SouthCrest Financial Group Reports Preliminary 1Q17 Earnings

WOODSTOCK, Ga., April 20, 2017 (GLOBE NEWSWIRE) — Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary net income of $930,000 or $0.11/share for the first quarter ended March 31, 2017. 

“I think the first quarter’s results are a good barometer of where the Company stands.  On a net basis our core earnings and un-adjusted earnings are effectively the same. We were excited to recently announce the dividend expense savings created by the final Series A and Series B Preferred share redemption (former TARP shares), and we are starting to see the impact of recent Atlanta metro region lending hires as we get ready to move into our Midtown headquarters during May,” Schmitt said.

“Unfortunately, we did have a delay in the closing of our Alabama branch sale due to regulatory schedules,” Schmitt continued.  “This is a top focus of senior management, and we are very confident that the deal will be completed even if the timeline has been stretched.

“The Company has two former locations in OREO and awaiting sale, which could cause additional one-time expenses during the next several quarters. Outside of that, management continues to push on expenses while taking the next steps to improve the loan book and overall profitability of the Bank. Our long term profitability target, which could be hit on a quarterly basis as early as late 2018, remains 1.0% ROAA,” Schmitt added. 

Core pre-tax earnings for the quarter were $1.36 million, with net unusual items during the quarter totaling $32,000 of pre-tax income. On a core basis, expenses for the quarter were $4.4 million, flat with the past few quarters, but down over 15% from 1Q16.

Loan balances were down less than 1% from 4Q16 and up 3% from 1Q16, with the weakness in growth due to a slow start to the quarter combining with the welcome payoff of the largest substandard loan in the portfolio at no loss. Activity late in the quarter improved and should lead to a good second quarter result. The Company continues to look for additional bankers who can drive both loan and deposit growth in the metro Atlanta area.  

Deposits were lower year over year and linked quarter by 2%, which was consistent with historic seasonality. Overall deposit mix continues to improve with balances in transaction accounts up 3% year over year, with a 7% year over year decline in CD balances.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.82% as a result of the $3.9 million dividend to the holding company as part of the preparation to redeem the former TARP shares. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.19 per share. This metric will continue to be influenced by OCI changes resulting from the swings in interest rates.  Currently, the negative impact to TBV by OCI is $0.13/share. The current fully converted share count at the end of the quarter is 8.39 million shares. In addition, the Company still retains a small deferred tax asset valuation allowance related to state taxes that totals approximately $0.06/fully converted share.

Asset quality remained solid with the aforementioned payoff of a nearly $3 million substandard loan. The Company maintains $2.1 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Excluding these buildings, 1Q17 NPAs/total assets was flat at 0.84% of assets, including the buildings the number level was 1.23%. Excluding the impact of the Bank buildings in OREO, OREO balances were down to $499,000.   

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, GA until May 2017, at which time it will relocate the Bank and Financial Group headquarters to Atlanta. The Company operates a 10 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, and online banking services. 

FORWARD LOOKING STATEMENTS

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)      
  2016
2017  
  Q1 Q2 Q3 Q4 Q1  
Interest Income            
Loans            
Construction and Development $ 206 $ 143   $ 153 $ 150   $ 197  
Commercial Real Estate   1,465   1,479     1,537   1,645     1,691  
Commercial Loans    280    280      276    291      316  
Multi Family    26    18      18    31      27  
Residential Mortgage    1,415    1,337      1,289    1,230      1,190  
Consumer Loans    166    156      139    122      117  
County/Municipal Loans   29   28     29   42     25  
Loss Share Loans    116    132      132    119      111  
Investment Securities            
Federal Funds/Overnight Funds $  38 $  27   $  42 $  28   $  58  
Bank Owned CDs    7    8     6   6     5  
Investment Securities   1,030   1,083     933   1039     967  
Total Interest Income $  4,779 $  4,685   $  4,556 $  4,703   $  4,705  
             
Total Interest Expense $  299 $  267   $  246 $  247   $  249  
 Net Interest Income $  4,480 $  4,417   $  4,311 $  4,456   $  4,456  
Provision for Loan Losses    50    0      0    94      106  
Net Interest Income after Loan Losses $  4,430 $  4,417   $  4,311 $  4,362   $  4,349  
             
             
Other Income            
Service Charges on Deposits $  105 $  215   $  245 $  228   $  216  
NSF/Overdraft Fees    475    515      575    542      488  
Other Service Charges    74    79      96    83      75  
ATM/Billpay/DR Card Income    293    336      302    303      296  
Other Income   829   (47 )   339   (386 )   451  
Total Other Income $  1,776 $  1,098   $  1,560 $  768   $  1,526  
Non-Interest Expense            
Salaries, Other Comp (+ FAS123R) $  2,006 $  1,772   $  1,705 $  2,014   $  1,799  
Employee Benefits   591   360     707   463     438  
Occupancy & FF&E Expense   933   848     860   764     739  
Professional Fees   174   209     212   190     190  
Data Processing   305   521     536   525     498  
OREO/Credit related Exp.   41   36     36   36     50  
Other Expense   1,243   927        861    694      766      
Total Noninterest Expenses $ 5,293 $ 4,673   $    4,917 $ 4,687   $ 4,480      
Pre-Tax Income (Loss) $ 913 $ 842   $  954 $ 443   $ 1,395      
Income Taxes     (10,592 )   274    128      465      
Net Income $ 913 $ 11,434   $  680 $ 315   $   930      
Preferred Dividends $ 125 $ 125      125 $ 125   $ 125      
             
                   
  Balance Sheet ($000s, Unaudited)              
  2016 2017
     
Assets Q1 Q2 Q3 Q4 Q1  
Current Assets            
Cash & Due from Bank $  30,427   $  34,838   $  31,268   $  33,015   $  41,302    
Federal Funds/Overnight Funds    3,306      569     0     4,299     6,688    
Bank Owned CDs    1,815      1,716      1,218      1,069      1,069    
Investment Securities    191,905      161,177      182,614      176,723      152,583    
Mortgage Loans Held for Sale   0     0     0     0     0    
Total Current Assets $  227,452   $  198,300   $  215,100   $  215,106   $  201,642    
Loans            
Construction and Development $  13,692   $  11,285   $  9,776   $  15,159   $  12,486    
Commercial Real Estate    116,175      119,419      121,609      138,155      140,003    
Commercial Loans    21,296      21,863      21,247      23,462      23,923    
Multi Family    1,450      1,419      1,401      2,281      2,093    
Residential Mortgage    110,094      107,270      102,512      97,194      98,302    
Consumer Loans    7,096      7,977      7,363      6,893      6,117    
County/Municipal Loans    3,537      4,501      6,456      3,387     2,999    
Loss Share Loans    9,360      7,689      7,589      7,123      6,626    
Total Loans $  282,700   $  281,425   $  277,952   $  293,654   $  292,549    
Allowance for Loss    (3,021 )   (2,817 )   (2,701 )   (2,766 )   (2,797 )  
Net Loans $  279,679   $  278,608   $  275,251   $  290,888   $  289,752    
OREO    1,500      1,769     936     3,581     2,728    
FDIC Indemnification    419      433      425      304     238    
BOLI    20,391      20,548      20,683      20,816      20,947    
Fixed Assets, net $  17,671   $  17,362   $  16,967   $  13,717   $  13,429    
Intangible Assets    583      555      507      468      420    
Other Assets    6,651      33,982      16,476      17,953      17,428    
Total Assets $  554,346   $  551,557   $  546,385   $  562,833   $  546,584    
             
             
Liabilities & Stockholders’ Equity            
Liabilities            
Deposits            
DDAs $  119,343   $  112,974   $  111,290   $  125,459   $  112,286    
Interest Bearing Demand    61,172     55,248     54,552     65,654     63,949    
Celebration Checking    108,076      110,894      111,544      112,355      113,548    
Money Market Accts    35,289      33,858      33,956      32,271      27,942    
Savings    55,831      53,397      52,061      50,495      51,304    
CDs Less Than $100k    79,221      76,301      73,964      72,091      70,020    
CDs Greater than $100k    39,576     40,585     39,832     38,922     39,966    
Total Deposits $  498,508   $  483,257   $  477,388   $  497,247   $  479,018    
             
Other Liabilities   1,988     1,919     2,281     1,252     1,632    
Net Borrowings (Wholesale Funding)           317            
Total Liabilities $  500,496   $ 485,176   $ 479,797   $ 498,499   $ 480,650    
Total Equity   53,850     66,381     66,548     64,334     65,934    
Total Liabilities & Stockholders’ Equity $ 554,346   $ 551,557   $ 546,345   $ 562,833   $ 546,584    
                                 
                                 
Ratios                                
    1Q 2016     2Q 2016     3Q 2016*     4Q 2016*     1Q 2017*    
ROAA   0.66 %   8.29 %   0.53 %   0.22 %   0.72 %  
ROAE   6.80 %   76.1 %   4.74 %   1.96 %   6.52 %  
NPAs/Assets (Core)   1.18 %   1.08 %   0.91 %   0.83 %   0.84 %  
Est. Tier 1 Leverage   8.94 %   9.54 %   9.84 %   9.73 %   10.09 %  
Total Common Equiv. Shares   8,380,337     8,380,337     8,380,337     8,389,954     8,389,954    
NIM   3.47 %   3.59 %   3.59 %   3.67 %   3.72 %  
Cost of Funds   0.24 %   0.22 %   0.20 %   0.20 %   0.21 %  
Loan/Deposit   56.6 %   58.2 %   58.2 %   59.0 %   60.3 %  
Employees   129     127     123     122     122    
                                 
*3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016.  2Q 2016 includes DTA valuation allowance recovery. 
CONTACT: Contact:
Andrew Bowen, APR
ab@clearviewcom.com
404-822-3309

Andy Borrmann
Chief Financial Officer
678.734.3505
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