What Southern First Bancshares, Inc. told the SEC could break it.

Southern First's earnings depend significantly on net interest income, and its balance sheet is rate-sensitive: as of December 31, 2025 approximately 75% of its loan portfolio was fixed-rate and only 25% variable, so sustained higher Federal Reserve rates would raise funding (deposit/borrowing) costs faster than fixed-rate asset yields reprice, compressing margins and pushing down securities valuations, while rate moves also affect asset prices and economic activity.

“As of December 31, 2025, approximately 75% of our loan portfolio was in fixed rate loans, while only 25% was in variable rate loans.”

Southern First's credit risk is heightened by macro pressures on its borrowers: consistently higher input costs, wage pressures and ongoing supply-chain disruptions challenge customers' ability to service debt, and inflation raises customer costs and default risk; separately, banking-industry stress and bank failures could volatilize deposits and the stock and adversely affect the company directly or through its customers.

“consistently higher input costs, wage pressures, and ongoing supply chain disruptions continue to challenge our customers' ability to service their debt, thereby potentially increasing our credit risk.”

Southern First Bank operates from a concentrated Southeast footprint — eight retail offices in the Greenville, Columbia and Charleston markets of South Carolina, three in the Raleigh, Greensboro and Charlotte markets of North Carolina, and one in Atlanta, Georgia — so its loan and deposit base depends on the economic health of those specific metro markets, and a regional downturn would disproportionately raise credit losses.

“The Bank is a commercial bank with eight retail offices located in the Greenville, Columbia, and Charleston markets of South Carolina, three retail offices in the Raleigh, Greensboro, and Charlotte markets of North Carolina and one retail office in Atlanta, Georgia.”

As a bank holding company, Southern First is primarily supervised by the Federal Reserve under the Bank Holding Company Act and is also subject to the South Carolina Banking and Branching Efficiency Act and FDIC oversight, with regulatory restrictions on bank dividends and capital distributions and on branching/acquisitions; it must also comply with evolving OFAC sanctions (e.g., Russia-related EO 14024) and FinCEN BSA/anti-money-laundering requirements, so regulatory change or non-compliance could constrain operations and growth.

“we are primarily subject to the supervision, examination and reporting requirements of the Federal Reserve under the BHCA and its regulations promulgated thereunder. Moreover, as a bank holding company of a bank located in South Carolina, we also are subject to the South Carolina Banking and Branching Efficiency Act.”