Business News

Southern First Reports Results for Second Quarter 2008

2008-07-15 11:15:00

                   Operating Results Continue to Improve



    GREENVILLE, S.C., July 15 /EMWNews-FirstCall/ -- Southern First

Bancshares, Inc. (Nasdaq: SFST), holding company for Southern First Bank,

NA (also doing business as Greenville First Bank), today announced that net

income for the second quarter of 2008 was $862 thousand, or $0.27 per

diluted share, a 14.7% increase when compared to net income of $751

thousand or $0.23 per diluted share for the second quarter in 2007.



    Net income for the six months ended June 30, 2008 was $1.6 million, or

$0.50 per diluted share, a 5.9% decrease when compared to net income of

$1.7 million, or $0.53 per diluted share for the first six months in 2007.

Included in the first six months of 2007 was an after-tax gain of $210

thousand related to the sale of the bank's former main office building.



    Art Seaver, the company's CEO, stated that he was very pleased with the

company's second quarter performance, especially in light of the

challenging economic environment. "During the quarter, our company

maintained its focus on asset quality with non-performing assets remaining

stable at 0.74% of total assets at June 30, 2008. Annualized charge-offs

for the first six months were 0.22%, compared to 0.23% during the first six

months of 2007. In addition, our net interest margin began improving in the

second quarter, and we experienced solid growth in earnings." Our net

interest margin was 2.87% for the second quarter of 2008 compared to 2.81%

for the first quarter of 2008, and 3.06% for the second quarter of 2007.



    Mr. Seaver commented, "Like most other banks, we experienced a

"tightening" of our net interest margin as the Federal Reserve

significantly lowered short-term market rates. We continue to re-position

our bank to be able to minimize the financial impact of various changes in

market rates."



    Total non-performing assets at June 30, 2008 were 0.74% of total

assets. Non-performing loans totaled $3.1 million at June 30, 2008 and now

represent 0.56% of total loans at June 30, 2008, compared to 0.87% at

December 31, 2007 and 0.96% at June 30, 2007. "During the second quarter

our company's other real estate owned remained at $2.1 million. We believe

that these properties are valued appropriately," Mr. Seaver added.



    Return on average assets for the second quarter of 2008 was 0.50%

compared to 0.53% for the same quarter in 2007. Return on average

shareholders' equity for the second quarter of 2008 was 8.77% compared to

7.32% for the second quarter in 2007. The company's efficiency ratio was

61.82% for the 2008 second quarter compared to 65.59% for the 2007 second

quarter.



    Total assets grew to $697.9 million as of June 30, 2008, compared to

$684.0 million as of March 31, 2008 and $628.1 million at December 31,

2007. Loans were $546.5 million at June 30, 2008, compared to $536.8

million as of March 31, 2008 and $508.8 million at December 31, 2007. Mr.

Seaver added, "Although loan demand remains strong, we have chosen to

manage our level of growth in loans during the second quarter. Asset growth

is not a primary strategy of our company in the current operating

environment. Our current strategy is to preserve capital, manage portfolio

risk, improve our margins, and continue growing retail deposits." Deposits

grew to $482.9 million at June 30, 2008, compared to $412.8 million at

December 30, 2007. Mr. Seaver also announced that the Bank had just opened

two additional retail deposit offices in July. "We now have four offices in

Greenville and two offices in the Columbia market."



    The Company's book value per share was $12.90 as of June 30, 2008,

while the closing stock price was $11.49 per share.



    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

projected growth, or loan quality, and are thus prospective. Such

forward-looking statements are subject to risks, uncertainties, and other

factors, such as a downturn in the economy, greater than expected

non-interest expenses, excessive loan losses and other factors, which could

cause actual results to differ materially from future expressed or implied

by such forward-looking statements. For a more detailed description of

factors that could cause or contribute to such differences, please see our

filings with the Securities and Exchange Commission.



    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 future events, plans, or

expectations contemplated by our company will be achieved. We undertake no

obligation to publicly update or revise any forward-looking statements,

whether as a result of new information, future events, or otherwise.




SUMMARY CONSOLIDATED FINANCIAL DATA Our summary consolidated financial data as of and for the three and six months ended June 30, 2008 and 2007 have not been audited but, in the opinion of our management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our financial position and results of operations for such periods in accordance with generally accepted accounting principles. Three Months Six Months Ended June 30, Ended June 30, 2008 2007 2008 2007 (Dollars in thousands, except per share data) Summary Results of Operations Data: Interest income $ 10,304 $ 9,742 $ 20,646 $ 18,703 Interest expense 5,526 5,592 11,474 10,769 Net interest income 4,778 4,150 9,172 7,934 Provision for loan losses 700 380 1,300 840 Net interest income after provision for loan losses 4,078 3,770 7,872 7,094 Noninterest income 375 148 686 742 Noninterest expense 3,185 2,819 6,172 5,327 Income before taxes 1,268 1,099 2,386 2,509 Income tax expense 406 348 778 800 Net income $ 862 $ 751 $ 1,608 $ 1,709 Per Share Data: Net income, basic $ 0.29 $ 0.25 $ 0.54 $ 0.58 Net income, diluted $ 0.27 $ 0.23 $ 0.50 $ 0.53 Book value $ 12.90 $ 12.11 $ 12.90 $ 12.11 Weighted average number of shares outstanding: Basic 2,988 2,940 2,976 2,938 Diluted 3,185 3,241 3,186 3,244 Performance Ratios: Return on average assets (1) 0.50 % 0.53 % 0.48 % 0.63 % Return on average equity (1) 8.77 % 7.32 % 8.14 % 9.65 % Net interest margin (1) 2.87 % 3.06 % 2.85 % 3.04 % Efficiency ratio (2) 61.82 % 65.59 % 62.61 % 61.40 % Growth Ratios and Other Data: Percentage change in net income from the same period of the previous year 14.71 % (5.91)% Percentage change in diluted net income per share from the same period of the previous year 17.39 % (5.66)% SUMMARY OF CONSOLIDATED FINANCIAL DATA, CONTINUED At June 30, 2008 2007 (Dollars in thousands) Summary Balance Sheet Data: Assets $ 697,864 $ 573,108 Investment securities 123,119 83,294 Loans (3) 546,537 461,580 Allowance for loan losses 6,463 5,294 Deposits 482,946 384,283 Federal Home Loan Bank Advances and related debt 157,700 133,500 Junior subordinate debentures 13,403 13,403 Shareholders' equity 38,664 35,686 Asset Quality Ratios: Nonperforming assets, past due and restructured loans to total loans (3) 0.94 % 1.07 % Nonperforming assets, past due and restructured loans to total assets 0.74 % 0.86 % Net charge-offs year to date to average total loans (3)(4) 0.22 % 0.23 % Allowance for loan losses to nonperforming loans 210.33 % 119.44 % Allowance for loan losses to total loans (3) 1.18 % 1.15 % Capital Ratios: Average equity to average assets 5.88 % 6.50 % Leverage ratio 7.48 % 8.70 % Tier 1 risk-based capital ratio 9.13 % 10.60 % Total risk-based capital ratio 10.28 % 11.70 % Growth Ratios and Other Data: Percentage change in assets 21.77 % Percentage change in loans (3) 18.41 % Percentage change in deposits 25.67 % Percentage change in equity 8.34 % Loans to deposit ratio (3) 113.17 % (1) Annualized for the three and six month periods. (2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income. (3) Includes nonperforming loans. (4) Annualized for the six month period. FINANCIAL CONTACT: JIM AUSTIN 864-679-9070 MEDIA CONTACT: EDDIE TERRELL 864-679-9016

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