SouthCrest Financial Group Reports Preliminary 3Q16 Earnings

WOODSTOCK, Ga., Oct. 28, 2016 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (PinkSheets: SCSG) announced today that the company reported preliminary net income of $680,000 or $0.08/share for the third quarter ended September 30, 2016. 

“I am excited to report my first quarter of earnings with SouthCrest Bank as the new CEO.  My goal is to to push our Company towards higher loan growth, better customer relationships, a higher level of employee satisfaction and higher, more consistent profitability for our shareholders,” Schmitt said.

“To complete this task, we will have some additional one-time items occur for the next few quarters, but expect these adjustments to move our return on assets closer to our long term target of 1.0% after tax.”  Schmitt continued.

“Our team has done significant work on the expense side and we will continue to maintain a high level of focus there. With that said, we are now looking to grow loans to improve our returns so we will dedicate additional financial resources to this area going forward.  We are also excited to have a new member of the Board of Directors, Dan Broos, join our team and help us push SouthCrest further along this path.” 

Core pre-tax earnings for the quarter were $1.3 million, with net unusual items during the quarter totaling $311,000 of pre-tax expenses.  This equates to an approximate 0.94% pre-tax ROA for the quarter.  On a core basis, expenses for the quarter were $4.4 million, down from approximately $5.9 million in 3Q15.

Deposits were lower, consistent with the seasonality the Company experiences every third quarter.  Year over year deposits fell less than 2%, which is well within the expectations of management based on the changes in deposit rates and fees that occurred over the past three quarters.

Loans did decline by 1.2% from 2Q16, but with the refocus on lending directly in the Atlanta market, management expects to make significant progress on balances.  

Service fee income, including all deposit fees, NSF/Overdraft and ATM/Card related income was up 12% from 2Q15, an annual run rate increase of over $500,000.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank was 9.00%.  On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.27 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 small deferred tax asset valuation allowance related to state taxes that totals approximately $0.06/fully converted share.

Asset quality continued its multi-quarter improvement trend, with 3Q16 NPAs/total assets declining to 0.91% of assets, the lowest level since March, 2008.  Other real estate owned decreased from 2Q16 and now stands at just $936,000, down from over $3.3 million in 3Q15.   

ABOUT SOUTHCRESTSouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, Ga. 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, and online banking services. 

FORWARD LOOKING STATEMENTSThis 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)
	2015								2016
	Q3				Q4				Q1				Q2				Q3
Interest Income
Loans
Construction and Development	$	261			$	205			$	206			$	143			$	153
Commercial Real Estate		1,483				1,512				1,465				1,479				1,537
Commercial Loans		301				275				280				280				276
Multi Family		29				27				26				18				18
Residential Mortgage		1,521				1,454				1,415				1,337				1,289
Consumer Loans		197				178				166				156				139
County/Municipal Loans		59				65				29				28				29
Loss Share Loans		214				140				116				132				132
Investment Securities
Federal Funds/Overnight Funds	$	11			$	22			$	38			$	27			$	42
Bank Owned CDs		7				8				7				8				6
Investment Securities		904				916				1,030				1,083				933
Total Interest Income	$	4,987			$	4,803			$	4,779			$	4,685			$	4,556
Total Interest Expense	$	308			$	302			$	299			$	267			$	246
Net Interest Income	$	4,679			$	4,501			$	4,480			$	4,417			$	4,311
Provision for Loan Losses		0				150				50				0				0
Net Interest Income after Loan Losses	$	4,679			$	4,351			$	4,430			$	4,417			$	4,311
Other Income
Service Charges on Deposits	$	113			$	110			$	105			$	215			$	245
NSF/Overdraft Fees		543				525				475				515				575
Other Service Charges		78				93				74				79				96
ATM/Billpay/DR Card Income		352				370				293				336				302
Other Income		973				475				829				(47	)			339
Total Other Income	$	2,059			$	1,535			$	1,776			$	1,098			$	1,560
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)	$	2,419			$	2,257			$	2,006			$	1,772			$	1,705
Employee Benefits		424				645				591				360				707
Occupancy & FF&E Expense		1,020				919				933				848				860
Professional Fees		206				263				174				209				212
Data Processing		244				321				305				521				536
OREO and Credit related Exp.		156				146				41				36				36
Other Expense		1,608				1,409				1,243				927				724
Total Noninterest Expenses	$	6,077			$	5,927			$	5,293			$	4,673			$	4,917
Pre-Tax Income (Loss)	$	661			$	(36	)		$	913			$	842			$	954
Income Taxes		-				-				-				(10,592	)			274
Net Income	$	661			$	(36	)		$	913			$	11,434			$	680
Preferred Dividends	$	125			$	125			$	125			$	125			$	125
Balance Sheet ($000s, Unaudited)
	2015										2016
Assets	Q3				Q4				Q1				Q2				Q3
Current Assets
Cash & Due from Bank	$	20,355			$	44,157			$	30,427			$	34,838			$	31,268
Federal Funds/Overnight Funds		14,171				2,186				3,306				569				0
Bank Owned CDs		1,815				1,815				1,815				1,716				1,218
Investment Securities		145,247				174,998				191,905				161,177				182,614
Mortgage Loans Held for Sale		3,011				899				0				0				0
Total Current Assets	$	184,599			$	224,055			$	227,452			$	198,300			$	215,100
Loans
Construction and Development	$	16,165			$	16,229			$	13,692			$	11,285			$	9,776
Commercial Real Estate		119,888				118,780				116,175				119,419				121,609
Commercial Loans		21,236				21,246				21,296				21,863				21,247
Multi Family		2,152				2,117				1,450				1,419				1,401
Residential Mortgage		116,969				114,803				110,094				107,270				102,512
Consumer Loans		10,814				9,657				7,096				7,977				7,363
County/Municipal Loans		12,293				3,911				3,537				4,501				6,456
Loss Share Loans		10,345				9,543				9,360				7,689				7,589
Total Loans	$	309,862			$	296,286			$	282,700			$	281,425			$	277,952
Allowance for Loss		(2,881	)			(3,052	)			(3,021	)			(2,817	)			(2,701	)
Net Loans	$	306,981			$	293,234			$	279,679			$	278,608			$	275,251
OREO		3,331				2,421				1,500				1,769				936
FDIC Indemnification		498				474				419				433				425
BOLI		20,130				20,265				20,391				20,548				20,683
Fixed Assets, net	$	18,553			$	18,214			$	17,671			$	17,362			$	16,967
Intangible Assets		648				618				583				555				507
Other Assets		6,339				6,983				6,651				33,982				16,476
Total Assets	$	541,079			$	566,264			$	554,346			$	551,557			$	546,385
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs	$	114,345			$	130,877			$	119,343			$	112,974			$	111,290
Interest Bearing Demand		50,965				62,784				61,172				55,248				54,552
Celebration Checking		90,893				97,316				108,076				110,894				111,544
Money Market Accts		41,731				38,643				35,289				33,858				33,956
Savings		56,517				55,550				55,831				53,397				52,061
CDs Less Than $100k		84,510				81,930				79,221				76,301				73,964
CDs Greater than $100k		46,603				44,080				39,576				40,585				39,832
Total Deposits	$	485,564			$	511,180			$	498,508			$	483,257			$	477,388
Other Liabilities		2,414				2,690				1,988				1,919				2,281
Net Borrowings (Wholesale Funding)		-				-				-				-				317
Total Liabilities	$	487,978			$	513,870			$	500,496			$	485,176			$	479,797
Total Equity		53,101				52,394				53,850				66,381				66,548
Total Liabilities & Stockholders' Equity	$	541,079			$	566,264			$	554,346			$	551,557			$	546,345
Ratios
	3Q 2015				4Q 2015				1Q 2016				2Q 2016				3Q 2016*
ROAA		0.48	%			-0.01	%			0.66	%			8.29	%			0.53	%
ROAE		5.01	%			-0.10	%			6.80	%			76.1	%			4.74	%
NPAs/Assets (Core)		1.68	%			1.40	%			1.18	%			1.08	%			0.91	%
Est. Tier 1 Leverage		9.12	%			8.87	%			8.94	%			9.54	%			9.84	%
Total Common Equiv. Shares		8,380,337				8,380,337				8,380,337				8,380,337				8,380,337
NIM		3.76	%			3.57	%			3.47	%			3.59	%			3.59	%
Cost of Funds		0.25	%			0.24	%			0.24	%			0.22	%			0.20	%
Loan/Deposit		63.8	%			57.9	%			56.6	%			58.2	%			58.2	%
Employees		163				153				129				127				123
*3Q2016 ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016.  2Q 2016 includes DTA valuation allowance recovery.

Contact:
Andrew Bowen, APR
[email protected]
404-822-3309 

Andy Borrmann
Chief Financial Officer
678.734.3505

Source: SouthCrest Financial Group, Inc.

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