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SouthCrest Financial Group Reports Preliminary 3Q15 Earnings

PEACHTREE CITY, Ga., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary net income for the third quarter of 2015 of $661,000 or $0.08 per share. “In the third quarter we continued to show the momentum on loan growth and expense control that have been our primary areas of focus throughout the year. While the expense levels were flat with 2Q15, the third quarter results include the one time buyout of several contracts that totaled $160,000. These buyouts will have an average breakeven period of under nine months.”

“Also, in our second quarter earnings release we estimated cost savings over the following 12 months of $3 million. We are increasing this estimate to $3.5 million by the end of 2Q16. We believe this two front attack on expenses and loan growth, if successful, will drive real improvements in 2016 profitability.”

Loan growth in 2Q15 was extremely strong with $19 million of organic loan growth (26% linked quarter annualized). This was above our expectations and will likely be the best loan growth quarter for the foreseeable future. Approximately half of the production was in C&I and owner occupied CRE. At this time we believe loans will be flattish during the fourth quarter due to annual pay downs in loans to municipalities.

Deposits were down during the quarter which is a seasonally driven effect for SouthCrest due to municipal deposits in our rural communities. The fourth quarter is usually the strongest quarter for deposits due to tax receipts for the municipalities and Management expects to see this effect again this year.

During the quarter the Company completed one of two planned office relocations, combining the Alpharetta, Cumming and Johns Creek operations into one new commercial branch in Cumming GA. This transition improves the growth potential for this branch as well as saving the company over $250,000/year starting in November. We were also able to buyout a substantial portion of our telecom contracts saving nearly $250,000/year starting in October/November.

The Company did take $150,000 of security gains during the quarter, effectively offsetting the impact of the contract buyout charges.

The estimated Tier 1 Leverage ratio at the end of the quarter was 9.12%. On a fully converted basis (including the conversion of all preferred equity) TBV/share ended the quarter at $5.66 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 $1.37/fully converted share.

Asset quality remained stable with 2Q15 at 1.68% NPAs/total assets.

SouthCrest Financial Group, Inc. is a $540 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 a full suite of 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
Q3Q4Q1Q2Q3
Interest Income
Loans
Construction and Development$262 $216 $219 $231 $261
Commercial Real Estate 1,297 1,371 1,274 1,374 1,483
Commercial Loans 214 319 245 261 301
Multi Family 14 17 20 26 29
Residential Mortgage 1,518 1,408 1,354 1,464 1,521
Consumer Loans 305 267 241 212 197
County/Municipal Loans 34 42 36 43 59
Loss Share Loans 200 194 169 324 214
Investment Securities
Federal Funds/Overnight Funds$ 20 $ 35 $ 22 $ 16 $ 11
Bank Owned CDs 6 4 8 7 7
Investment Securities 975 971 1,058 960 904
Total Interest Income $ 4,845 $ 4,844 $ 4,646 $ 4,918 $ 4,987
Total Interest Expense $ 348 $ 347 $ 329 $ 309 $ 308
Net Interest Income $ 4,497 $ 4,497 $ 4,320 $ 4,611 $ 4,679
Provision for Loan Losses 75 95 239 200 0
Net Interest Income after Loan Losses $ 4,422 $ 4,402 $ 4,078 $ 4,409 $ 4,679
Other Income
Service Charges on Deposits$ 102 $ 106 $ 99 $ 99 $ 113
NSF/Overdraft Fees 626 603 480 513 543
Other Service Charges 96 91 82 95 78
ATM/Billpay/DR Card Income 403 402 408 392 352
Other Income 1,775 1,270 1,028 1,017 973
Total Other Income $ 3,002 $ 2,472 $ 2,097 $ 2,116 $ 2,059
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$ 2,720 $ 2,529 $ 2,610 $ 2,492 $ 2,419
Employee Benefits 571 432 672 440 424
Occupancy & FF& E Expense 920 1,023 935 1,004 1,020
Professional Fees 419 293 229 249 206
Data Processing 295 306 282 221 244
OREO and Credit related Exp. -35 287 230 67 156
Other Expense 2,474 1,978 1,613 1,575 1,608
Total Noninterest Expenses $ 7,364 $ 6,848 $ 6,571 $ 6,048 $ 6,077
Pre-Tax Income (Loss) $ 60 $ 26 $ (396)$ 477 $ 661
Income Taxes - - - - -
Net Income$ 60 $ 26 $ (396)$ 477 $ 661
Balance Sheet
($000s, Unaudited)
2014 2015
AssetsQ3Q4Q1Q2Q3
Current Assets
Cash & Due from Bank$ 18,238 $ 16,991 $ 34,459 $ 22,335 $ 20,355
Federal Funds/Overnight Funds 50,260 34,182 17,067 10,736 14,171
Bank Owned CDs 2,231 2,974 1,814 1,814 1,815
Investment Securities 164,971 190,864 188,864 179,276 145,247
Mortgage Loans Held for Sale 5,376 932 3,985 1,869 3,011
Total Current Assets$ 241,076 $ 245,943 $ 246,189 $ 216,030 $ 184,599
Loans
Construction and Development$ 13,489 $ 15,187 $ 15,218 $ 16,495 $ 16,165
Commercial Real Estate 105,664 104,493 102,069 106,549 119,888
Commercial Loans 16,817 17,399 17,679 18,646 21,236
Multi Family 1,112 1,589 1,543 2,187 2,152
Residential Mortgage 107,234 110,347 105,021 116,961 116,969
Consumer Loans 15,345 14,215 12,790 11,787 10,814
County/Municipal Loans 5,110 4,343 5,178 7,631 12,293
Loss Share Loans 12,407 12,447 10,837 10,815 10,345
Total Loans$ 277,178 $ 280,020 $ 270,334 $ 291,071 $ 309,862
Allowance for Loss (3,723) (3,675) (3,121) (3,263) (2,881)
Net Loans$ 273,455 $ 276,345 $ 267,213 $ 287,808 $ 306,981
OREO 5,320 4,473 4,284 3,552 3,331
FDIC Indemnification 1,685 1,537 1,089 503 498
BOLI 19,574 19,710 19,834 19,995 20,130
Fixed Assets, net 19,503 $ 19,255 $ 18,978 $ 18,720 $ 18,553
Intangible Assets 657 583 573 535 648
Other Assets 6,917 7,523 7,964 6,552 6,339
Total Assets$ 568,187 $ 575,369 $ 566,124 $ 553,695 $ 541,079
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$ 122,374 $ 125,699 $ 121,381 $ 120,659 $ 114,345
Interest Bearing Demand 54,661 64,178 61,685 53,979 50,965
Celebration Checking 54,072 64,998 75,844 82,246 90,893
Money Market Accts 49,594 44,434 41,871 42,004 41,731
Savings 63,001 59,251 59,859 57,887 56,517
CDs Less Than $100k 98,984 94,923 91,545 88,158 84,510
CDs Greater than $100k 53,502 51,685 50,060 49,697 46,603
Total Deposits$ 496,188 $ 505,168 $ 502,245 $ 494,630 $ 485,564
Other Liabilities 10,695 9,361 11,363 6,684 2,414
Net Borrowings (Wholesale Funding) - - - - -
Total Liabilities$ 506,883 $ 514,529 $ 513,607 $ 501,314 $ 487,978
Total Equity 61,304 60,840 52,517 52,381 53,101
Total Liabilities & Stockholders' Equity$ 568,187 $ 575,369 $ 566,124 $ 553,695 $ 541,079
Ratios
3Q 20144Q 20141Q 20152Q 20153Q 2015
ROAA 0.04% 0.02% -0.07% 0.34% 0.48%
ROAE 0.34% 0.17% -0.66% 3.65% 5.01%
NPAs/Assets (Core) 2.44% 1.92% 1.68% 1.71% 1.68%
Tier 1 Leverage 10.78% 10.05% 8.78% 8.81% 9.12%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.77% 3.68% 3.60% 3.81% 3.76%
Cost of Funds 0.28% 0.28% 0.26% 0.25% 0.25%
Loan/Deposit 55.9% 55.4% 54.5% 58.8% 63.8%
Employees 190 187 172 170 163

Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.