SouthFirst Bancshares, Inc. announced that its Board of Directors has terminated its agreement and plan of merger with Palm Financial, Inc. SouthFirst is seeking compensatory damages, attorneys' fees, punitive damages and other relief from such parties. The company stated that it will review its strategic alternatives. Sandra H. Stephens, Chief Executive Officer of SouthFirst, said: “In light of the termination of the Merger Agreement with Palm and the challenging operating environment presently faced by the banking industry, we will continue to efficiently and effectively operate SouthFirst Bank as well as review our strategic alternatives. We will continue to work with our financial advisor, Sheshunoff & Co. Investment Banking, (Sheshunoff Management Services, LP) a nationally recognized investment banking firm that specializes in providing advisory services to community financial institutions, whom we have engaged to render investment banking advice with respect to the enhancement of stockholder value. The scope of our engagement includes assistance with strategic initiatives, market commentary and overview and evaluation of other stockholder enhancement alternatives.”

SouthFirst Bancshares Inc. announced its Board of Directors has voted to suspend quarterly dividends on its outstanding shares of stock. During the last few quarters, its dividends have exceeded its earnings.

SouthFirst Bancshares Inc. Board of Directors declared a $0.10 per share cash dividend on the Company's outstanding common stock. This dividend is for the Company's first fiscal quarter ended December 31, 2007. The dividend will be payable on February 19, 2008 to stockholders of record as of February 3, 2008.