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SouthCrest Financial Group Reports preliminary 3Q17 earnings: Alabama Branch Sale Completed

ATLANTA, Oct. 26, 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 $1.87MM or $0.22/share for the third quarter ended June 30, 2017. Excluding the impact of the Alabama branch sale closing and OREO expenses due to a previously closed branch, net income would have been $0.9MM or $0.11/share.

“We are very happy to have the Alabama branch sale completed and think the resulting company is much better positioned to serve our Georgia customers. We are also continuing to work to lower our non-interest expenses, which are down 10% YTD 2017 vs. YTD 2016, and down 3% from 1Q17 to 3Q17 (excluding $160,000 in Alabama sales related expenses). Finally, as the Company generates significant regulatory and tangible capital growth, we believe it is prudent to continually review all potential uses for any excess capital.

“We are also extremely excited to have Michael Washburn join our team in the CCO role. I have known Mike for years and it is already easy to see that he will be a huge benefit to SouthCrest on both tactical and strategic levels.

“As of the end of September we had 40% of our loans and 15% of our deposits in the core 13 county Atlanta MSA market that we track vs. 37% and 12% as of the end of June. These are the metrics we use to track the success of our Atlanta growth initiative.”

“Tangible book value grew to $7.59/share, up $0.18 from the end of June and up $0.56 from December 2016. Total loans grew 6% year over year but fell slightly on a linked quarter annualized (LQA) basis due to the Alabama branch sale and one large scheduled payoff.

Excluding the impact of the Alabama branch sale, deposits were effectively flat on both a year over year and LQA basis. Total deposits at the end of 3Q17 were $428.9MM vs. $428.9MM as of 2Q17 (Alabama adjusted) and $432.4MM as of 3Q16 (Alabama adjusted). The Company did draw $40.0MM from the FHLB during the quarter to fund the cash requirements of the branch sale. The borrowing is a 1 year term and will have some impact to the overall cost of funds, but it can be partially or totally repaid at the Company’s option every quarter.

On a core basis, expenses for the quarter were $4.36 million, continuing the downward trend that has existed for several quarters. Total expenses for the quarter were $4.52MM.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank increased to 10.00%. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.59 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 -$0.07/share vs. -$0.02/share as of 2Q17. The current fully converted share count at the end of the quarter is 8.41 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 steady during the quarter, with NPAs to assets ticking up slightly to 0.91% from 0.76%, excluding the $2.0 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Including these buildings, 3Q17 NPAs/total assets were 1.28% of assets vs. 1.16% in 2Q17. Excluding the impact of the Bank buildings in OREO, OREO balances were down to a cycle low of $84,000.

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 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.

Statement of Operations ($000s, Unaudited)
20162017
Q3Q4Q1Q2Q3
Interest Income
Loans
Construction and Development $153 $150 $197 $198 $238
Commercial Real Estate 1,537 1,645 1,691 1,737 1,767
Commercial Loans 276 291 316 341 378
Multi Family 18 31 27 26 29
Residential Mortgage 1,289 1,230 1,190 1,209 1,140
Consumer Loans 139 122 117 109 61
County/Municipal Loans 29 42 25 25 24
Loss Share Loans 132 119 111 33 89
Investment Securities
Federal Funds/Overnight Funds $42 $28 $58 $77 $97
Bank Owned CDs 6 6 5 6 5
Investment Securities 933 1039 967 872 922
Total Interest Income $ 4,556 $ 4,703 $ 4,705 $ 4,633 $ 4,750
Total Interest Expense $246 $247 $249 $250 $293
Net Interest Income $4,311 $4,456 $4,456 $4,383 $4,457
Provision for Loan Losses 0 94 106 70 0
Net Interest Income after Loan Losses $4,311 $4,362 $4,349 $4,314 $4,457
Other Income
Service Charges on Deposits $245 $228 $216 $209 $201
NSF/Overdraft Fees 575 542 488 491 494
Other Service Charges 96 83 75 78 68
ATM/Billpay/DR Card Income 302 303 296 307 284
Other Income 339 -386 451 541 1,920
Total Other Income $1,560 $768 $1,526 $1,626 $2,967
Non-Interest Expense
Salaries, Other Comp (+ FAS123R) $1,705 $2,014 $1,799 $1,874 $1,869
Employee Benefits 707 463 438 378 395
Occupancy & FF&E Expense 860 764 739 765 740
Professional Fees 212 190 190 157 201
Data Processing 536 525 498 549 561
OREO/Credit related Exp. 36 36 50 (27) 11
Other Expense 861 694 766 734 743
Total Noninterest Expenses $4,917 $4,687 $4,480 $4,430 $4,520
Pre-Tax Income (Loss) $954 $443 $1,395 $1,510 $2,904
Income Taxes 274 128 465 488 1036
Net Income $680 $315 $930 $1,022 $1,868
Preferred Dividends $125 $125 $125 $57 $0
Balance Sheet ($000s, Unaudited)
20162017
Assets Q3
Q4
Q1
Q2Q3
Current Assets
Cash & Due from Bank $31,268 $33,015 $41,302 $31,852 $32,153
Federal Funds/Overnight Funds 0 4,299 6,688 5,355 1,150
Bank Owned CDs 1,218 1,069 1,069 1,069 1,319
Investment Securities 182,614 176,723 152,583 144,740 157,261
Total Current Assets $ 215,100 $ 215,106 $ 201,642 $183,016 $191,883
Loans
Construction and Development $9,776 $15,159 $12,486 $15,604 $14,400
Commercial Real Estate 121,609 138,155 140,003 143,883 138,550
Commercial Loans 21,247 23,462 23,923 27,884 27,719
Multi Family 1,401 2,281 2,093 2,050 2,330
Residential Mortgage 102,512 97,194 98,302 95,682 89,760
Consumer Loans 7,363 6,893 6,117 5,874 14,086
County/Municipal Loans 6,456 3,387 2,999 2,971 2,791
Loss Share Loans 7,589 7,123 6,626 5,755 4,659
Total Loans $277,952 $293,654 $292,549 $299,703 $294,132
Allowance for Loss (2,701) (2,766) (2,797) (2,875) (2,813)
Net Loans $ 275,251 $ 290,888 $ 289,752 $ 296,828 $ 291,482
OREO 936 3,581 2,728 2,315 2,194
FDIC Indemnification 425 304 238 112 112
BOLI 20,683 20,816 20,947 21,094 21,227
Fixed Assets, net $16,967 $13,717 $13,429 $13,406 $11,868
Intangible Assets 507 468 420 373 326
Other Assets 16,476 17,953 17,428 16,564 15,867
Total Assets $546,385 $562,833 $546,584 $533,708 $534,959
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs $111,290 $125,459 $112,286 $106,968 $93,150
Interest Bearing Demand 54,552 65,654 63,949 63,481 58,723
Celebration Checking 111,544 112,355 113,548 112,731 105,514
Money Market Accts 33,956 32,271 27,942 28,689 29,869
Savings 52,061 50,495 51,304 51,095 44,703
CDs Less Than $100k 73,964 72,091 70,020 67,892 61,548
CDs Greater than $100k 39,832 38,922 39,966 38,952 36,234
Total Deposits $ 477,388 $ 497,247 $ 479,018 $ 469,809 $ 428,929
Other Liabilities 2,281 1,252 1,632 1,763 2,223
Net Borrowings (Wholesale Funding) 317 - - - 40,000
Total Liabilities $479,797 $498,499 $480,650 $471,572 $471,152
Total Equity 66,548 64,334 65,934 62,136 63,807
Total Liabilities & Stockholders' Equity $546,345 $562,833 $546,584 $533,708 $534,959


Ratios
3Q 20164Q 20161Q 20172Q 20173Q 2017
ROAA0.54%0.48%0.72%0.76%1.40%
ROAE4.77%4.44%6.78%6.57%11.86%
NPAs/Assets (Core)0.91%0.83%0.84%0.76%0.91%
Est. T1 Leverage (Bank) 9.31%9.26%8.87%9.31%10.00%
Total Common Equiv. Shares8,380,337 8,389,954 8,389,954 8,395,696 8,410,332
NIM3.58%3.63%3.72%3.68%3.70%
Cost of Funds0.20%0.20%0.21%0.21%0.23%
Loan/Deposit58.2%59.0%60.3%63.7%68.5%
Employees123 122 122 122 114

Contact:

Andy Borrmann
Chief Financial Officer
678.734.3505

Andrew Bowen, APR
ab@clearviewcom.com
404-822-3309

Source:SouthCrest Financial Group, Inc.