SouthCrest Financial Group Reports Preliminary 3Q15 Earnings

PEACHTREE CITY, Ga., Oct. 22, 2015 (GLOBE NEWSWIRE) — Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary net income for the third quarter of 2015 of $661,000 or $0.08 per share.  “In the third quarter we continued to show the momentum on loan growth and expense control that have been our primary areas of focus throughout the year.  While the expense levels were flat with 2Q15, the third quarter results include the one time buyout of several contracts that totaled $160,000.  These buyouts will have an average breakeven period of under nine months.” 

“Also, in our second quarter earnings release we estimated cost savings over the following 12 months of $3 million.  We are increasing this estimate to $3.5 million by the end of 2Q16.  We believe this two front attack on expenses and loan growth, if successful, will drive real improvements in 2016 profitability.”    

Loan growth in 2Q15 was extremely strong with $19 million of organic loan growth (26% linked quarter annualized).  This was above our expectations and will likely be the best loan growth quarter for the foreseeable future.  Approximately half of the production was in C&I and owner occupied CRE.  At this time we believe loans will be flattish during the fourth quarter due to annual pay downs in loans to municipalities.

Deposits were down during the quarter which is a seasonally driven effect for SouthCrest due to municipal deposits in our rural communities.  The fourth quarter is usually the strongest quarter for deposits due to tax receipts for the municipalities and Management expects to see this effect again this year. 

During the quarter the Company completed one of two planned office relocations, combining the Alpharetta, Cumming and Johns Creek operations into one new commercial branch in Cumming GA.  This transition improves the growth potential for this branch as well as saving the company over $250,000/year starting in November.  We were also able to buyout a substantial portion of our telecom contracts saving nearly $250,000/year starting in October/November.

The Company did take $150,000 of security gains during the quarter, effectively offsetting the impact of the contract buyout charges.

The estimated Tier 1 Leverage ratio at the end of the quarter was 9.12%.  On a fully converted basis (including the conversion of all preferred equity) TBV/share ended the quarter at $5.66 per share.  The current fully converted share count at the end of the quarter is 8.380 million shares.  In addition, the company still retains a deferred tax asset valuation allowance that totals approximately $1.37/fully converted share.

Asset quality remained stable with 2Q15 at 1.68% NPAs/total assets.   

SouthCrest Financial Group, Inc. is a $540 million asset bank holding company headquartered in Peachtree City, Georgia.  The company operates a 12 branch network throughout Georgia and Alabama through its subsidiary bank, SouthCrest Bank, N.A.    The bank provides a full suite of retail and commercial banking services, SBA lending, mortgage banking, and online banking services. 

This presentation may contain certain “forward-looking statements” that are subject to risks, uncertainties, and other factors that could cause actual results and shareholder values to differ materially from those projected.  Factors that could cause or contribute to such differences include economic conditions, government regulation and legislation, changes in interest rates, credit quality, competition, and other risk factors.

  Statement of Operations ($000s, Unaudited) 
       
           
      2014          2015
    Q3 Q4 Q1 Q2 Q3
   Interest Income          
   Loans           
   Construction and Development $ 262   $ 216   $ 219   $ 231   $ 261  
   Commercial Real Estate   1,297     1,371     1,274     1,374     1,483  
   Commercial Loans    214      319      245      261      301  
   Multi Family    14      17      20      26      29  
   Residential Mortgage     1,518      1,408      1,354      1,464      1,521  
   Consumer Loans    305      267      241      212      197  
   County/Municipal Loans    34      42      36      43     59  
   Loss Share Loans    200      194      169      324      214  
   Investment Securities          
   Federal Funds/Overnight Funds $  20   $  35   $  22   $  16   $  11  
   Bank Owned CDs    6      4      8      7      7  
   Investment Securities     975      971      1,058        960       904   
   Total Interest Income $  4,845   $  4,844   $  4,646   $  4,918   $  4,987  
             
   Total Interest Expense $  348   $  347   $  329   $  309   $  308  
   Net Interest Income $  4,497   $  4,497   $  4,320   $  4,611   $  4,679  
   Provision for Loan Losses    75      95      239      200      0  
   Net Interest Income after Loan Losses $  4,422   $  4,402   $  4,078   $  4,409   $  4,679  
             
  Other Income          
  Service Charges on Deposits $  102   $  106   $  99   $  99   $  113  
  NSF/Overdraft Fees    626      603      480      513      543  
  Other Service Charges    96      91      82      95      78  
  ATM/Billpay/DR Card Income    403      402      408      392      352  
  Other Income    1,775      1,270     1,028     1,017     973  
  Total Other Income $  3,002   $  2,472   $  2,097   $  2,116   $  2,059  
  Non-Interest Expense          
  Salaries, Other Comp (+ FAS123R) $  2,720   $  2,529   $  2,610   $  2,492   $  2,419  
  Employee Benefits    571     432     672     440     424  
  Occupancy & FF& E Expense    920     1,023     935     1,004     1,020  
  Professional Fees    419      293      229      249      206  
  Data Processing    295     306     282     221     244  
  OREO and Credit related Exp.    -35     287     230     67     156  
  Other Expense    2,474      1,978      1,613      1,575      1,608  
  Total Noninterest Expenses $  7,364   $  6,848   $  6,571   $  6,048   $  6,077  
  Pre-Tax Income (Loss) $  60   $  26   $  (396 ) $  477   $  661  
  Income Taxes    –      –      –      –      –  
  Net Income $  60   $  26   $  (396 ) $  477   $  661  
             
  Balance Sheet
($000s, Unaudited)
         
      2014      2015     
  Assets Q3 Q4 Q1 Q2 Q3
  Current Assets          
  Cash & Due from Bank $  18,238   $  16,991   $  34,459   $  22,335   $  20,355  
  Federal Funds/Overnight Funds    50,260      34,182      17,067      10,736      14,171  
  Bank Owned CDs    2,231      2,974      1,814      1,814      1,815  
  Investment Securities    164,971      190,864      188,864      179,276      145,247  
  Mortgage Loans Held for Sale    5,376      932     3,985     1,869     3,011  
  Total Current Assets $  241,076   $  245,943   $  246,189   $  216,030   $  184,599  
  Loans          
  Construction and Development $  13,489   $  15,187   $  15,218   $  16,495   $  16,165  
  Commercial Real Estate    105,664      104,493      102,069      106,549      119,888  
  Commercial Loans    16,817      17,399      17,679      18,646      21,236  
  Multi Family    1,112      1,589      1,543      2,187      2,152  
  Residential Mortgage    107,234      110,347      105,021      116,961      116,969  
  Consumer Loans    15,345      14,215      12,790      11,787      10,814  
  County/Municipal Loans    5,110      4,343      5,178      7,631      12,293  
  Loss Share Loans    12,407      12,447      10,837      10,815      10,345  
  Total Loans $  277,178   $  280,020   $  270,334   $  291,071   $  309,862  
  Allowance for Loss    (3,723 )    (3,675 )    (3,121 )    (3,263 )    (2,881 )
  Net Loans $  273,455   $  276,345   $  267,213   $  287,808   $  306,981  
  OREO    5,320      4,473      4,284      3,552      3,331  
  FDIC Indemnification    1,685      1,537      1,089      503      498  
  BOLI    19,574      19,710      19,834      19,995      20,130  
  Fixed Assets, net    19,503   $  19,255   $  18,978   $  18,720   $  18,553  
  Intangible Assets    657      583      573      535      648  
  Other Assets    6,917      7,523      7,964      6,552      6,339  
  Total Assets $  568,187   $  575,369   $  566,124   $  553,695   $  541,079  
             
  Liabilities & Stockholders’ Equity          
  Liabilities          
  Deposits          
  DDAs $  122,374   $  125,699   $  121,381   $  120,659   $  114,345  
  Interest Bearing Demand    54,661      64,178      61,685      53,979      50,965  
  Celebration Checking    54,072      64,998      75,844      82,246      90,893  
  Money Market Accts    49,594      44,434      41,871      42,004      41,731  
  Savings    63,001      59,251      59,859      57,887      56,517  
  CDs Less Than $100k    98,984      94,923      91,545      88,158      84,510  
  CDs Greater than $100k    53,502      51,685      50,060      49,697      46,603  
  Total Deposits $  496,188   $  505,168   $  502,245   $  494,630   $  485,564  
             
  Other Liabilities    10,695     9,361     11,363     6,684     2,414  
  Net Borrowings (Wholesale Funding)    –      –      –      –      –  
  Total Liabilities $  506,883   $  514,529   $  513,607   $  501,314   $  487,978  
  Total Equity    61,304      60,840      52,517      52,381      53,101  
  Total Liabilities & Stockholders’ Equity $  568,187   $  575,369   $  566,124   $  553,695   $  541,079  
           
Ratios          
  3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015
ROAA   0.04 %   0.02 %   -0.07 %   0.34 %   0.48 %
ROAE   0.34 %   0.17 %   -0.66 %   3.65 %   5.01 %
NPAs/Assets (Core)   2.44 %   1.92 %   1.68 %   1.71 %   1.68 %
Tier 1 Leverage    10.78 %   10.05 %   8.78 %   8.81 %   9.12 %
Total Common Equiv. Shares   8,380,337     8,380,337     8,380,337     8,380,337     8,380,337  
NIM   3.77 %   3.68 %   3.60 %   3.81 %   3.76 %
Cost of Funds   0.28 %   0.28 %   0.26 %   0.25 %   0.25 %
Loan/Deposit   55.9 %   55.4 %   54.5 %   58.8 %   63.8 %
Employees   190     187     172     170     163  

 

CONTACT: Andy Borrmann
Chief Financial Officer
678.734.3505