0.0050 0.0100 0001090009 false --12-31 2020 Q3 SC P7Y5M16D 20984000 3 110000 0001090009 2019-12-31 iso4217:USD 0001090009 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-12-31 0001090009 sfst:SbaSecuritiesMember 2019-12-31 0001090009 us-gaap:AgencySecuritiesMember 2019-12-31 0001090009 us-gaap:MortgageBackedSecuritiesMember 2019-12-31 0001090009 us-gaap:AssetBackedSecuritiesMember 2019-12-31 0001090009 us-gaap:AgencySecuritiesMember 2020-09-30 0001090009 sfst:SbaSecuritiesMember 2020-09-30 0001090009 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-09-30 0001090009 us-gaap:AssetBackedSecuritiesMember 2020-09-30 0001090009 us-gaap:MortgageBackedSecuritiesMember 2020-09-30 0001090009 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-12-31 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-12-31 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2020-09-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2020-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2020-09-30 0001090009 us-gaap:MortgageBankingMember 2020-09-30 0001090009 us-gaap:CorporateMember 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2019-09-30 0001090009 us-gaap:MortgageBankingMember 2019-09-30 0001090009 us-gaap:CorporateMember 2019-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2019-09-30 0001090009 2019-09-30 0001090009 us-gaap:CommonStockMember 2019-12-31 0001090009 us-gaap:PreferredStockMember 2019-12-31 0001090009 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001090009 us-gaap:RetainedEarningsMember 2019-12-31 0001090009 sfst:NonvestedRestrictedStockMember 2019-12-31 0001090009 us-gaap:CommonStockMember 2019-06-30 0001090009 us-gaap:PreferredStockMember 2019-06-30 0001090009 sfst:NonvestedRestrictedStockMember 2019-06-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001090009 us-gaap:RetainedEarningsMember 2019-06-30 0001090009 2018-12-31 0001090009 us-gaap:CommonStockMember 2018-12-31 0001090009 us-gaap:PreferredStockMember 2018-12-31 0001090009 sfst:NonvestedRestrictedStockMember 2018-12-31 0001090009 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001090009 us-gaap:RetainedEarningsMember 2018-12-31 0001090009 2020-06-30 0001090009 us-gaap:CommonStockMember 2020-09-30 0001090009 us-gaap:PreferredStockMember 2020-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2020-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001090009 us-gaap:RetainedEarningsMember 2020-09-30 0001090009 us-gaap:CommonStockMember 2019-09-30 0001090009 us-gaap:PreferredStockMember 2019-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2019-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001090009 us-gaap:RetainedEarningsMember 2019-09-30 0001090009 2019-06-30 0001090009 us-gaap:CommonStockMember 2020-06-30 0001090009 us-gaap:PreferredStockMember 2020-06-30 0001090009 sfst:NonvestedRestrictedStockMember 2020-06-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001090009 us-gaap:RetainedEarningsMember 2020-06-30 iso4217:USD i:shares i:shares 0001090009 2020-01-01 2020-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2020-01-01 2020-09-30 0001090009 us-gaap:MortgageBankingMember 2020-01-01 2020-09-30 0001090009 us-gaap:CorporateMember 2020-01-01 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2019-01-01 2019-09-30 0001090009 us-gaap:MortgageBankingMember 2019-01-01 2019-09-30 0001090009 us-gaap:CorporateMember 2019-01-01 2019-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-09-30 0001090009 2019-01-01 2019-09-30 0001090009 2019-07-01 2019-09-30 0001090009 2020-07-01 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2020-07-01 2020-09-30 0001090009 us-gaap:MortgageBankingMember 2020-07-01 2020-09-30 0001090009 us-gaap:CorporateMember 2020-07-01 2020-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2020-07-01 2020-09-30 0001090009 sfst:CommercialAndRetailBankingMember 2019-07-01 2019-09-30 0001090009 us-gaap:MortgageBankingMember 2019-07-01 2019-09-30 0001090009 us-gaap:CorporateMember 2019-07-01 2019-09-30 0001090009 us-gaap:IntersegmentEliminationMember 2019-07-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:BusinessLoanMember 2020-01-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:ConstructionLoansMember 2020-01-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2020-01-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2020-01-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-07-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-07-01 2019-09-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-07-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2020-07-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2020-07-01 2020-09-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2020-07-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-01-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-01-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:ConstructionLoansMember 2019-01-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:BusinessLoanMember 2019-01-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-01-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-01-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-01-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-01-01 2019-09-30 0001090009 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001090009 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0001090009 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001090009 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001090009 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001090009 sfst:PaycheckProtectionProgramMember 2020-01-01 2020-09-30 0001090009 sfst:PaycheckProtectionProgramMember 2020-06-01 2020-06-26 0001090009 us-gaap:CommercialLoanMember 2020-01-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember 2020-01-01 2020-09-30 0001090009 2020-03-03 i:pure 0001090009 2020-03-16 sfst:Investments 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:FederalHomeLoanMortgageCorporationCertificatesAndObligationsFHLMCMember 2019-12-31 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:FederalNationalMortgageAssociationCertificatesAndObligationsFNMAMember 2019-12-31 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:GovernmentNationalMortgageAssociationCertificatesAndObligationsGNMAMember 2019-12-31 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:FederalHomeLoanMortgageCorporationCertificatesAndObligationsFHLMCMember 2020-09-30 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:FederalNationalMortgageAssociationCertificatesAndObligationsFNMAMember 2020-09-30 0001090009 us-gaap:MortgageBackedSecuritiesMember us-gaap:GovernmentNationalMortgageAssociationCertificatesAndObligationsGNMAMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 sfst:NonOwnerOccupiedReMember us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember sfst:BusinessLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:OwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:PassMember sfst:NonOwnerOccupiedReMember us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:NonOwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:NonOwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:NonOwnerOccupiedReMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:SubstandardMember us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember sfst:BusinessLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:BusinessLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:BusinessLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:BusinessLoanMember 2019-12-31 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:PassMember sfst:NonOwnerOccupiedReMember us-gaap:CommercialLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:NonOwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:NonOwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:NonOwnerOccupiedReMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:SubstandardMember us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember sfst:BusinessLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember sfst:BusinessLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember sfst:BusinessLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember sfst:BusinessLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:PassMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember us-gaap:DoubtfulMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2020-09-30 0001090009 sfst:NonOwnerOccupiedReMember us-gaap:CommercialLoanMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:BusinessLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:HomeEquityLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:RealEstateLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember sfst:OtherConsumerMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember sfst:OtherConsumerMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:HomeEquityLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:RealEstateLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:RealEstateLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:HomeEquityLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember sfst:OtherConsumerMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember sfst:OtherConsumerMember 2019-12-31 0001090009 us-gaap:SpecialMentionMember us-gaap:HomeEquityLoanMember us-gaap:ConsumerLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember us-gaap:ConstructionLoansMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember us-gaap:RealEstateLoanMember 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:RealEstateLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember us-gaap:RealEstateLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:RealEstateLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:RealEstateLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:HomeEquityLoanMember 2020-09-30 0001090009 us-gaap:SpecialMentionMember us-gaap:HomeEquityLoanMember us-gaap:ConsumerLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:HomeEquityLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:HomeEquityLoanMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember us-gaap:ConstructionLoansMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember sfst:OtherConsumerMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember sfst:OtherConsumerMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember sfst:OtherConsumerMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember sfst:OtherConsumerMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:PassMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SpecialMentionMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:SubstandardMember 2020-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:DoubtfulMember 2020-09-30 0001090009 2019-01-01 2019-12-31 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-01-01 2019-12-31 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-01-01 2019-12-31 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:CommercialLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:ConsumerLoanMember 2019-01-01 2019-12-31 0001090009 us-gaap:CommercialLoanMember 2019-07-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember 2019-07-01 2019-09-30 0001090009 us-gaap:CommercialLoanMember 2020-07-01 2020-09-30 0001090009 us-gaap:ConsumerLoanMember 2020-07-01 2020-09-30 0001090009 us-gaap:CommercialLoanMember 2019-01-01 2019-09-30 0001090009 us-gaap:ConsumerLoanMember 2019-01-01 2019-09-30 0001090009 us-gaap:LineOfCreditMember 2020-09-30 0001090009 sfst:PaycheckProtectionProgramMember 2020-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommonStockMember 2019-01-01 2019-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001090009 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001090009 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001090009 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001090009 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2020-01-01 2020-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2019-01-01 2019-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2019-07-01 2019-09-30 0001090009 sfst:NonvestedRestrictedStockMember 2020-07-01 2020-09-30 0001090009 2020-10-23 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-06-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-09-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-09-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-09-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2018-12-31 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2018-12-31 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2018-12-31 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2018-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2018-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2018-12-31 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2018-12-31 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2018-12-31 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2019-06-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2019-06-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2019-06-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2019-09-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2019-06-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2019-06-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2019-06-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2019-06-30 0001090009 us-gaap:CommercialLoanMember sfst:OwnerOccupiedReMember 2020-06-30 0001090009 us-gaap:CommercialLoanMember sfst:NonOwnerOccupiedReMember 2020-06-30 0001090009 us-gaap:ConstructionLoansMember us-gaap:CommercialLoanMember 2020-06-30 0001090009 sfst:BusinessLoanMember us-gaap:CommercialLoanMember 2020-06-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:RealEstateLoanMember 2020-06-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:HomeEquityLoanMember 2020-06-30 0001090009 us-gaap:ConsumerLoanMember us-gaap:ConstructionLoansMember 2020-06-30 0001090009 us-gaap:ConsumerLoanMember sfst:OtherConsumerMember 2020-06-30 0001090009 sfst:FinancialDifficultytdrMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:BusinessMember 2020-09-30 0001090009 us-gaap:CommercialLoanMember sfst:BusinessMember 2020-01-01 2020-09-30 0001090009 us-gaap:InterestRateLockCommitmentsMember 2019-12-31 0001090009 us-gaap:SecuritiesSoldNotYetPurchasedMember 2019-12-31 0001090009 us-gaap:DerivativeMember 2019-12-31 0001090009 us-gaap:InterestRateLockCommitmentsMember 2020-09-30 0001090009 us-gaap:SecuritiesSoldNotYetPurchasedMember 2020-09-30 0001090009 us-gaap:DerivativeMember 2020-09-30 0001090009 us-gaap:InterestRateLockCommitmentsMember 2019-01-01 2019-12-31 0001090009 us-gaap:SecuritiesSoldNotYetPurchasedMember 2019-01-01 2019-12-31 0001090009 us-gaap:InterestRateLockCommitmentsMember 2020-01-01 2020-09-30 0001090009 us-gaap:SecuritiesSoldNotYetPurchasedMember 2020-01-01 2020-09-30 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2019-01-01 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2019-01-01 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2019-01-01 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember 2019-01-01 2019-12-31 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2020-01-01 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2020-01-01 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2020-01-01 2020-09-30 0001090009 us-gaap:FairValueMeasurementsNonrecurringMember 2020-01-01 2020-09-30 0001090009 us-gaap:FairValueInputsLevel1Member 2019-12-31 0001090009 us-gaap:FairValueInputsLevel2Member 2019-12-31 0001090009 us-gaap:FairValueInputsLevel3Member 2019-12-31 0001090009 us-gaap:FairValueInputsLevel1Member 2020-09-30 0001090009 us-gaap:FairValueInputsLevel2Member 2020-09-30 0001090009 us-gaap:FairValueInputsLevel3Member 2020-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from    to

Commission file number 000-27719

image provided by client

Southern First Bancshares, Inc.

(Exact name of registrant as specified in its charter)

South Carolina

 

58-2459561

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

100 Verdae Boulevard, Suite 100,

Greenville, S.C.

 

29607

(Address of principal executive offices)

 

(Zip Code)

 

864-679-9000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

SFST

The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 7,737,594 shares of common stock, par value $0.01 per share, were issued and outstanding as of October 23, 2020.


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

September 30, 2020 Form 10-Q

INDEX

PART I – CONSOLIDATED FINANCIAL INFORMATION

Page

Item 1.Consolidated Financial Statements

Consolidated Balance Sheets

3

Consolidated Statements of Income

4

Consolidated Statements of Comprehensive Income

5

Consolidated Statements of Shareholders’ Equity

6

Consolidated Statements of Cash Flows

7

Notes to Unaudited Consolidated Financial Statements

8

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.Qualitative and Quantitative Disclosures about Market Risk

44

Item 4.Controls and Procedures

44

PART II – OTHER INFORMATION

Item 1.Legal Proceedings

44

Item 1A.Risk Factors

44

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 3.Defaults upon Senior Securities

45

Item 4.Mine Safety Disclosures

45

Item 5.Other Information

45

Item 6.Exhibits

45

2


PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

(dollars in thousands, except share data)

2020

2019

(Unaudited)

(Audited)

ASSETS

Cash and cash equivalents:

Cash and due from banks

$

14,916

19,196

Federal funds sold

83,106

89,256

Interest-bearing deposits with banks

64,893

19,364

Total cash and cash equivalents

162,915

127,816

Investment securities:

Investment securities available for sale

87,991

67,694

Other investments

2,589

6,948

Total investment securities

90,580

74,642

Mortgage loans held for sale

63,823

27,046

Loans

2,078,540

1,943,525

Less allowance for loan losses

(42,219

)

(16,642

)

Loans, net

2,036,321

1,926,883

Bank owned life insurance

40,821

40,011

Property and equipment, net

61,386

58,478

Deferred income taxes

6,510

4,275

Other assets

17,055

8,044

Total assets

$

2,479,411

2,267,195

LIABILITIES

Deposits

$

2,181,056

1,876,124

Federal Home Loan Bank advances and other borrowings

-

110,000

Subordinated debentures

35,971

35,890

Other liabilities

43,635

39,321

Total liabilities

2,260,662

2,061,335

SHAREHOLDERS’ EQUITY

Preferred stock, par value $.01 per share, 10,000,000 shares authorized

-

-

Common stock, par value $.01 per share, 10,000,000 shares authorized, 7,737,594 and 7,672,678 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

77

77

Nonvested restricted stock

(989

)

(803

)

Additional paid-in capital

108,337

106,152

Accumulated other comprehensive income (loss)

865

(298

)

Retained earnings

110,459

100,732

Total shareholders’ equity

218,749

205,860

Total liabilities and shareholders’ equity

$

2,479,411

2,267,195

See notes to consolidated financial statements that are an integral part of these consolidated statements.

3


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

For the three months ended

September 30,

For the nine months ended

September 30,

(dollars in thousands, except share data)

2020

2019

2020

2019

Interest income

Loans

$

23,042

22,817

69,963

65,804

Investment securities

310

576

1,090

1,664

Federal funds sold and interest-bearing deposits with banks

63

663

218

1,288

Total interest income

23,415

24,056

71,271

68,756

Interest expense

Deposits

2,393

6,409

11,195

17,959

Borrowings

385

368

1,569

1,161

Total interest expense

2,778

6,777

12,764

19,120

Net interest income

20,637

17,279

58,507

49,636

Provision for loan losses

11,100

650

27,300

1,250

Net interest income after provision for loan losses

9,537

16,629

31,207

48,386

Noninterest income

Mortgage banking income

6,277

3,055

14,721

7,741

Service fees on deposit accounts

211

271

670

802

ATM and debit card income

465

464

1,258

1,287

Income from bank owned life insurance

270

282

810

720

Other income

361

324

3,249

930

Total noninterest income

7,584

4,396

20,708

11,480

Noninterest expenses

Compensation and benefits

8,894

7,668

25,216

21,850

Occupancy

1,602

1,416

4,635

4,099

Real estate owned expenses

673

-

673

-

Outside service and data processing costs

1,225

1,073

3,646

3,078

Insurance

377

145

995

743

Professional fees

568

399

1,591

1,252

Marketing

176

237

535

733

Other

668

546

1,907

1,745

Total noninterest expenses

14,183

11,484

39,198

33,500

Income before income tax expense

2,938

9,541

12,717

26,366

Income tax expense

721

2,129

2,990

5,705

Net income available to common shareholders

$

2,217

7,412

9,727

20,661

Earnings per common share

Basic

$

0.29

0.98

1.26

2.75

Diluted

0.28

0.95

1.24

2.66

Weighted average common shares outstanding

Basic

7,732,293

7,548,184

7,711,181

7,501,337

Diluted

7,815,265

7,780,504

7,820,345

7,759,611

See notes to consolidated financial statements that are an integral part of these consolidated statements.

4


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

For the three months

ended September 30,

For the nine months

ended September 30,

(dollars in thousands)

2020

2019

2020

2019

Net income

$

2,217

7,412

9,727

20,661

Other comprehensive income:

Unrealized gain on securities available for sale:

Unrealized holding gain arising during the period, pretax

77

301

1,472

1,705

Tax expense

(17

)

(64

)

(309

)

(358

)

Reclassification of realized gain

-

(2

)

-

(8

)

Tax expense

-

1

-

2

Other comprehensive income

60

236

1,163

1,341

Comprehensive income

$

2,277

7,648

10,890

22,002

See notes to consolidated financial statements that are an integral part of these consolidated statements.

5


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

 

For the three months ended September 30,

Accumulated

Nonvested

Additional

other

Common stock

Preferred stock

restricted

paid-in

comprehensive

Retained

(dollars in thousands, except share data)

Shares

Amount

Shares

Amount

stock

capital

income (loss)

earnings

Total

June 30, 2019

7,557,923

76

-

-

(887

)

104,354

188

86,123

189,854

Net income

-

-

-

-

-

-

-

7,412

7,412

Proceeds from exercise of stock options

56,596

-

-

-

-

557

-

-

557

Issuance of restricted stock

4,000

-

-

-

(143

)

143

-

-

-

Compensation expense related to restricted stock, net of tax

-

-

-

-

111

-

-

-

111

Compensation expense related to stock options, net of tax

-

-

-

-

-

324

-

-

324

Other comprehensive income

-

-

-

-

-

-

236

-

236

September 30, 2019

7,618,519

$

76

-

$

-

$

(919

)

$

105,378

$

424

$

93,535

$

198,494

June 30, 2020

7,734,644

77

-

-

(1,001

)

108,031

805

108,242

216,154

Net income

-

-

-

-

-

-

-

2,217

2,217

Proceeds from exercise of stock options

250

-

-

-

-

1

-

-

1

Issuance of restricted stock

2,700

-

-

-

(88

)

88

-

-

-

Compensation expense related to restricted stock, net of tax

-

-

-

-

100

-

-

-

100

Compensation expense related to stock options, net of tax

-

-

-

-

-

217

-

-

217

Other comprehensive income

-

-

-

-

-

-

60

-

60

 

September 30, 2020

7,737,594

$

77

-

$

-

$

(989

)

$

108,337

$

865

$

110,459

$

218,749

 

For the nine months ended September 30,

Accumulated

Nonvested

Additional

other

Common stock

Preferred stock

restricted

paid-in

comprehensive

Retained

(dollars in thousands, except share data)

Shares

Amount

Shares

Amount

stock

capital

income (loss)

earnings

Total

December 31, 2018

7,466,481

75

-

-

(741

)

102,625

(917

)

72,874

173,916

Net income

-

-

-

-

-

-

-

20,661

20,661

Proceeds from exercise of stock options

137,338

1

-

-

-

1,315

-

-

1,316

Issuance of restricted stock

14,700

-

-

-

(490

)

490

-

-

-

Compensation expense related to restricted stock, net of tax

-

-

-

-

312

-

-

-

312

Compensation expense related to stock options, net of tax

-

-

-

-

-

948

-

-

948

Other comprehensive income

-

-

-

-

-

-

1,341

-

1,341

September 30, 2019

7,618,519

$

76

-

$

-

$

(919

)

$

105,378

$

424

$

93,535

$

198,494

December 31, 2019

7,672,678

77

-

-

(803

)

106,152

(298

)

100,732

205,860

Net income

-

-

-

-

-

-

-

9,727

9,727

Proceeds from exercise of stock options

52,716

-

-

-

-

963

-

-

963

Issuance of restricted stock

12,200

-

-

-

(494

)

494

-

-

-

Compensation expense related to restricted stock, net of tax

-

-

-

-

308

-

-

-

308

Compensation expense related to stock options, net of tax

-

-

-

-

-

728

-

-

728

Other comprehensive income

-

-

-

-

-

-

1,163

-

1,163

 

September 30, 2020

7,737,594

$

77

-

$

-

$

(989

)

$

108,337

$

865

$

110,459

$

218,749

 

See notes to consolidated financial statements that are an integral part of these consolidated statements.

6


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the nine months ended

September 30,

(dollars in thousands)

2020

 

2019

Operating activities

 

Net income

$

9,727

20,661

Adjustments to reconcile net income to cash provided by (used for) operating activities:

Provision for loan losses

27,300

1,250

Depreciation and other amortization

1,569

1,390

Accretion and amortization of securities discounts and premium, net

497

293

Write-down of real estate owned

513

-

Net change in operating leases

157

534

Compensation expense related to stock options and restricted stock grants

1,036

1,260

Gain on sale of loans held for sale

(14,377

)

(7,456

)

Loans originated and held for sale

(412,069

)

(276,018

)

Proceeds from sale of loans held for sale

389,669

252,085

Increase in cash surrender value of bank owned life insurance

(810

)

(720

)

Increase in deferred tax asset

(2,545

)

(5,306

)

Increase in other assets

(7,345

)

(178

)

Increase in other liabilities

3,419

11,109

Net cash used for operating activities

(3,259

)

(1,096

)

Investing activities

Increase (decrease) in cash realized from:

Increase in loans, net

(138,935

)

(162,259

)

Purchase of property and equipment

(3,696

)

(7,658

)

Purchase of investment securities:

Available for sale

(36,609

)

(25,383

)

Other

(1,275

)

-

Payments and maturities, calls and repayments of investment securities:

Available for sale

17,290

12,273

Other investments

5,634

814

Purchase of life insurance policies

-

(5,000

)

Net cash used for investing activities

(157,591

)

(187,213

)

Financing activities

Increase (decrease) in cash realized from:

Increase in deposits, net

304,932

251,159

Decrease in Federal Home Loan Bank advances and other borrowings, net

(109,946

)

(2,516

)

Proceeds from the exercise of stock options

963

1,316

Net cash provided by financing activities

195,949

249,959

Net increase in cash and cash equivalents

35,099

61,650

Cash and cash equivalents at beginning of the period

127,816

72,873

Cash and cash equivalents at end of the period

$

162,915

134,523

Supplemental information

Cash paid for

Interest

$

14,031

18,752

Income taxes

2,544

5,307

Schedule of non-cash transactions

Unrealized gain on securities, net of income taxes

1,163

1,347

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

2,115

17,290

Real estate acquired in settlement of loans

2,197

-

 

See notes to consolidated financial statements that are an integral part of these consolidated statements.

7


SOUTHERN FIRST BANCSHARES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – Nature of Business and Basis of Presentation

Business Activity

Southern First Bancshares, Inc. (the “Company”) is a South Carolina corporation that owns all of the capital stock of Southern First Bank (the “Bank”) and all of the stock of Greenville First Statutory Trusts I and II (collectively, the “Trusts”). The Trusts are special purpose non-consolidated entities organized for the sole purpose of issuing trust preferred securities. The Bank's primary federal regulator is the Federal Deposit Insurance Corporation (the “FDIC”). The Bank is also regulated and examined by the South Carolina Board of Financial Institutions. The Bank is primarily engaged in the business of accepting demand deposits and savings deposits insured by the FDIC, and providing commercial, consumer and mortgage loans to the general public.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020. The consolidated financial statements include the accounts of the Company and the Bank. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation,” the financial statements related to the Trusts have not been consolidated.

Business Segments

In determining proper segment definition, the Company considers the materiality of a potential segment and components of the business about which financial information is available and regularly evaluated, relative to a resource allocation and performance assessment. The Company accounts for intersegment revenues and expenses as if the revenue/expense transactions were generated to third parties, that is, at current market prices. Please refer to “Note 10 – Reportable Segments” for further information on the reporting for the Company’s three business segments.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of income and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, real estate acquired in the settlement of loans, fair value of financial instruments, evaluating other-than-temporary-impairment of investment securities and valuation of deferred tax assets.

Risks and Uncertainties

The impact of the coronavirus (COVID-19) pandemic is fluid and continues to evolve, adversely affecting many of the Bank’s clients. The unprecedented and rapid spread of COVID-19 and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, consumer spending, and other economic activities has resulted in less economic activity, lower equity market valuations and significant volatility and disruption in financial markets, and has had an adverse effect on the Company’s business, financial condition and results of operations. The ultimate extent of the impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations is currently uncertain and the timing and pace of recovery will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets and our clients, employees and vendors.

8


The Company’s business, financial condition and results of operations generally rely upon the ability of the Bank’s borrowers to repay their loans, the value of collateral underlying the Bank’s secured loans, and demand for loans and other products and services the Bank offers, which are highly dependent on the business environment in the Bank’s primary markets where it operates and in the United States as a whole.

On March 3, 2020, the Federal Reserve reduced the target federal funds rate by 50 basis points, followed by an additional reduction of 100 basis points on March 16, 2020. These reductions in interest rates and other effects of the COVID-19 pandemic have had, and are expected to continue to have, possibly materially, an adverse effect on Company’s business, financial condition and results of operations. For instance, the pandemic has had negative effects on the Bank’s interest income, provision for loan losses, and certain transaction-based line items of noninterest income. Other financial impacts could occur though such potential impact is unknown at this time.

As of September 30, 2020, the Company’s and the Bank’s capital ratios were in excess of all regulatory requirements. While management believes that we have sufficient capital to withstand an extended economic recession brought about by the COVID-19 pandemic, our reported and regulatory capital ratios could be adversely impacted by further credit losses.

The Company maintains access to multiple sources of liquidity, including a $15.0 million holding company line of credit with another bank which could be used to support capital ratios at the subsidiary bank. As of September 30, 2020, the $15.0 million line was unused.

Reclassifications

Certain amounts, previously reported, have been reclassified to state all periods on a comparable basis and had no effect on shareholders’ equity or net income.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

Newly Issued, But Not Yet Effective Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to form their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for all annual and interim periods beginning after December 31, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. Adoption will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

In November 2019, the FASB issued guidance that addresses issues raised by stakeholders during the implementation of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments affect a variety of Topics in the Accounting Standards Codification. For public business entities that meet the definition of a smaller reporting company, such as the Company, the amendments are effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted in any interim period as long as the Company has adopted to amendments in ASU 2016-13. Currently, the Company is evaluating the impact of adoption on its financial statements and does not expect to adopt the ASU before the effective period.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

9


NOTE 2 – Investment Securities

The amortized costs and fair value of investment securities are as follows:

 

September 30, 2020

Amortized

Gross Unrealized

Fair

(dollars in thousands)

Cost

Gains

Losses

Value

Available for sale

US government agencies

$

5,500

-

3

5,497

SBA securities

509

-

19

490

State and political subdivisions

15,932

641

29

16,544

Asset-backed securities

11,956

2

189

11,769

Mortgage-backed securities

FHLMC

12,018

238

60

12,196

FNMA

31,803

602

80

32,325

GNMA

9,178

44

52

9,170

Total mortgage-backed securities

52,999

884

192

53,691

Total investment securities available for sale

$

86,896

1,527

432

87,991

 

December 31, 2019

Amortized

Gross Unrealized

Fair

Cost

Gains

Losses

Value

Available for sale

US government agencies

$

500

-

1

499

SBA securities

550

-

19

531

State and political subdivisions

4,205

3

24

4,184

Asset-backed securities

13,351

-

184

13,167

Mortgage-backed securities

FHLMC