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SouthCrest Financial Group Reports Preliminary 1Q14 Financial Results

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PEACHTREE CITY, Ga., April 29, 2014 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (OTCBB:SCSG) announced today that the company reported preliminary results for the first quarter of 2014.

During the quarter the Company produced a net loss of $958,000, an improvement from a $1.3 million loss excluding consolidation expenses in 4Q13. "During the quarter we initiated a significant portion of the initial cost saves that we expected from the charter consolidation finalized February 28th. Total operational expenses were down $565,000 from 4Q13 in the salary, benefits, and professional fee lines. While this is a real positive, and a better result than we expected this early in the process, we plan to improve on these levels substantially over the remainder of the year." During the quarter, salaries were down $171,000 from 4Q13, benefits were up $30,000 due to an increase in unemployment insurance, and professional fees were down $424,000. "We are fully committed to returning SouthCrest to peer-level profitability through better efficiencies and higher revenues," Maloy added.

The Company's balance sheet improvement continued with $4.9 million of loan growth (8.0% annualized from 4Q13) and $3.0 million of growth in interest and non-interest bearing checking account balances (6% annualized). Total deposits grew $8.6 million, or 7% annualized while total assets grew 5% annualized. "Based on our current pipeline, we believe that our loan growth will be stronger in the second quarter, and we continue to be pleased with the overall mix shift on both sides of our balance sheet," said Maloy.

SouthCrest has a loss sharing agreement, related to the purchase of a small failed bank in 2010, which expires in March, 2015. To continue to properly manage the indemnification asset, the Company accelerated both the income accretion and the indemnification expense in the first quarter by nearly $1.0 million and expects similar levels to occur in 2Q14. Based on the current analysis, SouthCrest's accounting for the indemnification asset should align closely with related income over the remaining life of the loss share agreement which expires in March 2015, and should not cause any one time material impact in the financial reports. The indemnification asset is now down to $4.6 million from $6.4 million at the end of 2013.

The estimated Tier 1 Leverage ratio at the end of the quarter was 10.97%, down slightly from 11.02% at the end of 2013 as a result of the capital raise that occurred in 3Q13. On a fully converted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share ended the quarter at $5.83 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 totaled $10.8 million.

SouthCrest Financial Group, Inc. is a $560 million asset bank holding company headquartered in Peachtree City, Georgia. The company operates a 13 branch network throughout Georgia and Alabama through its subsidiary bank, SouthCrest Bank, N.A. The bank provides 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.

Statement of Operations ($000s) 2013 2014
Q1 Q2 Q3 Q4 Q1
Interest Income
Loans
Construction and Development $201 $199 $213 $186 $215
Commercial Real Estate 974 1,012 1,004 1,058 1,081
Commercial Loans 155 151 156 175 185
Multi Family 18 16 19 14 17
Residential Mortgage 1,468 1,432 1,426 1,408 1,430
Consumer Loans 482 458 471 436 384
SCM Loans 110 100 84 72 31
Loss Share Loans 347 313 299 288 310
Investment Securities
Federal Funds/Overnight Funds $80 $80 $74 $59 $66
Bank Owned CDs 14 13 13 14 8
Investment Securities 557 604 665 686 767
Total Interest Income $4,405 $4,377 $4,425 $4,396 4,494
Total Interest Expense $484 $436 $397 $357 $327
Net Interest Income $3,922 $3,941 $4,028 $4,039 $4,167
Provision for Loan Losses 400 -- -- -- --
Net Interest Income after Loan Losses $3,522 $3,941 $4,028 $4,039 $4,167
Other Income
Service Charges on Deposits $122 $112 $112 $109 $108
NSF/Overdraft Fees 552 571 611 587 526
Other Service Charges 86 104 94 88 89
ATM/Billpay/DR Card Income 322 362 354 369 394
Gain on Sale of loans 415 322 159 295 364
Other Income 757 699 1,032 851 1,676
Total Other Income $2,254 $2,170 $2,362 $2,299 $3,157
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $2,623 $2,560 $2,838 $3,061 $2,890
Employee Benefits 658 524 574 628 658
Occupancy & FF& E Expense 676 760 757 852 857
Professional Fees 355 587 524 757 333
Data Processing 254 398 291 292 247
OREO and Credit related Exp. 451 178 293 276 295
Other Expense 1,847 1,886 2,052 2,746 2,962
Total Noninterest Expenses $6,864 $6,893 $7,329 $8,612 $8,282
Pre-Tax Income (Loss) $ (1,088) $ (782) $ (939) $ (2,274) $ (958)
Income Taxes -- -- -- -- --
Net Loss $ (1,088) $ (782) $ (939) $ (2,274) $ (958)
Balance Sheet ($000s) 2013 2014
Assets Q1 Q2 Q3 Q4 Q1
Current Assets
Cash & Due from Bank $16,468 $15,412 $29,665 $24,467 $27,766
Federal Funds/Overnight Funds 108,342 114,068 92,064 99,080 75,795
Bank Owned CDs 5,909 6,888 5,914 3,247 3,762
Investment Securities 116,360 113,784 122,132 123,685 143,221
Mortgage Loans Held for Sale 4,239 3,713 2,803 4,642 7,548
Total Current Assets $251,318 $253,865 $252,578 $255,121 $258,092
Loans
Construction and Development $13,110 $12,696 $13,424 $14,404 $17,344
Commercial Real Estate 79,046 76,646 76,705 82,492 85,158
Commercial Loans 9,910 9,566 8,985 9,977 9,352
Multi Family 2,281 2,216 2,278 2,155 2,112
Residential Mortgage 103,762 102,786 104,186 105,496 107,654
Consumer Loans 20,735 19,916 20,464 19,352 17,283
SCM Loans 9,978 9,410 11,665 3,845 3,684
Loss Share Loans 14,670 14,372 13,622 13,426 13,957
Total Loans $253,492 $247,608 $251,329 251,147 256,544
Allowance for Loss (5,486) (4,745) (4,444) (4,443) (4,294)
Net Loans $248,006 $242,863 $246,885 $246,704 $252,250
Core Loans $238,822 $233,236 $237,707 237,721 242,587
OREO $8,245 $11,441 $9,966 $5,283 4,763
FDIC Indemnification 8,562 7,688 7,266 6,374 4,642
BOLI 18,725 18,886 19,021 19,156 19,283
Fixed Assets, net 17,224 17,200 18,742 18,617 $19,314
--
Intangible Assets 1,135 1,080 1,002 920 838
Accrued Interest Receivable --
Other Assets 6,411 6,440 6,405 7,141 6,979
Total Assets $559,626 $559,463 $561,865 $559,316 $566,161
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $114,063 $119,096 $115,614 $127,477 $126,454
Interest Bearing Demand 48,914 50,914 50,218 48,950 52,320
Rewards Checking 35,131 32,981 32,352 32,596 33,292
Money Market Accts 58,152 58,500 57,197 54,704 53,658
Savings 64,131 64,823 63,820 61,960 65,174
CDs Less Than $100k 120,310 116,326 112,421 107,989 104,808
CDs Greater than $100k 56,520 56,191 53,389 50,623 57,230
Total Deposits $497,221 $498,831 $485,011 $484,299 $492,936
Other Liabilities $9,642 $10,053 $10,289 $11,576 10,585
Net Borrowings (Wholesale Funding) 275 -- 330 -- --
Total Liabilities $507,138 $508,884 $495,630 $495,875 $503,521
Total Equity $52,488 $50,579 $66,235 $63,441 $62,640
Total Liabilities & Stockholders' Equity $559,626 $559,463 $561,865 $559,316 $559,316
Ratios
1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014
ROAA -0.79% -0.56% -0.67% -1.62% -0.68%
ROAE -8.23% -6.08% -6.80% -14.02% -6.09%
NPAs/Assets (Core) 2.72% 2.27% 2.31% 1.64% 1.84%
Tier 1 Leverage 8.93% 8.67% 11.67% 11.02% 10.97%
Total Common Equiv. Shares 4,914,991 4,914,991 8,380,337 8,380,337 8,380,337
NIM 3.27% 3.23% 3.38% 3.36% 3.42%
Cost of Funds 0.39% 0.35% 0.32% 0.29% 0.27%
Loan/Deposit 51.0% 49.6% 51.8% 51.9% 52.0%

CONTACT: Andy Borrmann, 678-734-3505 Chief Strategy Officer, SouthCrest Financial Group

Source:SouthCrest Financial Group, Inc.