Southern First Reports Results for Second Quarter 2024
"We reported solid performance in the second quarter with improved profitability across all measures. Loans and core deposits were modestly down, as expected, as we continue to focus on disciplined pricing on both sides of the balance sheet. Noninterest-bearing deposit growth was excellent, which reflects the strength of our team. We are expanding profitable client relationships by delivering a unique, authentic service experience. Economic conditions across all our markets remain positive, but we are constantly aware of the broader environment and remain diligent and conservative. Our focus on building a strong, high-quality balance sheet with measured, deliberate growth has been paying off in our financial results," stated
2024 Second Quarter Highlights
-
Net income was
$3.0 million and diluted earnings per common share were$0.37 for Q2 2024 -
Total loans were
$3.6 billion at Q2 2024, a decrease of$21.2 million , or 2.35% annualized, from Q1 2024 -
Total deposits were
$3.5 billion at Q2 2024, a decrease of$812 thousand , or 0.09% annualized, from Q1 2024 - Nonperforming assets to total assets were 0.27% and past due loans to total loans were 0.30% at Q2 2024
- Net interest margin was 1.98% for Q2 2024, compared to 1.94% for Q1 2024
-
Book value per common share increased to
$39.09 at Q2 2024
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
|
|
2024 |
2024 |
2023 |
2023 |
2023 |
Earnings ($ in thousands, except per share data): |
|
|
|
|
|
|
Net income available to common shareholders |
$ |
2,999 |
2,522 |
4,167 |
4,098 |
2,458 |
Earnings per common share, diluted |
|
0.37 |
0.31 |
0.51 |
0.51 |
0.31 |
Total revenue(1) |
|
23,051 |
21,309 |
21,390 |
22,094 |
21,561 |
Net interest margin (tax-equivalent)(2) |
|
1.98 % |
1.94 % |
1.92 % |
1.97 % |
2.05 % |
Return on average assets(3) |
|
0.29 % |
0.25 % |
0.40 % |
0.40 % |
0.26 % |
Return on average equity(3) |
|
3.81 % |
3.22 % |
5.39 % |
5.35 % |
3.27 % |
Efficiency ratio(4) |
|
80.87 % |
84.94 % |
79.61 % |
78.31 % |
80.67 % |
Noninterest expense to average assets (3) |
|
1.81 % |
1.81 % |
1.64 % |
1.69 % |
1.82 % |
Balance Sheet ($ in thousands): |
|
|
|
|
|
|
Total loans(5) |
$ |
3,622,521 |
3,643,766 |
3,602,627 |
3,553,632 |
3,537,616 |
Total deposits |
|
3,459,869 |
3,460,681 |
3,379,564 |
3,347,771 |
3,433,018 |
Core deposits(6) |
|
2,788,223 |
2,807,473 |
2,811,499 |
2,866,574 |
2,880,507 |
Total assets |
|
4,109,849 |
4,105,704 |
4,055,789 |
4,019,957 |
4,002,107 |
Book value per common share |
|
39.09 |
38.65 |
38.63 |
37.57 |
37.42 |
Loans to deposits |
|
104.70 % |
105.29 % |
106.60 % |
106.15 % |
103.05 % |
Holding Company Capital Ratios(7): |
|
|
|
|
|
|
Total risk-based capital ratio |
|
12.77 % |
12.59 % |
12.57 % |
12.56 % |
12.40 % |
Tier 1 risk-based capital ratio |
|
10.80 % |
10.63 % |
10.60 % |
10.58 % |
10.42 % |
Leverage ratio |
|
8.27 % |
8.44 % |
8.14 % |
8.17 % |
8.48 % |
Common equity tier 1 ratio(8) |
|
10.39 % |
10.22 % |
10.19 % |
10.17 % |
10.00 % |
Tangible common equity(9) |
|
7.76 % |
7.68 % |
7.70 % |
7.56 % |
7.53 % |
Asset Quality Ratios: |
|
|
|
|
|
|
Nonperforming assets/total assets |
|
0.27 % |
0.09 % |
0.10 % |
0.11 % |
0.08 % |
Classified assets/tier one capital plus allowance for credit losses |
|
4.22 % |
3.99 % |
4.25 % |
4.72 % |
4.68 % |
Loans 30 days or more past due/loans(5) |
|
0.30 % |
0.36 % |
0.37 % |
0.13 % |
0.07 % |
Net charge-offs/average loans(5) (YTD annualized) |
|
0.07 % |
0.03 % |
0.00 % |
0.01 % |
0.03 % |
Allowance for credit losses/loans(5) |
|
1.11 % |
1.11 % |
1.13 % |
1.16 % |
1.16 % |
Allowance for credit losses/nonaccrual loans |
|
357.95 % |
1,109.13 % |
1,026.58 % |
953.25 % |
1,363.11 % |
[Footnotes to table located on page 6] |
INCOME STATEMENTS – Unaudited |
||||||
|
||||||
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
Interest income |
|
|
|
|
|
|
Loans |
$ |
46,545 |
45,605 |
44,758 |
43,542 |
41,089 |
Investment securities |
|
1,418 |
1,478 |
1,674 |
1,470 |
706 |
Federal funds sold |
|
2,583 |
1,280 |
2,703 |
2,435 |
891 |
Total interest income |
|
50,546 |
48,363 |
49,135 |
47,447 |
42,686 |
Interest expense |
|
|
|
|
|
|
Deposits |
|
28,216 |
26,932 |
27,127 |
25,130 |
25,937 |
Borrowings |
|
2,802 |
2,786 |
2,948 |
2,972 |
1,924 |
Total interest expense |
|
31,018 |
29,718 |
30,075 |
28,102 |
23,861 |
Net interest income |
|
19,528 |
18,645 |
19,060 |
19,345 |
18,825 |
Provision (reversal) for credit losses |
|
500 |
(175) |
(975) |
(500) |
910 |
Net interest income after provision for credit losses |
|
19,028 |
18,820 |
20,035 |
19,845 |
17,915 |
Noninterest income |
|
|
|
|
|
|
Mortgage banking income |
|
1,923 |
1,164 |
868 |
1,208 |
1,337 |
Service fees on deposit accounts |
|
423 |
387 |
371 |
356 |
331 |
ATM and debit card income |
|
587 |
544 |
565 |
588 |
536 |
Income from bank owned life insurance |
|
384 |
377 |
361 |
349 |
338 |
Other income |
|
206 |
192 |
165 |
248 |
194 |
Total noninterest income |
|
3,523 |
2,664 |
2,330 |
2,749 |
2,736 |
Noninterest expense |
|
|
|
|
|
|
Compensation and benefits |
|
11,290 |
10,857 |
9,401 |
10,231 |
10,287 |
Occupancy |
|
2,552 |
2,557 |
2,718 |
2,562 |
2,518 |
Outside service and data processing costs |
|
1,962 |
1,846 |
2,000 |
1,744 |
1,705 |
Insurance |
|
965 |
955 |
937 |
1,243 |
897 |
Professional fees |
|
582 |
618 |
581 |
504 |
751 |
Marketing |
|
389 |
369 |
364 |
293 |
335 |
Other |
|
903 |
898 |
1,027 |
725 |
900 |
Total noninterest expenses |
|
18,643 |
18,100 |
17,028 |
17,302 |
17,393 |
Income before provision for income taxes |
|
3,908 |
3,384 |
5,337 |
5,293 |
3,258 |
Income tax expense |
|
909 |
862 |
1,170 |
1,195 |
800 |
Net income available to common shareholders |
$ |
2,999 |
2,522 |
4,167 |
4,098 |
2,458 |
|
|
|
|
|
|
|
Earnings per common share – Basic |
$ |
0.37 |
0.31 |
0.51 |
0.51 |
0.31 |
Earnings per common share – Diluted |
|
0.37 |
0.31 |
0.51 |
0.51 |
0.31 |
Basic weighted average common shares |
|
8,126 |
8,110 |
8,056 |
8,053 |
8,051 |
Diluted weighted average common shares |
|
8,141 |
8,142 |
8,080 |
8,072 |
8,069 |
[Footnotes to table located on page 6] |
Net income for the second quarter of 2024 was
The provision for credit losses was
Noninterest income was
Noninterest expense for the second quarter of 2024 was
Our effective tax rate was 23.3% for the second quarter of 2024 as compared to 25.5% for the first quarter of 2024. The lower tax rate in the second quarter of 2024 was primarily related to the effect of equity compensation transactions during the quarter.
NET INTEREST INCOME AND MARGIN - Unaudited |
|||||||||
|
|||||||||
|
|
For the Three Months Ended |
|||||||
|
|
|
|
||||||
(dollars in thousands) |
Average |
Income/ |
Yield/ |
Average |
Income/ |
Yield/ |
Average |
Income/ |
Yield/ |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
Federal funds sold and interest-bearing deposits |
$ 186,584 |
$ 2,583 |
5.57 % |
$ 89,969 |
$ 1,280 |
5.71 % |
$ 71,004 |
$ 891 |
5.03 % |
Investment securities, taxable |
133,507 |
1,376 |
4.15 % |
137,271 |
1,436 |
4.20 % |
93,922 |
623 |
2.66 % |
Investment securities, nontaxable(2) |
8,027 |
55 |
2.73 % |
8,097 |
55 |
2.70 % |
10,200 |
108 |
4.24 % |
Loans(10) |
3,645,595 |
46,545 |
5.14 % |
3,622,972 |
45,605 |
5.05 % |
3,511,225 |
41,089 |
4.69 % |
Total interest-earning assets |
3,973,713 |
50,559 |
5.12 % |
3,858,309 |
48,376 |
5.03 % |
3,686,351 |
42,711 |
4.65 % |
Noninterest-earning assets |
165,093 |
|
|
159,813 |
|
|
155,847 |
|
|
Total assets |
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
NOW accounts |
$ 302,881 |
621 |
0.82 % |
$ 295,774 |
660 |
0.90 % |
$ 297,234 |
537 |
0.72 % |
Savings & money market |
1,611,991 |
16,324 |
4.07 % |
1,620,521 |
16,299 |
4.03 % |
1,727,009 |
15,298 |
3.55 % |
Time deposits |
898,878 |
11,271 |
5.04 % |
801,734 |
9,973 |
4.99 % |
573,095 |
6,102 |
4.27 % |
Total interest-bearing deposits |
2,813,750 |
28,216 |
4.03 % |
2,718,029 |
26,932 |
3.97 % |
2,597,338 |
21,937 |
3.39 % |
FHLB advances and other borrowings |
240,000 |
2,247 |
3.77 % |
241,319 |
2,229 |
3.71 % |
135,922 |
1,382 |
4.08 % |
Subordinated debentures |
36,360 |
555 |
6.14 % |
36,333 |
557 |
6.15 % |
36,251 |
542 |
6.00 % |
Total interest-bearing liabilities |
3,090,110 |
31,018 |
4.04 % |
2,995,681 |
29,718 |
3.98 % |
2,769,511 |
23,861 |
3.46 % |
Noninterest-bearing liabilities |
731,843 |
|
|
707,890 |
|
|
771,388 |
|
|
Shareholders' equity |
316,853 |
|
|
314,551 |
|
|
301,299 |
|
|
Total liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
1.08 % |
|
|
1.05 % |
|
|
1.19 % |
Net interest income (tax equivalent) / margin |
|
|
1.98 % |
|
|
1.94 % |
|
|
2.05 % |
Less: tax-equivalent adjustment(2) |
|
13 |
|
|
13 |
|
|
25 |
|
Net interest income |
|
|
|
|
|
|
|
|
|
[Footnotes to table located on page 6] |
Net interest income was
BALANCE SHEETS - Unaudited |
|||||||
|
|||||||
|
|
Ending Balance |
|||||
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
|
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
Cash and due from banks |
$ |
21,567 |
13,925 |
28,020 |
17,395 |
24,742 |
|
Federal funds sold |
|
164,432 |
144,595 |
119,349 |
127,714 |
170,145 |
|
Interest-bearing deposits with banks |
|
8,828 |
8,789 |
8,801 |
7,283 |
10,183 |
|
Total cash and cash equivalents |
|
194,827 |
167,309 |
156,170 |
152,392 |
205,070 |
|
Investment securities: |
|
|
|
|
|
|
|
Investment securities available for sale |
|
121,353 |
125,996 |
134,702 |
144,035 |
91,548 |
|
Other investments |
|
18,653 |
18,499 |
19,939 |
19,600 |
12,550 |
|
Total investment securities |
|
140,006 |
144,495 |
154,641 |
163,635 |
104,098 |
|
Mortgage loans held for sale |
|
14,759 |
11,842 |
7,194 |
7,117 |
15,781 |
|
Loans (5) |
|
3,622,521 |
3,643,766 |
3,602,627 |
3,553,632 |
3,537,616 |
|
Less allowance for credit losses |
|
(40,157) |
(40,441) |
(40,682) |
(41,131) |
(41,105) |
|
Loans, net |
|
3,582,364 |
3,603,325 |
3,561,945 |
3,512,501 |
3,496,511 |
|
Bank owned life insurance |
|
53,263 |
52,878 |
52,501 |
52,140 |
51,791 |
|
Property and equipment, net |
|
91,533 |
93,007 |
94,301 |
95,743 |
96,964 |
|
Deferred income taxes |
|
12,339 |
12,321 |
12,200 |
13,078 |
12,356 |
|
Other assets |
|
20,758 |
20,527 |
16,837 |
23,351 |
19,536 |
|
Total assets |
$ |
4,109,849 |
4,105,704 |
4,055,789 |
4,019,957 |
4,002,107 |
|
Liabilities |
|
|
|
|
|
|
|
Deposits |
$ |
3,459,869 |
3,460,681 |
3,379,564 |
3,347,771 |
3,433,018 |
|
FHLB Advances |
|
240,000 |
240,000 |
275,000 |
275,000 |
180,000 |
|
Subordinated debentures |
|
36,376 |
36,349 |
36,322 |
36,295 |
36,268 |
|
Other liabilities |
|
54,856 |
53,418 |
52,436 |
56,993 |
51,307 |
|
Total liabilities |
|
3,791,101 |
3,790,448 |
3,743,322 |
3,716,059 |
3,700,593 |
|
Shareholders' equity |
|
|
|
|
|
|
|
Preferred stock - |
|
- |
- |
- |
- |
- |
|
Common Stock - |
|
82 |
82 |
81 |
81 |
81 |
|
Nonvested restricted stock |
|
(4,710) |
(5,257) |
(3,596) |
(4,065) |
(4,051) |
|
Additional paid-in capital |
|
124,174 |
124,159 |
121,777 |
121,757 |
120,912 |
|
Accumulated other comprehensive loss |
|
(11,866) |
(11,797) |
(11,342) |
(15,255) |
(12,710) |
|
Retained earnings |
|
211,068 |
208,069 |
205,547 |
201,380 |
197,282 |
|
Total shareholders' equity |
|
318,748 |
315,256 |
312,467 |
303,898 |
301,514 |
|
Total liabilities and shareholders' equity |
$ |
4,109,849 |
4,105,704 |
4,055,789 |
4,019,957 |
4,002,107 |
|
Common Stock |
|
|
|
|
|
|
|
Book value per common share |
$ |
39.09 |
38.65 |
38.63 |
37.57 |
37.42 |
|
Stock price: |
|
|
|
|
|
|
|
High |
|
30.36 |
38.71 |
37.15 |
30.18 |
31.34 |
|
Low |
|
25.70 |
29.80 |
25.16 |
24.22 |
21.33 |
|
Period end |
|
29.24 |
31.76 |
37.10 |
26.94 |
24.75 |
|
Common shares outstanding |
|
8,155 |
8,156 |
8,088 |
8,089 |
8,058 |
|
[Footnotes to table located on page 6] |
ASSET QUALITY MEASURES - Unaudited |
||||||
|
||||||
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
(dollars in thousands) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
Nonperforming Assets |
|
|
|
|
|
|
Commercial |
|
|
|
|
|
|
Non-owner occupied RE |
$ |
7,949 |
1,410 |
1,423 |
1,615 |
754 |
Commercial business |
|
829 |
488 |
319 |
404 |
137 |
Consumer |
|
|
|
|
|
|
Real estate |
|
1,875 |
1,380 |
985 |
1,228 |
1,053 |
Home equity |
|
565 |
367 |
1,236 |
1,068 |
1,072 |
Other |
|
- |
1 |
- |
- |
- |
Total nonaccrual loans |
|
11,218 |
3,646 |
3,963 |
4,315 |
3,016 |
Other real estate owned |
|
- |
- |
- |
- |
- |
Total nonperforming assets |
$ |
11,218 |
3,646 |
3,963 |
4,315 |
3,016 |
Nonperforming assets as a percentage of: |
|
|
|
|
|
|
Total assets |
|
0.27 % |
0.09 % |
0.10 % |
0.11 % |
0.08 % |
Total loans |
|
0.31 % |
0.10 % |
0.11 % |
0.12 % |
0.09 % |
Classified assets/tier 1 capital plus allowance for credit losses |
|
4.22 % |
3.99 % |
4.25 % |
4.72 % |
4.68 % |
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
(dollars in thousands) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
Allowance for Credit Losses |
|
|
|
|
|
|
Balance, beginning of period |
$ |
40,441 |
40,682 |
41,131 |
41,105 |
40,435 |
Loans charged-off |
|
(1,049) |
(424) |
(119) |
(42) |
(440) |
Recoveries of loans previously charged-off |
|
15 |
183 |
310 |
168 |
15 |
Net loans (charged-off) recovered |
|
(1,034) |
(241) |
191 |
126 |
(425) |
Provision for (reversal of) credit losses |
|
750 |
- |
(640) |
(100) |
1,095 |
Balance, end of period |
$ |
40,157 |
40,441 |
40,682 |
41,131 |
41,105 |
Allowance for credit losses to gross loans |
|
1.11 % |
1.11 % |
1.13 % |
1.16 % |
1.16 % |
Allowance for credit losses to nonaccrual loans |
|
357.95 % |
1,109.13 % |
1,026.58 % |
953.25 % |
1,363.11 % |
Net charge-offs (recoveries) to average loans QTD (annualized) |
|
0.11 % |
0.03 % |
(0.02 %) |
(0.01 %) |
0.05 % |
Total nonperforming assets increased by
At
LOAN COMPOSITION - Unaudited |
||||||
|
||||||
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
(dollars in thousands) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
Commercial |
|
|
|
|
|
|
Owner occupied RE |
$ |
642,008 |
631,047 |
631,657 |
637,038 |
613,874 |
Non-owner occupied RE |
|
917,034 |
944,530 |
942,529 |
937,749 |
951,536 |
Construction |
|
144,968 |
157,464 |
150,680 |
119,629 |
115,798 |
Business |
|
527,017 |
520,073 |
500,161 |
500,253 |
511,719 |
Total commercial loans |
|
2,231,027 |
2,253,114 |
2,225,027 |
2,194,669 |
2,192,927 |
Consumer |
|
|
|
|
|
|
Real estate |
|
1,126,155 |
1,101,573 |
1,082,429 |
1,074,679 |
1,047,904 |
Home equity |
|
189,294 |
184,691 |
183,004 |
180,856 |
185,584 |
Construction |
|
32,936 |
53,216 |
63,348 |
54,210 |
61,044 |
Other |
|
43,109 |
51,172 |
48,819 |
49,218 |
50,157 |
Total consumer loans |
|
1,391,494 |
1,390,652 |
1,377,600 |
1,358,963 |
1,344,689 |
Total gross loans, net of deferred fees |
|
3,622,521 |
3,643,766 |
3,602,627 |
3,553,632 |
3,537,616 |
Less—allowance for credit losses |
|
(40,157) |
(40,441) |
(40,682) |
(41,131) |
(41,105) |
Total loans, net |
$ |
3,582,364 |
3,603,325 |
3,561,945 |
3,512,501 |
3,496,511 |
DEPOSIT COMPOSITION -
Unaudited
|
||||||
|
||||||
|
|
Quarter Ended |
||||
|
|
|
|
|
|
|
(dollars in thousands) |
|
2024 |
2024 |
2023 |
2023 |
2023 |
Non-interest bearing |
$ |
683,291 |
671,708 |
674,167 |
675,409 |
698,084 |
Interest bearing: |
|
|
|
|
|
|
NOW accounts |
|
293,875 |
293,064 |
310,218 |
306,667 |
308,762 |
Money market accounts |
|
1,562,786 |
1,603,796 |
1,605,278 |
1,685,736 |
1,692,900 |
Savings |
|
28,739 |
32,248 |
31,669 |
34,737 |
36,243 |
Time, less than |
|
219,532 |
206,657 |
190,167 |
125,506 |
114,691 |
Time and out-of-market deposits, |
|
671,646 |
653,208 |
568,065 |
519,716 |
582,338 |
Total deposits |
$ |
3,459,869 |
3,460,681 |
3,379,564 |
3,347,771 |
3,433,018 |
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 |
|
(7) |
|
(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
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," "future, "target," "continue," "lasting," "building," 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
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