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SouthCrest Financial Group Reports preliminary 2Q17 earnings: Net income over $1M

ATLANTA, July 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 $1.02M or $0.12/share for the second quarter ended June 30, 2017.

“As planned, both SouthCrest Bank and SouthCrest Financial Group are now operating out of our new headquarters in midtown Atlanta, and we intend for our loan and deposit growth in the core Atlanta market to grow substantially,” said Schmitt. “Now with our four locations in and around Atlanta, we will focus strategically on having 50% of our total assets and 25% of our deposits in what we consider the core 13 counties at the center of the MSA.

“As of the end of June, we had 37% of our loans and 12% of our deposits in these counties. We are on track for planned future growth,” Schmitt explained. “These will be the metrics we will use to track the success of our Atlanta growth initiative.

“Tangible book value grew to $7.41/share, up over $0.20 from the end of March. Total loans grew 6.5% year over year and 9.5% on a linked quarter annualized (LQA) basis to $300 million. During the quarter, we closed on the sale of a small credit card portfolio that benefitted the quarter by approximately $160,000 after tax, or $0.02/share, making core earnings $0.10/share.

“As is the norm for SouthCrest due to seasonality, deposits declined slightly in the second quarter from the first quarter, and are down 2.8% from 2Q16. This is primarily due to the strategic decisions made regarding locations and fees that occurred in 2016. This has generally been the magnitude of the decline on a year over year basis for the past few quarters, between 2-3%,” Schmitt explained.

“We have regulatory approval to close the sale of our two Alabama branches, which is now scheduled for September. The process has required more time to complete than anticipated, but ultimately we believe this strategic move is a net positive for SouthCrest’s shareholders, and will be beneficial for our Alabama based customers.”

On a core basis, expenses for the quarter were $4.4 million, flat with the past few quarters, but down over 5% from 2Q16.

Loan activity remained improved from the end of the first quarter through this writing, and management expects continued growth in 2H17. In addition, the Company continues to recruit in the core Metro area for top quality lenders to increase the percentage of total assets to hit the 50% target.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank increased to 9.31%. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.41 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 just $0.02/share. The current fully converted share count at the end of the quarter is 8.40 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 improved further during the quarter, with NPAs to assets declining to 0.76% from 0.84%, excluding the $2.1 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Including these buildings, 2Q17 NPAs/total assets were 1.16% of assets vs. 1.23% in 1Q17. Excluding the impact of the Bank buildings in OREO, OREO balances were down to a cycle low of $86,000.

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a $540 million asset bank holding company headquartered in Atlanta, 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, private, entrepreneurial, high-net-worth 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.

Andy Borrmann
Chief Financial Officer
678.734.3505

Statement of Operations ($000s, Unaudited)
2016 2017
Q2 Q3 Q4 Q1 Q2
Interest Income
Loans
Construction and Development$143 $153 $150 $197 $198
Commercial Real Estate 1,479 1,537 1,645 1,691 1,737
Commercial Loans 280 276 291 316 341
Multi Family 18 18 31 27 26
Residential Mortgage 1,337 1,289 1,230 1,190 1,209
Consumer Loans 156 139 122 117 109
County/Municipal Loans 28 29 42 25 25
Loss Share Loans 132 132 119 111 33
Investment Securities
Federal Funds/Overnight Funds$27 $42 $28 $58 $77
Bank Owned CDs 8 6 6 5 6
Investment Securities 1,083 933 1,039 967 872
Total Interest Income $ 4,685 $ 4,556 $ 4,703 $ 4,705 $ 4,633
Total Interest Expense $267 $246 $247 $249 $250
Net Interest Income $4,417 $4,311 $4,456 $4,456 $4,383
Provision for Loan Losses 0 0 94 106 70
Net Interest Income after Loan Losses $4,417 $4,311 $4,362 $4,349 $4,314
Other Income
Service Charges on Deposits$215 $245 $228 $216 $209
NSF/Overdraft Fees 515 575 542 488 491
Other Service Charges 79 96 83 75 78
ATM/Billpay/DR Card Income 336 302 303 296 307
Other Income (47) 339 -386 451 541
Total Other Income $1,098 $1,560 $768 $1,526 $1,626
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$1,772 $1,705 $2,014 $1,799 $1,874
Employee Benefits 360 707 463 438 378
Occupancy & FF&E Expense 848 860 764 739 765
Professional Fees 209 212 190 190 157
Data Processing 521 536 525 498 549
OREO/Credit related Exp. 36 36 36 50 (27)
Other Expense 927 861 694 766 734
Total Noninterest Expenses$4,673 $4,917 $4,687 $4,480 $4,430
Pre-Tax Income (Loss)$842 $954 $443 $1,395 $1,510
Income Taxes (10,592) 274 128 465 488
Net Income$11,434 $680 $315 $930 $1,022
Preferred Dividends$125 $125 $125 $125 $57
Balance Sheet ($000s, Unaudited)
2016
2017
Assets Q2 Q3 Q4 Q1 Q2
Current Assets
Cash & Due from Bank $34,838 $31,268 $33,015 $41,302 $31,852
Federal Funds/Overnight Funds 569 0 4,299 6,688 5,355
Bank Owned CDs 1,716 1,218 1,069 1,069 1,069
Investment Securities 161,177 182,614 176,723 152,583 144,740
Total Current Assets $ 198,300 $ 215,100 $ 215,106 $ 201,642 $183,016
Loans
Construction and Development $11,285 $9,776 $15,159 $12,486 $15,604
Commercial Real Estate 119,419 121,609 138,155 140,003 143,883
Commercial Loans 21,863 21,247 23,462 23,923 27,884
Multi Family 1,419 1,401 2,281 2,093 2,050
Residential Mortgage 107,270 102,512 97,194 98,302 95,682
Consumer Loans 7,977 7,363 6,893 6,117 5,874
County/Municipal Loans 4,501 6,456 3,387 2,999 2,971
Loss Share Loans 7,689 7,589 7,123 6,626 5,755
Total Loans $281,425 $277,952 $293,654 $292,549 $299,703
Allowance for Loss (2,817) (2,701) (2,766) (2,797) (2,875)
Net Loans $ 278,608 $ 275,251 $ 290,888 $ 289,752 $ 296,828
OREO 1,769 936 3,581 2,728 2,315
FDIC Indemnification 433 425 304 238 112
BOLI 20,548 20,683 20,816 20,947 21,094
Fixed Assets, net $17,362 $16,967 $13,717 $13,429 $13,406
Intangible Assets 555 507 468 420 373
Other Assets 33,982 16,476 17,953 17,428 16,564
Total Assets $551,557 $546,385 $562,833 $546,584 $533,708
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $112,974 $111,290 $125,459 $112,286 $106,968
Interest Bearing Demand 55,248 54,552 65,654 63,949 63,481
Celebration Checking 110,894 111,544 112,355 113,548 112,731
Money Market Accts 33,858 33,956 32,271 27,942 28,689
Savings 53,397 52,061 50,495 51,304 51,095
CDs Less Than $100k 76,301 73,964 72,091 70,020 67,892
CDs Greater than $100k 40,585 39,832 38,922 39,966 38,952
Total Deposits $ 483,257 $ 477,388 $ 497,247 $ 479,018 $ 469,809
Other Liabilities 1,919 2,281 1,252 1,632 1,763
Net Borrowings (Wholesale Funding) - 317 - - -
Total Liabilities $ 485,176 $479,797 $498,499 $480,650 $471,572
Total Equity 66,381 66,548 64,334 65,934 62,136
Total Liabilities & Stockholders' Equity $551,557 $546,345 $562,833 $546,584 $533,708
Ratios 2Q 2016 3Q 2016* 4Q 2016* 1Q 2017* 2Q 2017*
ROAA 6.30% 0.54% 0.48% 0.72% 0.76%
ROAE 62.07% 4.77% 4.44% 6.78% 6.57%
NPAs/Assets (Core) 1.08% 0.91% 0.83% 0.84% 0.76%
Est. T1 Leverage
(Bank)
9.00% 9.31% 9.26% 8.87% 9.31%
Total Common Equiv. Shares 8,380,337 8,380,337 8,389,954 8,389,954 8,395,696
NIM 3.59% 3.58% 3.63% 3.67% 3.68%
Cost of Funds 0.22% 0.20% 0.20% 0.20% 0.21%
Loan/Deposit 58.2% 58.2% 59.0% 60.3% 63.7%
Employees 127 123 122 122 122

*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

Source:SouthCrest Financial Group, Inc.