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.    
     

            

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