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.


            

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