PR Newswire
GREENVILLE, S.C., July 25, 2023
GREENVILLE, S.C., July 25, 2023 /PRNewswire/ -- Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today announced its financial results for the three-month period ended June 30, 2023.
"I am proud of our team's performance during a volatile quarter for the banking industry," stated Art Seaver, the Company's Chief Executive Officer. "It was a strong quarter in terms of new deposit accounts, loan growth, mortgage production, and credit quality. We witnessed margin stabilization in the latter half of the quarter and expect continued momentum in the second half of the year."
2023 Second Quarter Highlights
- Net income was $2.5 million and diluted earnings per common share were $0.31 for Q2 2023
- Total deposits increased 20% to $3.4 billion at Q2 2023, compared to $2.9 billion at Q2 2022
- Total loans increased 24% to $3.5 billion at Q2 2023, compared to $2.8 billion at Q2 2022
- Book value per common share increased to $37.42 at Q2 2023, or 6%, over Q2 2022
- Credit quality remains strong with nonperforming assets to total assets of 0.08% and past due loans to total loans of 0.07% at Q2 2023
- Core deposits decreased 2% to $2.9 billion at Q2 2023, compared to Q1 2023 and increased 11% from Q2 2022
Quarter Ended | ||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||
2023 | 2023 | 2022 | 2022 | 2022 | ||
Earnings ($ in thousands, except per share data): | ||||||
Net income available to common shareholders | $ | 2,458 | 2,703 | 5,492 | 8,413 | 7,240 |
Earnings per common share, diluted | 0.31 | 0.33 | 0.68 | 1.05 | 0.90 | |
Total revenue(1) | 21,561 | 22,468 | 25,826 | 28,134 | 27,149 | |
Net interest margin (tax-equivalent)(2) | 2.05 % | 2.36 % | 2.88 % | 3.19 % | 3.35 % | |
Return on average assets(3) | 0.26 % | 0.30 % | 0.63 % | 1.00 % | 0.92 % | |
Return on average equity(3) | 3.27 % | 3.67 % | 7.44 % | 11.57 % | 10.31 % | |
Efficiency ratio(4) | 80.67 % | 76.12 % | 63.55 % | 57.03 % | 58.16 % | |
Noninterest expense to average assets (3) | 1.82 % | 1.89 % | 1.87 % | 1.92 % | 2.02 % | |
Balance Sheet ($ in thousands): | ||||||
Total loans(5) | $ | 3,537,616 | 3,417,945 | 3,273,363 | 3,030,027 | 2,845,205 |
Total deposits | 3,433,018 | 3,426,774 | 3,133,864 | 3,001,452 | 2,870,158 | |
Core deposits(6) | 2,880,507 | 2,946,567 | 2,759,112 | 2,723,592 | 2,588,283 | |
Total assets | 4,002,107 | 3,938,140 | 3,691,981 | 3,439,669 | 3,287,663 | |
Book value per common share | 37.42 | 37.16 | 36.76 | 35.99 | 35.39 | |
Loans to deposits | 103.05 % | 99.74 % | 104.45 % | 100.95 % | 99.13 % | |
Holding Company Capital Ratios(7): | ||||||
Total risk-based capital ratio | 12.38 % | 12.67 % | 12.91 % | 13.58 % | 13.97 % | |
Tier 1 risk-based capital ratio | 10.40 % | 10.66 % | 10.88 % | 11.49 % | 11.83 % | |
Leverage ratio | 8.48 % | 8.80 % | 9.17 % | 9.44 % | 9.71 % | |
Common equity tier 1 ratio(8) | 9.99 % | 10.23 % | 10.44 % | 11.02 % | 11.33 % | |
Tangible common equity(9) | 7.53 % | 7.60 % | 7.98 % | 8.37 % | 8.60 % | |
Asset Quality Ratios: | ||||||
Nonperforming assets/ total assets | 0.08 % | 0.12 % | 0.07 % | 0.08 % | 0.09 % | |
Classified assets/tier one capital plus allowance for credit losses | 4.68 % | 5.10 % | 4.71 % | 5.24 % | 7.29 % | |
Loans 30 days or more past due/ loans(5) | 0.07 % | 0.11 % | 0.11 % | 0.07 % | 0.10 % | |
Net charge-offs (recoveries)/average loans(5) (YTD annualized) | 0.03 % | 0.01 % | (0.05 %) | (0.06 %) | 0.02 % | |
Allowance for credit losses/loans(5) | 1.16 % | 1.18 % | 1.18 % | 1.20 % | 1.20 % | |
Allowance for credit losses/nonaccrual loans | 1,363.11 % | 854.33 % | 1,470.74 % | 1,388.87 % | 1,166.70 % | |
[Footnotes to table located on page 6] | ||||||
INCOME STATEMENTS – Unaudited | ||||||
Quarter Ended | ||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||
(in thousands, except per share data) | 2023 | 2023 | 2022 | 2022 | 2022 | |
Interest income | ||||||
Loans | $ | 41,089 | 36,748 | 33,939 | 29,752 | 26,610 |
Investment securities | 706 | 613 | 562 | 506 | 448 | |
Federal funds sold | 891 | 969 | 525 | 676 | 180 | |
Total interest income | 42,686 | 38,330 | 35,026 | 30,934 | 27,238 | |
Interest expense | ||||||
Deposits | 21,937 | 17,179 | 10,329 | 5,021 | 1,844 | |
Borrowings | 1,924 | 727 | 578 | 459 | 510 | |
Total interest expense | 23,861 | 17,906 | 10,907 | 5,480 | 2,354 | |
Net interest income | 18,825 | 20,424 | 24,119 | 25,454 | 24,884 | |
Provision for credit losses | 910 | 1,825 | 2,325 | 950 | 1,775 | |
Net interest income after provision for credit losses | 17,915 | 18,599 | 21,794 | 24,504 | 23,109 | |
Noninterest income | ||||||
Mortgage banking income | 1,337 | 622 | 291 | 1,230 | 1,184 | |
Service fees on deposit accounts | 331 | 325 | 316 | 318 | 327 | |
ATM and debit card income | 536 | 555 | 558 | 542 | 548 | |
Income from bank owned life insurance | 338 | 332 | 344 | 315 | 315 | |
Loss on disposal of fixed assets | - | - | - | - | (394) | |
Other income | 194 | 210 | 198 | 275 | 285 | |
Total noninterest income | 2,736 | 2,044 | 1,707 | 2,680 | 2,265 | |
Noninterest expense | ||||||
Compensation and benefits | 10,287 | 10,356 | 9,576 | 9,843 | 9,915 | |
Occupancy | 2,518 | 2,457 | 2,666 | 2,442 | 2,219 | |
Outside service and data processing costs | 1,705 | 1,629 | 1,521 | 1,529 | 1,528 | |
Insurance | 897 | 689 | 551 | 507 | 367 | |
Professional fees | 751 | 660 | 788 | 555 | 693 | |
Marketing | 335 | 366 | 282 | 338 | 329 | |
Other | 900 | 947 | 1,029 | 832 | 737 | |
Total noninterest expenses | 17,393 | 17,104 | 16,413 | 16,046 | 15,788 | |
Income before provision for income taxes | 3,258 | 3,539 | 7,088 | 11,138 | 9,586 | |
Income tax expense | 800 | 836 | 1,596 | 2,725 | 2,346 | |
Net income available to common | $ | 2,458 | 2,703 | 5,492 | 8,413 | 7,240 |
Earnings per common share – Basic | $ | 0.31 | 0.34 | 0.69 | 1.06 | 0.91 |
Earnings per common share – Diluted | 0.31 | 0.33 | 0.68 | 1.04 | 0.90 | |
Basic weighted average common shares | 8,051 | 8,026 | 7,971 | 7,972 | 7,945 | |
Diluted weighted average common shares | 8,069 | 8,092 | 8,071 | 8,065 | 8,075 | |
[Footnotes to table located on page 6] | ||||||
Net income for the second quarter of 2023 was $2.5 million, or $0.31 per diluted share, a $244 thousand decrease from the first quarter of 2023 and a $4.8 million decrease from the second quarter of 2022. Net interest income decreased $1.6 million for the second quarter of 2023, compared to the first quarter of 2023, and decreased $6.1 million, compared to the second quarter of 2022. The decrease in net interest income from the prior quarter and prior year was driven primarily by an increase in interest expense on our deposit accounts related to the Federal Reserve's 500-basis point interest rate hikes during the past 16 months.
The provision for credit losses was $910 thousand for the second quarter of 2023, compared to $1.8 million for the first quarter of 2023 and for the second quarter of 2022. The provision expense during the second quarter of 2023 includes a $1.1 million provision for loan losses and a $185 thousand reversal of the reserve for unfunded commitments.
Noninterest income totaled $2.7 million for the second quarter of 2023, a $692 thousand increase from the first quarter of 2023 and an $471 thousand increase from the second quarter of 2022. Mortgage banking income is the largest component of our noninterest income. For the second quarter of 2023, mortgage banking income was $1.3 million, an increase of $715 thousand from the prior quarter income and an $153 thousand increase from the second quarter of 2022.
Noninterest expense for the second quarter of 2023 was $17.4 million, a $288 thousand increase from the first quarter of 2023, and a $1.6 million increase from the second quarter of 2022. The increase in noninterest expense from the previous quarter was driven by increases in insurance expense and professional fees, 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 year, driven by annual salary increases and the hiring of new team members. Occupancy expense increased from the prior year due primarily to increased depreciation and maintenance expense on our new headquarters building, while insurance costs increased from the prior quarter and year due to higher FDIC insurance premiums.
Our effective tax rate was 24.5% for the second quarter of 2023, 23.6% for the first quarter of 2023, and 24.5% for the second quarter of 2022. The higher tax rate in the second quarter of 2023 as compared to the first quarter of 2023 relates primarily to the effect of equity compensation transactions on our tax rate during the quarter.
NET INTEREST INCOME AND MARGIN - Unaudited | ||||||||||||||
For the Three Months Ended | ||||||||||||||
June 30, 2023 | March 31, 2023 | June 30,2022 | ||||||||||||
(dollars in thousands) | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||
Interest-earning assets | ||||||||||||||
Federal funds sold and interest-bearing deposits | $ 71,004 | $ 891 | 5.03 % | $ 85,966 | $ 969 | 4.57 % | $ 80,909 | $ 180 | 0.89 % | |||||
Investment securities, taxable | 93,922 | 623 | 2.66 % | 87,521 | 530 | 2.46 % | 98,527 | 404 | 1.64 % | |||||
Investment securities, nontaxable(2) | 10,200 | 108 | 4.24 % | 10,266 | 106 | 4.21 % | 10,382 | 56 | 2.16 % | |||||
Loans(10) | 3,511,225 | 41,089 | 4.69 % | 3,334,530 | 36,748 | 4.47 % | 2,795,274 | 26,610 | 3.82 % | |||||
Total interest-earning assets | 3,686,351 | 42,711 | 4.65 % | 3,518,283 | 38,353 | 4.42 % | 2,985,092 | 27,250 | 3.66 % | |||||
Noninterest-earning assets | 155,847 | 161,310 | 154,659 | |||||||||||
Total assets | $3,842,198 | $3,679,593 | $3,139,751 | |||||||||||
Interest-bearing liabilities | ||||||||||||||
NOW accounts | $ 297,234 | 537 | 0.72 % | $ 303,176 | 440 | 0.59 % | $ 389,563 | 144 | 0.15 % | |||||
Savings & money market | 1,727,009 | 15,298 | 3.55 % | 1,661,878 | 11,992 | 2.93 % | 1,267,174 | 1,200 | 0.38 % | |||||
Time deposits | 573,095 | 6,102 | 4.27 % | 543,425 | 4,747 | 3.54 % | 278,101 | 500 | 0.72 % | |||||
Total interest-bearing deposits | 2,597,338 | 21,937 | 3.39 % | 2,508,479 | 17,179 | 2.78 | ||||||||
