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SouthCrest Financial Group Reports Preliminary 2Q16 Earnings

WOODSTOCK, Ga., July 28, 2016 (GLOBE NEWSWIRE) -- Andrew Borrmann, Chief Financial Officer of SouthCrest Financial Group, Inc. (PinkSheets:SCSG) announced today that the company reported preliminary net income of $11.4 million or $1.36/share for the second quarter ended June 30, 2016. “As we expected, we were able to reverse $10.6 million of the valuation allowance against our deferred tax asset during the second quarter. This has long been the focus of the Company and we are proud to clear another significant hurdle in the ongoing improvement of SouthCrest.” Borrmann continued “The efforts of all our employees to achieve these goals cannot be over emphasized. We continue to improve our operating expenses and now expect the expense run rate to fall under $17.5 million/year during the next several months.”

Core pre-tax earnings for the quarter were $1.4 million. Unusual items during the quarter included $403,000 of securities losses, and $164,000 of one time payments for contract buyouts and incentives. This equates to an approximate 1.0% pre-tax ROA for the quarter. On a core basis, expenses for the quarter were $4.5 million, down from approximately $6.0 million in 2Q15.

Loans were effectively flat and deposits fell approximately 3% during the second quarter. The decline in deposits is due to an update of the service fee schedule that is improving non-interest income by well over $500,000 year. These have been some deposit accounts close due the fee reset, but the Company took this possibility into account when analyzing the potential impact of the change.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank was 9.00%. On a fully converted basis (including the conversion of all preferred equity) TBV/share ended the quarter at $7.25 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 small deferred tax asset valuation allowance related to state taxes that totals approximately $0.06/fully converted share.

Asset quality continued its multi-quarter improvement trend with 2Q16 NPAs/total assets declining to 1.08% of assets. Noncurrent loans/total loans is now just 1.22%, down from 1.97% in the year ago period. Other real estate owned increased slightly from 1Q16 and now stands at $1.77 million.

SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, 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)
2015 2016
Q2
Q3
Q4
Q1
Q2
Interest Income
Loans
Construction and Development $231 $261 $205 $206 $143
Commercial Real Estate 1,374 1,483 1,512 1,465 1,479
Commercial Loans 261 301 275 280 280
Multi Family 26 29 27 26 18
Residential Mortgage 1,464 1,521 1,454 1,415 1,337
Consumer Loans 212 197 178 166 156
County/Municipal Loans 43 59 65 29 28
Loss Share Loans 324 214 140 116 132
Investment Securities
Federal Funds/Overnight Funds $16 $11 $22 $38 $27
Bank Owned CDs 7 7 8 7 8
Investment Securities 960 904 916 1030 1083
Total Interest Income $4,918 $4,987 $4,803 $4,779 $4,685
Total Interest Expense $309 $308 $302 $299 $267
Net Interest Income $4,611 $4,679 $4,501 $4,480 $4,417
Provision for Loan Losses 200 0 150 50 0
Net Interest Income after Loan Losses $4,409 $4,679 $4,351 $4,430 $4,417
Other Income
Service Charges on Deposits $99 $113 $110 $105 $215
NSF/Overdraft Fees 513 543 525 475 515
Other Service Charges 95 78 93 74 79
ATM/Billpay/DR Card Income 392 352 370 293 336
Other Income 1,017 973 475 829 (47)
Total Other Income $2,116 $2,059 $1,535 $1,776 $1,098
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $2,492 $2,419 $2,257 $2,006 $1,772
Employee Benefits 440 424 645 591 360
Occupancy & FF&E Expense 1,004 1,020 919 933 848
Professional Fees 249 206 263 174 209
Data Processing 221 244 321 305 521
OREO and Credit related Exp. 67 156 146 41 36
Other Expense 1,575 1,608 1,409 1,243 927
Total Noninterest Expenses $6,048 $6,077 $5,927 $5,293 $4,673
Pre-Tax Income (Loss) $477 $661 $(36)$913 $842
Income Taxes - - - - (10,592)
Net Income$477 $661 $(36)$913 $11,434
Preferred Dividends$125 $125 $125 $125 $125

Balance Sheet ($000s, Unaudited)
2015 2016
Assets Q2
Q3
Q4
Q1
Q2
Current Assets
Cash & Due from Bank $22,335 $20,355 $44,157 $30,427 $34,838
Federal Funds/Overnight Funds 10,736 14,171 2,186 3,306 569
Bank Owned CDs 1,814 1,815 1,815 1,815 1,716
Investment Securities 179,276 145,247 174,998 191,905 161,177
Mortgage Loans Held for Sale 1,869 3,011 899 0 0
Total Current Assets $216,030 $184,599 $224,055 $227,452 $198,300
Loans
Construction and Development $16,495 $16,165 $16,229 $13,692 $11,285
Commercial Real Estate 106,549 119,888 118,780 116,175 119,419
Commercial Loans 18,646 21,236 21,246 21,296 21,863
Multi Family 2,187 2,152 2,117 1,450 1,419
Residential Mortgage 116,961 116,969 114,803 110,094 107,270
Consumer Loans 11,787 10,814 9,657 7,096 7,977
County/Municipal Loans 7,631 12,293 3,911 3,537 4,501
Loss Share Loans 10,815 10,345 9,543 9,360 7,689
Total Loans $291,071 $309,862 $296,286 $282,700 $281,425
Allowance for Loss (3,263) (2,881) (3,052) (3,021) (2,817)
Net Loans $287,808 $306,981 $293,234 $279,679 $278,608
OREO 3,552 3,331 2,421 1,500 1,769
FDIC Indemnification 503 498 474 419 433
BOLI 19,995 20,130 20,265 20,391 20,548
Fixed Assets, net $18,720 $18,553 $18,214 $17,671 $17,362
Intangible Assets 535 648 618 583 555
Other Assets 6,552 6,339 6,983 6,651 33,982
Total Assets $553,695 $541,079 $566,264 $554,346 $551,557
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $120,659 $114,345 $130,877 $119,343 $112,974
Interest Bearing Demand 53,979 50,965 62,784 61,172 55,248
Celebration Checking 82,246 90,893 97,316 108,076 110,894
Money Market Accts 42,004 41,731 38,643 35,289 33,858
Savings 57,887 56,517 55,550 55,831 53,397
CDs Less Than $100k 88,158 84,510 81,930 79,221 76,301
CDs Greater than $100k 49,697 46,603 44,080 39,576 40,585
Total Deposits $494,630 $485,564 $511,180 $498,508 $483,257
Other Liabilities 6,684 2,414 2,690 1,988 1,919
Net Borrowings (Wholesale Funding) - - - - -
Total Liabilities $501,314 $487,978 $513,870 $500,496 $485,176
Total Equity 52,381 53,101 52,394 53,850 66,381
Total Liabilities & Stockholders' Equity $553,695 $541,079 $566,264 $554,346 $551,557

Ratios
2Q 20153Q 20154Q 20151Q 20162Q 2016
ROAA 0.34% 0.48% -0.01% 0.66% 8.29%
ROAE 3.65% 5.01% -0.10% 6.80% 76.1%
NPAs/Assets (Core) 1.71% 1.68% 1.40% 1.18% 1.08%
Tier 1 Leverage 8.81% 9.12% 8.87% 8.94% 9.42%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.81% 3.76% 3.57% 3.47% 3.59%
Cost of Funds 0.25% 0.25% 0.24% 0.24% 0.22%
Loan/Deposit 58.8% 63.8% 57.9% 56.6% 58.2%
Employees 170 163 153 129 127


Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.