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Southern First Reports Results for Fourth Quarter 2022

Southern First Reports Results for Fourth Quarter 2022
PR Newswire
GREENVILLE, S.C., Jan. 24, 2023

GREENVILLE, S.C., Jan. 24, 2023 /PRNewswire/ — Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today announ…

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Southern First Reports Results for Fourth Quarter 2022

PR Newswire

GREENVILLE, S.C., Jan. 24, 2023 /PRNewswire/ -- Southern First Bancshares, Inc. (NASDAQ: SFST), holding company for Southern First Bank, today announced its financial results for the three and twelve months ended December 31, 2022.

"Southern First continues to attract talented bankers, and clients are moving their relationships to Southern First at a record pace," stated Art Seaver, the company's Chief Executive Officer. "In the fourth quarter of 2022, our team generated the largest loan growth quarter in our company's history. While this transitional interest rate cycle of the Federal Reserve is weakening our current margin, we continue to grow book value and are excited about our momentum as we head into the new year."

2022 Fourth Quarter Highlights

  • Net income was $5.5 million, compared to $12.0 million for Q4 2021
  • Diluted earnings per common share were $0.68 per share, compared to $1.49 for Q4 2021
  • Total loans increased 31% to $3.3 billion, compared to $2.5 billion at Q4 2021
  • Total deposits increased 22% to $3.1 billion at Q4 2022, compared to $2.6 billion at Q4 2021
  • Book value per common share increased to $36.76, or 5%, over Q4 2021


Quarter Ended



December 31

September 30

June 30

March 31

December 31



2022

2022

2022

2022

2021

Earnings ($ in thousands, except per share data):







Net income available to common shareholders

$

5,492

8,413

7,240

7,970

12,005

Earnings per common share, diluted


0.68

1.04

0.90

0.98

1.49

Total revenue(1)


25,826

28,134

27,149

26,091

26,194

Net interest margin (tax-equivalent)(2)


2.88 %

3.19 %

3.35 %

3.37 %

3.35 %

Return on average assets(3)


0.63 %

1.00 %

0.92 %

1.10 %

1.66 %

Return on average equity(3)


7.44 %

11.57 %

10.31 %

11.60 %

17.61 %

Efficiency ratio(4)


63.55 %

57.03 %

58.16 %

56.28 %

56.25 %

Noninterest expense to average assets (3)


1.87 %

1.92 %

2.02 %

2.03 %

2.06 %

Balance Sheet ($ in thousands):







Total loans(5)

$

3,273,363

3,030,027

2,845,205

2,660,675

2,489,877

Total deposits


3,133,864

3,001,452

2,870,158

2,708,174

2,563,826

Core deposits(6)


2,759,112

2,723,592

2,588,283

2,541,113

2,479,412

Total assets


3,691,981

3,439,669

3,287,663

3,073,234

2,925,548

Book value per common share


36.76

35.99

35.39

34.90

35.07

Loans to deposits


104.45 %

100.95 %

99.13 %

98.25 %

97.12 %

Holding Company Capital Ratios(7):







Total risk-based capital ratio


12.91 %

13.58 %

13.97 %

14.37 %

14.90 %

Tier 1 risk-based capital ratio


10.88 %

11.49 %

11.83 %

12.18 %

12.65 %

Leverage ratio


9.17 %

9.44 %

9.71 %

10.12 %

10.18 %

Common equity tier 1 ratio(8)


10.44 %

11.02 %

11.33 %

11.65 %

12.09 %

Tangible common equity(9)


7.98 %

8.37 %

8.60 %

9.06 %

9.50 %

Asset Quality Ratios:







Nonperforming assets/ total assets


0.07 %

0.08 %

0.09 %

0.15 %

0.17 %

Classified assets/tier one capital plus allowance for credit losses


4.71 %

5.24 %

7.29 %

7.83 %

12.61 %

Loans 30 days or more past due/ loans(5)


0.11 %

0.07 %

0.10 %

0.13 %

0.09 %

Net charge-offs (recoveries)/average loans(5) (YTD annualized)


(0.05 %)

(0.06 %)

0.02 %

0.00 %

0.06 %

Allowance for credit losses/loans(5)


1.18 %

1.20 %

1.20 %

1.24 %

1.22 %

Allowance for credit losses/nonaccrual loans


1,470.74 %

1,388.87 %

1,166.70 %

726.88 %

625.16 %

 [Footnotes to table located on page 6]

 

INCOME STATEMENTS – Unaudited












Quarter Ended


Twelve Months Ended



Dec 31

Sept 30

Jun 30

Mar 31

Dec 31


December 31

(in thousands, except per share data)


2022

2022

2022

2022

2021


2022

2021

Interest income










Loans

$

33,939

29,752

26,610

23,931

23,661


114,233

91,599

Investment securities


562

506

448

474

410


1,990

1,335

Federal funds sold


525

676

180

59

66


1,439

233

  Total interest income


35,026

30,934

27,238

24,464

24,137


117,662

93,167

Interest expense










Deposits


10,329

5,021

1,844

908

900


18,102

3,909

Borrowings


578

459

510

392

380


1,939

1,526

  Total interest expense


10,907

5,480

2,354

1,300

1,280


20,041

5,435

Net interest income


24,119

25,454

24,884

23,164

22,857


97,621

87,732

Provision (reversal) for loan losses


2,325

950

1,775

1,105

(4,200)


6,155

(12,400)

Net interest income after provision for loan losses


21,794

24,504

23,109

22,059

27,057


91,466

100,132

Noninterest income










Mortgage banking income


291

1,230

1,184

1,494

1,931


4,198

11,376

Service fees on deposit accounts


187

194

209

191

200


782

757

ATM and debit card income


575

559

563

528

560


2,225

2,092

Income from bank owned life insurance


344

315

315

315

312


1,289

1,231

Loss on disposal of fixed assets


-

-

(394)

-

-


(394)

-

Other income


310

382

388

399

334


1,480

1,645

  Total noninterest income


1,707

2,680

2,265

2,927

3,337


9,580

17,101

Noninterest expense










Compensation and benefits


9,576

9,843

9,915

9,456

9,208


38,790

36,103

Occupancy


2,666

2,442

2,219

1,778

2,081


9,105

6,956

Other real estate owned expenses


-

-

-

-

-


-

385

Outside service and data processing costs


1,521

1,529

1,528

1,533

1,395


6,112

5,468

Insurance


551

507

367

260

342


1,686

1,149

Professional fees


788

555

693

599

682


2,635

2,589

Marketing


282

338

329

269

260


1,216

905

Other


1,029

832

737

790

767


3,389

2,875

  Total noninterest expenses


16,413

16,046

15,788

14,685

14,735


62,933

56,430

Income before provision for income taxes


7,088

11,138

9,586

10,301

15,659


38,113

60,803

Income tax expense


1,596

2,725

2,346

2,331

3,654


8,998

14,092

Net income available to common shareholders

$

5,492

8,413

7,240

7,970

12,005


29,115

46,711











Earnings per common share – Basic

$

0.69

1.06

0.91

1.00

1.52


3.66

5.96

Earnings per common share – Diluted


0.68

1.04

0.90

0.98

1.49


3.61

5.85

Basic weighted average common shares


7,971

7,972

7,945

7,932

7,877


7,958

7,844

Diluted weighted average common shares


8,071

8,065

8,075

8,096

8,057


8,072

7,989

[Footnotes to table located on page 6]


Net income for the fourth quarter of 2022 was $5.5 million, or $0.68 per diluted share, a $2.9 million decrease from the third quarter of 2022 and a $6.5 million decrease from the fourth quarter of 2021. Net interest income decreased $1.3 million for the fourth quarter of 2022, compared to the third quarter of 2022, and increased $1.3 million, or 5.5%, compared to the fourth quarter of 2021. The decrease in net interest income from the prior quarter was driven by an increase in interest expense on our deposit accounts related to the Federal Reserve's 425-basis point increase in the federal funds rate. The increase in net interest income from the fourth quarter of 2021 related to growth in our loan portfolio, partially offset by the higher interest expense on our deposit accounts.   

The provision for credit losses was $2.3 million for the fourth quarter of 2022, compared to $950 thousand for the third quarter of 2022 and a reversal of $4.2 million for the fourth quarter of 2021.  The provision expense during the fourth quarter of 2022, calculated under the Current Expected Credit Loss ("CECL") methodology adopted effective January 1, 2022, includes a $2.3 million provision for loan losses and a $25 thousand provision for unfunded commitments.  The increased provision during the fourth quarter was driven by $243.3 million of loan growth.  The reversal in the provision during the fourth quarter of 2021 was driven by improvement in economic conditions after the onset of the pandemic. 

Noninterest income totaled $1.7 million for the fourth quarter of 2022, a $973 thousand decrease from the third quarter of 2022 and a $1.6 million decrease from the fourth quarter of 2021.  In prior quarters, mortgage banking income has been the largest component of our noninterest income; however, due to lower mortgage origination volume during the past 12 months, combined with our strategy to keep a larger percentage of these loans in our portfolio, mortgage banking income decreased to $291 thousand from prior quarter income of $1.2 million and from income of $1.9 million for the prior year. 

Noninterest expense for the fourth quarter of 2022 was $16.4 million, a $367 thousand increase from the third quarter of 2022, and a $1.7 million increase from the fourth quarter of 2021. The increase in noninterest expense from the previous quarter was driven by increases in occupancy, professional fees, and other noninterest expenses, while the increase from the prior year related to increases in compensation and benefits, occupancy, insurance and other noninterest expenses. In comparison to the prior quarter, the increases in occupancy, professional fees and other noninterest expenses were due to higher property tax expenses, an increase in legal and accounting/audit costs, as well as an increase in FDIC insurance premiums.  Compensation and benefits expense increased from the prior year primarily due to the hiring of new team members, combined with annual salary increases, while the increase in occupancy expense relates to costs associated with the relocation of our headquarters. In addition, our insurance costs increased during 2022 due to higher FDIC insurance premiums and our noninterest expense increase reflects higher travel and entertainment costs as well as an increase in fraud losses.

Our effective tax rate was 22.5% for the fourth quarter, a decrease from 24.5% for the prior quarter of 2022 and 23.3% for the fourth quarter of 2021. The lower tax rate in the fourth quarter of 2022 relates to the greater impact of our tax-exempt and equity compensation transactions on our tax rate during the quarter.

NET INTEREST INCOME AND MARGIN - Unaudited













For the Three Months Ended


December 31, 2022

September 30, 2022

December 31, 2021

(dollars in thousands)

Average
Balance

Income/
Expense

Yield/
Rate(3)

Average
Balance

Income/
Expense

Yield/
Rate(3)

Average
Balance

Income/
Expense

Yield/
Rate(3)

Interest-earning assets










 Federal funds sold and interest-bearing deposits

$      60,176

$       525

3.46 %

$      122,071

$       676

2.20 %

$    138,103

$       66

0.19 %

  Investment securities, taxable

86,594

515

2.36 %

91,462

449

1.95 %

107,181

351

1.30 %

  Investment securities, nontaxable(2)

9,987

61

2.42 %

10,160

74

2.89 %

11,695

75

2.56 %

  Loans(10)

3,165,061

33,939

4.25 %

2,941,350

29,752

4.01 %

2,452,677

23,661

3.83 %

    Total interest-earning assets

3,321,818

35,040

4.18 %

3,165,043

30,951

3.88 %

2,709,656

24,153

3.54 %

  Noninterest-earning assets

162,924



159,233



153,284



    Total assets

$3,484,742



$3,324,726



$2,862,940



Interest-bearing liabilities










 NOW accounts

$    343,541

379

0.44 %

$    361,500

178

0.20 %

$   330,067

64

0.08 %

 Savings & money market

1,529,532

7,657

1.99 %

1,417,181

3,663

1.03 %

1,278,930

637

0.20 %

 Time deposits

405,907

2,293

2.24 %

361,325

1,180

1.30 %

155,708

199

0.51 %

Total interest-bearing deposits

2,278,980

10,329

1.80 %

2,140,006

5,021

0.93 %

1,764,705

900

0.20 %

FHLB advances and other borrowings

7,594

81

4.23 %

1,357

10

2.92 %

-

-

- %

Subordinated debentures

36,197

497

5.45 %

36,169

449

4.93 %

36,089

380

4.18 %

Total interest-bearing liabilities

2,322,771

10,907

1.86 %

2,177,532

5,480

1.00 %

1,800,794

1,280

0.28 %

Noninterest-bearing liabilities

869,314



858,202



791,700



Shareholders' equity

292,657



288,542



270,446



Total liabilities and shareholders' equity

$3,484,742



$3,324,276



$2,862,940



Net interest spread



2.32 %



2.88 %



3.26 %

Net interest income (tax equivalent) / margin


$24,133

2.88 %


$25,471

3.19 %


$22,873

3.35 %

Less:  tax-equivalent adjustment(2)


14



17



16


Net interest income


$24,119



$25,454



$22,857


[Footnotes to table located on page 6]




Net interest income was $24.1 million for the fourth quarter of 2022, a $1.3 million decrease from the third quarter, driven by a $5.4 million increase in interest expense, partially offset by a $4.1 million increase in interest income, on a taxable basis. The increase in interest expense was driven by $139.0 million growth in average interest-bearing deposit balances at an average rate of 1.80%, an 87-basis points increase over the previous quarter, partially offset by $223.7 million growth in average loan balances at a yield of 4.25%, an increase of 24-basis points from the third quarter of 2022.  In comparison to the fourth quarter of 2021, net interest income increased $1.3 million, resulting primarily from $712.4 million growth in average loan balances during 2022, combined with a 42-basis point increase in loan yield.  Our net interest margin, on a tax-equivalent basis, was 2.88% for the fourth quarter of 2022, a 31-basis point decrease from 3.19% from the third quarter of 2022 and a 47-basis point decrease from 3.35% for the fourth quarter of 2021.  As a result of the Federal Reserve's 425-basis point interest rate hikes during 2022, the yield on our interest-earning assets has increased by 64-basis points during the fourth quarter of 2022 in comparison to the fourth quarter of 2021. However, the rate on our interest-bearing liabilities, specifically our interest-bearing deposits, has increased by 158-basis points during the same time period, resulting in the lower net interest margin during the fourth quarter of 2022. 

BALANCE SHEETS - Unaudited

















Ending Balance




December 31

September 30

June 30

March 31

December 31


(in thousands, except per share data)


2022

2022

2022

2022

2021


Assets








Cash and cash equivalents:








  Cash and due from banks

$

18,788

16,530

21,090

20,992

21,770


  Federal funds sold


101,277

139,544

124,462

95,093

86,882


  Interest-bearing deposits with banks


50,809

4,532

36,538

33,131

58,557


    Total cash and cash equivalents


170,874

160,606

182,090

149,216

167,209


Investment securities:








  Investment securities available for sale


93,347

91,521

98,991

106,978

120,281


  Other investments


10,833

5,449

5,065

4,104

4,021


    Total investment securities


104,180

96,970

104,056

111,082

124,302


Mortgage loans held for sale


3,917

9,243

18,329

17,840

13,556


Loans (5)


3,273,363

3,030,027

2,845,205

2,660,675

2,489,877


Less allowance for credit losses


(38,639)

(36,317)

(34,192)

(32,944)

(30,408)


    Loans, net


3,234,724

2,993,710

2,811,013

2,627,731

2,459,469


Bank owned life insurance


51,122

50,778

50,463

50,148

49,833


Property and equipment, net


99,183

99,530

96,674

95,129

92,370


Deferred income taxes


12,522

18,425

15,078

10,635

8,397


Other assets


15,459

10,407

9,960

10,859

10,412


    Total assets

$

3,691,981

3,439,669

3,287,663

3,072,640

2,925,548


Liabilities








Deposits

$

3,133,864

3,001,452

2,870,158

2,708,174

2,563,826


FHLB Advances


175,000

60,000

50,000

-

-


Subordinated debentures


36,214

36,187

36,160

36,133

36,106


Other liabilities


52,391

54,245

48,708

49,809

47,715


    Total liabilities


3,397,469

3,151,884

3,005,026

2,794,116

2,647,647


Shareholders' equity








Preferred stock - $.01 par value; 10,000,000 shares authorized


-

-

-

-

-


Common Stock - $.01 par value; 10,000,000 shares authorized


80

80

80

80

79


Nonvested restricted stock


(3,306)

(3,348)

(3,230)

(3,425)

(1,435)


Additional paid-in capital


119,027

118,433

117,714

117,286

114,226


Accumulated other comprehensive loss


(13,410)

(14,009)

(10,143)

(6,393)

(740)


Retained earnings


192,121

186,629

178,216

170,976

165,771


    Total shareholders' equity


294,512

287,785

282,637

278,524

277,901


    Total liabilities and shareholders' equity

$

3,691,981

3,439,669

3,287,663

3,072,640

2,925,548


Common Stock








Book value per common share

$

36.76

35.99

35.39

34.90

35.07


Stock price:








  High


49.50

47.16

50.09

65.02

64.73


  Low


41.46

41.66

42.25

50.84

52.73


  Period end


45.75

41.66

43.59

50.84

62.49


Common shares outstanding


8,011

7,997

7,986

7,981

7,925


[Footnotes to table located on page 6]

   

ASSET QUALITY MEASURES - Unaudited



Quarter Ended



December 31

September 30

June 30

March 31

December 31

(dollars in thousands)


2022

2022

2022

2022

2021

Nonperforming Assets







Commercial







  Non-owner occupied RE

$

247

253

259

265

270

  Commercial business


182

79

-

-

-

Consumer







  Real estate


207

-

183

739

989

  Home equity


195

197

200

815

653

Nonaccruing troubled debt restructurings


1,796

2,086

2,289

2,713

2,952

Total nonaccrual loans


2,627

2,615

2,931

4,532

4,864

Other real estate owned


-

-

-

-

-

Total nonperforming assets

$

2,627

2,615

2,931

4,532

4,864

Nonperforming assets as a percentage of:







  Total assets


0.07 %

0.08 %

0.09 %

0.15 %

0.17 %

  Total loans


0.08 %

0.09 %

0.10 %

0.17 %

0.20 %

Accruing troubled debt restructurings (TDRs)

$

4,503

4,683

3,558

3,241

3,299

Classified assets/tier 1 capital plus allowance for credit losses


4.71 %

5.24 %

7.29 %

7.83 %

12.61 %






Quarter Ended



December 31

September 30

June 30

March 31

December 31

(dollars in thousands)


2022

2022

2022

2022

2021

Allowance for Credit Losses







Balance, beginning of period

$

36,317

34,192

32,944

30,408

36,075

CECL adjustment


-

-

-

1,500

-

Loans charged-off


-

-

(316)

(169)

(1,509)

Recoveries of loans previously charged-off


22

1,600

39

180

42

  Net loans (charged-off) recovered


22

1,600

(277)

11

(1,467)

Provision for credit losses


2,300

525

1,525

1,025

(4,200)

Balance, end of period

$

38,639

36,317

34,192

32,944

30,408

Allowance for credit losses to gross loans


1.18 %

1.20 %

1.20 %

1.24 %

1.22 %

Allowance for credit losses to nonaccrual loans


1,470.74 %

1,388.87 %

1,166.70 %

726.88 %

625.22 %

Net charge-offs to average loans QTD (annualized)


0.00 %

(0.22 %)

0.04 %

0.00 %

0.24 %


Total nonperforming assets remained at $2.6 million for the fourth quarter of 2022, representing 0.07% of total assets, compared to 0.08% in the third quarter of 2022. During the fourth quarter of 2022, our classified asset ratio improved to 4.71% from 12.61% in the fourth quarter of 2021. The improvement over the fourth quarter of 2021 was primarily the result of six hotel loans, or $18.5 million in the aggregate, we upgraded from substandard during 2022.

Effective January 1, 2022, we early adopted the CECL methodology for estimating credit losses, which resulted in an increase of $1.5 million to our allowance for credit losses and an increase of $2.0 million to our reserve for unfunded commitments. The tax-effected impact of these two items totaled $2.8 million and was recorded as an adjustment to our retained earnings as of January 1, 2022.

On December 31, 2022, the allowance for credit losses was $38.6 million, or 1.18% of total loans, compared to $36.3 million, or 1.20% of total loans, at September 30, 2022, and $30.4 million, or 1.22% of total loans, at December 31, 2021. We had negligible net recoveries of $22 thousand for the fourth quarter of 2022 compared to net recoveries of $1.6 million for the third quarter of 2022 and net charge-offs of $1.5 million for the fourth quarter of 2021. There was a provision for credit losses of $2.3 million for the fourth quarter of 2022 compared to a provision of $525 thousand for the third quarter of 2022 and a reversal of $4.2 million for the fourth quarter of 2021.

LOAN COMPOSITION - Unaudited




Quarter Ended



December 31

September 30

June 30

March 31

December 31

(dollars in thousands)


2022

2022

2022

2022

2021

Commercial







Owner occupied RE

$

612,901

572,972

551,544

527,776

488,965

Non-owner occupied RE


862,579

799,569

741,263

705,811

666,833

Construction


109,726

85,850

84,612

75,015

64,425

Business


468,112

419,312

389,790

352,932

333,049

Total commercial loans


2,053,318

1,877,703

1,767,209

1,661,534

1,553,272

Consumer







Real estate


931,278

873,471

812,130

745,667

694,401

Home equity


179,300

171,904

161,512

155,678

154,839

Construction


80,415

77,798

76,878

72,627

59,846

Other


29,052

29,151

27,476

25,169

27,519

Total consumer loans


1,220,045

1,152,324

1,077,996

999,141

936,605

Total gross loans, net of deferred fees    


3,273,363

3,030,027

2,845,205

2,660,675

2,489,877

Less—allowance for credit losses


(38,639)

(36,317)

(34,192)

(32,944)

(30,408)

Total loans, net

$

3,234,724

2,993,710

2,811,013

2,627,731

2,459,469

 

DEPOSIT COMPOSITION - Unaudited




Quarter Ended



December 31

September 30

June 30

March 31

December 31

(dollars in thousands)


2022

2022

2022

2022

2021

Non-interest bearing

$

804,115

791,050

799,169

779,262

768,650

Interest bearing:







   NOW accounts


318,030

357,862

364,189

416,322

401,788

   Money market accounts


1,506,418

1,452,958

1,320,329

1,238,866

1,201,099

   Savings


40,673

42,335

41,944

41,630

39,696

   Time, less than $250,000


32,469

79,387

62,340

57,972

61,122

   Time and out-of-market deposits, $250,000 and over


432,159

277,860

282,187

174,122

91,471

  Total deposits

$

3,133,864

3,001,452

2,870,158

2,708,174

2,563,826

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 $250,000.

 (7) December 31, 2022 ratios are preliminary.

 (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 SOUTHERN FIRST BANCSHARES
Southern First Bancshares, Inc., Greenville, South Carolina is a registered bank holding company incorporated under the laws of South Carolina.  The company's wholly owned subsidiary, Southern First Bank, is the second largest bank headquartered in South Carolina.  Southern First Bank has been providing financial services since 1999 and now operates in 12 locations in the Greenville, Columbia, and Charleston markets of South Carolina as well as the Charlotte, Triangle and Triad regions of North Carolina and Atlanta, Georgia. Southern First Bancshares has consolidated assets of approximately $3.7 billion and its common stock is traded on The NASDAQ Global Market under the symbol "SFST."  More information can be found at www.southernfirst.com.

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," "intend," "plan," "target," 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 the United States economy in general and the strength of the local economies in which the company conducts operations may be different than expected; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit loss, the rates of loan and deposit growth as well as pricing of each product, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, changes affecting oversight of the financial services industry or consumer protection; (5) the impact of changes to Congress on the regulatory landscape and capital markets; (6) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; (7) changes in interest rates, which may affect the company's net income, interest expense, prepayment penalty income, mortgage banking income, and other future cash flows, or the market value of the company's assets, including its investment securities; and (8) changes in accounting principles, policies, practices, or guidelines. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC's Internet site (http://www.sec.gov). All subsequent written and oral forward-looking statements concerning the company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above.  We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

FINANCIAL CONTACT: MIKE DOWLING  864-679-9070

MEDIA CONTACT: ART SEAVER  864-679-9010

WEB SITE: www.southernfirst.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/southern-first-reports-results-for-fourth-quarter-2022-301728405.html

SOURCE Southern First Bancshares, Inc.

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Schedule for Week of January 29, 2023

The key reports scheduled for this week are the January employment report and November Case-Shiller house prices.Other key indicators include January ISM manufacturing and services surveys, and January vehicle sales.The FOMC meets this week, and the FO…

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The key reports scheduled for this week are the January employment report and November Case-Shiller house prices.

Other key indicators include January ISM manufacturing and services surveys, and January vehicle sales.

The FOMC meets this week, and the FOMC is expected to announce a 25 bp hike in the Fed Funds rate.

----- Monday, January 30th -----

10:30 AM: Dallas Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

----- Tuesday, January 31st -----

9:00 AM: FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

9:00 AM ET: S&P/Case-Shiller House Price Index for November.

This graph shows the Year over year change in the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 6.9% year-over-year increase in the Comp 20 index.

9:45 AM: Chicago Purchasing Managers Index for January. The consensus is for a reading of 44.9, down from 45.1 in December.

10:00 AM: The Q4 Housing Vacancies and Homeownership report from the Census Bureau.

----- Wednesday, February 1st -----

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for January. This report is for private payrolls only (no government). The consensus is for 170,000 payroll jobs added in January, down from 235,000 added in December.

10:00 AM: Construction Spending for December. The consensus is for a 0.1% decrease in construction spending.

Job Openings and Labor Turnover Survey10:00 AM ET: Job Openings and Labor Turnover Survey for December from the BLS.

This graph shows job openings (black line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Job openings decreased in November to 10.458 million from 10.512 million in October

10:00 AM: ISM Manufacturing Index for January. The consensus is for the ISM to be at 48.0, down from 48.4 in December.

2:00 PM: FOMC Meeting Announcement. The FOMC is expected to announce a 25 bp hike in the Fed Funds rate.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

Vehicle SalesAll day: Light vehicle sales for January. The consensus is for light vehicle sales to be 14.3 million SAAR in January, up from 13.3 million in December (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the December sales rate.

----- Thursday, February 2nd -----

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 200 thousand initial claims, up from 186 thousand last week.
----- Friday, February 3rd -----

Employment Recessions, Scariest Job Chart8:30 AM: Employment Report for December.   The consensus is for 185,000 jobs added, and for the unemployment rate to increase to 3.6%.

There were 223,000 jobs added in December, and the unemployment rate was at 3.5%.

This graph shows the job losses from the start of the employment recession, in percentage terms.

The pandemic employment recession was by far the worst recession since WWII in percentage terms. However, as of August 2022, the total number of jobs had returned and are now 1.24 million above pre-pandemic levels.

10:00 AM: ISM Manufacturing Index for January. The consensus is for the ISM to be at 50.3, up from 49.6 in December.

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US gov’t $1.5T debt interest will be equal 3X Bitcoin market cap in 2023

The U.S. will pay over $1 trillion in debt interest next year, the equivalent of three or more Bitcoin market caps at current prices.

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The U.S. will pay over $1 trillion in debt interest next year, the equivalent of three or more Bitcoin market caps at current prices.

Commentators believe that Bitcoin (BTC) bulls do not need to wait long for the United States to start printing money again.

The latest analysis of U.S. macroeconomic data has led one market strategist to predict quantitative tightening (QT) ending to avoid a “catastrophic debt crisis.”

Analyst: Fed will have “no choice” with rate cuts

The U.S. Federal Reserve continues to remove liquidity from the financial system to fight inflation, reversing years of COVID-19-era money printing.

While interest rate hikes look set to continue declining in scope, some now believe that the Fed will soon have only one option — to halt the process altogether.

“Why the Fed will have no choice but to cut or risk a catastrophic debt crisis,” Sven Henrich, founder of NorthmanTrader, summarized on Jan. 27.

“Higher for longer is a fantasy not rooted in math reality.”

Henrich uploaded a chart showing interest payments on current U.S. government expenditure, now hurtling toward $1 trillion a year.

A dizzying number, the interest comes from U.S. government debt being over $31 trillion, with the Fed printing trillions of dollars since March 2020. Since then, interest payments have increased by 42%, Henrich noted.

The phenomenon has not gone unnoticed elsewhere in crypto circles. Popular Twitter account Wall Street Silver compared the interest payments as a portion of U.S. tax revenue.

“US paid $853 Billion in Interest for $31 Trillion Debt in 2022; More than Defense Budget in 2023. If the Fed keeps rates at these levels (or higher) we will be at $1.2 trillion to $1.5 trillion in interest paid on the debt,” it wrote.

“The US govt collects about $4.9 trillion in taxes.”
Interest rates on U.S. government debt chart (screenshot). Source: Wall Street Silver/ Twitter

Such a scenario might be music to the ears of those with significant Bitcoin exposure. Periods of “easy” liquidity have corresponded with increased appetite for risk assets across the mainstream investment world.

The Fed’s unwinding of that policy accompanied Bitcoin’s 2022 bear market, and a “pivot” in interest rate hikes is thus seen by many as the first sign of the “good” times returning.

Crypto pain before pleasure?

Not everyone, however, agrees that the impact on risk assets, including crypto, will be all-out positive prior to that.

Related: Bitcoin ‘so bullish’ at $23K as analyst reveals new BTC price metrics

As Cointelegraph reported, ex-BitMEX CEO Arthur Hayes believes that chaos will come first, tanking Bitcoin and altcoins to new lows before any sort of long-term renaissance kicks in.

If the Fed faces a complete lack of options to avoid a meltdown, Hayes believes that the damage will have already been done before QT gives way to quantitative easing.

“This scenario is less ideal because it would mean that everyone who is buying risky assets now would be in store for massive drawdowns in performance. 2023 could be just as bad as 2022 until the Fed pivots,” he wrote in a blog post this month.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Stay Ahead of GDP: 3 Charts to Become a Smarter Trader

When concerns of a recession are front and center, investors tend to pay more attention to the Gross Domestic Product (GDP) report. The Q4 2022 GDP report…

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When concerns of a recession are front and center, investors tend to pay more attention to the Gross Domestic Product (GDP) report. The Q4 2022 GDP report showed the U.S. economy grew by 2.9% in the quarter, and Wall Street wasn't disappointed. The day the report was released, the market closed higher, with the Dow Jones Industrial Average ($DJIA) up 0.61%, the S&P 500 index ($SPX) up 1.1%, and the Nasdaq Composite ($COMPQ) up 1.76%. Consumer Discretionary, Technology, and Energy were the top-performing S&P sectors.

Add to the GDP report strong earnings from Tesla, Inc. (TSLA) and a mega announcement from Chevron Corp. (CVX)—raising dividends and a $75 billion buyback round—and you get a strong day in the stock markets.

Why is the GDP Report Important?

If a country's GDP is growing faster than expected, it could be a positive indication of economic strength. It means that consumer spending, business investment, and exports, among other factors, are going strong. But the GDP is just one indicator, and one indicator doesn't necessarily tell the whole story. It's a good idea to look at other indicators, such as the unemployment rate, inflation, and consumer sentiment, before making a conclusion.

Inflation appears to be cooling, but the labor market continues to be strong. The Fed has stated in many of its previous meetings that it'll be closely watching the labor market. So that'll be a sticky point as we get close to the next Fed meeting. Consumer spending is also strong, according to the GDP report. But that could have been because of increased auto sales and spending on services such as health care, personal care, and utilities. Retail sales released earlier in January indicated that holiday sales were lower.

There's a chance we could see retail sales slowing in Q1 2023 as some households run out of savings that were accumulated during the pandemic. This is something to keep an eye on going forward, as a slowdown in retail sales could mean increases in inventories. And this is something that could decrease economic activity.

Overall, the recent GDP report indicates the U.S. economy is strong, although some economists feel we'll probably see some downside in 2023, though not a recession. But the one drawback of the GDP report is that it's lagging. It comes out after the fact. Wouldn't it be great if you had known this ahead of time so you could position your trades to take advantage of the rally? While there's no way to know with 100% accuracy, there are ways to identify probable events.

3 Ways To Stay Ahead of the Curve

Instead of waiting for three months to get next quarter's GDP report, you can gauge the potential strength or weakness of the overall U.S. economy. Steven Sears, in his book The Indomitable Investor, suggested looking at these charts:

  • Copper prices
  • High-yield corporate bonds
  • Small-cap stocks

Copper: An Economic Indicator

You may not hear much about copper, but it's used in the manufacture of several goods and in construction. Given that manufacturing and construction make up a big chunk of economic activity, the red metal is more important than you may have thought. If you look at the chart of copper futures ($COPPER) you'll see that, in October 2022, the price of copper was trading sideways, but, in November, its price rose and trended quite a bit higher. This would have been an indication of a strengthening economy.

CHART 1: COPPER CONTINUOUS FUTURES CONTRACTS. Copper prices have been rising since November 2022. Chart source: StockCharts.com. For illustrative purposes only.

High-Yield Bonds: Risk On Indicator

The higher the risk, the higher the yield. That's the premise behind high-yield bonds. In short, companies that are leveraged, smaller, or just starting to grow may not have the solid balance sheets that more established companies are likely to have. If the economy slows down, investors are likely to sell the high-yield bonds and pick up the safer U.S. Treasury bonds.

Why the flight to safety? It's because when the economy is sluggish, the companies that issue the high-yield bonds tend to find it difficult to service their debts. When the economy is expanding, the opposite happens—they tend to perform better.

The chart below of the Dow Jones Corporate Bond Index ($DJCB) shows that, since the end of October 2022, the index trended higher. Similar to copper prices, high-yield corporate bond activity was also indicating economic expansion. You'll see similar action in charts of high-yield bond exchange-traded funds (ETFs) such as iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and SPDR Barclays High Yield Bond ETF (JNK).

CHART 2: HIGH-YIELD BONDS TRENDING HIGHER. The Dow Jones Corporate Bond Index ($DJCB) has been trending higher since end of October 2022.Chart source: StockCharts.com. For illustrative purposes only.

Small-Cap Stocks: They're Sensitive

Pull up a chart of the iShares Russell 2000 ETF (IWM) and you'll see similar price action (see chart 3). Since mid-October, small-cap stocks (the Russell 2000 index is made up of 2000 small companies) have been moving higher.

CHART 3: SMALL-CAP STOCKS TRENDING HIGHER. When the economy is expanding, small-cap stocks trend higher.Chart source: StockCharts.com. For illustrative purposes only.

Three's Company

If all three of these indicators are showing strength, you can expect the GDP number to be strong. There are times when the GDP number may not impact the markets, but, when inflation is a problem and the Fed is trying to curb it by raising interest rates, the GDP number tends to impact the markets.

This scenario is likely to play out in 2023, so it would be worth your while to set up a GDP Tracker ChartList. Want a live link to the charts used in this article? They're all right here.


Jayanthi Gopalakrishnan

Director, Site Content

StockCharts.com

 

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

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