SouthCrest Financial Group Reports preliminary 4Q17 earnings

ATLANTA, Jan. 24, 2018 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary results of -$4.59MM or -$0.55/share for the fourth quarter ended December 31, 2017. Excluding the impact of previously announced one-time items which included the impact of the new tax law and office relocations, net income would have been $0.9MM or $0.11/share.

“Like a large number of our peers, the tax law change created a significant mark to our deferred tax asset. In addition, we made what we have thought of as a capital investment by preparing to move out of our operations center and to move our Tyrone branch to our Fayetteville LPO. These two items were responsible for a $5.9MM negative impact to earnings in the fourth quarter.

“We were also excited to announce a special dividend of $0.60/common share recently. At the end of the day, our primary responsibility is to be good stewards of the capital that our investors have given us, and we believe that this was the best use of this capital at this time. Importantly, we believe that after this dividend the Company has sufficient capital to take advantage of any strategic growth opportunity that may present itself.

“The Company should continue to have significant operating leverage, improved loan growth and significantly improved ROA and ROE.”

Tangible book value declined to $6.37/share which takes into account both the one-time items and the impact of the special dividend.

Deposits saw a normal seasonal pattern for the quarter and were up 15% LQA vs a slight year over year decline of 2%. Total deposits at the end of 4Q17 were $444.7MM vs. $428.9MM as of 3Q17 and $452.7MM as of 4Q16 (adjusted for the Alabama branch sale).

On a core basis, expenses for the quarter were $4.2 million, continuing the downward trend that has existed for several quarters. Total expenses for the quarter were $4.79MM.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.27% due to the funding of the special dividend. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $6.37 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 -$0.19/share vs. -$0.07/share as of 3Q17. The current fully converted share count at the end of the quarter remained 8.41 million shares. In addition, the Company still retains a small deferred tax asset valuation allowance related to state taxes that totals approximately $0.07/fully converted share.

Asset quality remained steady during the quarter, with NPAs to assets ticking up slightly to 1.05% from 0.91%, excluding the $2.5 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 1.51% of assets vs. 1.28% in 3Q17, with half of the increase being driven by the operations center that is being vacated. Excluding the impact of the Bank buildings in OREO, OREO balances were just $115,000.

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a bank holding company with over half a billion dollars in assets, headquartered in Atlanta, GA. The company operates a 9 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.

Contact:
Andy Borrmann
Chief Financial Officer
678.734.3505

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

Statement of Operations ($000s, Unaudited)
2016
2017
Q4Q1Q2Q3Q4
Interest Income
Loans
Construction and Development$150 $197 $198 $238 $360
Commercial Real Estate1,645 1,691 1,737 1,767 1,669
Commercial Loans291 316 341 378 368
Multi Family31 27 26 29 30
Residential Mortgage1,230 1,190 1,209 1,140 1,117
Consumer Loans122 117 109 61 68
County/Municipal Loans42 25 25 24 24
Loss Share Loans119 111 33 89 81
Investment Securities
Federal Funds/Overnight Funds$28 $58 $77 $97 $99
Bank Owned CDs6 5 6 5 7
Investment Securities1,039 967 872 922 1,036
Total Interest Income$4,703 $4,705 $4,633 $4,750 $4,859
Total Interest Expense$247 $249 $250 $293 $393
Net Interest Income$4,456 $4,456 $4,383 $4,457 $4,466
Provision for Loan Losses94 106 70 0 0
Net Interest Income after Loan Losses$4,362 $4,349 $4,314 $4,457 $4,466


Other Income
Service Charges on Deposits$228 $216 $209 $201 $174
NSF/Overdraft Fees542 488 491 494 393
Other Service Charges83 75 78 68 63
ATM/Billpay/DR Card Income303 296 307 284 266
Other Income(386) 451 541 1,920 (969)
Total Other Income$768 $1,526 $1,626 $2,967 $(73)
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)$2,014 $1,799 $1,874 $1,869 $1,977
Employee Benefits463 438 378 395 409
Occupancy & FF&E Expense764 739 765 740 934
Professional Fees190 190 157 201 154
Data Processing525 498 549 561 488
Other Expense730 816 707 754 825
Total Noninterest Expenses$4,687 $4,480 $4,430 $4,520 $4,787
Pre-Tax Income (Loss)$443 $1,395 $1,510 $2,904 $(394)
Income Taxes128 465 488 1,036 4,192
Net Income$315 $930 $1,022 $1,868 $(4,586)
Preferred Dividends$125 $125 $57 $0 $0
Balance Sheet ($000s, Unaudited)
2016
2017
AssetsQ4
Q1
Q2
Q3Q4
Current Assets
Cash & Due from Bank$33,015 $41,302 $31,852 $32,153 $41,514
Federal Funds/Overnight Funds4,299 6,688 5,355 1,150 2,356
Bank Owned CDs1,069 1,069 1,069 1,319 1,319
Investment Securities176,723 152,583 144,740 157,261 165,203
Total Current Assets$215,106 $201,642 $183,016 $191,883 $210,392


Loans
Construction and Development$15,159 $12,486 $15,604 $14,400 $31,184
Commercial Real Estate138,155 140,003 143,883 138,550 133,191
Commercial Loans23,462 23,923 27,884 27,719 26,681
Multi Family2,281 2,093 2,050 2,330 2,283
Residential Mortgage97,194 98,302 95,682 89,760 87,001
Consumer Loans6,893 6,117 5,874 14,086 3,304
County/Municipal Loans3,387 2,999 2,971 2,791 2,771
Loss Share Loans7,123 6,626 5,755 4,659 4,593
Total Loans$293,654 $292,549 $299,703 $294,132 $291,008
Allowance for Loss(2,766) (2,797) (2,875) (2,813) (2,820)
Net Loans$290,888 $289,752 $296,828 $291,482 $288,188
OREO3,581 2,728 2,315 2,194 2,761
FDIC Indemnification304 238 112 112 112
BOLI20,816 20,947 21,094 21,227 21,359
Fixed Assets, net$13,717 $13,429 $13,406 $11,868 $9,916
Intangible Assets468 420 373 326 242
Other Assets17,953 17,428 16,564 15,867 19,383
Total Assets$562,833 $546,584 $533,708 $534,959 $552,353
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs$125,459 $112,286 $106,968 $93,150 $99,905
Interest Bearing Demand65,654 63,949 63,481 58,723 73,555
Celebration Checking112,355 113,548 112,731 105,514 102,367
Money Market Accts32,271 27,942 28,689 29,869 29,699
Savings50,495 51,304 51,095 44,703 43,147
CDs Less Than $100k72,091 70,020 67,892 61,548 59,272
CDs Greater than $100k38,922 39,966 38,952 36,234 36,723
Total Deposits$497,247 $479,018 $469,809 $428,929 $444,668
Other Liabilities1,252 1,632 1,763 2,223 13,756
Net Borrowings (Wholesale Funding)- - - 40,000 40,000
Total Liabilities$498,499 $480,650 $471,572 $471,152 $498,738
Total Equity64,334 65,934 62,136 63,807 53,615
Total Liabilities & Stockholders' Equity$562,833 $546,584 $533,708 $534,959 $552,353
Ratios
4Q 2016 1Q 2016 2Q 2017 3Q 2017 4Q 2017
ROAA0.48% 0.72% 0.76% 1.40% -0.84%
ROAE4.44% 6.78% 6.57% 11.86% -7.81%
NPAs/Assets (Core)0.83% 0.84% 0.76% 0.91% 1.05%
Est. T1 Leverage (Bank)9.26% 8.87% 9.31% 10.00% 8.27%
Total Common Equiv. Shares8,389,954 8,389,954 8,395,696 8,410,332 8,413,372
NIM3.63% 3.72% 3.68% 3.70% 3.68%
Cost of Deposits0.20% 0.21% 0.21% 0.23% 0.24%
Loan/Deposit59.0% 60.3% 63.7% 68.5% 65.3%
Employees122 122 122 114 115

Source:SouthCrest Financial Group, Inc.