Southern First Bancshares 8K Southern First Reports Results for Third Quarter of 2018 | SFST 23 Oct 18

Exhibit 99.1

Southern First Reports Results for Third Quarter of 2018

Greenville, South Carolina, October 23, 2018– Southern First Bancshares, Inc.(NASDAQ: SFST), holding company for Southern First Bank, today reported net income available to common shareholders of $5.8 million, or $0.75 per diluted share, for the third quarter of 2018. In comparison, net income available to common shareholders was $4.3 million, or $0.55 per diluted share, for the third quarter of 2017. For the nine months ended September 30, 2018, net income available to common shareholders was $16.5 million, or $2.13 per diluted share. In comparison, net income to common shareholders for the nine months ended September 30, 2017 was $11.0 million, or $1.50 per diluted share.

2018 Third Quarter Highlights

●	Net income available to common shareholders increased 36% to $5.8 million for Q3 2018 compared to $4.3 million for Q3 2017
●	Total loans increased 22% to $1.62 billion at Q3 2018, compared to $1.33 billion at Q3 2017
●	Total deposits increased 18% to $1.59 billion at Q3 2018, compared to $1.34 billion at Q3 2017
●	Total core deposits increased 20% to $1.39 billion at Q3 2018, compared to $1.16 billion at Q3 2017
●	Net interest margin remained at 3.60% for Q3 2018 compared to Q3 2017

“I am proud of our Southern First team and our third quarter results as we report record earnings and loan growth for the quarter,” stated Art Seaver, the company’s Chief Executive Officer. “Our team continues to build and develop client relationships in each of our markets, generating strong momentum as we finish out 2018.”


	Quarter Ended
	September 30			June 30		March 31		December 31		September 30
	2018			2018		2018		2017		2017
Earnings($ in thousands, except per share data):
Net income available to common shareholders	$	5,782		5,510		5,214		2,080		4,250
Earnings per common share, diluted		0.75		0.71		0.67		0.27		0.55
Total revenue⁽¹⁾		18,034		17,383		16,462		15,789		15,851
Net interest margin (tax-equivalent)⁽²⁾		3.60	%	3.49	%	3.63	%	3.59	%	3.60	%
Return on average assets⁽³⁾		1.28	%	1.26	%	1.28	%	0.52	%	1.09	%
Return on average equity⁽³⁾		13.98	%	14.03	%	13.88	%	5.50	%	11.60	%
Efficiency ratio⁽⁴⁾		56.49	%	57.41	%	55.92	%	54.61	%	55.55	%
Balance Sheet($ in thousands):
Total loans⁽⁵⁾	$	1,620,201		1,533,447		1,459,382		1,387,070		1,327,739
Total deposits		1,589,483		1,567,982		1,520,523		1,381,123		1,342,577
Core deposits⁽⁶⁾		1,390,626		1,387,928		1,336,363		1,221,363		1,160,906
Total assets		1,857,707		1,787,784		1,729,299		1,624,625		1,557,684
Holding Company Capital Ratios⁽⁷⁾:
Total risk-based capital ratio		12.50	%	12.77	%	13.01	%	13.27	%	13.58	%
Tier 1 risk-based capital ratio		11.48	%	11.70	%	11.90	%	12.11	%	12.38	%
Leverage ratio		10.15	%	9.96	%	10.27	%	10.26	%	10.36	%
Common equity tier 1 ratio⁽⁸⁾		10.66	%	10.83	%	10.98	%	11.15	%	11.37	%
Tangible common equity⁽⁹⁾		8.99	%	9.00	%	8.95	%	9.21	%	9.47	%
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets		0.33	%	0.44	%	0.43	%	0.46	%	0.39	%
Net charge-offs as a percentage of average loans⁽⁵⁾(YTD annualized)		0.06	%	0.04	%	0.05	%	0.10	%	0.08	%
Allowance for loan losses as a percentage of loans⁽⁵⁾		1.00	%	1.05	%	1.09	%	1.12	%	1.17	%
Allowance for loan losses as a percentage of nonaccrual loans		270.54	%	208.52	%	217.92	%	212.60	%	278.05	%
[Footnotes to table located on page 3]

Operating Results
Net interest margin was 3.60% for the third quarter of 2018 and 2017. During the third quarter of 2018, our average interest-earning assets increased by $233.4 million, compared to the third quarter of 2017, while the yield on our interest-earning assets increased by 30 basis points. In comparison, our average interest-bearing liabilities increased by $180.7 million during the third quarter of 2018, compared to the third quarter of 2017, with the respective cost increasing by 40 basis points.

Noninterest income was $2.5 million for the three months ended September 30, 2018 and 2017. For the nine months ended September 30, 2018 and 2017, noninterest income was $7.7 million and $7.2 million, respectively. While total noninterest income was relatively unchanged for the three-month period ended September 30, 2018 as compared to the same period in 2017, ATM and debit card income increased and mortgage banking income and service fees on deposit accounts decreased during the third quarter of 2018. The increase in noninterest income during the nine-month period ended September 30, 2018 was driven primarily by increases in mortgage banking income, ATM and debit card income and other income, partially offset by a decrease in service fees on deposit accounts. Mortgage banking revenue comprises a significant portion of our noninterest income and totaled $1.4 million and $4.3 million for the three and nine months ended September 30, 2018, respectively, and $1.4 million and $4.1 million for the three and nine months ended September 30, 2017, respectively.

Noninterest expense was $10.2 million and $8.8 million for the three months ended September 30, 2018 and 2017, respectively, and $29.4 million and $25.9 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in noninterest expense during both the three- and nine-month periods ended September 30, 2018 was driven primarily by increases in compensation and benefits, occupancy, and insurance expense, while professional fees also contributed to the increase during the nine-months ended September 30, 2018. Included in noninterest expense are mortgage banking expenses of $1.1 million and $3.2 million for the three and nine months ended September 30, 2018, respectively, and $970 thousand and $2.9 million for the three and nine months ended September 30, 2017, respectively.

During the three months ended September 30, 2018, we recorded total credit costs of $401 thousand, including a $400 thousand provision for loan losses and $1,000 of expenses related to the sale and management of other real estate owned. In addition, we had net charge-offs for the third quarter of 2018 of $360 thousand, or 0.09% of average loans, annualized. During the three months ended September 30, 2017, our total credit costs were $528 thousand, including a $500 thousand provision for loan losses and $28 thousand of expenses related to the sale and management of other real estate owned. Net loan charge-offs for the third quarter of 2017 were $365 thousand, or 0.11% of average loans, annualized. For the nine months ended September 30, 2018 and 2017, total credit costs were $1.3 million and $1.5 million, respectively. Our allowance for loan losses was $16.1 million, or 1.00% of gross loans, at September 30, 2018, which provides approximately 271% coverage of nonaccrual loans, compared to $15.6 million, or 1.17% of gross loans, and approximately 278% coverage of nonaccrual loans at September 30, 2017.

Nonperforming assets were $6.1 million, or 0.33% of total assets, as of September 30, 2018. Comparatively, nonperforming assets were $6.0 million, or 0.39% of total assets, at September 30, 2017. Of the $6.1 million in total nonperforming assets as of September 30, 2018, nonperforming loans represent $6.0 million and other real estate owned represents $117 thousand. Classified assets totaled 9% of tier 1 capital plus the allowance for loan losses at September 30, 2018, compared to 11% at September 30, 2017.

Gross loans were $1.6 billion, excluding mortgage loans held for sale, as of September 30, 2018, compared to $1.3 billion at September 30, 2017. Core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, totaled to $1.4 billion at September 30, 2018 compared to $1.2 billion at September, 2017.

Shareholders’ equity totaled $166.9 million as of September 30, 2018, compared to $149.7 million at December 31, 2017, and $147.4 million at September 30, 2017. As of September 30, 2018, our capital ratios continue to exceed the regulatory requirements for a “well capitalized” institution.

FINANCIAL HIGHLIGHTS - Unaudited

	Quarter Ended					3^rdQtr		Nine Months Ended				YTD
	September 30					2018-2017		September 30				2018-2017
(in thousands, except per share data)	2018			2017		% Change		2018		2017		% Change
Earnings Summary
Interest income	$	19,865		15,955		24.5	%	55,578		44,845		23.9	%
Interest expense		4,364		2,646		64.9	%	11,423		7,577		50.8	%
Net interest income		15,501		13,309		16.5	%	44,155		37,268		18.5	%
Provision for loan losses		400		500		(20.0	)%	1,300		1,500		(13.3	)%
Noninterest income		2,533		2,542		(0.4	)%	7,725		7,156		8.0	%
Noninterest expense		10,188		8,806		15.7	%	29,372		25,929		13.3	%
Income before provision for income taxes		7,446		6,545		13.8	%	21,208		16,995		24.8	%
Income tax expense		1,664		2,295		(27.5	)%	4,702		6,030		(22.0	)%
Net income available to common shareholders	$	5,782		4,250		36.0	%	16,506		10,965		50.5	%
Basic weighted average common shares		7,400		7,282		1.6	%	7,369		6,905		6.7	%
Diluted weighted average common shares		7,746		7,668		1.0	%	7,741		7,291		6.2	%
Earnings per common share – Basic	$	0.78		0.58		34.5	%	2.24		1.59		40.9	%
Earnings per common share – Diluted		0.75		0.55		36.4	%	2.13		1.50		42.0	%

	Quarter Ended					3rd Qtr		Quarter Ended
	September 30					2018-2017		June 30		March 31		December 31
(in thousands, except per share data)	2018			2017		% Change		2018		2018		2017
Balance Sheet Highlights
Assets	$	1,857,707		1,557,684		19.3	%	1,787,784		1,729,299		1,624,625
Investment securities		71,815		81,504		(11.9	)%	73,126		61,562		72,065
Mortgage loans held for sale		9,298		9,124		1.9	%	8,075		10,885		11,790
Loans⁽⁵⁾		1,620,201		1,327,739		22.0	%	1,533,447		1,459,382		1,387,070
Allowance for loan losses		16,140		15,579		3.6	%	16,100		15,852		15,523
Other real estate owned		117		420		(72.1	)%	117		242		242
Noninterest bearing deposits		300,331		272,759		10.1	%	310,709		297,892		295,680
Interest bearing deposits		1,289,152		1,069,818		20.5	%	1,257,273		1,222,631		1,085,443
Total deposits		1,589,483		1,342,577		18.4	%	1,567,982		1,520,523		1,381,123
Other borrowings		68,500		39,200		74.7	%	28,600		28,600		67,200
Junior subordinated debentures		13,403		13,403		-		13,403		13,403		13,403
Tangible common equity		166,944		147,449		13.2	%	160,856		154,739		149,686
Total shareholders’ equity		166,944		147,449		13.2	%	160,856		154,739		149,686
Common Stock
Book value per common share	$	22.41		20.15		11.2	%	21.66		20.96		20.37
Stock price:
High		47.00		37.45		25.5	%	48.35		46.55		42.90
Low		39.20		33.50		17.0	%	44.20		41.00		36.75
Period end		39.30		36.35		8.1	%	44.20		44.50		41.25
Common shares outstanding		7,449		7,319		1.8	%	7,426		7,382		7,348
Other
Loans to deposits		101.93	%	98.89	%	3.1	%	97.80	%	95.98	%	100.43	%
Team members		223		198		12.6	%	224		211		198
Average Balances($ in thousands):
Loans⁽⁵⁾	$	1,592,279		1,314,061		21.2	%	1,491,246		1,444,343		1,351,355
Deposits		1,555,618		1,328,481		17.1	%	1,543,045		1,431,967		1,369,547
Assets		1,786,656		1,549,875		15.3	%	1,757,155		1,645,846		1,589,206
Equity		164,100		145,294		12.9	%	157,575		152,374		149,928

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 and nine month periods.
(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) September 30, 2018 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 loans held for sale.

ASSET QUALITY MEASURES - Unaudited

	Quarter Ended
	September 30			June 30		March 31		December 31		September 30
(dollars in thousands)	2018			2018		2018		2017		2017
Nonperforming Assets
Commercial
Owner occupied RE	$	-		-		-		-		244
Non-owner occupied RE		1,680		1,689		1,525		1,581		2,049
Construction		-		-		-		-		-
Commercial business		89		94		102		910		1,116
Consumer
Real estate		1,153		1,174		1,091		992		1,267
Home equity		850		1,598		1,730		1,145		195
Construction		-		-		-		-		-
Other		-		-		-		1		2
Nonaccruing troubled debt restructurings		2,194		3,166		2,826		2,673		730
Total nonaccrual loans		5,966		7,721		7,274		7,302		5,603
Other real estate owned		117		117		242		242		420
Total nonperforming assets	$	6,083		7,838		7,516		7,544		6,023
Nonperforming assets as a percentage of:
Total assets		0.33	%	0.44	%	0.43	%	0.46	%	0.39	%
Total loans		0.38	%	0.51	%	0.52	%	0.54	%	0.45	%
Accruing troubled debt restructurings	$	6,699		7,397		5,649		5,145		6,954

	Quarter Ended
	September 30			June 30		March 31		December 31		September 30
(dollars in thousands)	2018			2018		2018		2017		2017
Allowance for Loan Losses
Balance, beginning of period	$	16,100		15,852		15,523		15,579		15,444
Loans charged-off		(556	)	(311	)	(293	)	(676	)	(399	)
Recoveries of loans previously charged-off		196		159		122		120		34
Net loans charged-off		(360	)	(152	)	(171	)	(556	)	(365	)
Provision for loan losses		400		400		500		500		500
Balance, end of period	$	16,140		16,100		15,852		15,523		15,579
Allowance for loan losses to gross loans		1.00	%	1.05	%	1.09	%	1.12	%	1.17	%
Allowance for loan losses to nonaccrual loans		270.54	%	208.52	%	217.92	%	212.60	%	278.05	%
Net charge-offs to average loans QTD (annualized)		0.09	%	0.04	%	0.05	%	0.17	%	0.11	%

LOAN COMPOSITION

	Quarter Ended
	September 30			June 30		March 31		December 31		September 30
(dollars in thousands)	2018			2018		2018		2017		2017
Commercial
Owner occupied RE	$	372,120		358,169		339,444		316,818		317,262
Non-owner occupied RE		399,166		355,309		339,231		312,798		301,360
Construction		68,415		73,655		56,210		51,179		32,332
Business		244,348		238,402		234,820		226,158		214,898
Total commercial loans		1,084,049		1,025,535		969,705		906,953		865,852
Consumer
Real estate		311,271		290,433		275,731		273,050		250,483
Home equity		163,654		156,630		155,507		156,141		150,371
Construction		38,015		38,400		35,017		28,351		38,766
Other		23,212		22,449		23,422		22,575		22,267
Total consumer loans		536,152		507,912		489,677		480,117		461,887
Total gross loans, net of deferred fees		1,620,201		1,533,447		1,459,382		1,387,070		1,327,739
Less—allowance for loan losses		(16,140	)	(16,100	)	(15,852	)	(15,523	)	(15,579	)
Total loans, net	$	1,604,061		1,517,347		1,443,530		1,371,547		1,312,160

DEPOSIT COMPOSITION

	Quarter Ended
	September 30		June 30	March 31	December 31	September 30
(dollars in thousands)	2018		2018	2018	2017	2017
Non-interest bearing	$	300,331	310,709	297,892	295,680	272,758
Interest bearing:
NOW accounts		237,860	251,511	243,418	229,945	209,607
Money market accounts		680,824	659,353	642,333	545,029	533,575
Savings		16,041	15,913	15,952	16,298	15,659
Time, less than $100,000		62,744	60,632	56,778	55,461	54,133
Time and out-of-market deposits, $100,000 and over		291,683	269,864	264,150	238,710	256,845
Total deposits	$	1,589,483	1,567,982	1,520,523	1,381,123	1,342,577

NONINTEREST INCOME & EXPENSE - Unaudited

	Quarter Ended					3^rdQtr		Nine Months Ended				YTD
	September 30					2018-2017		September 30				2018-2017
(dollars in thousands)	2018			2017		% Change		2018		2017		% Change
Noninterest income
Mortgage banking income	$	1,354		1,403		(3.5	)%	4,311		4,063		6.1	%
Service fees on deposit accounts		257		324		(20.7	)%	769		886		(13.2	)%
ATM and debit card income		381		284		34.2	%	1,085		818		32.6	%
Income from bank owned life insurance		221		224		(1.3	)%	662		590		12.2	%
Other income		320		307		4.2	%	898		799		12.4	%
Total noninterest income	$	2,533		2,542		(0.4	)%	7,725		7,156		8.0	%
Noninterest income to average assets⁽³⁾		0.56	%	0.65	%	(13.8	)%	0.60	%	0.65	%	(7.7	)%

Noninterest expense
Compensation and benefits	$	6,599		5,698		15.8	%	18,808		16,496		14.0	%
Occupancy		1,350		1,043		29.4	%	3,763		3,042		23.7	%
Data processing and related costs		841		794		5.9	%	2,400		2,362		1.6	%
Insurance		376		258		45.7	%	987		845		16.8	%
Professional fees		275		334		(17.7	)%	1,208		1,029		17.4	%
Marketing		215		199		8.0	%	652		605		7.8	%
Other		532		480		10.8	%	1,554		1,550		0.3	%
Total noninterest expenses	$	10,188		8,806		15.7	%	29,372		25,929		13.3	%
Noninterest expense to average assets⁽³⁾		2.26	%	2.25	%	0.4	%	2.27	%	2.35	%	(3.4	)%

AVERAGE YIELD/RATE - Unaudited

	Quarter Ended
	September 30		June 30		March 31		December 31		September 30
	2018		2018		2018		2017		2017
	Yield/Rate⁽³⁾
Interest-earning assets
Federal funds sold	1.95	%	1.82	%	1.62	%	1.29	%	1.31	%
Investment securities, taxable	2.65	%	2.49	%	2.18	%	1.95	%	2.05	%
Investment securities, nontaxable	3.89	%	3.68	%	4.19	%	3.91	%	3.67	%
Loans⁽¹⁰⁾	4.77	%	4.70	%	4.65	%	4.59	%	4.59	%
Total interest-earning assets	4.61	%	4.42	%	4.44	%	4.31	%	4.31	%
Interest-bearing liabilities
NOW accounts	0.20	%	0.17	%	0.15	%	0.16	%	0.18	%
Savings & money market	1.34	%	1.25	%	1.07	%	0.90	%	0.84	%
Time deposits	1.79	%	1.61	%	1.38	%	1.21	%	1.08	%
Total interest-bearing deposits	1.24	%	1.14	%	0.97	%	0.84	%	0.78	%
FHLB advances and other borrowings	3.13	%	3.35	%	3.25	%	3.36	%	3.50	%
Junior subordinated debentures	4.47	%	4.79	%	3.48	%	3.49	%	3.43	%
Total interest-bearing liabilities	1.33	%	1.23	%	1.06	%	0.96	%	0.93	%
Net interest spread	3.28	%	3.19	%	3.38	%	3.35	%	3.38	%
Net interest income (tax equivalent) / margin	3.60	%	3.49	%	3.63	%	3.59	%	3.60	%

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 third largest bank headquartered in South Carolina. Southern First Bancshares has been providing financial services since 1999 and now operates in 13 locations in the Greenville, Columbia, and Charleston markets of South Carolina, as well as the Triangle and Triad regions of North Carolina and Atlanta, Georgia. Southern First Bancshares has consolidated assets of approximately $1.9 billion and its common stock is traded on the NASDAQ Global Market under the symbol “SFST.” More information can be found atwww.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,” “continues,” “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 our 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). Any subsequent written and oral forward-looking statement 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

Southern First Bancshares (SFST) 8-KSouthern First Reports Results for Third Quarter of 2018