Breaking Down Southern First Bancshares, Inc. (SFST) Financial Health: Key Insights for Investors

You're looking at Southern First Bancshares, Inc. (SFST) and wondering if their recent performance signals a durable trend or just a blip in a choppy market, and honestly, the Q3 2025 numbers give us a lot to unpack. The bank delivered a strong quarter, reporting diluted earnings per common share (EPS) of $1.07, which is an impressive 98% jump compared to the same quarter last year, plus their net income hit $8.7 million for the quarter, clearly beating analyst expectations. Still, you have to be a realist: while their total loans grew to $3.8 billion, demonstrating solid organic growth, the bank's heavy exposure to commercial real estate (CRE) remains a key near-term risk that needs careful monitoring. Wall Street analysts are currently projecting a full-year 2025 EPS of around $3.30, so the question isn't just about past performance, but how they manage funding costs and maintain that superior asset quality in a slowing economy-let's dive into the details that will defintely drive your investment decision.

Revenue Analysis

You're looking for a clear picture of how Southern First Bancshares, Inc. (SFST) actually makes its money, and that's the right place to start. For a bank holding company like this, the revenue story is mostly about the spread between what they earn on loans and what they pay on deposits-Net Interest Income (NII). The third quarter of 2025 results show a clear acceleration in this core business, but the fee-based income is also showing signs of life.

The total revenue for Southern First Bancshares, Inc. in the third quarter of 2025 hit $31.13 million, which is a significant jump. The trailing twelve months (TTM) revenue, which gives you a better annual view as of September 30, 2025, stands at $109.39 million. That's defintely a solid number, but the real insight is in the growth rate and the composition.

Here's the quick math on the growth: The $31.13 million in Q3 2025 revenue represents a powerful 31% increase year-over-year from the third quarter of 2024. The TTM growth rate is also strong, coming in at 21.32%. This kind of acceleration suggests their strategy to focus on high-quality loan growth and disciplined deposit pricing is paying off in a higher net interest margin (NIM), which is the profit engine for any bank.

The primary revenue streams for Southern First Bancshares, Inc. are split into two major components, and it's a classic bank structure:

• Net Interest Income (NII): Revenue from interest-earning assets (like loans) minus interest paid on liabilities (like deposits).
• Noninterest Income: Revenue from fees, service charges, and other non-lending activities.

In the third quarter of 2025, the vast majority of revenue came from NII, clocking in at $27.53 million. This means approximately 88.4% of the company's total revenue is driven by its core lending and funding activities. Noninterest income, while smaller, still contributed a respectable $3.6 million.

What this estimate hides is the change in the NII driver. That $27.53 million in NII was boosted by two factors: an increase in interest income from loans and a decrease in interest expense on deposits. This is the ideal scenario for a bank in this interest rate environment. The noninterest income segment is also showing targeted strength, with mortgage banking income being the largest single component at $1.6 million for the quarter. Also, a significant change to note is that service fees on deposit accounts grew 37% year-over-year, which shows a successful pivot to more stable, fee-based revenue streams.

For a deeper dive into the valuation and strategic frameworks, you should read the full post: Breaking Down Southern First Bancshares, Inc. (SFST) Financial Health: Key Insights for Investors.

Your next step should be to look at the cost side-specifically, the efficiency ratio-to see how well the company is converting this revenue growth into bottom-line profit.

Profitability Metrics

You're looking for a clear picture of Southern First Bancshares, Inc. (SFST)'s earning power, and the Q3 2025 results show a significant acceleration in profitability. The bank is successfully widening its spread (Net Interest Margin) and keeping a tight lid on non-interest costs, which is defintely the right move in this rate environment.

For a bank, we swap the traditional Gross Profit for Net Interest Income (NII), which is the core revenue from lending, and we use Pre-Tax Income as the closest analog to Operating Profit. The numbers for the third quarter of 2025 are strong, underscoring a disciplined approach to asset-liability management.

• Net Profit Margin (Q3 2025): 27.97%
• Operating Profit Margin (Pre-Tax Income Margin, Q3 2025): 36.50%

Margin Performance and Trends

Southern First Bancshares, Inc.'s profitability trend is decisively upward. Its Net Profit Margin for Q3 2025 reached nearly 28.0% ($8.7 million in Net Income on $31.1 million in Total Revenue), a sharp increase from the trailing twelve months' (TTM) margin of 23.9% reported in October 2025. This jump is a direct result of expanding Net Interest Margin (NIM), which is the bank's gross profit engine.

The core NIM expanded sequentially throughout 2025: Q1 was 2.41%, Q2 hit 2.50%, and Q3 rose to 2.62%. This positive trend is driven primarily by higher interest income on loans combined with a decrease in interest expense on deposits. For a regional bank, this margin expansion is crucial, as it relies more on traditional lending than fee-based services. You can read more about the strategic drivers behind this performance in the Mission Statement, Vision, & Core Values of Southern First Bancshares, Inc. (SFST).

Operational Efficiency and Industry Comparison

Operational efficiency, measured by the efficiency ratio (Noninterest Expense / Total Revenue), is a key area of focus for banks. Southern First Bancshares, Inc. reported a Q3 2025 efficiency ratio of 60.86%, which is a significant improvement from 67.54% in Q2 2025. This means the bank is spending less to generate each dollar of revenue. The CEO noted that Q3 revenue growth was 2.5 times the expense growth over the same quarter last year, a clear sign of positive operating leverage.

Still, a comparison to industry peers shows room for improvement. While its NIM of 2.62% sits within the typical range for large U.S. banks (2.5% to 3.5%), it is below the range for community banks (3.5% to 4.5%), which is the peer group its asset size of approximately $4.3 billion often aligns with. The bank's Return on Average Assets (ROAA) of 0.80% in Q3 2025, while a strong improvement from Q2's 0.63%, is still well below the national average of 1.21% for a bank of its size.

Here's the quick math on the core profitability metrics for Q3 2025:

The biggest near-term risk remains the Provision for Credit Losses (PCL), which increased to $850 thousand in Q3 2025, up from $700 thousand in Q2 2025. This increase was driven by a change in qualitative factors related to an increase in past due loans, especially among commercial business and non-owner occupied loans. This signals a cautious outlook on credit quality, even as core profitability improves.

Your action item is to track the PCL and ROAA closely; sustained profitability requires closing that 41 basis point gap to the industry average ROAA.

Debt vs. Equity Structure

You're looking at Southern First Bancshares, Inc. (SFST) and trying to figure out if their growth is built on a solid foundation or too much borrowed money. The short answer is they're using more debt relative to their equity than the typical regional bank, but it's a calculated strategy for a growth-focused institution.

As of the TTM (Trailing Twelve Months) period ending September 30, 2025, Southern First Bancshares, Inc.'s Debt-to-Equity (D/E) ratio stood at approximately 0.81. Here's the quick math: that means for every dollar of shareholder equity (the owners' stake), the company has 81 cents in total debt. Compare this to the 'Banks - Regional' industry average, which is closer to 0.5. That difference tells you they are running a more leveraged balance sheet than peers, which can amplify returns but also raises the risk profile.

• Higher D/E ratio suggests a more aggressive, growth-oriented financing mix.
• The primary liability is customer deposits, not just traditional corporate bonds.
• Expanded profitability is currently fueling capital growth.

For a bank, the liability structure is a little different because customer deposits are their main source of funding, which is a form of short-term debt. As of Q3 2025, the bank reported $3.7 Billion in Total Deposits, which is the engine for their $3.8 Billion in Total Loans. This high loan-to-deposit ratio shows they are putting their funding to work aggressively in their high-growth Southeastern markets. They are defintely not sitting on too much cash.

In terms of formal debt, the company's credit profile remains stable. On September 5, 2025, KBRA affirmed the senior unsecured debt rating of BBB and the short-term debt rating of K3 for Southern First Bancshares, Inc., with a Stable Outlook. This is a crucial signal that credit agencies see their debt as investment-grade and manageable, even with the higher leverage. The management team has focused on internal equity generation, noting that expanded profitability in Q3 2025 further strengthened capital levels. They are balancing debt financing (deposits and other borrowings) with equity funding (retained earnings) to support their strong business pipelines.

What this estimate hides is the composition of the debt. The bank is highly reliant on interest-bearing deposits, which means their cost of funding is sensitive to interest rate changes. This is a key risk to monitor, but their improving net interest margin (NIM) of 2.62% in Q3 2025 suggests they are managing that cost effectively right now. You can find a deeper dive into their performance in Breaking Down Southern First Bancshares, Inc. (SFST) Financial Health: Key Insights for Investors.

The clear action for you is to monitor their Tangible Common Equity (TCE) ratio, which was 8.18% in Q3 2025. While this metric is improving, its relative position to peers is what will dictate future capital flexibility and potential for new debt issuance.

Liquidity and Solvency

You need to know if Southern First Bancshares, Inc. (SFST) can cover its near-term obligations, and for a bank, that means looking past the typical corporate ratios and straight into its core funding structure. The short answer is that SFST's liquidity position is solid, anchored by strong capital ratios and an improving funding mix, but you should watch the operating cash flow trend very closely.

While the standard Current Ratio (current assets divided by current liabilities) is less meaningful for a bank, a reported figure of around 1.86 as of late 2025 suggests sufficient short-term asset coverage, which is a good baseline. The Quick Ratio (acid-test ratio) is even less relevant here because a bank's 'inventory'-its loan portfolio-is its primary asset.

• Current Ratio (2025): Approximately 1.86
• Tangible Common Equity (TCE) Ratio (Q3 2025): 8.18%
• Tier 1 Risk-Based Capital (RBC) (Q3 2025): 11.26%

Working Capital and Funding Trends

For a bank, working capital is best viewed through its loans and deposits. The trend here is positive for Southern First Bancshares, Inc. They are making progress in funding their loan growth with client retail deposits, which are generally more stable and less expensive than wholesale funding. Total deposits stood at approximately $3.7 billion in Q3 2025, which is a key measure of liquidity.

The core deposits-the stickier, more reliable money-reached $2.9 billion in Q3 2025, growing at an annualized rate of 2% from the prior quarter. This stable funding base is crucial. Consequently, the loan-to-deposit ratio improved to 101.7% in Q1 2025, down from 105.7% in Q4 2024. This is a clear sign of strengthened liquidity management; they are funding a greater portion of their $3.8 billion loan portfolio with deposits, not borrowed money.

Cash Flow Statements Overview

The cash flow statement tells the story of where the money is really coming from and going. For Southern First Bancshares, Inc., the cash flow from operating activities (CFO) is the profit engine, but it shows some near-term pressure.

In Q3 2025, operating cash flow was approximately $28.88 million. Honestly, this is a point of concern because reports indicate this figure is 'significantly lower than the same period last year,' suggesting increased pressure on cash management and operational flexibility. This is the cash generated from the bank's core business of lending and deposit-taking. When it dips, it means less internal capital is available to fund growth or absorb unexpected losses.

Cash flow from investing activities for a bank is primarily driven by the origination and sale of loans and the purchase or maturity of investment securities. Given that total loans grew to $3.8 billion in Q3 2025, you can infer a substantial cash outflow for investing activities as the bank puts capital to work in its loan portfolio. Cash flow from financing activities is dominated by deposit movements and debt issuance. The growth in core deposits to $2.9 billion is a strong, positive financing inflow, helping to offset the outflow from loan growth.

Mission Statement, Vision, & Core Values of Southern First Bancshares, Inc. (SFST).

Liquidity Strengths and Potential Concerns

The primary strength is the quality of the balance sheet and capital structure. The Tangible Common Equity (TCE) ratio of 8.18% is a strong indicator of the bank's capacity to absorb losses, and its asset quality is outstanding, with nonperforming assets (NPAs) to total assets at a low 0.27% in Q3 2025. The management is defintely focused on a high-quality, full-relationship banking strategy.

The single biggest near-term risk is the drop in operating cash flow. While the core deposit growth is excellent, a sustained decline in CFO could force the bank to rely more on more expensive financing sources to maintain its loan growth momentum. For now, the strong capital ratios and improving loan-to-deposit ratio provide a solid buffer.

Valuation Analysis

You want to know if Southern First Bancshares, Inc. (SFST) is a smart buy right now, and the short answer is that the market sees it as fairly valued with a clear path for growth, justifying a Buy consensus. The valuation metrics suggest the stock is trading at a discount to its tangible value, but the lack of a dividend means your return comes purely from price appreciation.

As of November 2025, the stock price sits around the $48.19 mark, having delivered a solid 14.5% return over the past year, which is a defintely strong performance for a regional bank. The stock's 52-week range of $29.14 to $49.83 shows it's currently near its high point, so you're buying into positive momentum, but also closer to the top of its recent trading channel.

When we look at the core valuation multiples for the 2025 fiscal year, the picture is interesting. Here's the quick math on what the market is telling us about Southern First Bancshares, Inc. compared to its projected earnings and book value:

• Price-to-Earnings (P/E): The estimated P/E ratio for 2025 is 12.9x. Given that the consensus Earnings Per Share (EPS) forecast for the year is $3.65, this multiple is reasonable, suggesting the stock isn't wildly expensive compared to its expected profits.
• Price-to-Book (P/B): The estimated P/B ratio for 2025 is 0.96x. This is critical for a bank; it means the stock is trading slightly below its reported book value. For context, the book value per common share was $43.51 as of Q3 2025. A P/B below 1.0x often signals a potential undervaluation, or at least that the market is cautious.
• EV/EBITDA: Since Southern First Bancshares, Inc. is a bank, Enterprise Value-to-EBITDA (EV/EBITDA) is less relevant than Price-to-Book. For banks, interest income and net interest margin are the real drivers, not just operating profit before interest, taxes, depreciation, and amortization (EBITDA).

The analyst community is largely positive. The consensus rating for Southern First Bancshares, Inc. is a Buy. The average 12-month price target from analysts is $51.00, which implies a modest upside of 5.83% from the current price. This tells you that while the stock has run up, Wall Street still sees a bit more room to climb over the next year.

One key factor to remember is the dividend situation. Southern First Bancshares, Inc. has historically chosen to reinvest all earnings back into the business to fuel growth and strengthen its capital base. This means the dividend yield is 0.00%, and there is no payout ratio to track. Your entire return is tied to the stock's price movement, which is a trade-off for investors who prioritize income.

What this estimate hides is the potential for merger and acquisition (M&A) activity, which is common in the regional banking sector. A low P/B ratio of 0.96x makes Southern First Bancshares, Inc. an attractive, relatively cheap target for a larger bank looking to expand in the high-growth Southeastern US markets. This M&A potential is a quiet opportunity that could lead to a sudden, significant price jump. For a deeper dive into who is taking positions in the stock, you should be Exploring Southern First Bancshares, Inc. (SFST) Investor Profile: Who's Buying and Why?

Risk Factors

You need to look past Southern First Bancshares, Inc.'s (SFST) strong Q3 2025 earnings-net income hit $8.7 million and diluted EPS was $1.07-and focus on the structural risks that could create headwinds. The primary concern is loan portfolio concentration, but you also have to factor in competitive pressure on profitability metrics.

The biggest near-term risk for Southern First Bancshares, Inc. is its heavy exposure to the real estate market, which is a classic financial risk for regional banks. Here's the quick math: Commercial Real Estate (CRE) makes up 43.4% of their total loan portfolio, with residential real estate adding another 31.1%. This means nearly three-quarters of their lending is tied to a single, cyclical sector. While their service area in the Southeast is growing, a sharp correction in the commercial property market-especially office or retail-would defintely hit their books hard.

• Commercial Real Estate (CRE) exposure is 37.8% of total assets, above the national average of 34.4%.
• A potential rise in defaults would force a higher provision for credit losses, directly cutting into their earnings.

On the operational side, the bank is still facing a competitive efficiency challenge. Despite a Net Interest Margin (NIM) increase to 2.62% in Q3 2025, which is a solid improvement, it remains well below the national average for a bank of its size. This translates directly to a lower return on assets (ROAA), which stood at just 0.80% for the quarter. You can't ignore a 124 basis point gap against peers. That is a scale and efficiency problem that needs a strategic fix, not just a cyclical rate lift.

To be fair, management is actively monitoring for emerging risks and their mitigation strategy focuses on maintaining superior asset quality, which is crucial. As of Q3 2025, their asset quality metrics are outstanding: Nonperforming Assets (NPA) to Total Assets is only 0.27%, and the bank reported net charge-offs (NCOs) of 0.00% for the quarter. The Allowance for Credit Losses (ACL) is robust at 1.10% of total loans. They are also focused on funding high-quality loan growth with sticky client retail deposits, which reached $2.9 billion in Q3 2025, helping to stabilize their funding costs. This disciplined approach is their best defense against a real estate downturn. For a deeper dive into the valuation, check out Breaking Down Southern First Bancshares, Inc. (SFST) Financial Health: Key Insights for Investors.

Next step: Portfolio Managers should model a 15% decline in CRE collateral values to stress-test the 1.10% ACL coverage by the end of the year.

Growth Opportunities

You're looking for a clear path forward on Southern First Bancshares, Inc. (SFST), and the direct takeaway is this: the bank's growth story is tightly linked to its high-growth Southeastern footprint and its ability to expand net interest margin (NIM). The numbers for fiscal year 2025 are defintely pointing up, driven by strong organic growth in its core markets.

For the full fiscal year 2025, the consensus estimate for Southern First Bancshares, Inc. (SFST) is for earnings per share (EPS) to hit approximately $3.42, representing a massive year-over-year change of 79.06%. On the top line, revenue is projected to reach $115.77 million, a solid 23.99% increase. That's a strong growth profile, especially for a regional bank in a challenging rate environment. They are beating expectations; the Q3 2025 EPS of $1.07 topped the consensus by $0.18. That's how you execute.

Key Growth Drivers and Strategic Focus

Southern First Bancshares, Inc. (SFST)'s strategy isn't about complex financial engineering; it's about geography and relationships. Their key growth driver is their presence in high-growth Southeastern metro markets like Greenville, Columbia, and Charleston in South Carolina, plus expansion into North Carolina and Atlanta, Georgia. South Carolina, their home base, posted the fastest-growing GDP in the nation earlier this year, so they are swimming in the right current. Their focus is clear:

• Drive organic growth in high-demand markets.
• Expand net interest margin (NIM) through disciplined pricing.
• Leverage the Relationship Team model for client retention.

Their net interest margin-the difference between interest income and interest paid-improved to 2.62% in Q3 2025, up from 2.50% in the prior quarter. This margin expansion is a direct result of their disciplined pricing strategy and balance sheet positioning.

Future Projections and Competitive Edge

Looking ahead, the balance sheet is positioned for further margin expansion as interest rates adjust. Here's the quick math on their interest rate sensitivity: the company has approximately $1.5 billion in assets and $2.8 billion in deposits expected to reprice through 2026. This repricing schedule should continue to fuel net interest income growth. Total assets reached $4.36 billion as of September 30, 2025, which shows they are scaling up effectively, posting a 6.6% increase from year-end 2024. Their competitive advantage is twofold: local ownership and leadership, which fosters strong client relationships, and a clean balance sheet with nonperforming assets (NPAs) at a low 0.27% in Q3 2025.

The table below summarizes the core financial estimates driving the near-term outlook for Southern First Bancshares, Inc. (SFST):

What this estimate hides is the potential for a larger bank to acquire Southern First Bancshares, Inc. (SFST), given its attractive footprint in the Southeast-a distinct possibility in the current banking merger and acquisition (M&A) environment. Still, even without a takeover, the organic growth engine is running hot. For a deeper dive into the bank's current financial standing, you should review our full analysis at Breaking Down Southern First Bancshares, Inc. (SFST) Financial Health: Key Insights for Investors.

Next step: Your team needs to model the impact of a 50 basis point (0.50%) NIM expansion on the 2026 EPS forecast by the end of next week.