 | 7,972 | 7,945 | 7,932 | |
| Diluted<br> weighted average common shares | 8,092 | 8,071 | 8,065 | 8,075 | 8,096 |
[Footnotes to table located on page 6]
Net income for the first quarter of 2023 was $2.7 million, or $0.33 per diluted share, a $2.8 million decrease from the fourth quarter of 2022 and a $5.3 million decrease from the first quarter of 2022. Net interest income decreased $3.7 million for the first quarter of 2023, compared to the fourth quarter of 2022, and decreased $2.7 million, compared to the first quarter of 2022. The decrease in net interest income from the prior quarter and prior year was driven by an increase in interest expense on our deposit accounts related to the Federal Reserve’s 475-basis point interest rate hikes during the past 12 months.
The provision for credit losses was $1.8 million for the first quarter of 2023, compared to $2.3 million for the fourth quarter of 2022 and $1.1 million for the first quarter of 2022. The provision expense during the first quarter of 2023, calculated under the Current Expected Credit Loss (“CECL”) methodology adopted effective January 1, 2022, includes a $1.9 million provision for loan losses and a $30 thousand reversal of the reserve for unfunded commitments.
2
Noninterest income totaled $2.0 million for the first quarter of 2023, a $337 thousand increase from the fourth quarter of 2022 and an $883 thousand decrease from the first quarter of 2022. Mortgage banking income has typically been the largest component of our noninterest income; however, lower mortgage origination volume during the past 12 months, combined with our strategy to keep a larger percentage of these loans in our portfolio, has impacted our profitability. Consequently, mortgage banking income was $622 thousand for the first quarter of 2023, an increase of $331 thousand from the prior quarter income and an $872 thousand decrease from the first quarter of 2022.
Noninterest expense for the first quarter of 2023 was $17.1 million, a $691 thousand increase from the fourth quarter of 2022, and a $2.4 million increase from the first quarter of 2022. The increase in noninterest expense from the previous quarter was driven by increases in compensation and benefits, outside service and data processing costs, and insurance expense, while the increase from the prior year related to increases in compensation and benefits, occupancy, and insurance expenses. Compensation and benefits expense increased from the previous quarter and year, driven by annual salary increases, hiring of new team members, and higher benefits expense. Occupancy expense increased from the prior year due to costs associated with the construction and relocation of our headquarters, while insurance costs increased from the prior quarter and year due to higher FDIC insurance premiums.
Our effective tax rate was 23.6% for the first quarter, an increase from 22.5% for the fourth quarter of 2022 and from 22.6% for the first quarter of 2022. The higher tax rate in the first quarter of 2023 relates to the effect of equity compensation transactions on our tax rate during the quarter.
Net interest income and margin - Unaudited
| For<br> the Three Months Ended | |||
|---|---|---|---|
| March<br> 31, 2023 | December<br> 31, 2022 | March<br> 31, 2022 | |
| (dollars<br> in thousands) | Average<br> Balance | Average<br> Balance | Average<br> Balance |
| Interest-earning assets | |||
| Federal<br> funds sold and interest-bearing deposits | 85,966 | 60,176 | 89,096 |
| Investment securities,<br> taxable | 87,521 | 86,594 | 113,101 |
| Investment securities,<br> nontaxable^(2)^ | 10,266 | 9,987 | 11,899 |
| Loans^(10)^ | 3,334,530 | 3,165,061 | 2,573,978 |
| Total interest-earning<br> assets | 3,518,283 | 3,321,818 | 2,788,074 |
| Noninterest-earning<br> assets | 161,310 | 162,924 | 152,565 |
| Total<br> assets | 3,679,593 | 3,484,742 | 2,940,639 |
| Interest-bearing liabilities | |||
| NOW<br> accounts | 303,176 | 343,541 | 406,054 |
| Savings<br> & money market | 1,661,878 | 1,529,532 | 1,242,225 |
| Time<br> deposits | 543,425 | 405,907 | 158,720 |
| Total<br> interest-bearing deposits | 2,508,479 | 2,278,980 | 1,806,999 |
| FHLB<br> advances and other borrowings | 18,243 | 7,594 | 16,626 |
| Subordinated<br> debentures | 36,224 | 36,197 | 36,116 |
| Total<br> interest-bearing liabilities | 2,562,946 | 2,322,771 | 1,859,741 |
| Noninterest-bearing<br> liabilities | 818,123 | 869,314 | 802,299 |
| Shareholders’<br> equity | 298,524 | 292,657 | 278,600 |
| Total<br> liabilities and shareholders’ equity | 3,679,593 | 3,484,742 | 2,940,639 |
| Net<br> interest spread | |||
| Net<br> interest income (tax equivalent) / margin | |||
| Less: tax-equivalent<br> adjustment^(2)^ | |||
| Net<br> interest income |
All values are in US Dollars.
[Footnotes to table located on page 6]
3
Net interest income was $20.4 million for the first quarter of 2023, a $3.7 million decrease from the fourth quarter of 2022, driven by a $7.0 million increase in interest expense, partially offset by a $3.3 million increase in interest income, on a taxable basis. The increase in interest expense was driven by $229.5 million growth in average interest-bearing deposit balances at an average rate of 2.78%, a 98-basis points increase over the previous quarter, partially offset by $169.5 million growth in average loan balances at a yield of 4.47%, an increase of 22-basis points from the fourth quarter of 2022. In comparison to the first quarter of 2022, net interest income decreased $2.7 million, resulting primarily from $701.5 million growth in average interest-bearing deposit balances during the 13 months ended March 31, 2023, combined with a 258-basis point increase in deposit rates. Our net interest margin, on a tax-equivalent basis, was 2.36% for the first quarter of 2023, a 52-basis point decrease from 2.88% for the fourth quarter of 2022 and a 101-basis point decrease from 3.37% for the first quarter of 2022. As a result of the Federal Reserve’s 475-basis point interest rate hikes during the past 12 months, the rate on our interest-bearing liabilities has increased by 255-basis points during the first quarter of 2023 in comparison to the first quarter of 2022. However, the yield on our interest-earning assets, driven by our loan portfolio, has increased by only 86-basis points during the same time period, resulting in the lower net interest margin during the first quarter of 2023.
Balance sheets - Unaudited
| Ending Balance | |||||
|---|---|---|---|---|---|
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| (in<br> thousands, except per share data) | 2023 | 2022 | 2022 | 2022 | 2022 |
| Assets | |||||
| Cash<br> and cash equivalents: | |||||
| Cash<br> and due from banks | 22,213 | 18,788 | 16,530 | 21,090 | 20,992 |
| Federal<br> funds sold | 242,642 | 101,277 | 139,544 | 124,462 | 95,093 |
| Interest-bearing<br> deposits with banks | 7,350 | 50,809 | 4,532 | 36,538 | 33,131 |
| Total<br> cash and cash equivalents | 272,205 | 170,874 | 160,606 | 182,090 | 149,216 |
| Investment<br> securities: | |||||
| Investment<br> securities available for sale | 94,036 | 93,347 | 91,521 | 98,991 | 106,978 |
| Other<br> investments | 10,097 | 10,833 | 5,449 | 5,065 | 4,104 |
| Total<br> investment securities | 104,133 | 104,180 | 96,970 | 104,056 | 111,082 |
| Mortgage<br> loans held for sale | 6,979 | 3,917 | 9,243 | 18,329 | 17,840 |
| Loans<br> (5) | 3,417,945 | 3,273,363 | 3,030,027 | 2,845,205 | 2,660,675 |
| Less<br> allowance for credit losses | (40,435) | (38,639) | (36,317) | (34,192) | (32,944) |
| Loans,<br> net | 3,377,510 | 3,234,724 | 2,993,710 | 2,811,013 | 2,627,731 |
| Bank<br> owned life insurance | 51,453 | 51,122 | 50,778 | 50,463 | 50,148 |
| Property<br> and equipment, net | 97,806 | 99,183 | 99,530 | 96,674 | 95,129 |
| Deferred<br> income taxes | 12,087 | 12,522 | 18,425 | 15,078 | 10,635 |
| Other<br> assets | 15,967 | 15,459 | 10,407 | 9,960 | 10,859 |
| Total<br> assets | 3,938,140 | 3,691,981 | 3,439,669 | 3,287,663 | 3,072,640 |
| Liabilities | |||||
| Deposits | 3,426,774 | 3,133,864 | 3,001,452 | 2,870,158 | 2,708,174 |
| FHLB<br> Advances | 125,000 | 175,000 | 60,000 | 50,000 | - |
| Subordinated<br> debentures | 36,241 | 36,214 | 36,187 | 36,160 | 36,133 |
| Other<br> liabilities | 50,775 | 52,391 | 54,245 | 48,708 | 49,809 |
| Total<br> liabilities | 3,638,790 | 3,397,469 | 3,151,884 | 3,005,026 | 2,794,116 |
| Shareholders’<br> equity | |||||
| Preferred<br> stock - .01 par value; 10,000,000 shares authorized | - | - | - | - | - |
| Common<br> Stock - .01 par value; 10,000,000 shares authorized | 80 | 80 | 80 | 80 | 80 |
| Nonvested<br> restricted stock | (4,462) | (3,306) | (3,348) | (3,230) | (3,425) |
| Additional<br> paid-in capital | 120,683 | 119,027 | 118,433 | 117,714 | 117,286 |
| Accumulated<br> other comprehensive loss | (11,775) | (13,410) | (14,009) | (10,143) | (6,393) |
| Retained<br> earnings | 194,824 | 192,121 | 186,629 | 178,216 | 170,976 |
| Total<br> shareholders’ equity | 299,350 | 294,512 | 287,785 | 282,637 | 278,524 |
| Total<br> liabilities and shareholders’ equity | 3,938,140 | 3,691,981 | 3,439,669 | 3,287,663 | 3,072,640 |
| Common<br> Stock | |||||
| Book<br> value per common share | 37.16 | 36.76 | 35.99 | 35.39 | 34.90 |
| Stock<br> price: | |||||
| High | 45.05 | 49.50 | 47.16 | 50.09 | 65.02 |
| Low | 30.70 | 41.46 | 41.66 | 42.25 | 50.84 |
| Period<br> end | 30.70 | 45.75 | 41.66 | 43.59 | 50.84 |
| Common<br> shares outstanding | 8,048 | 8,011 | 7,997 | 7,986 | 7,981 |
All values are in US Dollars.
[Footnotes to table located on page 6]
4
Asset quality measures- Unaudited
| Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| March 31 | December 31 | September 30 | June 30 | March 31 | ||
| (dollars<br> in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 | |
| Nonperforming Assets | ||||||
| Commercial | ||||||
| Non-owner<br> occupied RE | $ | 1,384 | 247 | 253 | 981 | 1,026 |
| Commercial<br> business | 1,196 | 182 | 79 | - | - | |
| Consumer | ||||||
| Real<br> estate | 1,075 | 1,099 | 904 | 552 | 1,482 | |
| Home<br> equity | 1,078 | 1,099 | 1,379 | 1,398 | 2,024 | |
| Total<br> nonaccrual loans | 4,733 | 2,627 | 2,615 | 2,931 | 4,532 | |
| Other<br> real estate owned | - | - | - | - | - | |
| Total<br> nonperforming assets | $ | 4,733 | 2,627 | 2,615 | 2,931 | 4,532 |
| Nonperforming<br> assets as a percentage of: | ||||||
| Total<br> assets | 0.12% | 0.07% | 0.08% | 0.09% | 0.15% | |
| Total<br> loans | 0.14% | 0.08% | 0.09% | 0.10% | 0.17% | |
| Classified<br> assets/tier 1 capital plus allowance for credit losses | 5.10% | 4.71% | 5.24% | 7.29% | 7.83% | |
| Quarter Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| March 31 | December 31 | September 30 | June 30 | March 31 | ||
| (dollars<br> in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 | |
| Allowance for Credit Losses | ||||||
| Balance,<br> beginning of period | $ | 38,639 | 36,317 | 34,192 | 32,944 | 30,408 |
| CECL<br> adjustment | - | - | - | - | 1,500 | |
| Loans<br> charged-off | (161) | - | - | (316) | (169) | |
| Recoveries<br> of loans previously charged-off | 102 | 22 | 1,600 | 39 | 180 | |
| Net<br> loans (charged-off) recovered | (59) | 22 | 1,600 | (277) | 11 | |
| Provision<br> for credit losses | 1,855 | 2,300 | 525 | 1,525 | 1,025 | |
| Balance,<br> end of period | $ | 40,435 | 38,639 | 36,317 | 34,192 | 32,944 |
| Allowance<br> for credit losses to gross loans | 1.18 % | 1.18 % | 1.20 % | 1.20 % | 1.24 % | |
| Allowance<br> for credit losses to nonaccrual loans | 854.33 % | 1,470.74 % | 1,388.87 % | 1,166.70 % | 726.88 % | |
| Net<br> charge-offs to average loans QTD (annualized) | 0.01<br> % | 0.00<br> % | (0.22<br> %) | 0.04<br> % | 0.00<br> % |
Total nonperforming assets increased by $2.1 million during the first quarter of 2023, representing 0.12% of total assets, compared to 0.07% in the fourth quarter of 2023. The increase in nonperforming assets during the first quarter of 2023 results primarily from three commercial loans that went on nonaccrual status. In addition, our classified asset ratio increased to 5.10% for the first quarter of 2023 from 4.71% in the fourth quarter of 2022 and decreased from 7.83% in the first quarter of 2022. The improvement from the first quarter of 2022 was primarily the result of six hotel loans, or $18.5 million in the aggregate, we upgraded from substandard during the prior year.
On March 31, 2023, the allowance for credit losses was $40.4 million, or 1.18% of total loans, compared to $38.6 million, or 1.18% of total loans, at December 31, 2022, and $32.9 million, or 1.24% of total loans, at March 31, 2022. We had net charge-offs of $59 thousand, or 0.01% annualized, for the first quarter of 2023, compared to net recoveries of $22 thousand for the fourth quarter of 2022 and net recoveries of $11 thousand for the first quarter of 2022. There was a provision for credit losses of $1.9 million for the first quarter of 2023, compared to a provision of $2.3 million for the fourth quarter of 2022 and a provision of $1.0 million for the first quarter of 2022.
5
LOAN COMPOSITION - Unaudited
| Quarter<br> Ended | ||||||
|---|---|---|---|---|---|---|
| March 31 | December 31 | September 30 | June 30 | March 31 | ||
| (dollars<br> in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 | |
| Commercial | ||||||
| Owner<br> occupied RE | $ | 615,094 | 612,901 | 572,972 | 551,544 | 527,776 |
| Non-owner<br> occupied RE | 928,059 | 862,579 | 799,569 | 741,263 | 705,811 | |
| Construction | 94,641 | 109,726 | 85,850 | 84,612 | 75,015 | |
| Business | 495,161 | 468,112 | 419,312 | 389,790 | 352,932 | |
| Total<br> commercial loans | 2,132,955 | 2,053,318 | 1,877,703 | 1,767,209 | 1,661,534 | |
| Consumer | ||||||
| Real<br> estate | 993,258 | 931,278 | 873,471 | 812,130 | 745,667 | |
| Home<br> equity | 180,974 | 179,300 | 171,904 | 161,512 | 155,678 | |
| Construction | 71,137 | 80,415 | 77,798 | 76,878 | 72,627 | |
| Other | 39,621 | 29,052 | 29,151 | 27,476 | 25,169 | |
| Total<br> consumer loans | 1,284,990 | 1,220,045 | 1,152,324 | 1,077,996 | 999,141 | |
| Total<br> gross loans, net of deferred fees | 3,417,945 | 3,273,363 | 3,030,027 | 2,845,205 | 2,660,675 | |
| Less—allowance<br> for credit losses | (40,435) | (38,639) | (36,317) | (34,192) | (32,944) | |
| Total<br> loans, net | $ | 3,377,510 | 3,234,724 | 2,993,710 | 2,811,013 | 2,627,731 |
DEPOSIT COMPOSITION - Unaudited
| Quarter<br> Ended | |||||
|---|---|---|---|---|---|
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| (dollars<br> in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 |
| Non-interest bearing | 740,534 | 804,115 | 791,050 | 799,169 | 779,262 |
| Interest<br> bearing: | |||||
| NOW<br> accounts | 303,743 | 318,030 | 357,862 | 364,189 | 416,322 |
| Money<br> market accounts | 1,748,562 | 1,506,418 | 1,452,958 | 1,320,329 | 1,238,866 |
| Savings | 39,706 | 40,673 | 42,335 | 41,944 | 41,630 |
| Time,<br> less than 250,000 | 106,679 | 89,877 | 79,387 | 62,340 | 57,972 |
| Time<br> and out-of-market deposits, 250,000 and over | 487,550 | 374,751 | 277,860 | 282,187 | 174,122 |
| Total<br> deposits | 3,426,774 | 3,133,864 | 3,001,452 | 2,870,158 | 2,708,174 |
All values are in US Dollars.
Footnotes to tables:
(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) Annualized for the respective three-month period.
(4) Noninterest expense divided by the sum of net interest income and noninterest income.
(5) Excludes mortgage loans held for sale.
(6) Excludes out of market deposits and time deposits greater than $250,000.
(7) March 31, 2023 ratios are preliminary.
(8) The common equity tier 1 ratio is calculated as the sum of common equity divided by risk-weighted assets.
(9) The tangible common equity ratio is calculated as total equity less preferred stock divided by total assets.
(10) Includes mortgage loans held for sale.
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’s wholly owned subsidiary, Southern First Bank, is the second largest bank headquartered in South Carolina. Southern First Bank has been providing financial services since 1999 and now operates in 12 locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as the Charlotte, Triangle and Triad regions of North Carolina and Atlanta, Georgia. Southern First Bancshares has consolidated assets of approximately $3.9 billion and its common stock is traded on 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 “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “continue,” “lasting,” and “project,” 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.
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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 the company conducts operations may be different than expected; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan and deposit growth as well as pricing of each product, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, changes affecting oversight of the financial services industry or consumer protection; (5) the impact of changes to Congress on the regulatory landscape and capital markets; (6) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could continue to have a negative impact on the company; (7) changes in interest rates, which may continue to affect the company’s net income, interest expense, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of the company’s assets, including its investment securities; and (8) elevated inflation which causes adverse risk to the overall economy, and could indirectly pose challenges to our clients and to our business; (9) any increase in FDIC assessments which will increase our cost of doing business; and (10) changes in accounting principles, policies, practices, or guidelines. 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, except as required by law.
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FINANCIAL & MEDIA CONTACT:
ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com
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