Exhibit 99.1
Southern First Reports Results for Fourth Quarter of 2013
Greenville, South Carolina, January 28, 2014 – Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today announced that net income available to the common shareholders for the fourth quarter of 2013 was $1.2 million, or $0.27 per diluted share, compared to $929 thousand, or $0.21 per diluted share, for the fourth quarter of 2012. For the year ended December 31, 2013, net income to common shareholders was $4.4 million, or $0.98 per diluted share. In comparison, net income to common shareholders for the year ended December 31, 2012 was $2.8 million, or $0.64 per diluted share.
2013 Fourth Quarter Highlights
• Net income to common shareholders increased 34% to $1.2 million during the 4th quarter of 2013 compared to the prior year
• Net interest margin for the 4th quarter of 2013 increased to 3.71% compared to 3.66% in 2012
• Loan balances increased 14% to $737.3 million at December 31, 2013 compared to $645.9 million in 2012
• Core deposits increased 13% to $482.0 million at December 31, 2013 compared to $427.9 million in 2012
• Nonperforming assets improved to 1.07% at December 31, 2013 compared to 1.24% in 2012
2014 Strategic Highlight
• Private placement of $6,175,000 of common stock and $4,057,000 redemption of preferred stock
“2013 was a year of record growth and earnings for Southern First Bank. I am proud of the performance of our team and the momentum we carry entering into 2014. We continue to focus on providing our clients with an outstanding level of service and building additional client relationships in each of our markets,” stated Art Seaver, the company’s CEO.
| | Quarter Ended |
| | December 31 | September 30 | June 30 | March 31 | December 31 |
| | 2013 | 2013 | 2013 | 2013 | 2012 |
Earnings ($ in thousands, except per share data): | | | | | | |
Net income | $ | 1,439 | 1,419 | 1,300 | 961 | 1,133 |
Net income to common shareholder | | 1,248 | 1,228 | 1,109 | 784 | 929 |
Earnings per common share, diluted (1) | | 0.27 | 0.27 | 0.25 | 0.18 | 0.21 |
Total revenue, net of gain/loss on investment securities (2) | | 8,637 | 8,418 | 8,008 | 7,760 | 7,677 |
Net interest margin (tax-equivalent)(3) | | 3.71% | 3.73% | 3.70% | 3.69% | 3.66% |
Asset Quality Ratios: | | | | | | |
Nonperforming assets as a percentage of total assets | | 1.07% | 1.19% | 0.82% | 1.07% | 1.24% |
Net charge-offs as a percentage of average loans (YTD annualized) | | 0.34% | 0.38% | 0.43% | 0.52% | 0.71% |
Allowance for loan losses as a percentage of total loans | | 1.39% | 1.39% | 1.39% | 1.41% | 1.41% |
Allowance for loan losses as a percentage of nonperforming loans | | 122.50% | 115.54% | 172.48% | 148.49% | 111.32% |
Capital Ratios (4): | | | | | | |
Total risk-based capital ratio | | 12.22% | 12.48% | 12.56% | 12.76% | 12.88% |
Tier 1 risk-based capital ratio | | 10.96% | 11.23% | 11.31% | 11.51% | 11.63% |
Leverage ratio | | 9.13% | 9.33% | 9.33% | 9.46% | 9.63% |
Common equity tier 1 ratio (5) | | 7.09% | 7.18% | 7.16% | 7.17% | 7.25% |
Other ($ in thousands): | | | | | | |
Gross loans | $ | 737,267 | 708,033 | 687,482 | 665,244 | 645,949 |
Core deposits | | 481,967 | 452,970 | 474,296 | 460,237 | 427,936 |
Total deposits | | 680,319 | 607,052 | 632,072 | 612,394 | 576,299 |
Total assets | | 890,831 | 849,890 | 839,007 | 821,705 | 797,998 |
Average Balances ($ in thousands): | | | | | | |
Loans | $ | 725,776 | 695,524 | 672,930 | 657,616 | 638,198 |
Deposits | | 656,063 | 629,271 | 614,411 | 586,904 | 580,992 |
Assets | | 876,583 | 841,886 | 829,059 | 810,197 | 788,882 |
Equity | | 65,992 | 64,430 | 64,931 | 64,683 | 64,495 |
(1) Per share amounts for the 2012 period has been restated to reflect the 10% stock dividend in 2013. |
(2) Total revenue is the sum of net interest income and noninterest income. |
(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) December 31, 2013 ratios are preliminary. |
(5) The common equity tier 1 ratio is calculated as the sum of common equity divided by risk-weighted assets. |
Operating Results
Net interest margin for the fourth quarter of 2013 was 3.71%, compared to 3.73% for the prior quarter, and 3.66% for the fourth quarter of 2012. The primary driver of the increased net interest margin over the prior year is the $91.3 million growth in loan balances during the past twelve months, combined with the 32 basis point decrease in the cost of our interest bearing liabilities.
During the fourth quarter of 2013, the company recorded total credit costs of $975 thousand compared to $1.2 million during the fourth quarter of 2012. The $975 thousand in credit costs during the fourth quarter of 2013 related primarily to the $825 thousand provision for loan losses, combined with expenses of $150 thousand related to the sale and management of other real estate owned. In addition, net loan charge-offs for the fourth quarter were $428 thousand, or 0.23% of average loans on an annual basis, and related primarily to two commercial loans. Comparatively, the company recorded a loan loss provision of $950 thousand and expenses related to the sale and management of real estate owned of $218 thousand during the fourth quarter of 2012. For the year ended December 31, 2013, total credit costs were $3.7 million, consisting of a $3.5 million provision for loan losses and expenses of $179 thousand from the sale and management of other real estate owned. Total credit costs were $5.5 million during the year ended December 31, 2012, which consisted of a $4.6 million provision for loan losses and $939 thousand of net loss from the sale and management of other real estate owned. The company’s allowance for loan losses was $10.2 million, or 1.39% of loans, at December 31, 2013 which provides approximately 123% coverage of nonaccrual loans, compared to $9.1 million, or 1.41% of loans, at December 31, 2012.
Noninterest income was $987 thousand and $897 thousand for the three months ended December 31, 2013 and 2012, respectively. For the years ended December 31, 2013 and 2012, noninterest income was $3.8 million. The increase in noninterest income during the three month period ended December 31, 2013 relates primarily to increases in loan fee income and service fees on deposit accounts. A significant portion of our loan fee income relates to income derived from mortgage originations which was $272 thousand and $1.1 million for the three and twelve months ended December 31, 2013, respectively. Comparatively, mortgage origination income was $245 thousand and $911 thousand for the three and twelve months ended December 31, 2012, respectively.
Noninterest expense was $5.8 million and $5.1 million for the three months ended December 31, 2013 and 2012, respectively, and $21.8 million and $19.5 million for the year ended December 31, 2013 and 2012, respectively. The increase in noninterest expense during the 2013 periods relates primarily to increases in salaries and benefits, occupancy, and data processing and related costs, partially offset by decreases in costs associated with real estate owned and insurance expense. Noninterest expenses for the 2013 periods include costs associated with our two new retail offices in Columbia and Charleston, South Carolina which were opened in December 2012.
Nonperforming assets decreased to $9.5 million, or 1.07% of total assets, as of December 31, 2013. Comparatively, nonperforming assets were $9.9 million, or 1.24% of total assets, at December 31, 2012. Of the $9.5 million in total nonperforming assets as of December 31, 2013, nonperforming loans represent $8.3 million and other real estate owned represents $1.2 million. Comparatively, of the $9.9 million in total nonperforming assets at December 31, 2012, nonperforming loans represented $8.2 million and other real estate owned represented $1.7 million. Classified assets improved to 30% of tier 1 capital plus the allowance for loan losses at December 31, 2013, compared to 37% at December 31, 2012.
Gross loans were $737.3 million as of December 31, 2013 compared to $645.9 million at December 31, 2012. Core deposits, which exclude out-of-market deposits and time deposits of $100,000 or more, increased to $482.0 million at December 31, 2013 compared to $427.9 million at December 31, 2012.
Shareholders’ equity totaled $65.7 million as of December 31, 2013, compared to $64.1 million at December 31, 2012. During 2013, the Company redeemed a total of $1.0 million of its outstanding preferred stock from three of its preferred shareholders. As of December 31, 2013, the Company’s capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.
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On January 27, 2014, the company issued a total of 475,000 shares of its common stock at $13.00 per share (the “Private Placement”). Immediately following the consummation of the Private Placement, the company redeemed 4,057 shares of its outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series T at redemption price of $1,000 per share, or par. The remaining proceeds will be retained by the company to pay related transaction fees and expenses and for general corporate purposes.
Financial Highlights - Unaudited
| | Quarter Ended | 4th Qtr | Twelve Months Ended | YTD |
| | December 31 | 2013-2012 | December 31 | 2013 - 2012 |
(in thousands, except earnings per share) | | 2013 | 2012 | % Change | 2013 | 2012 | % Change |
Earnings Summary | | | | | | | |
Interest income | $ | 9,363 | 8,817 | 6.2% | 36,118 | 34,698 | 4.1% |
Interest expense | | 1,714 | 2,037 | (15.9)% | 7,097 | 8,702 | (18.4)% |
Net interest income | | 7,649 | 6,780 | 12.8% | 29,021 | 25,996 | 11.6% |
Provision for loan losses | | 825 | 950 | (13.2)% | 3,475 | 4,550 | (23.6)% |
Noninterest income | | 987 | 897 | 10.0% | 3,802 | 3,762 | 1.1% |
Noninterest expense | | 5,771 | 5,053 | 14.2% | 21,812 | 19,513 | 11.8% |
Income before provision for income taxes | | 2,040 | 1,674 | 21.9% | 7,536 | 5,695 | 32.3% |
Income tax expense | | 601 | 541 | 11.1% | 2,416 | 1,833 | 31.8% |
Net income | | 1,439 | 1,133 | 27.0% | 5,120 | 3,862 | 32.6% |
Preferred stock dividends | | 191 | 204 | (6.4)% | 771 | 840 | (8.2)% |
Discount accretion | | - | - | - | - | 360 | n/m |
Redemption of preferred stock | | - | - | - | 20 | 96 | (79.2)% |
Net income available to common shareholders | $ | 1,248 | 929 | 34.3% | 4,369 | 2,758 | 58.4% |
| | | | | | | |
Basic weighted average common shares (6) | | 4,317 | 4,241 | 1.8% | 4,280 | 4,230 | 1.2% |
Diluted weighted average common shares (6) | | 4,551 | 4,305 | 5.7% | 4,459 | 4,340 | 2.7% |
| | | | | | | |
Earnings per common share - Basic (6) | $ | 0.29 | 0.22 | 31.8% | 1.02 | 0.65 | 56.9% |
Earnings per common share - Diluted (6) | | 0.27 | 0.22 | 22.7% | 0.98 | 0.64 | 53.1% |
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| | Quarter Ended | 4th Qtr | Quarter Ended |
| | December 31 | 2013-2012 | September 30 | June 30 | March 31 |
| | 2013 | 2012 | % Change | 2013 | 2013 | 2013 |
Balance Sheet Highlights | | | | | | | |
Assets | $ | 890,831 | 797,998 | 11.6% | 849,890 | 839,007 | 821,705 |
Investment securities | | 73,556 | 86,016 | (14.50)% | 77,636 | 75,599 | 82,708 |
Loans | | 737,267 | 645,949 | 14.1% | 708,033 | 687,482 | 665,244 |
Allowance for loan losses | | 10,213 | 9,091 | 12.3% | 9,816 | 9,561 | 9,367 |
Other real estate owned | | 1,198 | 1,719 | (30.3)% | 1,579 | 1,310 | 2,522 |
Noninterest bearing deposits | | 101,971 | 80,880 | 26.1% | 94,588 | 94,079 | 86,377 |
Interest bearing deposits | | 578,348 | 495,419 | 16.7% | 512,464 | 537,993 | 526,017 |
Total deposits | | 680,319 | 576,299 | 18.0% | 607,052 | 632,072 | 612,394 |
Other borrowings | | 124,100 | 137,290 | (9.6)% | 157,655 | 124,100 | 124,100 |
Junior subordinated debentures | | 13,403 | 13,403 | 0.0% | 13,403 | 13,403 | 13,403 |
Preferred stock | | 15,299 | 16,299 | (6.1)% | 15,299 | 15,299 | 15,799 |
Total shareholders’ equity | | 65,665 | 64,125 | 2.4% | 64,776 | 63,562 | 64,426 |
Common Stock | | | | | | | |
Book value per common share (6) | $ | 11.66 | 11.26 | 3.6% | 11.47 | 11.30 | 11.39 |
Stock price (6): | | | | | | | |
High | | 13.98 | 9.00 | 55.3% | 13.63 | 11.35 | 11.26 |
Low | | 12.81 | 7.96 | 60.9% | 10.80 | 10.28 | 8.41 |
Period end | | 13.28 | 8.45 | 57.2% | 13.20 | 10.99 | 10.45 |
Common shares outstanding (6) | | 4,320 | 4,247 | 1.7% | 4,313 | 4,269 | 4,268 |
Other | | | | | | | |
Return on average assets (7) | | 0.65% | 0.57% | 14.0% | 0.67% | 0.63% | 0.48% |
Return on average equity (7) | | 8.65% | 6.99% | 23.7% | 8.74% | 8.03% | 6.03% |
Loans to deposits | | 108.37% | 112.09% | (3.3)% | 116.63% | 108.77% | 108.63% |
Efficiency ratio (8) | | 65.09% | 62.98% | 3.4% | 65.16% | 66.37% | 67.14% |
Team members | | 140 | 125 | 12.0% | 138 | 134 | 131 |
(6) Shares and per share amounts for the 2012 period have been restated to reflect the 10% stock dividend in 2013. |
(7 Annualized based on quarterly net income. |
(8) Noninterest expense divided by the sum of net interest income and noninterest income, excluding real estate activity and gain on sale of investments. |
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Asset quality measures - Unaudited
| | | 4th Qtr | Quarter Ended |
| | December 31 | 2013-2012 | September 30 | June 30 | March 31 |
(dollars in thousands) | | 2013 | 2012 | % Change | 2013 | 2013 | 2013 |
Nonperforming Assets | | | | | | | |
Commercial | | | | | | | |
Owner occupied RE | $ | 1,199 | 155 | 673.5 % | 276 | 292 | 294 |
Non-owner occupied RE | | 373 | 1,255 | (70.3)% | 424 | 568 | 1,215 |
Construction | | 914 | 1,006 | (9.1)% | 938 | 938 | 1,006 |
Commercial business | | 712 | 202 | 252.5 % | 859 | 490 | 202 |
Consumer | | | | | | | |
Real estate | | 76 | 119 | (36.1)% | 188 | 171 | 116 |
Home equity | | 77 | 577 | (86.7)% | 274 | 491 | 575 |
Construction | | - | - | - | - | - | - |
Other | | 3 | 44 | (93.2)% | 4 | - | - |
Nonaccruing troubled debt restructurings | | 4,983 | 4,809 | 3.6 % | 5,533 | 2,594 | 2,900 |
Total nonaccrual loans | | 8,337 | 8,167 | 2.1 % | 8,496 | 5,544 | 6,308 |
Other real estate owned | | 1,198 | 1,719 | (30.3)% | 1,579 | 1,310 | 2,522 |
Total nonperforming assets | $ | 9,535 | 9,886 | (3.6)% | 10,075 | 6,854 | 8,830 |
Nonperforming assets as a percentage of: | | | | | | | |
Total assets | | 1.07% | 1.24% | (13.7)% | 1.19% | 0.82% | 1.07% |
Total loans | | 1.28% | 1.53% | (16.3)% | 1.42% | 1.00% | 1.33% |
Accruing troubled debt restructurings | $ | 8,045 | 9,421 | (14.6)% | 6,953 | 9,833 | 8,997 |
| | Quarter Ended | 4th Qtr | Twelve Months Ended | YTD |
| | December 31 | 2013-2012 | December 31 | 2013 – 2012 |
| | 2013 | 2012 | Change | 2013 | 2012 | % Change |
Allowance for Loan Losses | | | | | | | |
Balance, beginning of period | $ | 9,816 | 9,254 | 6.1 % | 9,091 | 8,925 | 1.9 % |
Loans charged-off | | (444) | (1,214) | (63.4)% | (2,478) | (4,505) | (45.0)% |
Recoveries of loans previously charged-off | | 16 | 101 | (84.2)% | 125 | 121 | 3.3 % |
Net loans charged-off | | (428) | (1,113) | (61.5)% | (2,353) | (4,384) | (46.3)% |
Provision for loan losses | | 825 | 950 | (13.2)% | 3,475 | 4,550 | (23.6)% |
Balance, end of period | $ | 10,213 | 9,091 | 12.3 % | 10,213 | 9,091 | 12.3 % |
Allowance for loan losses to gross loans | | 1.39 % | 1.41 % | (1.4)% | 1.39 % | 1.41 % | (1.4)% |
Allowance for loan losses to nonaccrual loans | | 122.50 % | 111.32 % | 10.0 % | 122.50 % | 111.32 % | 10.0 % |
Net charge-offs to average loans (annualized) | | 0.23 % | 0.69 % | (66.7)% | 0.34 % | 0.71 % | (52.1)% |
AVERAGE YIELD/RATE - Unaudited | |
| Quarter Ended |
| December 31 | September 30 | June 30 | March 31 | December 31 |
| 2013 | 2013 | 2013 | 2013 | 2012 |
| Yield/Rate(9) |
Interest-earning assets | | | | | |
Federal funds sold | 0.25% | 0.28% | 0.25% | 0.24% | 0.27% |
Investment securities, taxable | 2.45% | 2.18% | 1.95% | 2.06% | 2.33% |
Investment securities, nontaxable | 4.18% | 4.25% | 4.10% | 4.07% | 4.19% |
Loans | 4.85% | 4.93% | 5.04% | 5.10% | 5.18% |
Total interest-earning assets | 4.53% | 4.60% | 4.61% | 4.68% | 4.75% |
Interest-bearing liabilities | | | | | |
NOW accounts | 0.21% | 0.22% | 0.26% | 0.31% | 0.45% |
Savings & money market | 0.30% | 0.34% | 0.33% | 0.28% | 0.37% |
Time deposits | 0.73% | 0.81% | 0.91% | 1.09% | 1.15% |
Total interest-bearing deposits | 0.47% | 0.50% | 0.55% | 0.65% | 0.76% |
Note payable and other borrowings | 2.87% | 3.03% | 2.99% | 2.85% | 3.23% |
Junior subordinated debentures | 2.40% | 2.43% | 2.60% | 2.60% | 2.64% |
Total interest-bearing liabilities | 0.97% | 1.02% | 1.07% | 1.16% | 1.29% |
Net interest spread | 3.56% | 3.58% | 3.54% | 3.52% | 3.46% |
Net interest income (tax equivalent) / margin | 3.71% | 3.73% | 3.70% | 3.69% | 3.66% |
(9) Annualized for the respective three month period. |
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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 8th largest bank headquartered in South Carolina. Since 1999 Southern First Bancshares has been providing financial services and now operates in eight locations in the Greenville, Columbia, and Charleston markets of South Carolina. Southern First Bancshares has assets of approximately $890 million 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 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.
FINANCIAL CONTACT: MIKE DOWLING 864-679-9070
MEDIA CONTACT: ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com
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