SFST.NASDAQSouthern First Bancshares INC
DEF 14A: Southern First Bancshares Seeks Shareholder Approval for Key Proposals at Upcoming Annual Meeting
Sentiment:
Proxy Statement
Southern First Bancshares is holding its annual shareholder meeting on May 21, 2024, to vote on key proposals including director elections, increasing authorized shares, extending the equity incentive plan, executive compensation, and auditor ratification.
Worse than expectedNet income was $13.4 million for the year ended December 31, 2023, a 53.9% decrease from $29.1 million for the year ended December 31, 2022.
Summary
- Southern First Bancshares, Inc. will hold its 2024 Annual Meeting of Shareholders on May 21, 2024.
- Shareholders will vote on six proposals, including the election of four directors, an amendment to increase authorized common stock to 20,000,000 shares, and an extension of the 2020 Equity Incentive Plan for three years.
- The meeting will also include a non-binding advisory vote on executive compensation and ratification of Elliott Davis, LLC as the independent registered public accountant.
- The record date for shareholders entitled to vote is March 22, 2024, with 8,156,109 shares outstanding on that date.
- The proxy statement and annual report are available online, and shareholders are encouraged to vote via mail, online, or telephone.
- The board of directors recommends voting FOR all proposals.
Sentiment
Score: 5
Explanation: The document is neutral, primarily conveying factual information about the upcoming shareholder meeting and proposals. The decrease in net income is a negative point, but the overall tone is objective.
Positives
- The proposed increase in authorized shares provides flexibility for future needs, including equity compensation, acquisitions, and financings.
- Extending the Equity Incentive Plan helps attract and retain key personnel by offering stock ownership opportunities.
- The board of directors is committed to good corporate governance practices, with a majority of independent directors and independent committees.
- The company has a Code of Ethics applicable to senior management and financial officers.
- The company has an Incentive Compensation Recovery Policy effective November 21, 2023.
- The company has a clawback policy in place to recover incentive awards or payments in the event the financial reporting measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment.
Negatives
- Net income decreased 53.9% for the year ended December 31, 2023, compared to 2022.
- The advisory vote on executive compensation is non-binding, meaning the board isn't obligated to act on the results.
- The company's compensation committee did not use the compensation peer group provided by McLagan in 2021 to perform compensation benchmarking but rather utilized broader-based compensation third-party industry surveys to obtain an additional understanding of what is current market practice among US-based community banks.
Risks
- The threat from cyber-attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures.
- The company's systems and those of its customers and third-party service providers are under constant threat and it is possible that the company could experience a significant event in the future.
- Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by the company and its customers.
Future Outlook
The board of directors believes that the amendment to the Plan provides a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company.
Industry Context
The document does not provide specific details on how this announcement relates to broader industry trends or competitors beyond the general banking environment.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | D. Andrew Borrmann | TBD | March 29, 2024 | Resignation |
| Chief Operating Officer/Chief Financial Officer | Michael D. Dowling | TBD | February 15, 2023 | Resignation |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Amendment to Articles of Incorporation | Increase the number of authorized shares of common stock from 10,000,000 to 20,000,000. | Upon filing of Articles of Amendment with the Secretary of State of South Carolina | Provides flexibility for future needs, including equity compensation, acquisitions, and financings. |
| Amendment to 2020 Equity Incentive Plan | Extend the plan's term for an additional three years, until March 17, 2028. | Upon approval by the board of directors | Helps attract and retain key personnel by offering stock ownership opportunities. |
| Incentive Compensation Recovery Policy | The board of directors approved the Incentive Compensation Recovery Policy effective November 21, 2023. | November 21, 2023 | The policy generally requires recovery of any erroneously awarded incentive-based compensation (calculated based on the error that was subsequently corrected in an accounting restatement), regardless of any misconduct or knowledge of the officer who received the compensation. |
Related Party Transactions
- The Bank has a land lease with a company owned by director, Mr. Cothran, for one of its branch offices, with monthly payments of $9,120.
- The aggregate dollar amount of loans outstanding to persons affiliated with the bank was approximately $25.3 million at December 31, 2023 and $17.2 million at December 31, 2022.
Stakeholder Impact
- Shareholders will have the opportunity to vote on key proposals that could impact the company's future.
- Executive officers' compensation is subject to shareholder advisory vote.
- Employees may be affected by changes to the Equity Incentive Plan.
- The company's performance and governance practices impact the community and regulatory agencies.
Next Steps
- Shareholders are encouraged to review the proxy materials and vote on the proposals.
- The company will hold its Annual Meeting of Shareholders on May 21, 2024.
- The board of directors will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
Key Dates
| Date | Description |
|---|---|
| 1999 | Mark A. Cothran and Rudolph G. Johnstone, III, M.D. have served as directors of the Company since 1999. |
| 1999 | Andrew B. Cajka has served as a director of the Company since 1999. |
| 1999 | Leighton M. Cubbage has served as director of the Company since 1999. |
| 1999 | R. Arthur Art Seaver, Jr. has served as our Chief Executive Officer since 1999. |
| 1999 | James B. Orders, III has served as director the Company and chairman of our board of directors since 1999. |
| 2001 | Anne S. Ellefson has served as a director of the Company since 2001. |
| 2001 | David G. Ellison has served as director of the Company since 2001. |
| 2001 | Tecumseh Tee Hooper , Jr. has served as a director of the Company since 1999. |
| 2009-01-01 | We entered into endorsement split dollar insurance agreements effective January 1, 2009, with Mr. Seaver. |
| 2012-11-01 | We entered into endorsement split dollar insurance agreements on November 1, 2012 with Mr. Dowling. |
| 2013-09-30 | The Company and the Bank are parties to an amended and restated employment agreement with R. Arthur Seaver, Jr., dated September 30, 2013. |
| 2018-03 | Silvia T. King has served as chief human resources officer of our Company and our Bank since March 2018. |
| 2018 | Anna T. Locke has served as director of the Company since 2018. |
| 2019-03 | Calvin C. Hurst has served as the president of our Company and our Bank since August 2022 and previously served as our chief banking officer since March 2019. |
| 2020-03-17 | On March 17, 2020, our board of directors adopted the 2020 Southern First Bancshares, Inc. Equity Incentive Plan. |
| 2020-05-12 | On May 12, 2020, our shareholders approved the 2020 Southern First Bancshares, Inc. Equity Incentive Plan. |
| 2020 | William M. Aiken, III has served as a senior executive vice president and chief risk officer of our Company and our Bank since 2021 and previously served as an executive credit risk officer since 2020. |
| 2021 | Terry Grayson-Caprio has served as director of the Company since 2021. |
| 2021 | Ray A. Lattimore has served as director of the Company since 2021. |
| 2021 | William A. Maner , IV has served as a director of the Company since 2021. |
| 2022-08 | Calvin C. Hurst has served as the president of our Company and our Bank since August 2022. |
| 2023-02-15 | Michael D. Dowling resigned from the Company and the Bank effective February 15, 2023. |
| 2023-04-17 | D. Andrew Borrmann served as executive vice president and chief financial officer of the Company and the Bank from April 17, 2023 until his resignation effective March 29, 2024. |
| 2023-11-21 | The board of directors approved the Incentive Compensation Recovery Policy effective November 21, 2023. |
| 2024-01-24 | The BlackRock, Inc. information set forth in this proxy statement is based on information set forth in a Schedule 13G, as amended, filed by BlackRock, Inc. with the SEC on January 24, 2024. |
| 2024-02-07 | The FJ Capital Management LLC information set forth in this proxy statement is based on information set forth in a Schedule 13G, as amended, filed by FJ Capital Management LLC with the SEC on February 7, 2024. |
| 2024-02-09 | TBFC information set forth in this proxy statement is based on information set forth in a Schedule 13G, as amended, filed by TBFC with the SEC on February 9, 2024. |
| 2024-02-14 | The T. Rowe Price Investment Management, Inc. information set forth in this proxy statement is based on information set forth in a Schedule 13G, filed by T. Rowe Price Investment Management, Inc. with the SEC on February 14, 2024. |
| 2024-03-15 | As of March 15, 2024, 263,347 shares of common stock remained available for issuance as either restricted stock or stock options under the Plan. |
| 2024-03-15 | As of March 15, 2024, Mr. Seaver receives a minimum annual salary of $515,000, which may be increased annually by the board of directors. |
| 2024-03-15 | As of March 15, 2024, Messrs. Hurst and Aiken are paid a salary of $355,000, and $264,500, respectively, which may be increased annually by the board of directors. |
| 2024-03-15 | The table below includes information on the diversity of the board of directors based upon such information voluntarily provided by each director. Board Diversity Matrix (As of March 15, 2024) |
| 2024-03-22 | Our Board of Directors set March 22, 2024 as the record date for the meeting. |
| 2024-03-29 | D. Andrew Borrmann served as executive vice president and chief financial officer of the Company and the Bank from April 17, 2023 until his resignation effective March 29, 2024. |
| 2024-04-08 | The enclosed proxy statement and proxy are first being sent to our shareholders on or about April 8, 2024. |
| 2024-04-08 | April 8, 2024 |
| 2024-04-21 | Mr. Borrmann, an executive officer, inadvertently neglected to timely report the acquisition of 1,500 shares of restricted stock made on April 18, 2023, which error has since been corrected in filing a Form 4 on April 21, 2023. |
| 2024-05-16 | Mr. Borrmann, an executive officer, inadvertently neglected to timely report an acquisition of 200 shares of common stock made on May 16, 2023, which error has since been corrected in filing a Form 4 on May 22, 2023. |
| 2024-05-21 | We cordially invite you to attend the 2024 Annual Meeting of Shareholders (the Annual Meeting) of Southern First Bancshares, Inc. (the Company or Southern First). |
| 2024-12-09 | If shareholders wish a proposal to be included in our proxy statement and form of proxy relating to the 2025 Annual Meeting of Shareholders, they must deliver a written copy of their proposal to our principal executive offices no later than December 9, 2024. |
| 2025-02-20 | If you would like to submit a director nomination, it must be received by our Corporate Secretary at the address below no later than the close of business on February 20, 2025. |
| 2025-03-22 | To be timely for the 2025 annual meeting, a shareholder proposal must be delivered to Southern First Bancshares, Inc., P.O. Box 17465, Greenville, South Carolina 29606, Attention: Corporate Secretary, no earlier than March 22, 2025. |
| 2025-03-22 | Finally, in addition to satisfying the foregoing requirements under our bylaws, to comply with Rule 14a-19, the SECs universal proxy rule, for our 2025 annual meeting of shareholders, a shareholder who intends to solicit proxies in support of director nominees, other than the Companys nominees must provide notice that sets forth the information required by Rule 14a-19 by March 22, 2025. |
| 2025-04-21 | To be timely for the 2025 annual meeting, a shareholder proposal must be delivered to Southern First Bancshares, Inc., P.O. Box 17465, Greenville, South Carolina 29606, Attention: Corporate Secretary, no later than April 21, 2025. |
| 2028-03-17 | This amendment would extend the term of the Plan for another three years until March 17, 2028, the eighth anniversary of the effective date of the Plan. |
Keywords
Annual Meeting, Shareholders, Proxy Statement, Board of Directors, Executive Compensation, Equity Incentive Plan, Authorized Shares, Director Election, Elliott Davis, Southern First Bancshares
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