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SouthCrest Financial Group Reports Preliminary 1Q17 Earnings

WOODSTOCK, Ga., April 20, 2017 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary net income of $930,000 or $0.11/share for the first quarter ended March 31, 2017.

“I think the first quarter’s results are a good barometer of where the Company stands. On a net basis our core earnings and un-adjusted earnings are effectively the same. We were excited to recently announce the dividend expense savings created by the final Series A and Series B Preferred share redemption (former TARP shares), and we are starting to see the impact of recent Atlanta metro region lending hires as we get ready to move into our Midtown headquarters during May,” Schmitt said.

“Unfortunately, we did have a delay in the closing of our Alabama branch sale due to regulatory schedules,” Schmitt continued. “This is a top focus of senior management, and we are very confident that the deal will be completed even if the timeline has been stretched.

“The Company has two former locations in OREO and awaiting sale, which could cause additional one-time expenses during the next several quarters. Outside of that, management continues to push on expenses while taking the next steps to improve the loan book and overall profitability of the Bank. Our long term profitability target, which could be hit on a quarterly basis as early as late 2018, remains 1.0% ROAA,” Schmitt added.

Core pre-tax earnings for the quarter were $1.36 million, with net unusual items during the quarter totaling $32,000 of pre-tax income. On a core basis, expenses for the quarter were $4.4 million, flat with the past few quarters, but down over 15% from 1Q16.

Loan balances were down less than 1% from 4Q16 and up 3% from 1Q16, with the weakness in growth due to a slow start to the quarter combining with the welcome payoff of the largest substandard loan in the portfolio at no loss. Activity late in the quarter improved and should lead to a good second quarter result. The Company continues to look for additional bankers who can drive both loan and deposit growth in the metro Atlanta area.

Deposits were lower year over year and linked quarter by 2%, which was consistent with historic seasonality. Overall deposit mix continues to improve with balances in transaction accounts up 3% year over year, with a 7% year over year decline in CD balances.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.82% as a result of the $3.9 million dividend to the holding company as part of the preparation to redeem the former TARP shares. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.19 per share. This metric will continue to be influenced by OCI changes resulting from the swings in interest rates. Currently, the negative impact to TBV by OCI is $0.13/share. 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 remained solid with the aforementioned payoff of a nearly $3 million substandard loan. The Company maintains $2.1 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Excluding these buildings, 1Q17 NPAs/total assets was flat at 0.84% of assets, including the buildings the number level was 1.23%. Excluding the impact of the Bank buildings in OREO, OREO balances were down to $499,000.

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, GA until May 2017, at which time it will relocate the Bank and Financial Group headquarters to Atlanta. 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)
2016
2017
Q1Q2Q3Q4Q1
Interest Income
Loans
Construction and Development$206$143 $153$150 $197
Commercial Real Estate 1,465 1,479 1,537 1,645 1,691
Commercial Loans 280 280 276 291 316
Multi Family 26 18 18 31 27
Residential Mortgage 1,415 1,337 1,289 1,230 1,190
Consumer Loans 166 156 139 122 117
County/Municipal Loans 29 28 29 42 25
Loss Share Loans 116 132 132 119 111
Investment Securities
Federal Funds/Overnight Funds$ 38$ 27 $ 42$ 28 $ 58
Bank Owned CDs 7 8 6 6 5
Investment Securities 1,030 1,083 933 1039 967
Total Interest Income $ 4,779$ 4,685 $ 4,556$ 4,703 $ 4,705
Total Interest Expense $ 299$ 267 $ 246$ 247 $ 249
Net Interest Income $ 4,480$ 4,417 $ 4,311$ 4,456 $ 4,456
Provision for Loan Losses 50 0 0 94 106
Net Interest Income after Loan Losses $ 4,430$ 4,417 $ 4,311$ 4,362 $ 4,349
Other Income
Service Charges on Deposits$ 105$ 215 $ 245$ 228 $ 216
NSF/Overdraft Fees 475 515 575 542 488
Other Service Charges 74 79 96 83 75
ATM/Billpay/DR Card Income 293 336 302 303 296
Other Income 829 (47) 339 (386) 451
Total Other Income $ 1,776$ 1,098 $ 1,560$ 768 $ 1,526
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$ 2,006$ 1,772 $ 1,705$ 2,014 $ 1,799
Employee Benefits 591 360 707 463 438
Occupancy & FF&E Expense 933 848 860 764 739
Professional Fees 174 209 212 190 190
Data Processing 305 521 536 525 498
OREO/Credit related Exp. 41 36 36 36 50
Other Expense 1,243 927 861 694 766
Total Noninterest Expenses $5,293$4,673 $ 4,917$4,687 $4,480
Pre-Tax Income (Loss) $913$842 $ 954$443 $1,395
Income Taxes - (10,592) 274 128 465
Net Income$913$11,434 $ 680$315 $ 930
Preferred Dividends$125$125 125$125 $125
Balance Sheet ($000s, Unaudited)
20162017
AssetsQ1Q2Q3Q4Q1
Current Assets
Cash & Due from Bank$ 30,427 $ 34,838 $ 31,268 $ 33,015 $ 41,302
Federal Funds/Overnight Funds 3,306 569 0 4,299 6,688
Bank Owned CDs 1,815 1,716 1,218 1,069 1,069
Investment Securities 191,905 161,177 182,614 176,723 152,583
Mortgage Loans Held for Sale 0 0 0 0 0
Total Current Assets$ 227,452 $ 198,300 $ 215,100 $ 215,106 $ 201,642
Loans
Construction and Development$ 13,692 $ 11,285 $ 9,776 $ 15,159 $ 12,486
Commercial Real Estate 116,175 119,419 121,609 138,155 140,003
Commercial Loans 21,296 21,863 21,247 23,462 23,923
Multi Family 1,450 1,419 1,401 2,281 2,093
Residential Mortgage 110,094 107,270 102,512 97,194 98,302
Consumer Loans 7,096 7,977 7,363 6,893 6,117
County/Municipal Loans 3,537 4,501 6,456 3,387 2,999
Loss Share Loans 9,360 7,689 7,589 7,123 6,626
Total Loans$ 282,700 $ 281,425 $ 277,952 $ 293,654 $ 292,549
Allowance for Loss (3,021) (2,817) (2,701) (2,766) (2,797)
Net Loans$ 279,679 $ 278,608 $ 275,251 $ 290,888 $ 289,752
OREO 1,500 1,769 936 3,581 2,728
FDIC Indemnification 419 433 425 304 238
BOLI 20,391 20,548 20,683 20,816 20,947
Fixed Assets, net$ 17,671 $ 17,362 $ 16,967 $ 13,717 $ 13,429
Intangible Assets 583 555 507 468 420
Other Assets 6,651 33,982 16,476 17,953 17,428
Total Assets$ 554,346 $ 551,557 $ 546,385 $ 562,833 $ 546,584
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$ 119,343 $ 112,974 $ 111,290 $ 125,459 $ 112,286
Interest Bearing Demand 61,172 55,248 54,552 65,654 63,949
Celebration Checking 108,076 110,894 111,544 112,355 113,548
Money Market Accts 35,289 33,858 33,956 32,271 27,942
Savings 55,831 53,397 52,061 50,495 51,304
CDs Less Than $100k 79,221 76,301 73,964 72,091 70,020
CDs Greater than $100k 39,576 40,585 39,832 38,922 39,966
Total Deposits$ 498,508 $ 483,257 $ 477,388 $ 497,247 $ 479,018
Other Liabilities 1,988 1,919 2,281 1,252 1,632
Net Borrowings (Wholesale Funding) - - 317 - -
Total Liabilities$ 500,496 $485,176 $479,797 $498,499 $480,650
Total Equity 53,850 66,381 66,548 64,334 65,934
Total Liabilities & Stockholders' Equity$554,346 $551,557 $546,345 $562,833 $546,584
Ratios
1Q 2016 2Q 2016 3Q 2016* 4Q 2016* 1Q 2017*
ROAA 0.66% 8.29% 0.53% 0.22% 0.72%
ROAE 6.80% 76.1% 4.74% 1.96% 6.52%
NPAs/Assets (Core) 1.18% 1.08% 0.91% 0.83% 0.84%
Est. Tier 1 Leverage 8.94% 9.54% 9.84% 9.73% 10.09%
Total Common Equiv. Shares 8,380,337 8,380,337 8,380,337 8,389,954 8,389,954
NIM 3.47% 3.59% 3.59% 3.67% 3.72%
Cost of Funds 0.24% 0.22% 0.20% 0.20% 0.21%
Loan/Deposit 56.6% 58.2% 58.2% 59.0% 60.3%
Employees 129 127 123 122 122
*3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery.

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

Source:SouthCrest Financial Group, Inc.