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SouthCrest Financial Group Reports Preliminary 4Q14 Earnings

PEACHTREE CITY, Ga., Jan. 30, 2015 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary earnings for the fourth quarter of 2014.

"2014 was very much a transitional year for SouthCrest, but we are proud of the accomplishments during the year including:

  • Completing legal and operational consolidation of our legacy four charters into one
  • Core (ex. loss share) loan growth of 13%
  • Total loan growth of 12%
  • Total deposit growth of 4%
  • Core (non-CD) deposit growth of 10%
  • Net interest income growth of 11%
  • Core expense decrease of 13% from 4Q13 to 4Q14
  • A cumulatively profitable second half of 2014
  • Paying the accrued Series A and Series B Perpetual Cumulative Preferred dividends

Our employees worked extremely hard this year to drive the improvement in financial results that occurred during the second half of 2014. While profitability remains at levels far from where we expect the Company to be over the next several quarters, we do believe in the people who have gotten us this far."

During the quarter the Company produced net income of $26,000 or $0.00/share while dropping salary and benefit expenses by $330,000 from the third quarter, increasing the loan loss provision by $25,000. The Company did experience some seasonal decline in mortgage related revenue during the quarter, but had the first meaningful SBA related revenues to partially offset the mortgage decline.

The Company's balance sheet was generally level with $2.8 million of loan growth from 3Q14 (4% annualized, 12% year over year) while deposits grew by over $9 million from the third quarter (7% annualized). "We were expecting better loan growth during the quarter, but we had one very large pre-payment that decreased the growth. Also, we tend to have some seasonal strength in deposits late in the year, so we do expect flat deposit levels during 1Q15," said Maloy.

The estimated Tier 1 Leverage ratio at the end of the quarter was 10.05%. On a fully converted basis (including the conversion of all preferred equity) TBV/share was negatively impacted by the TARP dividends moving up to 9% and ended the quarter at $5.63 per share. As of December 31, 2014, the Company had paid the total accrued dividends. The Company is currently reviewing all available TARP redemption options and expects some progress during 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 for the non-residential portfolio. 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 $1.5 million from $3.1 million at the end of 2Q14 and $6.4 million as of 4Q13.

Asset quality remained reasonable as the Company continues to work through the last few remaining troubled assets. The non-performing assets/total assets (excluding loss share assets) ratio moved down from 2.44% to 1.92%. The allowance for loan losses fell to 1.37% of loans.

SouthCrest Financial Group, Inc. is a $570 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, SBA lending, mortgage banking, 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
Q4 Q1 Q2 Q3 Q4
Interest Income
Loans
Construction and Development $186 $215 $231 $262 $216
Commercial Real Estate 1,058 1,081 1,173 1,297 1,371
Commercial Loans 175 185 162 214 319
Multi Family 14 17 13 14 17
Residential Mortgage 1,408 1,430 1,573 1,518 1,408
Consumer Loans 436 384 343 305 267
County/Municipal Loans 72 31 32 34 42
Loss Share Loans 288 310 236 200 194
Investment Securities
Federal Funds/Overnight Funds $59 $66 $44 $20 $35
Bank Owned CDs 14 8 7 6 4
Investment Securities 686 767 1,022 975 971
Total Interest Income $4,396 $4,494 $4,836 $4,845 $4,844
Total Interest Expense $357 $327 $334 $348 $347
Net Interest Income $4,039 $4,167 $4,502 $4,497 $4,497
Provision for Loan Losses -- -- -- 75 95
Net Interest Income after Loan Losses $4,039 $4,167 $4,502 $4,422 $4,402
Other Income
Service Charges on Deposits $109 $108 $105 $102 $106
NSF/Overdraft Fees 587 526 575 626 603
Other Service Charges 88 89 91 96 91
ATM/Billpay/DR Card Income 369 394 414 403 402
Gain on Sale of loans 295 364 581 566 476
Other Income 851 1,676 2,004 1,209 794
Total Other Income $2,299 $3,157 $3,770 $3,002 $2,472
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $3,061 $2,930 $2,924 $2,720 $2,529
Employee Benefits 628 658 719 571 432
Occupancy & FF& E Expense 852 857 888 920 1,023
Professional Fees 757 333 469 419 293
Data Processing 292 247 301 295 306
OREO and Credit related Exp. 276 295 223 (35) 287
Other Expense 2,746 2,962 3,613 2,474 1,978
Total Noninterest Expenses $8,612 $8,282 $9,137 $7,364 $6,848
Pre-Tax Income (Loss) $(2,274) $(958) $(865) $60 $26
Income Taxes -- -- -- -- --
Net Income $(2,274) $(958) $(865) $60 $26
Balance Sheet ($000s)
2013 2014
Assets Q4 Q1 Q2 Q3 Q4
Current Assets
Cash & Due from Bank $24,467 $27,766 $26,083 $18,238 $16,991
Federal Funds/Overnight Funds 99,080 75,795 31,083 50,260 34,182
Bank Owned CDs 3,247 3,762 2,965 2,231 2,974
Investment Securities 123,685 143,221 166,182 164,971 190,864
Mortgage Loans Held for Sale 4,642 7,548 13,343 5,376 932
Total Current Assets $255,121 $258,092 $239,656 $241,076 $245,943
Loans
Construction and Development $14,404 $17,344 $16,791 $13,489 $15,187
Commercial Real Estate 82,492 85,158 96,664 105,664 104,493
Commercial Loans 9,977 9,352 14,573 16,817 17,399
Multi Family 2,155 2,112 1,142 1,112 1,589
Residential Mortgage 105,496 107,654 109,916 107,234 110,347
Consumer Loans 19,352 17,283 16,125 15,345 14,215
County/Municipal Loans 3,845 3,684 4,190 5,110 4,343
Loss Share Loans 13,426 13,957 12,844 12,407 12,447
Total Loans $251,147 $256,544 $272,245 $277,178 $280,020
Allowance for Loss (4,443) (4,294) (3,914) (3,723) (3,675)
Net Loans $246,704 $252,250 $268,331 $273,455 $276,345
Core Loans $237,721 $242,587 $259,401 $264,771 $267,573
OREO 5,283 4,763 4,932 5,320 4,473
FDIC Indemnification 6,374 4,642 3,139 1,685 1,537
BOLI 19,156 19,283 19,442 19,574 19,710
Fixed Assets, net $18,617 $19,314 $19,509 $19,503 $19,255
Intangible Assets 920 838 747 657 583
Other Assets 7,141 6,979 6,926 6,917 7,523
Total Assets $559,316 $566,161 $562,682 $568,187 $575,369
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $127,477 $126,454 $123,672 $122,374 $125,699
Interest Bearing Demand 48,950 52,320 51,018 54,661 64,178
Celebration Checking 32,596 33,292 34,977 54,072 64,998
Money Market Accts 54,704 53,658 57,056 49,594 44,434
Savings 61,960 65,174 64,134 63,001 59,251
CDs Less Than $100k 107,989 104,808 102,512 98,984 94,923
CDs Greater than $100k 50,623 57,230 55,634 53,502 51,685
Total Deposits $484,299 $492,936 $489,003 $496,188 $505,168
Other Liabilities 11,576 10,585 11,263 10,695 9,361
Net Borrowings (Wholesale Funding) -- -- 900 -- --
Total Liabilities $495,875 $503,521 $501,166 $506,883 $514,529
Total Equity 63,441 62,640 61,516 61,304 60,840
Total Liabilities & Stockholders' Equity $559,316 $566,161 $562,682 $568,187 $575,369
Ratios
4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014
ROAA -1.62% -0.68% -0.67% 0.04% 0.02%
ROAE -14.02% -6.09% -6.00% 0.34% 0.17%
NPAs/Assets (Core) 1.64% 1.84% 1.90% 2.44% 1.92%
Tier 1 Leverage 11.02% 10.97% 10.80% 10.78% 10.05%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.36% 3.42% 3.67% 3.77% 3.68%
Cost of Funds 0.29% 0.27% 0.27% 0.28% 0.28%
Loan/Deposit 51.9% 52.0% 55.7% 55.9% 55.4%

CONTACT: For further information contact: Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.