SouthCrest Financial Group Reports Preliminary 4Q16 Earnings

WOODSTOCK, Ga., Jan. 25, 2017 (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 $315,000 or $0.04/share for the fourth quarter ended Dec. 31, 2016.

“We continue to push towards our long term profit goals after what I view as a very successful fourth quarter for SouthCrest. We grew loans by over 20% annualized, we absorbed the cost of selling two newly closed locations, and we continue to make progress towards better customer relationships, a higher level of employee satisfaction and higher, more consistent profitability for our shareholders,” Schmitt said.

“The quarter included one-time, pre-tax expenses of approximately $700,000,” Schmitt continued. “This was primarily due to the sale of two buildings and costs related to benefits and incentive plans. Excluding these one-time expenses, earnings for the quarter would have been $0.10/share.

“While we may have additional one-time expenses during the next few quarters as a result of additional building sales to improve our facilities costs, the goal is to have each individual sale meet a two-year earn-back hurdle,” Schmitt added. “At this time, we believe the largest of the potential losses have occurred, but we will use the two-year period to make each decision.”

Core pre-tax earnings for the quarter were $1.14 million, with net unusual items during the quarter totaling $700,000 of pre-tax expenses. On a core basis, expenses for the quarter were $4.4 million, flat with 3Q16 and down from approximately $5.6 million in 4Q15. The Company continues to have a long-term ROA target of 1.0% after tax.

Loan growth was very strong, with balances increasing by nearly $16 million from 3Q16, a 23% annualized rate. The Company added one new lender during the quarter, but actually achieved the loan growth with two fewer lenders net than the Company had in 3Q16. Management currently expects significant loan growth to continue, although perhaps at a slightly slower pace than in the fourth quarter. The Company is also currently targeting additional lending hires for the metro Atlanta market in 1Q17.

Deposits were lower year over year by 3%, which was primarily a result of an upwardly adjusted fee schedule and deposit pricing discipline. Deposits increased from 3Q16 by over 4% or 17% annualized, which is consistent with historic seasonality. Balances in DDAs and interest bearing checking increased 4% year over year, with a 12% year over year decline in CD balances.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank was 9.20%. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.06 per share, with the decline completely driven by the decrease in the investment portfolio that occurred late in the quarter. The current fully converted share count at the end of the quarter is 8.39 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, however the Company did move $2.8 million of bank buildings that are projected to be sold over the next several months to OREO. Excluding these buildings 4Q16 NPAs/total assets declining to 0.83% of assets, including the buildings, the number level was 1.33%. The sale of two of these buildings is expected to occur in 1Q17. Excluding the impact of the Bank building OREO, NPAs stood at the lowest level since March, 2008, with OREO totaling only $667,000.

ABOUT SOUTHCREST
SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, Ga. The company operates a 10 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
Q4 Q1 Q2 Q3 Q4
Interest Income
Loans
Construction and Development$205 $206 $143 $153 $150
Commercial Real Estate 1,512 1,465 1,479 1,537 1,645
Commercial Loans 275 280 280 276 291
Multi Family 27 26 18 18 31
Residential Mortgage 1,454 1,415 1,337 1,289 1,230
Consumer Loans 178 166 156 139 122
County/Municipal Loans 65 29 28 29 42
Loss Share Loans 140 116 132 132 119
Investment Securities
Federal Funds/Overnight Funds$22 $38 $27 $42 $28
Bank Owned CDs 8 7 8 6 6
Investment Securities 916 1,030 1,083 933 1039
Total Interest Income $4,803 $4,779 $4,685 $4,556 $4,703
Total Interest Expense $302 $299 $267 $246 $247
Net Interest Income $4,501 $4,480 $4,417 $4,311 $4,456
Provision for Loan Losses 150 50 0 0 94
Net Interest Income after Loan Losses $4,351 $4,430 $4,417 $4,311 $4,362
Other Income
Service Charges on Deposits$110 $105 $215 $245 $228
NSF/Overdraft Fees 525 475 515 575 542
Other Service Charges 93 74 79 96 83
ATM/Billpay/DR Card Income 370 293 336 302 303
Other Income 475 829 (47) 339 -386
Total Other Income $1,573 $1,776 $1,098 $1,560 $768
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$2,257 $2,006 $1,772 $1,705 $2,014
Employee Benefits 645 591 360 707 463
Occupancy & FF&E Expense 919 933 848 860 764
Professional Fees 263 174 209 212 190
Data Processing 321 305 521 536 525
OREO/Credit related Exp. 146 41 36 36 36
Other Expense 1,409 1,243 927 861 694
Total Noninterest Expenses$5,960 $5,293 $4,673 $4,917 $4,687
Pre-Tax Income (Loss) ($36) $913 $842 $954 $443
Income Taxes - - (10,592) 274 128
Net Income($36) $913 $11,434 $680 $315
Preferred Dividends$125 $125 $125 $125 $125
Balance Sheet ($000s, Unaudited)
2015 2016
AssetsQ4 Q1 Q2 Q3 Q4
Current Assets
Cash & Due from Bank$44,157 $30,427 $34,838 $31,268 $33,015
Federal Funds/Overnight Funds 2,186 3,306 569 0 4,299
Bank Owned CDs 1,815 1,815 1,716 1,218 1,069
Investment Securities 174,998 191,905 161,177 182,614 176,723
Mortgage Loans Held for Sale 899 0 0 0 0
Total Current Assets$224,055 $227,452 $198,300 $215,100 $215,106
Loans
Construction and Development$16,229 $13,692 $11,285 $9,776 $15,159
Commercial Real Estate 118,780 116,175 119,419 121,609 138,155
Commercial Loans 21,246 21,296 21,863 21,247 23,462
Multi Family 2,117 1,450 1,419 1,401 2,281
Residential Mortgage 114,803 110,094 107,270 102,512 97,194
Consumer Loans 9,657 7,096 7,977 7,363 6,893
County/Municipal Loans 3,911 3,537 4,501 6,456 3,387
Loss Share Loans 9,543 9,360 7,689 7,589 7,123
Total Loans$296,286 $282,700 $281,425 $277,952 $277,952
Allowance for Loss (3,052) (3,021) (2,817) (2,701) (2,766)
Net Loans$293,234 $279,679 $278,608 $275,251 $290,888
OREO 2,421 1,500 1,769 936 3,581
FDIC Indemnification 474 419 433 425 304
BOLI 20,265 20,391 20,548 20,683 20,816
Fixed Assets, net$18,214 $17,671 $17,362 $16,967 $13,717
Intangible Assets 618 583 555 507 468
Other Assets 6,983 6,651 33,982 16,476 17,953
Total Assets$566,264 $554,346 $551,557 $546,385 $562,833
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$130,877 $119,343 $112,974 $111,290 $125,459
Interest Bearing Demand 62,784 61,172 55,248 54,552 65,654
Celebration Checking 97,316 108,076 110,894 111,544 112,355
Money Market Accts 38,643 35,289 33,858 33,956 32,271
Savings 55,550 55,831 53,397 52,061 50,495
CDs Less Than $100k 81,930 79,221 76,301 73,964 72,091
CDs Greater than $100k 44,080 39,576 40,585 39,832 38,922
Total Deposits$511,180 $498,508 $483,257 $477,388 $497,247
Other Liabilities 2,690 1,988 1,919 2,281 1,252
Net Borrowings (Wholesale Funding) - - - 317 -
Total Liabilities$513,870 $500,496 $485,176 $479,797 $498,499
Total Equity 52,394 53,850 66,381 66,548 64,334
Total Liabilities & Stockholders' Equity$566,264 $554,346 $551,557 $546,345 $562,833
Ratios
4Q 2015 1Q 2016 2Q 2016 3Q 2016* 4Q 2016*
ROAA -0.01% 0.66% 8.29% 0.53% 0.22%
ROAE -0.1% 6.8% 76.1% 4.74% 1.96%
NPAs/Assets (Core) 1.4% 1.18% 1.08% 0.91% 0.83%
Est. Tier 1 Leverage 8.87% 8.94% 9.54% 9.84% 9.73%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,380,337 8,389,954
NIM 3.57% 3.47% 3.59% 3.59% 3.67%
Cost of Funds 0.24% 0.24% 0.22% 0.20% 0.20%
Loan/Deposit 57.9% 56.6% 58.2% 58.2% 59.0%
Employees 153 129 127 123 122
*3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery.

Contact: Andy Borrmann Chief Financial Officer 678.734.3505

Source:SouthCrest Financial Group, Inc.