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SouthCrest Financial Group Reports Preliminary 1Q15 Results

PEACHTREE CITY, Ga., May 6, 2015 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK), announced today that the company reported a preliminary net loss for the first quarter of 2015 of $375,000. “There were several moving pieces that impacted our first quarter results. We exited the non-single family residential portion of our loss share agreement that resulted in $279,000 of expense and we completed an additional personnel downsizing that resulted in severance expenses of nearly $170,000. We also completed a sale of nearly $4 million of non-performing TDR loans and exited some additional OREO which was offset by securities gains. Core earnings for the quarter excluding these items was $74,000.”

As previously announced, the Company also redeemed $8.0 million of its Series A Preferred Stock (the former TARP shares) during the quarter from cash on hand.

Loan growth was somewhat weaker than expected, especially early in the quarter, with total loans declining approximately $4 million excluding the loans sold. However activity reaccelerated later in the quarter and Management expects to report solid loan growth in 2Q15.

The loan sale occurred in two tranches, a 1-4 family pool and a CRE pool and while it formally closed in April, the financial impact is recorded in 1Q. Including all related expenses, the Company realized a loss of approximately 16% of the loan book balance.

The Company has continued to focus on expenses, with core non-interest expense (excluding severance, loss share and consolidation expenses) down $280,000 in 1Q15 from 4Q14. Management expects this number to continue to trend downwards in 2Q.

The estimated Tier 1 Leverage ratio at the end of the quarter was 8.78%. On a fully converted basis (including the conversion of all preferred equity) TBV/share was negatively impacted by the TARP dividends, although the redemption will lower future dividends by approximately $180,000/quarter, and ended the quarter at $5.60 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 totals approximately $11.5 million ($1.37/fully converted share).

SouthCrest maintains a single family residential loss sharing agreement, related to the purchase of a small failed bank in 2010. The non-residential portfolio loss share agreement expired at the end of the first quarter. The indemnification asset is now down to $1.1 million from $1.5 million at the end of 4Q14 and $4.6 million as of 1Q14, and should decline meaningfully in 2Q15.

Asset quality improved significantly as a result of the previously mentioned troubled loan sale. The non-performing assets/total assets (excluding loss share assets) ratio moved down 1.68%, the lowest level since the beginning of the recession.

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, Unaudited)
2014 2015
Q1
Q2
Q3
Q4
Q1
Interest Income
Loans
Construction and Development $ 215 $ 231 $ 262 $ 216 $ 219
Commercial Real Estate 1,081 1,173 1,297 1,371 1,275
Commercial Loans 185 162 214 319 245
Multi Family 17 13 14 17 20
Residential Mortgage 1,430 1,573 1,518 1,408 1,355
Consumer Loans 384 343 305 267 241
County/Municipal Loans 31 32 34 42 36
Loss Share Loans 310 236 200 194 169
Investment Securities
Federal Funds/Overnight Funds $ 66 $ 44 $ 20 $ 35 $ 122
Bank Owned CDs 8 7 6 4 8
Investment Securities 767 1,022 975 971 1,058
Total Interest Income $ 4,494 $ 4,836 $ 4,845 $ 4,844 $ 4,649
Total Interest Expense $ 327 $ 334 $ 348 $ 347 $ 329
Net Interest Income $ 4,167 $ 4,502 $ 4,497 $ 4,497 $ 4,320
Provision for Loan Losses - - 75 95 224
Net Interest Income after Loan Losses $ 4,167 $ 4,502 $ 4,422 $ 4,402 $ 4,096
Other Income
Service Charges on Deposits $ 108 $ 105 $ 102 $ 106 $ 99
NSF/Overdraft Fees 526 575 626 603 480
Other Service Charges 89 91 96 91 82
ATM/Billpay/DR Card Income 394 414 403 402 408
Gain on Sale of loans 364 581 566 476 467
Other Income 1,676 2,004 1,209 794 783
Total Other Income $ 3,157 $ 3,770 $ 3,002 $ 2,472 $ 2,319
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $ 2,930 $ 2,924 $ 2,720 $ 2,529 $ 2,610
Employee Benefits 658 719 571 432 672
Occupancy & FF& E Expense 857 888 920 1,023 935
Professional Fees 333 469 419 293 229
Data Processing 247 301 295 306 282
OREO and Credit related Exp. 295 223 -35 287 230
Other Expense 2,962 3,613 2,474 1,978 1,333
Total Noninterest Expenses $ 8,282 $ 9,137 $ 7,364 $ 6,848 $ 6,291
Pre-Tax Income (Loss) $ (958) $ (865) $ 60 $ 26 $ (375)
Income Taxes - - - - -
Net Income$ (958) $ (865) $ 60 $ 26 $ (375)


Balance Sheet ($000s, Unaudited)
2014 2015
AssetsQ1
Q2
Q3
Q4
Q1
Current Assets
Cash & Due from Bank$ 27,766 $ 26,083 $ 18,238 $ 16,991 $ 34,459
Federal Funds/Overnight Funds 75,795 31,083 50,260 34,182 17,067
Bank Owned CDs 3,762 2,965 2,231 2,974 1,814
Investment Securities 143,221 166,182 164,971 190,864 188,864
Mortgage Loans Held for Sale 7,548 13,343 5,376 932 3,872
Total Current Assets$ 258,092 $ 239,656 $ 241,076 $ 245,943 $ 246,076
Loans
Construction and Development$ 17,344 $ 16,791 $ 13,489 $ 15,187 $ 15,316
Commercial Real Estate 85,158 96,664 105,664 104,493 102,720
Commercial Loans 9,352 14,573 16,817 17,399 17,792
Multi Family 2,112 1,142 1,112 1,589 1,553
Residential Mortgage 107,654 109,916 107,234 110,347 105,691
Consumer Loans 17,283 16,125 15,345 14,215 12,872
County/Municipal Loans 3,684 4,190 5,110 4,343 5,210
Loss Share Loans 13,957 12,844 12,407 12,447 10,837
Total Loans$ 256,544 $ 272,245 $ 277,178 $ 280,020 $ 272,010
Allowance for Loss (4,294) (3,914) (3,723) (3,675) (3,110)
Net Loans$ 252,250 $ 268,331 $ 273,455 $ 276,345 $ 268,895
OREO 4,763 4,932 5,320 4,473 4,284
FDIC Indemnification 4,642 3,139 1,685 1,537 1,089
BOLI 19,283 19,442 19,574 19,710 19,834
Fixed Assets, net 19,314 19,509 19,503 19,255 18,978
Intangible Assets 838 747 657 583 573
Other Assets 6,979 6,926 6,917 7,523 6,819
Total Assets$ 566,161 $ 562,682 $ 568,187 $ 575,369 $ 566,189
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$ 126,454 $ 123,672 $ 122,374 $ 125,699 $ 121,381
Interest Bearing Demand 52,320 51,018 54,661 64,178 61,685
Celebration Checking 33,292 34,977 54,072 64,998 75,844
Money Market Accts 53,658 57,056 49,594 44,434 41,871
Savings 65,174 64,134 63,001 59,251 59,859
CDs Less Than $100k 104,808 102,512 98,984 94,923 91,545
CDs Greater than $100k 57,230 55,634 53,502 51,685 50,060
Total Deposits$ 492,936 $ 489,003 $ 496,188 $ 505,168 $ 502,244
Other Liabilities 10,585 11,263 10,695 9,361 11,363
Net Borrowings (Wholesale Funding) - 900 - - -
Total Liabilities$ 503,521 $ 501,166 $ 506,883 $ 514,529 $ 513,607
Total Equity 62,640 61,516 61,304 60,840 52,582
Total Liabilities & Stockholders' Equity$ 566,161 $ 562,682 $ 568,187 $ 575,369 $ 566,189


Ratios
1Q 2014 2Q 20143Q 20144Q 20141Q 2015
ROAA -0.68% -0.67% 0.04% 0.02% -0.07%
ROAE -6.09% -6.00% 0.34% 0.17% -0.66%
NPAs/Assets (Core) 1.84% 1.90% 2.44% 1.92% 1.68%
Tier 1 Leverage 10.97% 10.80% 10.78% 10.05% 8.78%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.42% 3.67% 3.77% 3.68% 3.60%
Cost of Funds 0.27% 0.27% 0.28% 0.28% 0.26%
Loan/Deposit 52.0% 55.7% 55.9% 55.4% 54.5%


Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.