Southern First(SFST) - 2024 Q3 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q3 2024 was $4.4 million, up from $4.1 million in Q3 2023, representing a 6.9% increase[126]. - Diluted earnings per share (EPS) for Q3 2024 was $0.54, compared to $0.51 for Q3 2023, reflecting a 5.9% increase[126]. - Net income available to common shareholders for the nine months ended September 30, 2024, was $9.9 million, compared to $9.3 million for the same period in 2023, a 6.5% increase[127]. - Diluted EPS for the nine months ended September 30, 2024, was $1.22, up from $1.15 in the same period of 2023, reflecting a 6.1% increase[127]. Assets and Liabilities - Total assets as of September 30, 2024, were $4.17 billion, a 2.9% increase from $4.06 billion at December 31, 2023[124]. - Total liabilities as of September 30, 2024, were $3.85 billion, up from $3.74 billion at December 31, 2023[124]. - The principal component of liabilities is deposits, which accounted for $3.52 billion of total liabilities as of September 30, 2024[124]. - Total deposits increased to $3.52 billion as of September 30, 2024, from $3.38 billion at December 31, 2023[124]. Interest Income and Margin - Net interest income for Q3 2024 was $20.6 million, a 6.4% increase from $19.3 million in Q3 2023, driven by a $3.7 million increase in interest income[128]. - Net interest margin on a tax-equivalent basis was 2.08% for Q3 2024, compared to 1.97% for the same period in 2023[128]. - The net interest margin (TE) increased by 11 basis points to 2.08% in Q3 2024 compared to Q3 2023, driven by an increase in interest-earning assets and yield[133]. - For the first nine months of 2024, the net interest margin (TE) decreased by 12 basis points to 2.00% compared to 2.12% in the same period of 2023[140]. Loans and Credit Quality - Average loans, excluding mortgage loans held for sale, increased to $3.62 billion for the nine months ended September 30, 2024, from $3.46 billion in the same period of 2023, representing a growth of 4.6%[162]. - Nonperforming assets increased to $11.6 million, or 0.28% of total assets, as of September 30, 2024, compared to $4.0 million, or 0.10% of total assets, at December 31, 2023[171]. - The allowance for credit losses was $40.2 million, representing 1.11% of outstanding loans and providing coverage of 346.78% of nonperforming loans at September 30, 2024[175]. Deposits and Funding - Retail deposits represented $2.93 billion, or 83.3% of total deposits, while wholesale deposits were $588.5 million, or 16.7%, at September 30, 2024[177]. - The loan-to-deposit ratio was 103% at September 30, 2024, down from 107% at December 31, 2023[177]. - Time deposits exceeding the FDIC insurance limit of $250,000 rose to $813.4 million from $568.1 million year-over-year[182]. Noninterest Income and Expenses - Noninterest income for Q3 2024 was $3.2 million, a 15.5% increase from $2.8 million in Q3 2023, with mortgage banking income rising by 20.0%[152]. - Noninterest expense for Q3 2024 was $18.0 million, a 4.3% increase from $17.3 million in Q3 2023, primarily due to higher compensation and benefits expenses[154]. - The efficiency ratio improved to 75.9% in Q3 2024 from 78.3% in Q3 2023, indicating better cost management relative to revenue[159]. Capital and Regulatory Compliance - Total shareholders' equity increased to $326.5 million, up $14.1 million from $312.5 million at the end of 2023, primarily due to net income of $9.9 million[195]. - The company maintains a capital conservation buffer, ensuring compliance with Basel III capital requirements, remaining "well capitalized" as of September 30, 2024[199]. - Total Capital to risk weighted assets as of September 30, 2024, is $399,736, representing a ratio of 12.61%[202]. Interest Rate Risk Management - The asset/liability management committee actively monitors interest rate risk exposure to maintain an appropriate balance between interest sensitive assets and liabilities[215]. - The forecasted impact on net interest income shows a decrease of 9.34% under a scenario of a 300 basis points increase in interest rates[217]. - A decrease of 300 basis points in interest rates is projected to increase net interest income by 26.29%[217].