SouthCrest Financial Group Reports Closure of $17.5 Million Capital Raise and Charter Consolidation Application With Preliminary 3Q13 Financial Results

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PEACHTREE CITY, Ga., Oct. 24, 2013 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary results for the third quarter of 2013, as well as the completion of the previously disclosed $17.5 million capital raise. On September 27th, SouthCrest funded investments with affiliates of Castle Creek Capital and other institutional investors that total $17.5 million in a mix of voting common and non-voting preferred securities at a price of $5.05 per share. "We are beyond enthusiastic about our partnership with Castle Creek Capital and our other new investors," stated Mr. Maloy. "Their experience and involvement enables us to capitalize on our already building momentum and internal loan growth. We look forward to taking the fundamental dynamics we've developed into future growth opportunities in our Georgia and Alabama markets."

"The influx of this new capital enhances the Company's ability to help our customers thrive, empower our employees with training and technology, and continue to build value for our shareholders over time," continued Mr. Maloy.

The Company intends to use the proceeds for general corporate purposes, including the potential redemption of the TARP preferred shares and other strategic initiatives.

The Company also announced the approval by the Board of Directors to make the necessary applications to consolidate the charters of the four banks in the holding company. Charter consolidation has been a long term goal of the Company, and management expects to complete and file the application over the next few weeks. "The profitability improvements created by combining the charters should approach 0.20% ROAA. We expect to completely phase in these improvements within six to twelve months after we receive the required regulatory approvals," said Mr. Maloy.

During the quarter the company produced a net loss of $0.9 million, a large portion of which was due to the restructuring of the mortgage division that started in late 2Q13 and was completed in mid-3Q13. Total assets at the end of the quarter were up 1.7% linked quarter annualized (LQA) to $561.9 million from 2Q13, while total core loans increased 7.7% LQA, constituting the Company's strongest loan growth since before the financial crisis.

The deposit mix continued to improve, with total non-CD funding increasing to 66% in 3Q13 from 65% the prior quarter, although total deposits did decline somewhat. Given the current loan to deposit ratio, the Company is maintaining at or below market deposit pricing at this time which has led to the decline in total deposits. The improvement in deposit mix and disciplined pricing continued to drive the cost of funds down. The total cost of funds in 3Q13 was just 0.32%, vs. 0.52% during 3Q12.

Credit costs remained controlled with no loan loss provision expense, although OREO costs of $293,000 were up slightly from $178,000 in the prior quarter.

Finally, the completion of the capital raise during the quarter caused a significant increase in the capital ratios. The estimated Tier 1 Leverage ratio at the end of the quarter was 11.68%, up from 8.72% for 2Q13 and 8.83% at the end of 2012. The capital raise was modestly dilutive from a tangible book value perspective. On a fully diluted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share ended the quarter at $6.26 per share. The current fully diluted, fully converted share count at the end of the quarter is 8.380 million shares. Not reflected in the current TBV/share is a deferred tax asset valuation allowance of $9.482 million.

The Company also continued to work through its FDIC loss share covered assets, with the net loan balance shrinking by 21% LQA. The FDIC Indemnification Asset declined by $422,000 or 5.5% from 2Q13 to 3Q13 (22% LQA), and now stands at $7.3 million with approximately 6 quarters remaining on the commercial portfolio loss sharing agreement.

SouthCrest Financial Group, Inc. is a $560 million asset bank holding company headquartered in Peachtree City, Georgia. The company operates a 14 branch network throughout Georgia and Alabama through its four subsidiary banks: SouthCrest Bank, The First National Bank of Polk County, Peachtree Bank and Bank of Chickamauga. The banks provide retail and commercial banking services, mortgage banking, investment management, 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.

Income Statement 2013
Q1 Q2 Q3 YTD
Interest Income
Loans
Construction and Development $ 201 $ 199 $ 213 $ 613
Commercial Real Estate 974 1,012 1,004 2,990
Commercial Loans 155 151 156 461
Multi Family 18 16 19 53
Residential Mortgage 1,468 1,432 1,426 4,326
Consumer Loans 482 458 471 1,411
SCM Loans 110 100 84 294
Loss Share Loans 347 313 299 959
$ 3,754 $ 3,680 $ 3,673 $ 11,107
Investment Securities
Federal Funds/Overnight Funds $ 80 $ 80 $ 74 $ 234
Bank Owned CDs 14 13 18 45
Investment Securities 557 604 665 1,826
Total Interest Income $ 4,405 $ 4,377 $ 4,430 $ 13,212
Total Interest Expense $ 484 $ 436 $ 397 $ 1,316
Net Interest Income $ 3,922 $ 3,941 $ 4,033 $ 11,896
Provision for Loan Losses 400 -- -- 400
Net Interest Income after Loan Losses $ 3,522 $ 3,941 $ 4,033 $ 11,496
Service Charges on Deposits $ 122 $ 112 $ 112 $ 346
NSF/Overdraft Fees 552 571 611 1,734
Other Service Charges 86 104 94 284
ATM/Billpay/DR Card Income 322 362 354 1,038
Gain on Sale of loans 415 322 159 896
Other Income 757 699 1,032 2,488
Total Other Income $ 2,254 $ 2,170 $ 2,362 $ 6,786
Non Interest Expense
Salaries, Other Comp (+ FAS123R) (- FAS 91) $ 2,623 $ 2,560 $ 2,838 $ 8,021
Employee Benefits 658 524 574 1,756
Occupancy & FF& E Expense 676 760 757 2,193
Professional Fees 355 587 524 1,466
Data Processing 254 398 291 943
OREO and Credit related Exp. 451 178 293 922
Other Expense 1,847 1,886 2,052 5,785
Total Other Expenses $ 6,864 $ 6,893 $ 7,329 $ 21,086
Pre-Tax Income (Loss) $ (1,088) $ (782) $ (934) $ (2,804)
Income Taxes -- -- -- --
Net Income $ (1,088) $ (782) $ (934) $ (2,804)
Balance Sheet
Assets 1Q 2013 2Q 2013 3Q 2013
Current Assets
Cash & Due from Bank $ 16,468 $ 15,412 $ 29,665
Federal Funds/Overnight Funds 108,342 114,068 92,064
Bank Owned CDs 5,909 6,888 5,914
Investment Securities 116,360 113,784 122,132
Mortgage Loans Held for Sale 4,239 3,713 2,803
Total Current Assets $ 251,318 $ 253,865 $ 252,578
Loans
Construction and Development $ 13,110 $ 12,696 $ 13,424
Commercial Real Estate 79,046 76,646 76,705
Commercial Loans 9,910 9,566 8,985
Multi Family 2,281 2,216 2,278
Residential Mortgage 103,762 102,786 104,186
Consumer Loans 20,735 19,916 20,464
SCM Loans 9,978 9,410 11,665
Loss Share Loans 14,670 14,372 13,622
Total Loans $ 253,492 $ 247,608 $ 251,329
Allowance for Loss (5,486) (4,745) (4,444)
Net Loans $ 248,006 $ 242,863 $ 246,885
Core Loans $ 238,822 $ 233,236 $ 237,707
OREO $ 8,245 $ 11,441 $ 9,966
FDIC Indemnification 8,562 7,688 7,266
BOLI 18,725 18,886 19,021
Technology, Software, & FFE 17,224 17,200 18,742
Accumulated Depreciation -- -- --
Intangible Assets 1,135 1,080 1,002
Accrued Interest Receivable -- -- --
Other Assets 6,411 6,440 6,405
Total Assets $ 559,626 $ 559,463 $ 561,865
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $ 114,063 $ 119,096 $ 115,614
Interest Bearing Demand 48,914 50,914 50,218
Rewards Checking 35,131 32,981 32,352
Money Market Accts 58,152 58,500 57,197
Savings 64,131 64,823 63,820
CDs Less Than $100k 120,310 116,326 112,421
CDs Greater than $100k 56,520 56,191 53,389
Total Deposits $ 497,221 $ 498,831 $ 485,011
Other Liabilities $ 9,642 $ 10,053 $ 10,289
Net Borrowings (Wholesale Funding) 275 -- 330
Total Liabilities $ 507,138 $ 508,884 $ 495,630
Total Equity $ 52,488 $ 50,579 $ 66,235
Total Liabilities & Stockholders' Equity $ 559,626 $ 559,463 $ 561,865
Ratios
1Q 2013 2Q 2013 3Q 2013
ROAA -0.79% -0.56% -.67%
ROAE -8.23% -6.08% -6.80%
NPAs/Assets (Core) 2.72% 2.27% 2.31%
Tier 1 Leverage 8.93% 8.67% 11.67%
Total Common Equiv. Shares 4,914,991 4,914,991 8,380,337
NIM 3.27% 3.23% 3.38%
Cost of Funds 0.39% 0.35% 0.32%
Loan/Deposit 51.0% 49.6% 51.8%

CONTACT: Andy Borrmann, 678-734-3505 SVP Finance, SouthCrest Financial Group

Source:SouthCrest Financial Group, Inc.