Southern First Bancshares, Inc. (Nasdaq:SFST) holding company for Southern First Bank, NA (also doing business as Greenville First Bank),recently announced that net income for the third quarter of 2009 was $424 thousand compared to a net loss of $126 thousand for the third quarter of 2008. The $550 thousand increase is primarily due to a $1.8 million impairment charge on Fannie Mae stock during the third quarter of 2008, partially offset by increases of $435 thousand in the provision for loan losses, $825 thousand in noninterest expenses, and $257 thousand in income tax expense during the third quarter of 2009 compared to the same period in 2008.
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"The economic recession and difficult banking environment continue to negatively impact our company's earnings," stated Art Seaver, the company's CEO. "Despite higher credit costs and absorbing an additional $700 thousand in FDIC insurance premiums, our company generated $1.3 million in earnings for the first nine months of 2009 and made significant progress on our strategic goals of maintaining strong capital ratios, managing credit risk, and growing retail deposits. In addition, the 33% increase in noninterest income, excluding the prior year impairment charge, strengthened the core earnings of our company." While nonperforming assets as a percentage of total assets has increased from 1.42% at December 31, 2008 to 1.91% at September 30, 2009, the number of additional loans that are being placed on nonaccrual each quarter is declining. The primary reason for the higher percentage of nonperforming assets in 2009 relates to the increase in other real estate owned. The time required to foreclose and sell these properties continues to lengthen due to the soft real estate market. Nonperforming assets at September 30, 2009 consisted of $9.9 million of nonperforming loans and $4.1 million of other real estate owned. During the first nine months of 2009, the company increased its provision for loan losses to $2.8 million compared to $2.0 million during the first nine months of 2008. The company's reserve for loan losses increased to $7.9 million or 1.39% of loans at September 30, 2009.
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