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SouthCrest Financial Group Reports Preliminary 3Q16 Earnings

WOODSTOCK, Ga., Oct. 28, 2016 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (PinkSheets:SCSG) announced today that the company reported preliminary net income of $680,000 or $0.08/share for the third quarter ended September 30, 2016.

“I am excited to report my first quarter of earnings with SouthCrest Bank as the new CEO. My goal is to to push our Company towards higher loan growth, better customer relationships, a higher level of employee satisfaction and higher, more consistent profitability for our shareholders,” Schmitt said.

“To complete this task, we will have some additional one-time items occur for the next few quarters, but expect these adjustments to move our return on assets closer to our long term target of 1.0% after tax.” Schmitt continued.

“Our team has done significant work on the expense side and we will continue to maintain a high level of focus there. With that said, we are now looking to grow loans to improve our returns so we will dedicate additional financial resources to this area going forward. We are also excited to have a new member of the Board of Directors, Dan Broos, join our team and help us push SouthCrest further along this path.”

Core pre-tax earnings for the quarter were $1.3 million, with net unusual items during the quarter totaling $311,000 of pre-tax expenses. This equates to an approximate 0.94% pre-tax ROA for the quarter. On a core basis, expenses for the quarter were $4.4 million, down from approximately $5.9 million in 3Q15.

Deposits were lower, consistent with the seasonality the Company experiences every third quarter. Year over year deposits fell less than 2%, which is well within the expectations of management based on the changes in deposit rates and fees that occurred over the past three quarters.

Loans did decline by 1.2% from 2Q16, but with the refocus on lending directly in the Atlanta market, management expects to make significant progress on balances.

Service fee income, including all deposit fees, NSF/Overdraft and ATM/Card related income was up 12% from 2Q15, an annual run rate increase of over $500,000.

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 $7.27 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 3Q16 NPAs/total assets declining to 0.91% of assets, the lowest level since March, 2008. Other real estate owned decreased from 2Q16 and now stands at just $936,000, down from over $3.3 million in 3Q15.

ABOUT SOUTHCREST
SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, Ga. 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, and online banking services.

FORWARD LOOKING STATEMENTS
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
Q3
Q4
Q1
Q2
Q3
Interest Income
Loans
Construction and Development$261 $205 $206 $143 $153
Commercial Real Estate 1,483 1,512 1,465 1,479 1,537
Commercial Loans 301 275 280 280 276
Multi Family 29 27 26 18 18
Residential Mortgage 1,521 1,454 1,415 1,337 1,289
Consumer Loans 197 178 166 156 139
County/Municipal Loans 59 65 29 28 29
Loss Share Loans 214 140 116 132 132
Investment Securities
Federal Funds/Overnight Funds$11 $22 $38 $27 $42
Bank Owned CDs 7 8 7 8 6
Investment Securities 904 916 1,030 1,083 933
Total Interest Income$4,987 $4,803 $4,779 $4,685 $4,556
Total Interest Expense$308 $302 $299 $267 $246
Net Interest Income$4,679 $4,501 $4,480 $4,417 $4,311
Provision for Loan Losses 0 150 50 0 0
Net Interest Income after Loan Losses $4,679 $4,351 $4,430 $4,417 $4,311
Other Income
Service Charges on Deposits$113 $110 $105 $215 $245
NSF/Overdraft Fees 543 525 475 515 575
Other Service Charges 78 93 74 79 96
ATM/Billpay/DR Card Income 352 370 293 336 302
Other Income 973 475 829 (47) 339
Total Other Income$2,059 $1,535 $1,776 $1,098 $1,560
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$2,419 $2,257 $2,006 $1,772 $1,705
Employee Benefits 424 645 591 360 707
Occupancy & FF&E Expense 1,020 919 933 848 860
Professional Fees 206 263 174 209 212
Data Processing 244 321 305 521 536
OREO and Credit related Exp. 156 146 41 36 36
Other Expense 1,608 1,409 1,243 927 724
Total Noninterest Expenses$6,077 $5,927 $5,293 $4,673 $4,917
Pre-Tax Income (Loss)$661 $ (36) $913 $842 $954
Income Taxes - - - (10,592) 274
Net Income$661 $ (36) $913 $11,434 $680
Preferred Dividends$125 $125 $125 $125 $125
Balance Sheet ($000s, Unaudited)
2015
2016
AssetsQ3
Q4
Q1
Q2
Q3
Current Assets
Cash & Due from Bank$20,355 $44,157 $30,427 $34,838 $31,268
Federal Funds/Overnight Funds 14,171 2,186 3,306 569 0
Bank Owned CDs 1,815 1,815 1,815 1,716 1,218
Investment Securities 145,247 174,998 191,905 161,177 182,614
Mortgage Loans Held for Sale 3,011 899 0 0 0
Total Current Assets$184,599 $224,055 $227,452 $198,300 $215,100
Loans
Construction and Development$16,165 $16,229 $13,692 $11,285 $9,776
Commercial Real Estate 119,888 118,780 116,175 119,419 121,609
Commercial Loans 21,236 21,246 21,296 21,863 21,247
Multi Family 2,152 2,117 1,450 1,419 1,401
Residential Mortgage 116,969 114,803 110,094 107,270 102,512
Consumer Loans 10,814 9,657 7,096 7,977 7,363
County/Municipal Loans 12,293 3,911 3,537 4,501 6,456
Loss Share Loans 10,345 9,543 9,360 7,689 7,589
Total Loans$309,862 $296,286 $282,700 $281,425 $277,952
Allowance for Loss (2,881) (3,052) (3,021) (2,817) (2,701)
Net Loans$306,981 $293,234 $279,679 $278,608 $275,251
OREO 3,331 2,421 1,500 1,769 936
FDIC Indemnification 498 474 419 433 425
BOLI 20,130 20,265 20,391 20,548 20,683
Fixed Assets, net$18,553 $18,214 $17,671 $17,362 $16,967
Intangible Assets 648 618 583 555 507
Other Assets 6,339 6,983 6,651 33,982 16,476
Total Assets$541,079 $566,264 $554,346 $551,557 $546,385
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$114,345 $130,877 $119,343 $112,974 $111,290
Interest Bearing Demand 50,965 62,784 61,172 55,248 54,552
Celebration Checking 90,893 97,316 108,076 110,894 111,544
Money Market Accts 41,731 38,643 35,289 33,858 33,956
Savings 56,517 55,550 55,831 53,397 52,061
CDs Less Than $100k 84,510 81,930 79,221 76,301 73,964
CDs Greater than $100k 46,603 44,080 39,576 40,585 39,832
Total Deposits$485,564 $511,180 $498,508 $483,257 $477,388
Other Liabilities 2,414 2,690 1,988 1,919 2,281
Net Borrowings (Wholesale Funding) - - - - 317
Total Liabilities$487,978 $513,870 $500,496 $485,176 $479,797
Total Equity 53,101 52,394 53,850 66,381 66,548
Total Liabilities & Stockholders' Equity$541,079 $566,264 $554,346 $551,557 $546,345
Ratios
3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016*
ROAA 0.48% -0.01% 0.66% 8.29% 0.53%
ROAE 5.01% -0.10% 6.80% 76.1% 4.74%
NPAs/Assets (Core) 1.68% 1.40% 1.18% 1.08% 0.91%
Est. Tier 1 Leverage 9.12% 8.87% 8.94% 9.54% 9.84%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,380,337
NIM 3.76% 3.57% 3.47% 3.59% 3.59%
Cost of Funds 0.25% 0.24% 0.24% 0.22% 0.20%
Loan/Deposit 63.8% 57.9% 56.6% 58.2% 58.2%
Employees 163 153 129 127 123
*3Q2016 ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery.

Contact: Andrew Bowen, APR ab@clearviewcom.com 404-822-3309 Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.