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SouthCrest Financial Group Reports Preliminary 4Q15 Earnings

PEACHTREE CITY, Ga., Feb. 09, 2016 (GLOBE NEWSWIRE) -- Andrew Borrmann, Chief Financial Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary net income of -$36,000 or $0.00/share. Core net income for the fourth quarter of 2015 was $509,000 or $0.06 per share prior to $545,000 one-time items including $416,000 in severance. Mr. Borrmann said, “In the fourth quarter we furthered our cost control efforts, bringing down core expenses to a run rate under $22 million/year in December. At this time we believe the run rate entering 3Q16 will be under $18 million/year due to additional technology, occupancy, and personnel savings. Most of the personnel savings will come from the elimination of the mortgage division, which was effectively break even during 2015. Mortgage produced just under $250,000 in gain on sale in 4Q. We believe 2016 will be slightly better on a net income basis without the division.” Speaking on the balance sheet Borrmann said, “The decline in loans was disappointing and more than we were projecting. We did see the expected growth in deposits versus the third quarter and the overall mix continues to shift away from CD’s into core categories.”

Loan growth in 4Q15 was weak with a decline of $13.6 million from 3Q15 with tax revenue related loans to municipalities falling by $8.4 million. The municipal related decline was expected, however traditional commercial lending was weaker than projected as pricing competition remained substantial. Total loan balances were up 6% year over year.

Deposits were up significantly during the quarter with a continued improvement in the product mix and cost of funds. This is a seasonal effect for SouthCrest due to municipal deposits in our rural communities. Year over year deposits increased by 1%, with transaction accounts increasing to 57% of total deposits from 50% at the end of 2014. Time deposits declined over the same period from 29% of deposits to 25% of deposits.

The estimated Tier 1 Leverage ratio at the end of the quarter was 8.87%. On a fully converted basis (including the conversion of all preferred equity) TBV/share ended the quarter at $5.59 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 $1.36/fully converted share.

Asset quality improved from 3Q15 with NPAs/total assets declining by 28 basis points to 1.40%. This was primarily due to the sale of the Company’s largest single OREO property during the quarter. Other real estate owned fell 46% year over year and now stands at $2.4 million.

SouthCrest Financial Group, Inc. is a $565 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, 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
Q4 Q1 Q2 Q3 Q4
Interest Income
Loans
Construction and Development$216 $219 $231 $261 $205
Commercial Real Estate 1,371 1,274 1,374 1,483 1,512
Commercial Loans 319 245 261 301 275
Multi Family 17 20 26 29 27
Residential Mortgage 1,408 1,354 1,464 1,521 1,454
Consumer Loans 267 241 212 197 178
County/Municipal Loans 42 36 43 59 65
Loss Share Loans 194 169 324 214 140
Investment Securities
Federal Funds/Overnight Funds$35 $22 $16 $11 $22
Bank Owned CDs 4 8 7 7 8
Investment Securities 971 1,058 960 904 916
Total Interest Income$4,844 $4,646 $4,918 $4,987 $4,803
Total Interest Expense$347 $329 $309 $308 $302
Net Interest Income$4,497 $4,320 $4,611 $4,679 $4,501
Provision for Loan Losses 95 239 200 0 150
Net Interest Income after Loan Losses$4,402 $4,078 $4,409 $4,679 $4,351
Other Income
Service Charges on Deposits$106 $99 $99 $113 $110
NSF/Overdraft Fees 603 480 513 543 525
Other Service Charges 91 82 95 78 93
ATM/Billpay/DR Card Income 402 408 392 352 370
Other Income 1,270 1,028 1,017 973 475
Total Other Income$2,472 $2,097 $2,116 $2,059 $1,535
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$2,529 $2,610 $2,492 $2,419 $2,257
Employee Benefits 432 672 440 424 645
Occupancy & FF&E Expense 1,023 935 1,004 1,020 919
Professional Fees 293 229 249 206 263
Data Processing 306 282 221 244 321
OREO and Credit related Exp. 287 230 67 156 146
Other Expense 1,978 1,613 1,575 1,608 1,409
Total Noninterest Expenses$6,848 $6,571 $6,048 $6,077 $5,927
Pre-Tax Income (Loss)$26 $(396)$477 $661 $(36)
Income Taxes - - - - -
Net Income$26 $(396)$477 $661 $(36)

Balance Sheet
($000s, Unaudited)
2014
2015
Assets Q4 Q1 Q2 Q3 Q4
Current Assets
Cash & Due from Bank$16,991 $34,459 $22,335 $20,355 $44,157
Federal Funds/Overnight Funds 34,182 17,067 10,736 14,171 2,186
Bank Owned CDs 2,974 1,814 1,814 1,815 1,815
Investment Securities 190,864 188,864 179,276 145,247 174,998
Mortgage Loans Held for Sale 932 3,985 1,869 3,011 899
Total Current Assets$245,943 $246,189 $216,030 $184,599 $224,055
Loans
Construction and Development$15,187 $15,218 $16,495 $16,165 $16,229
Commercial Real Estate 104,493 102,069 106,549 119,888 118,780
Commercial Loans 17,399 17,679 18,646 21,236 21,246
Multi Family 1,589 1,543 2,187 2,152 2,117
Residential Mortgage 110,347 105,021 116,961 116,969 114,803
Consumer Loans 14,215 12,790 11,787 10,814 9,657
County/Municipal Loans 4,343 5,178 7,631 12,293 3,911
Loss Share Loans 12,447 10,837 10,815 10,345 9,543
Total Loans$280,020 $270,334 $291,071 $309,862 $296,286
Allowance for Loss (3,675) (3,121) (3,263) (2,881) (3,052)
Net Loans$276,345 $267,213 $287,808 $306,981 $293,234
OREO 4,473 4,284 3,552 3,331 2,421
FDIC Indemnification 1,537 1,089 503 498 474
BOLI 19,710 19,834 19,995 20,130 20,265
Fixed Assets, net$19,255 $18,978 $18,720 $18,553 $18,214
Intangible Assets 583 573 535 648 618
Other Assets 7,523 7,964 6,552 6,339 6,983
Total Assets$575,369 $566,124 $553,695 $541,079 $566,264
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$125,699 $121,381 $120,659 $114,345 $130,877
Interest Bearing Demand 64,178 61,685 53,979 50,965 62,784
Celebration Checking 64,998 75,844 82,246 90,893 97,316
Money Market Accts 44,434 41,871 42,004 41,731 38,643
Savings 59,251 59,859 57,887 56,517 55,550
CDs Less Than $100k 94,923 91,545 88,158 84,510 81,930
CDs Greater than $100k 51,685 50,060 49,697 46,603 44,080
Total Deposits$505,168 $502,245 $494,630 $485,564 $511,180
Other Liabilities 9,361 11,363 6,684 2,414 2,690
Net Borrowings (Wholesale Funding) - - - - -
Total Liabilities$514,529 $513,607 $501,314 $487,978 $513,870
Total Equity 60,840 52,517 52,381 53,101 52,394
Total Liabilities & Stockholders' Equity$575,369 $566,124 $553,695 $541,079 $566,264

Ratios
4Q 20141Q 20152Q 20153Q 20154Q 2015
ROAA 0.02% -0.07% 0.34% 0.48% -0.01%
ROAE 0.17% -0.66% 3.65% 5.01% -0.10%
NPAs/Assets (Core) 1.92% 1.68% 1.71% 1.68% 1.40%
Tier 1 Leverage 10.05% 8.78% 8.81% 9.12% 8.87%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.68% 3.60% 3.81% 3.76% 3.57%
Cost of Funds 0.28% 0.26% 0.25% 0.25% 0.24%
Loan/Deposit 55.4% 54.5% 58.8% 63.8% 57.9%
Employees 187 172 170 163 153


Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.