Southern First Reports Results for Third Quarter 2023
- Net income was $4.1 million, diluted earnings per share were $0.51 for Q3 2023
- Core deposits remained at $2.9 billion and increased 5% from Q3 2022
- Total loans increased 2% to $3.6 billion compared to Q2 2023 and increased 17% from Q3 2022
- Book value per common share increased to $37.57, a 4% increase from Q3 2022
- Net interest margin was 1.97% for Q3 2023, compared to 2.05% for Q2 2023 and 3.19% for Q3 2022
- Improvement in common equity tier 1 and risk-based capital ratios during Q3 2023 compared to Q2 2023
- Loan demand declined due to increased interest rates by the Federal Reserve
"Our team generated improved performance over the prior quarter as evidenced by the growth in book value, general margin stability, capital accretion, and outstanding credit quality," stated Art Seaver, the Company's Chief Executive Officer. "While the monetary policy of the Federal Reserve has increased interest rates dramatically and resulted in a significant decline in loan demand, we are proud of our efforts to grow client relationships and support the needs of our clients and communities."
2023 Third Quarter Highlights
- Net income was
and diluted earnings per common share were$4.1 million for Q3 2023$0.51 - Core deposits remained at
at Q3 2023, compared to Q2 2023 and increased$2.9 billion 5% from Q3 2022 - Total loans increased
2% (annualized) to at Q3 2023, compared to Q2 2023 and increased$3.6 billion 17% , from at Q3 2022$3.0 billion - Book value per common share increased to
at Q3 2023, or$37.57 4% , over Q3 2022 - Credit quality remains strong with nonperforming assets to total assets of
0.11% and past due loans to total loans of0.13% at Q3 2023 - Net interest margin was
1.97% for Q3 2023, compared to2.05% for Q2 2023 and3.19% for Q3 2022 - Improvement in common equity tier 1 and risk-based capital ratios during Q3 2023, compared to Q2 2023
Quarter Ended | ||||||
September 30 | June 30 | March 31 | December 31 | September 30 | ||
2023 | 2023 | 2023 | 2022 | 2022 | ||
Earnings ($ in thousands, except per share data): | ||||||
Net income available to common shareholders | $ | 4,098 | 2,458 | 2,703 | 5,492 | 8,413 |
Earnings per common share, diluted | 0.51 | 0.31 | 0.33 | 0.68 | 1.04 | |
Total revenue(1) | 22,094 | 21,561 | 22,468 | 25,826 | 28,134 | |
Net interest margin (tax-equivalent)(2) | 1.97 % | 2.05 % | 2.36 % | 2.88 % | 3.19 % | |
Return on average assets(3) | 0.40 % | 0.26 % | 0.30 % | 0.63 % | 1.00 % | |
Return on average equity(3) | 5.35 % | 3.27 % | 3.67 % | 7.44 % | 11.57 % | |
Efficiency ratio(4) | 78.31 % | 80.67 % | 76.12 % | 63.55 % | 57.03 % | |
Noninterest expense to average assets (3) | 1.69 % | 1.82 % | 1.89 % | 1.87 % | 1.92 % | |
Balance Sheet ($ in thousands): | ||||||
Total loans(5) | $ | 3,553,632 | 3,537,616 | 3,417,945 | 3,273,363 | 3,030,027 |
Total deposits | 3,347,771 | 3,433,018 | 3,426,774 | 3,133,864 | 3,001,452 | |
Core deposits(6) | 2,866,574 | 2,880,507 | 2,946,567 | 2,759,112 | 2,723,592 | |
Total assets | 4,019,957 | 4,002,107 | 3,938,140 | 3,691,981 | 3,439,669 | |
Book value per common share | 37.57 | 37.42 | 37.16 | 36.76 | 35.99 | |
Loans to deposits | 106.15 % | 103.05 % | 99.74 % | 104.45 % | 100.95 % | |
Holding Company Capital Ratios(7): | ||||||
Total risk-based capital ratio | 12.56 % | 12.40 % | 12.67 % | 12.91 % | 13.58 % | |
Tier 1 risk-based capital ratio | 10.58 % | 10.42 % | 10.66 % | 10.88 % | 11.49 % | |
Leverage ratio | 8.17 % | 8.48 % | 8.80 % | 9.17 % | 9.44 % | |
Common equity tier 1 ratio(8) | 10.17 % | 10.00 % | 10.23 % | 10.44 % | 11.02 % | |
Tangible common equity(9) | 7.56 % | 7.53 % | 7.60 % | 7.98 % | 8.37 % | |
Asset Quality Ratios: | ||||||
Nonperforming assets/ total assets | 0.11 % | 0.08 % | 0.12 % | 0.07 % | 0.08 % | |
Classified assets/tier one capital plus allowance for credit losses | 4.72 % | 4.68 % | 5.10 % | 4.71 % | 5.24 % | |
Loans 30 days or more past due/ loans(5) | 0.13 % | 0.07 % | 0.11 % | 0.11 % | 0.07 % | |
Net charge-offs (recoveries)/average loans(5) (YTD annualized) | 0.01 % | 0.03 % | 0.01 % | (0.05 %) | (0.06 %) | |
Allowance for credit losses/loans(5) | 1.16 % | 1.16 % | 1.18 % | 1.18 % | 1.20 % | |
Allowance for credit losses/nonaccrual loans | 953.25 % | 1,363.11 % | 854.33 % | 1,470.74 % | 1,388.87 % | |
[Footnotes to table located on page 6] |
INCOME STATEMENTS – Unaudited | ||||||
Quarter Ended | ||||||
September 30 | June 30 | March 31 | December 31 | September 30 | ||
(in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | |
Interest income | ||||||
Loans | $ | 43,542 | 41,089 | 36,748 | 33,939 | 29,752 |
Investment securities | 1,470 | 706 | 613 | 562 | 506 | |
Federal funds sold | 2,435 | 891 | 969 | 525 | 676 | |
Total interest income | 47,447 | 42,686 | 38,330 | 35,026 | 30,934 | |
Interest expense | ||||||
Deposits | 25,130 | 21,937 | 17,179 | 10,329 | 5,021 | |
Borrowings | 2,972 | 1,924 | 727 | 578 | 459 | |
Total interest expense | 28,102 | 23,861 | 17,906 | 10,907 | 5,480 | |
Net interest income | 19,345 | 18,825 | 20,424 | 24,119 | 25,454 | |
Provision for (reversal of) credit losses | (500) | 910 | 1,825 | 2,325 | 950 | |
Net interest income after provision for credit losses | 19,845 | 17,915 | 18,599 | 21,794 | 24,504 | |
Noninterest income | ||||||
Mortgage banking income | 1,208 | 1,337 | 622 | 291 | 1,230 | |
Service fees on deposit accounts | 356 | 331 | 325 | 316 | 318 | |
ATM and debit card income | 588 | 536 | 555 | 558 | 542 | |
Income from bank owned life insurance | 349 | 338 | 332 | 344 | 315 | |
Other income | 248 | 194 | 210 | 198 | 275 | |
Total noninterest income | 2,749 | 2,736 | 2,044 | 1,707 | 2,680 | |
Noninterest expense | ||||||
Compensation and benefits | 10,231 | 10,287 | 10,356 | 9,576 | 9,843 | |
Occupancy | 2,562 | 2,518 | 2,457 | 2,666 | 2,442 | |
Outside service and data processing costs | 1,744 | 1,705 | 1,629 | 1,521 | 1,529 | |
Insurance | 1,243 | 897 | 689 | 551 | 507 | |
Professional fees | 504 | 751 | 660 | 788 | 555 | |
Marketing | 293 | 335 | 366 | 282 | 338 | |
Other | 725 | 900 | 947 | 1,029 | 832 | |
Total noninterest expenses | 17,302 | 17,393 | 17,104 | 16,413 | 16,046 | |
Income before provision for income taxes | 5,293 | 3,258 | 3,539 | 7,088 | 11,138 | |
Income tax expense | 1,195 | 800 | 836 | 1,596 | 2,725 | |
Net income available to common shareholders | $ | 4,098 | 2,458 | 2,703 | 5,492 | 8,413 |
Earnings per common share – Basic | $ | 0.51 | 0.31 | 0.34 | 0.69 | 1.06 |
Earnings per common share – Diluted | 0.51 | 0.31 | 0.33 | 0.68 | 1.04 | |
Basic weighted average common shares | 8,053 | 8,051 | 8,026 | 7,971 | 7,972 | |
Diluted weighted average common shares | 8,072 | 8,069 | 8,092 | 8,071 | 8,065 | |
[Footnotes to table located on page 6] |
Net income for the third quarter of 2023 was
There was a reversal of the provision for credit losses of
Noninterest income was
Noninterest expense for the third quarter of 2023 was
Our effective tax rate was
NET INTEREST INCOME AND MARGIN - Unaudited | |||||||||
For the Three Months Ended | |||||||||
September 30, 2023 | June 30, 2023 | September 30,2022 | |||||||
(dollars in thousands) | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ |
Interest-earning assets | |||||||||
Federal funds sold and interest-bearing deposits | $ 181,784 | $ 2,435 | 5.31 % | $ 71,004 | $ 891 | 5.03 % | $ 122,071 | $ 676 | 2.20 % |
Investment securities, taxable | 148,239 | 1,429 | 3.82 % | 93,922 | 623 | 2.66 % | 91,462 | 449 | 1.95 % |
Investment securities, nontaxable(2) | 7,799 | 55 | 2.77 % | 10,200 | 108 | 4.24 % | 10,160 | 74 | 2.89 % |
Loans(10) | 3,554,478 | 43,542 | 4.86 % | 3,511,225 | 41,089 | 4.69 % | 2,941,350 | 29,752 | 4.01 % |
Total interest-earning assets | 3,892,300 | 47,461 | 4.84 % | 3,686,351 | 42,711 | 4.65 % | 3,165,043 | 30,951 | 3.88 % |
Noninterest-earning assets | 159,103 | 155,847 | 159,233 | ||||||
Total assets | |||||||||
Interest-bearing liabilities | |||||||||
NOW accounts | $ 297,028 | 620 | 0.83 % | $ 297,234 | 537 | 0.72 % | $ 361,500 | 178 | 0.20 % |
Savings & money market | 1,748,638 | 16,908 | 3.84 % | 1,727,009 | 15,298 | 3.55 % | 1,417,181 | 3,663 | 1.03 % |
Time deposits | 648,949 | 7,602 | 4.65 % | 573,095 | 6,102 | 4.27 % | 361,325 | 1,180 | 1.30 % |
Total interest-bearing deposits | 2,694,615 | 25,130 | 3.70 % | 2,597,338 | 21,937 | 3.39 % | 2,140,006 | 5,021 | 0.93 % |
FHLB advances and other borrowings | 264,141 | 2,414 | 3.63 % | 135,922 | 1,382 | 4.08 % | 1,357 | 10 | 2.92 % |
Subordinated debentures | 36,278 | 558 | 6.10 % | 36,251 | 542 | 6.00 % | 36,169 | 449 | 4.93 % |
Total interest-bearing liabilities | 2,995,034 | 28,102 | 3.72 % | 2,769,511 | 23,861 | 3.46 % | 2,177,532 | 5,480 | 1.00 % |
Noninterest-bearing liabilities | 752,433 | 771,388 | 858,202 | ||||||
Shareholders' equity | 303,936 | 301,299 | 288,542 | ||||||
Total liabilities and shareholders' equity | |||||||||
Net interest spread | 1.12 % | 1.19 % | 2.88 % | ||||||
Net interest income (tax equivalent) / margin | 1.97 % | 2.05 % | 3.19 % | ||||||
Less: tax-equivalent adjustment(2) | 14 | 25 | 17 | ||||||
Net interest income | |||||||||
[Footnotes to table located on page 6] |
Net interest income was
BALANCE SHEETS - Unaudited | |||||||
Ending Balance | |||||||
September 30 | June 30 | March 31 | December 31 | September 30 | |||
(in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | ||
Assets | |||||||
Cash and cash equivalents: | |||||||
Cash and due from banks | $ | 17,395 | 24,742 | 22,213 | 18,788 | 16,530 | |
Federal funds sold | 127,714 | 170,145 | 242,642 | 101,277 | 139,544 | ||
Interest-bearing deposits with banks | 7,283 | 10,183 | 7,350 | 50,809 | 4,532 | ||
Total cash and cash equivalents | 152,392 | 205,070 | 272,205 | 170,874 | 160,606 | ||
Investment securities: | |||||||
Investment securities available for sale | 144,035 | 91,548 | 94,036 | 93,347 | 91,521 | ||
Other investments | 19,600 | 12,550 | 10,097 | 10,833 | 5,449 | ||
Total investment securities | 163,635 | 104,098 | 104,133 | 104,180 | 96,970 | ||
Mortgage loans held for sale | 7,117 | 15,781 | 6,979 | 3,917 | 9,243 | ||
Loans (5) | 3,553,632 | 3,537,616 | 3,417,945 | 3,273,363 | 3,030,027 | ||
Less allowance for credit losses | (41,131) | (41,105) | (40,435) | (38,639) | (36,317) | ||
Loans, net | 3,512,501 | 3,496,511 | 3,377,510 | 3,234,724 | 2,993,710 | ||
Bank owned life insurance | 52,140 | 51,791 | 51,453 | 51,122 | 50,778 | ||
Property and equipment, net | 95,743 | 96,964 | 97,806 | 99,183 | 99,530 | ||
Deferred income taxes | 13,078 | 12,356 | 12,087 | 12,522 | 18,425 | ||
Other assets | 23,351 | 19,536 | 15,967 | 15,459 | 10,407 | ||
Total assets | $ | 4,019,957 | 4,002,107 | 3,938,140 | 3,691,981 | 3,439,669 | |
Liabilities | |||||||
Deposits | $ | 3,347,771 | 3,433,018 | 3,426,774 | 3,133,864 | 3,001,452 | |
FHLB Advances | 275,000 | 180,000 | 125,000 | 175,000 | 60,000 | ||
Subordinated debentures | 36,295 | 36,268 | 36,241 | 36,214 | 36,187 | ||
Other liabilities | 56,993 | 51,307 | 50,775 | 52,391 | 54,245 | ||
Total liabilities | 3,716,059 | 3,700,593 | 3,638,790 | 3,397,469 | 3,151,884 | ||
Shareholders' equity | |||||||
Preferred stock - | - | - | - | - | - | ||
Common Stock - | 81 | 81 | 80 | 80 | 80 | ||
Nonvested restricted stock | (4,065) | (4,051) | (4,462) | (3,306) | (3,348) | ||
Additional paid-in capital | 121,757 | 120,912 | 120,683 | 119,027 | 118,433 | ||
Accumulated other comprehensive loss | (15,255) | (12,710) | (11,775) | (13,410) | (14,009) | ||
Retained earnings | 201,380 | 197,282 | 194,824 | 192,121 | 186,629 | ||
Total shareholders' equity | 303,898 | 301,514 | 299,350 | 294,512 | 287,785 | ||
Total liabilities and shareholders' equity | $ | 4,019,957 | 4,002,107 | 3,938,140 | 3,691,981 | 3,439,669 | |
Common Stock | |||||||
Book value per common share | $ | 37.57 | 37.42 | 37.16 | 36.76 | 35.99 | |
Stock price: | |||||||
High | 30.18 | 31.34 | 45.05 | 49.50 | 47.16 | ||
Low | 24.22 | 21.33 | 30.70 | 41.46 | 41.66 | ||
Period end | 26.94 | 24.75 | 30.70 | 45.75 | 41.66 | ||
Common shares outstanding | 8,089 | 8,058 | 8,048 | 8,011 | 7,997 | ||
[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) | 2023 | 2023 | 2023 | 2022 | 2022 | |
Nonperforming Assets | ||||||
Commercial | ||||||
Non-owner occupied RE | $ | 1,615 | 754 | 1,384 | 247 | 253 |
Commercial business | 404 | 137 | 1,196 | 182 | 79 | |
Consumer | ||||||
Real estate | 1,228 | 1,053 | 1,075 | 1,099 | 904 | |
Home equity | 1,068 | 1,072 | 1,078 | 1,099 | 1,379 | |
Total nonaccrual loans | 4,315 | 3,016 | 4,733 | 2,627 | 2,615 | |
Other real estate owned | - | - | - | - | - | |
Total nonperforming assets | $ | 4,315 | 3,016 | 4,733 | 2,627 | 2,615 |
Nonperforming assets as a percentage of: | ||||||
Total assets | 0.11 % | 0.08 % | 0.12 % | 0.07 % | 0.08 % | |
Total loans | 0.12 % | 0.09 % | 0.14 % | 0.08 % | 0.09 % | |
Classified assets/tier 1 capital plus allowance for credit losses | 4.72 % | 4.68 % | 5.10 % | 4.71 % | 5.24 % | |
Quarter Ended | ||||||
September 30 | June 30 | March 31 | December 31 | September 30 | ||
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |
Allowance for Credit Losses | ||||||
Balance, beginning of period | $ | 41,105 | 40,435 | 38,639 | 36,317 | 34,192 |
Loans charged-off | (42) | (440) | (161) | - | - | |
Recoveries of loans previously charged-off | 168 | 15 | 102 | 22 | 1,600 | |
Net loans (charged-off) recovered | 126 | (425) | (59) | 22 | 1,600 | |
Provision for (reversal of) credit losses | (100) | 1,095 | 1,855 | 2,300 | 525 | |
Balance, end of period | $ | 41,131 | 41,105 | 40,435 | 38,639 | 36,317 |
Allowance for credit losses to gross loans | 1.16 % | 1.16 % | 1.18 % | 1.18 % | 1.20 % | |
Allowance for credit losses to nonaccrual loans | 953.25 % | 1,363.11 % | 854.33 % | 1,470.74 % | 1,388.87 % | |
Net charge-offs to average loans QTD (annualized) | 0.01 % | 0.03 % | 0.01 % | 0.00 % | (0.22 %) |
Total nonperforming assets increased by
At both September 30, 2023 and June 30, 2023, the allowance for credit losses was
LOAN COMPOSITION - Unaudited | ||||||
Quarter Ended | ||||||
September 30 | June 30 | March 31 | December 31 | September 30 | ||
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |
Commercial | ||||||
Owner occupied RE | $ | 637,038 | 613,874 | 615,094 | 612,901 | 572,972 |
Non-owner occupied RE | 937,749 | 951,536 | 928,059 | 862,579 | 799,569 | |
Construction | 119,629 | 115,798 | 94,641 | 109,726 | 85,850 | |
Business | 500,253 | 511,719 | 495,161 | 468,112 | 419,312 | |
Total commercial loans | 2,194,669 | 2,192,927 | 2,132,955 | 2,053,318 | 1,877,703 | |
Consumer | ||||||
Real estate | 1,074,679 | 1,047,904 | 993,258 | 931,278 | 873,471 | |
Home equity | 180,856 | 185,584 | 180,974 | 179,300 | 171,904 | |
Construction | 54,210 | 61,044 | 71,137 | 80,415 | 77,798 | |
Other | 49,218 | 50,157 | 39,621 | 29,052 | 29,151 | |
Total consumer loans | 1,358,963 | 1,344,689 | 1,284,990 | 1,220,045 | 1,152,324 | |
Total gross loans, net of deferred fees | 3,553,632 | 3,537,616 | 3,417,945 | 3,273,363 | 3,030,027 | |
Less—allowance for credit losses | (41,131) | (41,105) | (40,435) | (38,639) | (36,317) | |
Total loans, net | $ | 3,512,501 | 3,496,511 | 3,377,510 | 3,234,724 | 2,993,710 |
DEPOSIT COMPOSITION - Unaudited | ||||||
Quarter Ended | ||||||
September 30 | June 30 | March 31 | December 31 | September 30 | ||
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |
Non-interest bearing | $ | 675,409 | 698,084 | 740,534 | 804,115 | 791,050 |
Interest bearing: | ||||||
NOW accounts | 306,667 | 308,762 | 303,743 | 318,030 | 357,862 | |
Money market accounts | 1,685,736 | 1,692,900 | 1,748,562 | 1,506,418 | 1,452,958 | |
Savings | 34,737 | 36,243 | 39,706 | 40,673 | 42,335 | |
Time, less than | 125,506 | 114,691 | 106,679 | 89,877 | 79,387 | |
Time and out-of-market deposits, | 519,716 | 582,338 | 487,550 | 374,751 | 277,860 | |
Total deposits | $ | 3,347,771 | 3,433,018 | 3,426,774 | 3,133,864 | 3,001,452 |
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 | |
(7) September 30, 2023 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.,
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," "preliminary", "intend," "plan," "target," "continue," "lasting," 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
FINANCIAL & MEDIA CONTACT:
ART SEAVER 864-679-9010
WEB SITE: www.southernfirst.com
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SOURCE Southern First Bancshares, Inc.
FAQ
What was the net income for Q3 2023?
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How did the net interest margin change in Q3 2023 compared to Q2 2023?
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