Net income rose 41.2% to $12.2 million as net interest income grew 25.9% and the margin widened to 3.02% 8-K. Diluted EPS rose less because the diluted share count grew about 17% 8-K.
Southern First Bancshares, Inc · Q3 2026 · Reported 20 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Pre-tax income | 15.83 | 11.33 | +39.6 % |
Net income | 12.23 | 8.66 | +41.2 % |
Diluted EPS | 1.28 USD/share | 1.07 USD/share | +19.6 % |
Figures in USD, as reported.
Margin expansion and loan growth, not fees, produced the profit jump
Net interest income rose 25.9% to $34.7 million against a year earlier, which management attributes mainly to new loan volume 8-K. Pre-tax income rose 39.6% and net income 41.2% to $12.2 million 8-K. Net interest margin was 3.02%, against 2.62% a year earlier and 2.87% in the prior quarter 8-K.
The margin gain came from both sides. Interest income rose 10.0% while interest expense fell 5.9% against a year earlier 8-K. The rate on interest-bearing deposits was 2.97% against 3.36% a year earlier, and loan yield was 5.42% against 5.35% 8-K. Loans were up $145 million in the quarter, or 14% annualized, and retail deposits up $163 million 8-K.
Fee income shrank as the bank kept more mortgages on its balance sheet
Noninterest income fell 20.4% to $2.9 million 8-K. Management attributes the fall to retaining a larger share of mortgage loans rather than selling them 8-K. Mortgage banking income was $638 thousand against $1,600 thousand a year earlier 8-K. Service fees on deposit accounts rose 45%, helped by a focus on treasury management 8-K.
Costs were contained. Noninterest expense rose 7.2%, well below revenue growth of 20.6%, and the efficiency ratio improved to 54.10% from 60.86% a year earlier 8-K. Operating leverage, more than fee growth, explains why pre-tax income grew faster than revenue.
EPS growth trailed net income because the share count grew
Diluted EPS was $1.28, up $0.22 from a year earlier, against net income growth of 41.2% 8-K. Diluted weighted average shares were 9,567 thousand against 8,176 thousand, up 17.0% 8-K. Average shareholders' equity was $460 million against $351 million 8-K. This suggests the profit gain was partly spread over a larger capital base, though the cause of the extra shares is a question for management.
Returns still improved. Return on average assets was 1.03% against 0.80% a year earlier, and return on average equity was 10.54% against 9.78% 8-K.
Credit costs rose with growth while the allowance ratio slipped
The provision for credit losses was $1.4 million against $850 thousand a year earlier 8-K. Management links it to new loan growth 8-K. The allowance fell to 1.07% of loans from 1.10% a year earlier 8-K.
Asset quality was mixed. Nonperforming assets were 0.30% of total assets against 0.27% a year earlier and in the prior quarter 8-K. Classified assets to Tier 1 capital plus allowance were 3.25% against 3.97% a year earlier 8-K. Net charge-offs were 0.07% of average loans, annualized 8-K.
What to watch next
Whether the margin holds near 3.02% after rising 15 basis points from the prior quarter, with CEO Art Seaver saying the company is well placed to "finish strong in 2026" 8-K.
Whether mortgage banking income recovers or the policy of retaining mortgages keeps noninterest income near $2.9 million 8-K.
Whether the allowance ratio, now 1.07% of loans, and nonperforming assets at 0.30% of total assets hold as loan growth continues; the tangible common equity ratio of 9.47% was down 15 basis points from the prior quarter 8-K.
The report does not give operating cash flow.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.