×

SouthCrest Financial Group Reports Preliminary 3Q14 Earnings

PEACHTREE CITY, Ga., Oct. 28, 2014 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (OTCBB:SCSG) announced today that the company reported preliminary earnings for the third quarter of 2014.

During the quarter the Company produced net income of $52,000 or $0.01/share while dropping operating expenses by $750,000 from the second quarter, maintaining flat operating revenues and increasing the loan loss provision by $75,000. "As we have mentioned in each of the earnings releases this year, our goal is to return SouthCrest to peer-level profitability through higher revenues and improving expense levels. This quarter's results are our first step back into profitability, but profitability remains at levels far from where we expect SouthCrest to be over the next several quarters."

The Company's balance sheet improvement continued with $4.9 million of loan growth from 2Q14 (8% annualized, 11% year over year) while core (non-CD) deposits grew by over $12 million from the second quarter (16% annualized, 8% from 3Q13), the strongest performance in several quarters. Total deposits grew $7.2 million, or 6% annualized while total assets grew 4% annualized. "We are expecting to maintain high single digit loan growth during the fourth quarter. We are also extremely satisfied with the deposit metrics given the number of disruptions that have occurred this year as we have completely restructured the company. However, given our deposit pricing discipline it is unlikely to see deposits grow this rapidly again soon," said Maloy.

The estimated Tier 1 Leverage ratio at the end of the quarter was 10.78%, down slightly from 10.80% at the end of 1Q14. On a fully converted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share was negatively impacted by the TARP dividends moving up to 9% and ended the quarter at $5.68 per share. The Company is currently reviewing all available TARP redemption options and expects some progress between now and 1Q15. 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 approximately $10.7 million ($1.28/fully converted share).

SouthCrest has a loss sharing agreement, related to the purchase of a small failed bank in 2010, which expires in March, 2015. Based on the current internal analysis and external reviews, 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 $1.7 million from $3.1 million at the end of 2Q14 and $7.3 million as of 3Q13.

Asset quality remained reasonable as the Company continues to work through the last few remaining troubled assets. The non-performing assets/total assets ratio moved up from 1.90% to 2.44% due primarily to the downgrade of one relationship that is paying as contractually agreed. The allowance for loan losses fell to 1.41% of loans.

SouthCrest Financial Group, Inc. is a $560 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 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
Q3 Q4 Q1 Q2 Q3
Interest Income
Loans
Construction and Development $213 $186 $215 $231 $262
Commercial Real Estate 1,004 1,058 1,081 1,173 1,297
Commercial Loans 156 175 185 162 214
Multi Family 19 14 17 13 14
Residential Mortgage 1,426 1,408 1,430 1,573 1,518
Consumer Loans 471 436 384 343 305
County/Municipal Loans 84 72 31 32 34
Loss Share Loans 299 288 310 236 200
Investment Securities
Federal Funds/Overnight Funds $74 $59 $66 $44 $20
Bank Owned CDs 13 14 8 7 6
Investment Securities 665 686 767 1,022 975
Total Interest Income $4,425 $4,396 $4,494 $4,836 $4,845
Total Interest Expense $397 $357 $327 $334 $348
Net Interest Income $4,028 $4,039 $4,167 $4,502 $4,497
Provision for Loan Losses -- -- -- -- 75
Net Interest Income after Loan Losses $4,028 $4,039 $4,167 $4,502 $4,422
Other Income
Service Charges on Deposits $112 $109 $108 $105 $102
NSF/Overdraft Fees 611 587 526 575 626
Other Service Charges 94 88 89 91 96
ATM/Billpay/DR Card Income 354 369 394 414 403
Gain on Sale of loans 159 295 364 581 566
Other Income 1,032 851 1,676 2,004 1,209
Total Other Income $2,362 $2,299 $3,157 $3,770 $3,002
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $2,838 $3,061 $2,865 $2,756 $2,525
Employee Benefits 574 628 658 719 571
Occupancy & FF& E Expense 757 852 857 888 920
Professional Fees 524 757 333 469 419
Data Processing 291 292 247 301 295
OREO and Credit related Exp. 293 276 295 223 -35
Other Expense 2,052 2,746 2,962 3,613 2,482
Total Noninterest Expenses $7,329 $8,612 $8,282 $9,137 $7,372
Pre-Tax Income (Loss) $ (939) $ (2,274) $ (958) $ (865) $52
Income Taxes -- -- -- -- --
Net Income $ (939) $ (2,274) $ (958) $ (865) $52
Balance Sheet ($000s) 2013 2014
Assets Q3 Q4 Q1 Q2 Q3
Current Assets
Cash & Due from Bank $29,665 $24,467 $27,766 $26,083 $18,238
Federal Funds/Overnight Funds 92,064 99,080 75,795 31,083 50,260
Bank Owned CDs 5,914 3,247 3,762 2,965 2,231
Investment Securities 122,132 123,685 143,221 166,182 164,971
Mortgage Loans Held for Sale 2,803 4,642 7,548 13,343 5,376
Total Current Assets $252,578 $255,121 $258,092 $239,656 $241,076
Loans
Construction and Development $13,424 14,404 $17,344 $16,791 $13,489
Commercial Real Estate 76,705 82,492 85,158 96,664 105,664
Commercial Loans 8,985 9,977 9,352 14,573 16,817
Multi Family 2,278 2,155 2,112 1,142 1,112
Residential Mortgage 104,186 105,496 107,654 109,916 107,234
Consumer Loans 20,464 19,352 17,283 16,125 15,345
County/Municipal Loans 11,665 3,845 3,684 4,190 5,110
Loss Share Loans 13,622 13,426 13,957 12,844 12,407
Total Loans $251,329 $251,147 $256,544 $272,245 $277,178
Allowance for Loss (4,444) (4,443) (4,294) (3,914) (3,723)
Net Loans $246,885 $246,704 $252,250 $268,331 $273,455
Core Loans $237,707 $237,721 $242,587 $259,401 $264,771
OREO $9,966 5,283 4,763 4,932 5,320
FDIC Indemnification 7,266 6,374 4,642 3,139 1,685
BOLI 19,021 19,156 19,283 19,442 19,574
Fixed Assets, net 18,742 18,617 19,314 19,509 19,503
-- --
Intangible Assets 1,002 920 838 747 657
Other Assets 6,405 7,141 6,979 6,926 6,917
Total Assets $561,865 $559,316 $566,161 $562,682 $568,187
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $115,614 127,477 $126,454 $123,672 $122,374
Interest Bearing Demand 50,218 48,950 52,320 51,018 54,661
Celebration Checking 32,352 32,596 33,292 34,977 54,072
Money Market Accts 57,197 54,704 53,658 57,056 49,594
Savings 63,820 61,960 65,174 64,134 63,001
CDs Less Than $100k 112,421 107,989 104,808 102,512 98,984
CDs Greater than $100k 53,389 50,623 57,230 55,634 53,502
Total Deposits $485,011 $484,299 $492,936 $489,003 $496,188
Other Liabilities $10,289 11,576 10,585 11,263 10,695
Net Borrowings (Wholesale Funding) 330 -- -- 900 --
Total Liabilities $495,630 $495,875 $503,521 $501,166 $506,883
Total Equity 66,235 63,441 62,640 61,516 61,304
Total Liabilities & Stockholders' Equity $561,865 $559,316 $566,161 $562,682 $568,187
Ratios
3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014
ROAA -0.67% -1.62% -0.68% -0.67% 0.04%
ROAE -6.80% -14.02% -6.09% -6.00% 0.34%
NPAs/Assets (Core) 2.31% 1.64% 1.84% 1.90% 2.44%
Tier 1 Leverage 11.67% 11.02% 10.97% 10.80% 10.78%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.38% 3.36% 3.42% 3.67% 3.77%
Cost of Funds 0.32% 0.29% 0.27% 0.27% 0.28%
Loan/Deposit 51.80% 51.90% 52.00% 55.70% 55.90%

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

Source:SouthCrest Financial Group, Inc.