Southern First(US:SFST)2025-10-31 15:07Financial Performance - Net income to common shareholders for Q3 2025 was $8.7 million, a 97.7% increase from $4.4 million in Q3 2024, with diluted EPS rising to $1.07 from $0.54[117]. - For the nine months ended September 30, 2025, net income to common shareholders was $20.5 million, up 106.1% from $9.9 million in the same period of 2024, with diluted EPS increasing to $2.54 from $1.22[118]. - Noninterest income for the third quarter of 2025 was $3.6 million, a 13.4% increase from $3.2 million in the third quarter of 2024, with mortgage banking income rising by 10.4%[143]. - Total noninterest income for the first nine months of 2025 reached $10.0 million, up 7.3% from $9.4 million in the same period of 2024, driven by a 36.8% increase in service fees on deposit accounts[144]. - Noninterest expense for the third quarter of 2025 was $18.9 million, a 5.0% increase from $18.0 million in the third quarter of 2024, primarily due to higher compensation and benefits[146]. - The efficiency ratio improved to 66.2% in the third quarter of 2025 from 75.9% in the same quarter of 2024, reflecting increased net interest income[148]. Assets and Liabilities - Total assets increased by 6.6% to $4.36 billion as of September 30, 2025, compared to $4.09 billion at December 31, 2024[114]. - Total liabilities and shareholders' equity as of September 30, 2025, were $4.00 billion and $356.3 million, respectively, compared to $3.76 billion and $330.4 million at December 31, 2024[114]. - Loans increased to $3.79 billion as of September 30, 2025, from $3.63 billion at December 31, 2024[114]. - Deposits rose to $3.68 billion as of September 30, 2025, compared to $3.44 billion at December 31, 2024[114]. - As of September 30, 2025, cash and cash equivalents totaled $282.9 million, representing 6.5% of total assets, compared to $162.9 million or 4.0% of total assets at December 31, 2024[182]. - Investment securities amounted to $151.1 million at September 30, 2025, or 3.5% of total assets, slightly down from $151.6 million or 3.7% of total assets at December 31, 2024[182]. Interest Income and Margin - Net interest income for Q3 2025 was $27.5 million, a 33.7% increase from $20.6 million in Q3 2024, driven by a $3.8 million increase in interest income[119]. - The net interest margin (TE) increased by 54 basis points to 2.62% in Q3 2025 compared to 2.08% in Q3 2024, primarily due to a decrease in the cost of interest-bearing liabilities[124]. - Average interest-earning assets grew by $239.0 million in Q3 2025, while the average yield on these assets increased by five basis points to 5.23%[124]. - Net interest spread improved to 1.80% in Q3 2025, up from 1.16% in Q3 2024, reflecting a 64 basis point increase due to lower rates on interest-bearing liabilities[127]. - For the first nine months of 2025, net interest income was $76.2 million, a 29.7% increase compared to $58.8 million in 2024, driven by a decrease in interest expense[138]. Credit Quality - The provision for credit losses was recorded at $850,000 in Q3 2025, compared to no provision in Q3 2024, due to an increase in past due loans[140]. - The allowance for credit losses was $41.8 million, or 1.10% of outstanding loans, providing coverage of 364.50% of nonperforming loans as of September 30, 2025, compared to $39.9 million or 1.10% of outstanding loans and 366.94% coverage at December 31, 2024[166]. - Nonperforming assets remained stable, with no loans 90 days past due and still accruing as of September 30, 2025[160]. - As of September 30, 2025, nonperforming assets totaled $11.7 million, representing 0.27% of total assets and 0.31% of gross loans, compared to $10.9 million or 0.27% of total assets and 0.30% of gross loans at December 31, 2024[161]. Capital and Ratios - Total shareholders' equity increased to $356.3 million at September 30, 2025, up from $330.4 million at December 31, 2024, primarily due to net income of $20.5 million during the first nine months of 2025[190]. - Return on average assets improved to 0.65% for the nine months ended September 30, 2025, compared to 0.38% for the year ended December 31, 2024[192]. - Total capital to risk-weighted assets ratio was 12.72% as of September 30, 2025, exceeding the minimum requirement of 8.00%[196]. - Tier 1 capital to risk-weighted assets ratio stood at 11.47% as of September 30, 2025, above the minimum requirement of 6.00%[196]. - Common equity Tier 1 capital to risk-weighted assets ratio was 11.47% as of September 30, 2025, surpassing the minimum requirement of 4.50%[196]. Risk Management - The company plans to manage interest rate risk through various asset liability management strategies[128]. - The company actively manages interest rate risk through asset/liability management, aiming to maintain an appropriate balance between interest-sensitive assets and liabilities[209]. - The forecasted impact on net interest income shows a decrease of 6.96% under a scenario of a 300 basis points increase in interest rates[212]. - A 200 basis points increase in interest rates is projected to decrease net interest income by 3.84%[212]. - A 100 basis points increase in interest rates is expected to decrease net interest income by 1.51%[212]. - A decrease of 300 basis points in interest rates is projected to increase net interest income by 3.02%[212]. Client and Market Position - The company maintains a client-focused business model, emphasizing exceptional client service as a competitive advantage[114]. - The company received a "satisfactory" rating in its most recent Community Reinvestment Act performance evaluation[207]. - The company is not involved in off-balance sheet contractual relationships that could significantly impact earnings[202].