GREENVILLE, S.C., Oct. 25,
2022 /PRNewswire/ -- Southern First Bancshares,
Inc. (NASDAQ: SFST), holding company for Southern First
Bank, today announced its financial results for the three-month
period ended September 30, 2022.
"The third quarter saw exceptional growth for our company,
including opening a record number of new deposit accounts," stated
Art Seaver, the company's Chief
Executive Officer. "I am proud of the performance of our team as we
also experienced solid increases in total revenue and book value
during the quarter."
2022 Third Quarter Highlights
- Net income was $8.4 million
and diluted earnings per common share were $1.04 for Q3 2022
- Net interest income increased 14.8% to $25.5 million at Q3 2022, compared to
$22.2 million at Q3 2021
- Total loans increased 27% to $3.0
billion at Q3 2022, compared to $2.4
billion at Q3 2021
- Total deposits increased 23% to $3.0 billion at Q3 2022, compared to $2.4 billion at Q3 2021
- Book value per common share increased to $35.99, or 7%, over Q3 2021
|
|
Quarter
Ended
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Earnings ($ in
thousands, except per share data):
|
|
|
|
|
|
|
Net income available to
common shareholders
|
$
|
8,413
|
7,240
|
7,970
|
12,005
|
14,017
|
Earnings per common
share, diluted
|
|
1.05
|
0.90
|
0.98
|
1.49
|
1.75
|
Total
revenue(1)
|
|
28,134
|
27,149
|
26,091
|
26,194
|
26,411
|
Net interest margin
(tax-equivalent)(2)
|
|
3.19 %
|
3.35 %
|
3.37 %
|
3.35 %
|
3.38 %
|
Return on average
assets(3)
|
|
1.00 %
|
0.92 %
|
1.10 %
|
1.66 %
|
2.03 %
|
Return on average
equity(3)
|
|
11.57 %
|
10.31 %
|
11.60 %
|
17.61 %
|
21.67 %
|
Efficiency
ratio(4)
|
|
57.03 %
|
58.16 %
|
56.28 %
|
56.25 %
|
53.15 %
|
Noninterest expense to
average assets (3)
|
|
1.92 %
|
2.02 %
|
2.03 %
|
2.06 %
|
2.06 %
|
Balance Sheet ($
in thousands):
|
|
|
|
|
|
|
Total
loans(5)
|
$
|
3,030,027
|
2,845,205
|
2,660,675
|
2,489,877
|
2,389,047
|
Total
deposits
|
|
3,001,452
|
2,870,158
|
2,708,174
|
2,563,826
|
2,433,018
|
Core
deposits(6)
|
|
2,723,592
|
2,588,283
|
2,541,113
|
2,479,412
|
2,367,841
|
Total assets
|
|
3,439,669
|
3,287,663
|
3,073,234
|
2,925,548
|
2,784,176
|
Book value per common
share
|
|
35.99
|
35.39
|
34.90
|
35.07
|
33.57
|
Loans to
deposits
|
|
100.95 %
|
99.13 %
|
98.25 %
|
97.12 %
|
98.19 %
|
Holding Company
Capital Ratios(7):
|
|
|
|
|
|
|
Total risk-based
capital ratio
|
|
13.75 %
|
13.97 %
|
14.37 %
|
14.90 %
|
14.88 %
|
Tier 1 risk-based
capital ratio
|
|
11.65 %
|
11.83 %
|
12.18 %
|
12.65 %
|
12.59 %
|
Leverage
ratio
|
|
9.44 %
|
9.71 %
|
10.12 %
|
10.18 %
|
10.20 %
|
Common equity tier 1
ratio(8)
|
|
11.17 %
|
11.33 %
|
11.65 %
|
12.09 %
|
12.00 %
|
Tangible common
equity(9)
|
|
8.37 %
|
8.60 %
|
9.06 %
|
9.50 %
|
9.54 %
|
Asset Quality
Ratios:
|
|
|
|
|
|
|
Nonperforming assets/
total assets
|
|
0.08 %
|
0.09 %
|
0.15 %
|
0.17 %
|
0.50 %
|
Classified assets/tier
one capital plus allowance for credit losses
|
|
5.24 %
|
7.29 %
|
7.83 %
|
12.61 %
|
14.90 %
|
Loans 30 days or more
past due/ loans(5)
|
|
0.07 %
|
0.10 %
|
0.13 %
|
0.09 %
|
0.49 %
|
Net charge-offs
(recoveries)/average loans(5) (YTD
annualized)
|
|
(0.06 %)
|
0.02 %
|
0.00 %
|
0.06 %
|
(0.01 %)
|
Allowance for credit
losses/loans(5)
|
|
1.20 %
|
1.20 %
|
1.24 %
|
1.22 %
|
1.51 %
|
Allowance for credit
losses/nonaccrual loans
|
|
1,388.87 %
|
1,166.70 %
|
726.88 %
|
625.16 %
|
259.95 %
|
[Footnotes to
table located on page 6]
|
INCOME STATEMENTS –
Unaudited
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
Sept
30
|
June
30
|
Mar
31
|
Dec
31
|
Sept
30
|
(in thousands, except
per share data)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Interest
income
|
|
|
|
|
|
|
Loans
|
$
|
29,752
|
26,610
|
23,931
|
23,661
|
23,063
|
Investment
securities
|
|
506
|
448
|
474
|
410
|
355
|
Federal funds
sold
|
|
676
|
180
|
59
|
66
|
68
|
Total interest
income
|
|
30,934
|
27,238
|
24,464
|
24,137
|
23,486
|
Interest
expense
|
|
|
|
|
|
|
Deposits
|
|
5,021
|
1,844
|
908
|
900
|
934
|
Borrowings
|
|
459
|
510
|
392
|
380
|
380
|
Total interest
expense
|
|
5,480
|
2,354
|
1,300
|
1,280
|
1,314
|
Net interest
income
|
|
25,454
|
24,884
|
23,164
|
22,857
|
22,172
|
Provision (reversal)
for credit losses
|
|
950
|
1,775
|
1,105
|
(4,200)
|
(6,000)
|
Net interest income
after provision for credit losses
|
|
24,504
|
23,109
|
22,059
|
27,057
|
28,172
|
Noninterest
income
|
|
|
|
|
|
|
Mortgage banking
income
|
|
1,230
|
1,184
|
1,494
|
1,931
|
2,829
|
Service fees on deposit
accounts
|
|
194
|
209
|
191
|
200
|
199
|
ATM and debit card
income
|
|
559
|
563
|
528
|
560
|
542
|
Income from bank owned
life insurance
|
|
315
|
315
|
315
|
312
|
321
|
Loss on disposal of
fixed assets
|
|
-
|
(394)
|
-
|
-
|
-
|
Other income
|
|
382
|
388
|
399
|
334
|
348
|
Total
noninterest income
|
|
2,680
|
2,265
|
2,927
|
3,337
|
4,239
|
Noninterest
expense
|
|
|
|
|
|
|
Compensation and
benefits
|
|
9,843
|
9,915
|
9,456
|
9,208
|
9,064
|
Occupancy
|
|
2,442
|
2,219
|
1,778
|
2,081
|
1,685
|
Outside service and
data processing costs
|
|
1,529
|
1,528
|
1,533
|
1,395
|
1,368
|
Insurance
|
|
507
|
367
|
260
|
342
|
244
|
Professional
fees
|
|
555
|
693
|
599
|
682
|
694
|
Marketing
|
|
338
|
329
|
269
|
260
|
248
|
Other
|
|
832
|
737
|
790
|
767
|
736
|
Total
noninterest expenses
|
|
16,046
|
15,788
|
14,685
|
14,735
|
14,039
|
Income before provision
for income taxes
|
|
11,138
|
9,586
|
10,301
|
15,659
|
18,372
|
Income tax
expense
|
|
2,725
|
2,346
|
2,331
|
3,654
|
4,355
|
Net income available
to common shareholders
|
$
|
8,413
|
7,240
|
7,970
|
12,005
|
14,017
|
|
|
|
|
|
|
|
Earnings per common
share – Basic
|
$
|
1.06
|
0.91
|
1.00
|
1.52
|
1.78
|
Earnings per common
share – Diluted
|
|
1.04
|
0.90
|
0.98
|
1.49
|
1.75
|
Basic weighted average
common shares
|
|
7,972
|
7,945
|
7,932
|
7,877
|
7,874
|
Diluted weighted
average common shares
|
|
8,065
|
8,075
|
8,096
|
8,057
|
8,001
|
[Footnotes to table
located on page 6]
|
Net income for the third quarter of 2022 was $8.4 million, or $1.04 per diluted share, a $1.2 million increase from the second quarter of
2022 and a $5.6 million decrease from
the third quarter of 2021. The increase in net income from
the second quarter was driven by an increase in net interest income
and a reduction in the provision for credit losses, partially
offset by an increase in noninterest expenses. In addition,
there was a loss on disposal of fixed assets recorded during the
second quarter period. Net income for the third quarter of
2022 decreased from the prior year due primarily to an increase in
the provision for credit losses, a decrease in mortgage banking
income and an increase in noninterest expenses. In addition,
net interest income increased $570
thousand, or 2.3%, for the third quarter of 2022, compared
with the second quarter of 2022, and increased $3.3 million, or 14.8%, compared to the third
quarter of 2021. The increase in net interest income was driven by
$184.8 million of loan growth during
the third quarter of 2022.
The provision for credit losses was $950
thousand for the third quarter of 2022, compared to
$1.8 million for the second quarter
of 2022 and a reversal of $6.0
million for the third quarter of 2021. The provision
expense during the third quarter of 2022, calculated under the new
Current Expected Credit Loss ("CECL") methodology, includes a
$525 thousand provision for loan
losses and a $425 thousand provision
for unfunded commitments. We received a $1.5 million recovery on a previously charged-off
loan during the third quarter of 2022 that drove the decrease in
provision expense from the second quarter and the prior year
periods. The reversal in the provision during the third
quarter of 2021 was driven by improvement in economic conditions
after the onset of the pandemic.
Noninterest income totaled $2.7
million for the third quarter of 2022, a $415 thousand increase from the second quarter of
2022 and a $1.6 million decrease from
the third quarter of 2021. As the largest component of our
noninterest income, mortgage banking income improved slightly from
the prior quarter, but decreased by $1.6
million from the prior year due to lower mortgage
origination volume during the past 12 months. In addition, we
recorded a loss on disposal of assets during the second quarter of
2022 as we completed construction and relocated to our new
headquarters building in Greenville, South Carolina.
Noninterest expense for the third quarter of 2022 was
$16.0 million, or a $258 thousand increase from the second quarter of
2022, and a $2.0 million increase
from the third quarter of 2021. The increase in noninterest expense
from the previous quarter was driven by increases in occupancy 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 decreased slightly from
the second quarter driven by less benefits expense and increased
from the prior year due to hiring of new team members, combined
with annual salary increases. Occupancy expense increased from the
prior quarter and prior year due to costs associated with the
relocation of our headquarters, while our insurance costs increased
during the second quarter of 2022 related to higher FDIC insurance
premiums.
Our effective tax rate was 24.5% for the second and third
quarters of 2022 and 23.7% for the third quarter of 2021. The
higher tax rate in the third quarter of 2022 relates to the lesser
impact of equity compensation transactions on our tax rate during
the quarter.
NET INTEREST INCOME
AND MARGIN - Unaudited
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
September 30, 2022
|
June 30, 2022
|
September 30, 2021
|
(dollars in
thousands)
|
Average
Balance
|
Income/
Expense
|
Yield/
Rate(3)
|
Average
Balance
|
Income/
Expense
|
Yield/
Rate(3)
|
Average
Balance
|
Income/
Expense
|
Yield/
Rate(3)
|
Interest-earning
assets
|
|
|
|
|
|
|
|
|
|
Federal funds sold and
interest-bearing deposits
|
$ 122,071
|
$ 676
|
2.20 %
|
$ 80,909
|
$ 180
|
0.89 %
|
$
145,899
|
$ 68
|
0.18 %
|
Investment
securities, taxable
|
91,462
|
449
|
1.95 %
|
98,527
|
404
|
1.64 %
|
93,428
|
301
|
1.28 %
|
Investment
securities, nontaxable(2)
|
10,160
|
74
|
2.89 %
|
10,382
|
56
|
2.16 %
|
10,974
|
70
|
2.54 %
|
Loans(10)
|
2,941,350
|
29,752
|
4.01 %
|
2,795,274
|
26,610
|
3.82 %
|
2,351,467
|
23,063
|
3.89 %
|
Total interest-earning assets
|
3,165,043
|
30,951
|
3.88 %
|
2,985,092
|
27,250
|
3.66 %
|
2,601,768
|
23,502
|
3.58 %
|
Noninterest-earning assets
|
159,233
|
|
|
154,659
|
|
|
132,929
|
|
|
Total assets
|
$3,324,726
|
|
|
$3,139,751
|
|
|
$2,734,697
|
|
|
Interest-bearing
liabilities
|
|
|
|
|
|
|
|
|
|
NOW accounts
|
$
361,500
|
178
|
0.20 %
|
$
389,563
|
144
|
0.15 %
|
$
316,775
|
48
|
0.06 %
|
Savings & money
market
|
1,417,181
|
3,663
|
1.03 %
|
1,267,174
|
1,200
|
0.38 %
|
1,209,991
|
651
|
0.21 %
|
Time
deposits
|
361,325
|
1,180
|
1.30 %
|
278,101
|
500
|
0.72 %
|
161,300
|
235
|
0.58 %
|
Total interest-bearing
deposits
|
2,140,006
|
5,021
|
0.93 %
|
1,934,838
|
1,844
|
0.38 %
|
1,688,066
|
934
|
0.22 %
|
FHLB advances and other
borrowings
|
1,357
|
10
|
2.92 %
|
53,179
|
105
|
0.79 %
|
-
|
-
|
- %
|
Subordinated
debentures
|
36,169
|
449
|
4.93 %
|
36,143
|
405
|
4.49 %
|
36,062
|
380
|
4.18 %
|
Total interest-bearing
liabilities
|
2,177,532
|
5,480
|
1.00 %
|
2,024,160
|
2,354
|
0.47 %
|
1,724,128
|
1,314
|
0.30 %
|
Noninterest-bearing
liabilities
|
858,202
|
|
|
833,943
|
|
|
753,901
|
|
|
Shareholders'
equity
|
288,542
|
|
|
281,648
|
|
|
256,668
|
|
|
Total liabilities and
shareholders' equity
|
$3,324,276
|
|
|
$3,139,751
|
|
|
$2,734,697
|
|
|
Net interest
spread
|
|
|
2.88 %
|
|
|
3.19 %
|
|
|
3.28 %
|
Net interest income
(tax equivalent) / margin
|
|
$25,471
|
3.19 %
|
|
$24,896
|
3.35 %
|
|
$22,188
|
3.38 %
|
Less:
tax-equivalent adjustment(2)
|
|
17
|
|
|
12
|
|
|
16
|
|
Net interest
income
|
|
$25,454
|
|
|
$24,884
|
|
|
$22,172
|
|
[Footnotes to table
located on page 6]
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income was $25.5
million for the third quarter of 2022, a $570 thousand increase from the second quarter,
resulting primarily from a $3.7
million increase in interest income, on a tax-equivalent
basis, partially offset by a $3.1
million increase in interest expense. The increase in
interest income was driven by $146.1
million growth in average loan balances at an average rate
of 4.01%, 19-basis points higher than the previous quarter.
In comparison to the third quarter of 2021, net interest
income increased $3.3 million,
resulting primarily from $589.9
million growth in average loan balances during the 2022
period, combined with a 12-basis point increase in loan yield.
Our net interest margin, on a tax-equivalent basis, was 3.19%
for the third quarter of 2022, a 16-basis point decrease from 3.35%
for the third quarter of 2022, and a 19-basis point decrease from
3.38% for the third quarter of 2021. As a result of the
Federal Reserve's 300-basis point interest rate hikes during the
first nine months of 2022, the yield on our interest-earning assets
has increased by 30-basis points during the third quarter of 2022
in comparison to the third quarter of 2021. However, the rate on
our interest-bearing liabilities has increased by 70-basis points
during the same time period, resulting in the lower net interest
margin during the third quarter of 2022.
BALANCE SHEETS -
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Ending
Balance
|
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
|
(in thousands, except
per share data)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents:
|
|
|
|
|
|
|
|
Cash and due
from banks
|
$
|
16,530
|
21,090
|
20,992
|
21,770
|
17,944
|
|
Federal funds
sold
|
|
139,544
|
124,462
|
95,093
|
86,882
|
47,440
|
|
Interest-bearing
deposits with banks
|
|
4,532
|
36,538
|
33,131
|
58,557
|
63,149
|
|
Total cash and cash equivalents
|
|
160,606
|
182,090
|
149,216
|
167,209
|
128,533
|
|
Investment
securities:
|
|
|
|
|
|
|
|
Investment
securities available for sale
|
|
91,521
|
98,991
|
106,978
|
120,281
|
113,802
|
|
Other
investments
|
|
5,449
|
5,065
|
4,104
|
4,021
|
2,820
|
|
Total investment securities
|
|
96,970
|
104,056
|
111,082
|
124,302
|
116,622
|
|
Mortgage loans held for
sale
|
|
9,243
|
18,329
|
17,840
|
13,556
|
31,641
|
|
Loans
(5)
|
|
3,030,027
|
2,845,205
|
2,660,675
|
2,489,877
|
2,389,047
|
|
Less allowance for
credit losses
|
|
(36,317)
|
(34,192)
|
(32,944)
|
(30,408)
|
(36,075)
|
|
Loans, net
|
|
2,993,710
|
2,811,013
|
2,627,731
|
2,459,469
|
2,352,972
|
|
Bank owned life
insurance
|
|
50,778
|
50,463
|
50,148
|
49,833
|
49,521
|
|
Property and equipment,
net
|
|
99,530
|
96,674
|
95,129
|
92,370
|
78,456
|
|
Deferred income
taxes
|
|
18,425
|
15,078
|
10,635
|
8,397
|
16,591
|
|
Other assets
|
|
10,407
|
9,960
|
10,859
|
10,412
|
9,840
|
|
Total assets
|
$
|
3,439,669
|
3,287,663
|
3,072,640
|
2,925,548
|
2,784,176
|
|
Liabilities
|
|
|
|
|
|
|
|
Deposits
|
$
|
3,001,452
|
2,870,158
|
2,708,174
|
2,563,826
|
2,433,018
|
|
FHLB
Advances
|
|
60,000
|
50,000
|
-
|
-
|
-
|
|
Subordinated
debentures
|
|
36,187
|
36,160
|
36,133
|
36,106
|
36,079
|
|
Other
liabilities
|
|
54,245
|
48,708
|
49,809
|
47,715
|
49,450
|
|
Total liabilities
|
|
3,151,884
|
3,005,026
|
2,794,116
|
2,647,647
|
2,518,547
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
Preferred stock - $.01
par value; 10,000,000 shares authorized
|
|
-
|
-
|
-
|
-
|
-
|
|
Common Stock - $.01 par
value; 10,000,000 shares authorized
|
|
80
|
80
|
80
|
79
|
79
|
|
Nonvested restricted
stock
|
|
(3,348)
|
(3,230)
|
(3,425)
|
(1,435)
|
(1,469)
|
|
Additional paid-in
capital
|
|
118,433
|
117,714
|
117,286
|
114,226
|
113,501
|
|
Accumulated other
comprehensive income (loss)
|
|
(14,009)
|
(10,143)
|
(6,393)
|
(740)
|
(248)
|
|
Retained
earnings
|
|
186,629
|
178,216
|
170,976
|
165,771
|
153,766
|
|
Total shareholders' equity
|
|
287,785
|
282,637
|
278,524
|
277,901
|
265,629
|
|
Total liabilities and shareholders' equity
|
$
|
3,439,669
|
3,287,663
|
3,072,640
|
2,925,548
|
2,784,176
|
|
Common
Stock
|
|
|
|
|
|
|
|
Book value per common
share
|
$
|
35.99
|
35.39
|
34.90
|
35.07
|
33.57
|
|
Stock price:
|
|
|
|
|
|
|
|
High
|
|
47.16
|
50.09
|
65.02
|
64.73
|
53.50
|
|
Low
|
|
41.66
|
42.25
|
50.84
|
52.73
|
48.62
|
|
Period
end
|
|
41.66
|
43.59
|
50.84
|
62.49
|
53.50
|
|
Common shares
outstanding
|
|
7,997
|
7,986
|
7,981
|
7,925
|
7,913
|
|
[Footnotes to table
located on page 6]
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
MEASURES - Unaudited
|
|
|
|
|
Quarter
Ended
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
(dollars in
thousands)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Nonperforming
Assets
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
Non-owner
occupied RE
|
$
|
253
|
259
|
265
|
270
|
7,400
|
Commercial
business
|
|
79
|
-
|
-
|
-
|
1,469
|
Consumer
|
|
|
|
|
|
|
Real
estate
|
|
-
|
183
|
739
|
989
|
1,461
|
Home
equity
|
|
197
|
200
|
815
|
653
|
818
|
Nonaccruing troubled
debt restructurings
|
|
2,086
|
2,289
|
2,713
|
2,952
|
2,730
|
Total nonaccrual
loans
|
|
2,615
|
2,931
|
4,532
|
4,864
|
13,878
|
Other real estate
owned
|
|
-
|
-
|
-
|
-
|
-
|
Total nonperforming
assets
|
$
|
2,615
|
2,931
|
4,532
|
4,864
|
13,878
|
Nonperforming assets as
a percentage of:
|
|
|
|
|
|
|
Total
assets
|
|
0.08 %
|
0.09 %
|
0.15 %
|
0.17 %
|
0.50 %
|
Total
loans
|
|
0.09 %
|
0.10 %
|
0.17 %
|
0.20 %
|
0.58 %
|
Accruing troubled debt
restructurings (TDRs)
|
$
|
4,683
|
3,558
|
3,241
|
3,299
|
4,044
|
Classified assets/tier
1 capital plus allowance for credit losses
|
|
5.24 %
|
7.29 %
|
7.83 %
|
12.61 %
|
14.90 %
|
|
|
Quarter
Ended
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
(dollars in
thousands)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Allowance for Credit
Losses
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
34,192
|
32,944
|
30,408
|
36,075
|
41,912
|
CECL
adjustment
|
|
-
|
-
|
1,500
|
-
|
-
|
Loans
charged-off
|
|
-
|
(316)
|
(169)
|
(1,509)
|
(243)
|
Recoveries of loans
previously charged-off
|
|
1,600
|
39
|
180
|
42
|
406
|
Net loans
(charged-off) recovered
|
|
1,600
|
(277)
|
11
|
(1,467)
|
163
|
Provision for credit
losses
|
|
525
|
1,525
|
1,025
|
(4,200)
|
(6,000)
|
Balance, end of
period
|
$
|
36,317
|
34,192
|
32,944
|
30,408
|
36,075
|
Allowance for credit
losses to gross loans
|
|
1.20 %
|
1.20 %
|
1.24 %
|
1.22 %
|
1.51 %
|
Allowance for credit
losses to nonaccrual loans
|
|
1,388.87 %
|
1,166.70 %
|
726.88 %
|
625.22 %
|
259.95 %
|
Net charge-offs to
average loans QTD (annualized)
|
|
(0.22 %)
|
0.04 %
|
0.00 %
|
0.24 %
|
(0.03 %)
|
Total nonperforming assets decreased by $316 thousand to $2.6
million for the third quarter of 2022, representing 0.08% of
total assets, compared to 0.09% in the second quarter of 2022. The
allowance for credit losses as a percentage of nonaccrual loans was
1,388.9% on September 30, 2022,
compared to 1,166.7% on June 30, 2022
and 260.0% on September 30, 2021.
During the third quarter of 2022, our classified asset ratio
improved to 5.24%. The improvement over the third quarter of 2021
was primarily the result of six hotel loans, or $18.5 million in the aggregate, we upgraded from
substandard during the first nine months of 2022.
Effective January 1, 2022, we
early adopted the CECL methodology for estimating credit losses,
which resulted in an increase of $1.5
million to our allowance for credit losses and an increase
of $2.0 million to our reserve for
unfunded commitments. The tax-effected impact of these two items
totaled $2.8 million and was recorded
as an adjustment to our retained earnings as of January 1, 2022.
On September 30, 2022, the
allowance for credit losses was $36.3
million, or 1.20% of total loans, compared to $34.2 million, or 1.20% of total loans, at
June 30, 2022, and $36.1 million, or 1.51% of total loans, at
September 30, 2021. We had net
recoveries of $1.6 million, or
(0.22%) annualized, for the third quarter of 2022 compared to net
charge-offs of $277 thousand for the
second quarter of 2022. Net recoveries were $163 thousand for the third quarter of 2021.
There was a provision for credit losses of $525 thousand for the third quarter of 2022
compared to a provision of $1.5
million for the second quarter of 2022 and a reversal of
$6.0 million for the third quarter of
2021.
LOAN COMPOSITION
- Unaudited
|
|
|
|
Quarter Ended
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
(dollars in
thousands)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Commercial
|
|
|
|
|
|
|
Owner occupied
RE
|
$
|
572,972
|
551,544
|
527,776
|
488,965
|
470,614
|
Non-owner occupied
RE
|
|
799,569
|
741,263
|
705,811
|
666,833
|
628,521
|
Construction
|
|
85,850
|
84,612
|
75,015
|
64,425
|
87,892
|
Business
|
|
419,312
|
389,790
|
352,932
|
333,049
|
307,969
|
Total commercial
loans
|
|
1,877,703
|
1,767,209
|
1,661,534
|
1,553,272
|
1,494,996
|
Consumer
|
|
|
|
|
|
|
Real estate
|
|
873,471
|
812,130
|
745,667
|
694,401
|
648,276
|
Home equity
|
|
171,904
|
161,512
|
155,678
|
154,839
|
155,049
|
Construction
|
|
77,798
|
76,878
|
72,627
|
59,846
|
57,419
|
Other
|
|
29,151
|
27,476
|
25,169
|
27,519
|
33,307
|
Total consumer
loans
|
|
1,152,324
|
1,077,996
|
999,141
|
936,605
|
894,051
|
Total gross loans, net
of deferred fees
|
|
3,030,027
|
2,845,205
|
2,660,675
|
2,489,877
|
2,389,047
|
Less—allowance for
credit losses
|
|
(36,317)
|
(34,192)
|
(32,944)
|
(30,408)
|
(36,075)
|
Total loans,
net
|
$
|
2,993,710
|
2,811,013
|
2,627,731
|
2,459,469
|
2,352,972
|
DEPOSIT COMPOSITION
- Unaudited
|
|
|
|
Quarter Ended
|
|
|
September
30
|
June
30
|
March
31
|
December
31
|
September
30
|
(dollars in
thousands)
|
|
2022
|
2022
|
2022
|
2021
|
2021
|
Non-interest
bearing
|
$
|
791,050
|
799,169
|
779,262
|
768,650
|
720,444
|
Interest
bearing:
|
|
|
|
|
|
|
NOW
accounts
|
|
357,862
|
364,189
|
416,322
|
401,788
|
331,167
|
Money
market accounts
|
|
1,452,958
|
1,320,329
|
1,238,866
|
1,201,099
|
1,188,666
|
Savings
|
|
42,335
|
41,944
|
41,630
|
39,696
|
34,018
|
Time, less
than $250,000
|
|
79,387
|
62,340
|
57,972
|
61,122
|
65,177
|
Time and
out-of-market deposits, $250,000 and over
|
|
277,860
|
282,187
|
174,122
|
91,471
|
93,546
|
Total
deposits
|
$
|
3,001,452
|
2,870,158
|
2,708,174
|
2,563,826
|
2,433,018
|
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) September 30,
2022 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 $3.4 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," 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.
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 have a negative impact on the company; (7)
changes in interest rates, which may 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)
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.
FINANCIAL CONTACT: MIKE
DOWLING 864-679-9070
MEDIA CONTACT: ART SEAVER
864-679-9010
WEB SITE: www.southernfirst.com
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SOURCE Southern First Bancshares, Inc.