Southern First(SFST) - 2024 Q2 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q2 2024 was $2.999 million, up 22% from $2.458 million in Q2 2023[124] - Diluted earnings per share (EPS) increased to $0.37 for Q2 2024, compared to $0.31 for Q2 2023, reflecting a 19.35% growth[124] - For the six months ended June 30, 2024, net income was $5.5 million, up from $5.2 million in the same period of 2023[125] - Diluted EPS for the six months ended June 30, 2024, was $0.68, compared to $0.64 for the same period in 2023, indicating a 6.25% increase[125] Assets and Liabilities - Total assets as of June 30, 2024, reached $4.11 billion, a 1.3% increase from $4.06 billion at December 31, 2023[122] - Total liabilities at June 30, 2024, were $3.79 billion, compared to $3.74 billion at December 31, 2023[122] - The principal component of liabilities is deposits, which accounted for $3.46 billion of total liabilities as of June 30, 2024[122] - Total deposits increased to $3.46 billion as of June 30, 2024, from $3.38 billion at December 31, 2023[122] Interest Income and Margin - Net interest income for Q2 2024 was $19.5 million, a 3.7% increase from $18.8 million in Q2 2023, driven by a $7.9 million rise in interest income[126] - The net interest margin on a tax-equivalent basis was 1.98% for Q2 2024, down from 2.05% in Q2 2023[126] - The net interest margin (TE) decreased by 7 basis points to 1.98% in Q2 2024 compared to Q2 2023, primarily due to rising deposit and borrowing costs outpacing loan yields[131] - Total interest income for the first half of 2024 was $38.2 million, compared to $39.2 million for the same period in 2023, reflecting a $1.1 million, or 2.74%, decrease[141] Interest Expense - The company recorded a $19.0 million increase in interest expense for the first half of 2024, primarily due to higher rates on interest-bearing deposits[141] - Total interest expense for Q2 2024 was $2.2 million, reflecting a $572,000 increase from the previous year[140] Noninterest Income and Expenses - Noninterest income for Q2 2024 was $3.5 million, a $787,000, or 28.8%, increase from $2.7 million in Q2 2023, with mortgage banking income rising by 43.8%[146] - Total noninterest expense for Q2 2024 was $18.6 million, a $1.3 million, or 7.2%, increase from $17.4 million in Q2 2023, primarily due to higher compensation and benefits[150] - The efficiency ratio for Q2 2024 was 80.9%, compared to 80.7% in Q2 2023, indicating a slight increase in expenses relative to revenue[151] Credit Quality - The provision for credit losses in Q2 2024 was $500,000, down from $910,000 in Q2 2023, with a total provision expense of $325,000 for the first half of 2024[144] - Nonperforming assets totaled $11.2 million, or 0.27% of total assets, as of June 30, 2024, compared to $4.0 million, or 0.10% of total assets, at December 31, 2023[161] - The allowance for credit losses was $40.2 million, representing 1.11% of outstanding loans and providing coverage of 357.95% of nonperforming loans at June 30, 2024[166] Deposits and Loans - Retail deposits represented $3.00 billion, or 86.6% of total deposits, while wholesale deposits were $463.7 million, or 13.4%, at June 30, 2024[169] - The loan-to-deposit ratio was 105% at June 30, 2024, compared to 107% at December 31, 2023[169] - Average loans for the six months ended June 30, 2024, were $3.63 billion, up from $3.42 billion in the same period of 2023[153] - The loan portfolio increased by $19.9 million, or 0.55%, during the first six months of 2024, with a $6.0 million increase in commercial loans and a $13.9 million increase in consumer loans[156] Capital and Equity - Total shareholders' equity increased to $318.7 million at June 30, 2024, from $312.5 million at December 31, 2023, driven by net income of $5.5 million[182] - Total Capital to risk-weighted assets as of June 30, 2024, is $406,383 thousand with a ratio of 12.77%[189] - Tier 1 Capital to risk-weighted assets is $343,614 thousand, representing 10.80% as of June 30, 2024[189] - Common Equity Tier 1 Capital to risk-weighted assets stands at $330,614 thousand, which is 10.39% as of June 30, 2024[189] Risk Management - Interest rate risk is actively monitored, with potential impacts on net interest income forecasted under various scenarios[199] - A 300 basis point increase in interest rates is projected to decrease net interest income by 13.97%[202] Miscellaneous - The Company has not paid cash dividends to shareholders since inception, as cash dividends depend on receiving cash from the Bank[190] - The financial statements have been prepared on a historical cost basis, not accounting for inflation effects[191]