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WOODSTOCK, Ga., Oct. 28, 2016 -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (PinkSheets:SCSG) announced today that the company reported preliminary net income of $680,000 or $0.08/share for the third quarter ended September 30, 2016.
“I am excited to report my first quarter of earnings with SouthCrest Bank as the new CEO. My goal is to to push our Company towards higher loan growth, better customer relationships, a higher level of employee satisfaction and higher, more consistent profitability for our shareholders,” Schmitt said.
“To complete this task, we will have some additional one-time items occur for the next few quarters, but expect these adjustments to move our return on assets closer to our long term target of 1.0% after tax.” Schmitt continued.
“Our team has done significant work on the expense side and we will continue to maintain a high level of focus there. With that said, we are now looking to grow loans to improve our returns so we will dedicate additional financial resources to this area going forward. We are also excited to have a new member of the Board of Directors, Dan Broos, join our team and help us push SouthCrest further along this path.”
Core pre-tax earnings for the quarter were $1.3 million, with net unusual items during the quarter totaling $311,000 of pre-tax expenses. This equates to an approximate 0.94% pre-tax ROA for the quarter. On a core basis, expenses for the quarter were $4.4 million, down from approximately $5.9 million in 3Q15.
Deposits were lower, consistent with the seasonality the Company experiences every third quarter. Year over year deposits fell less than 2%, which is well within the expectations of management based on the changes in deposit rates and fees that occurred over the past three quarters.
Loans did decline by 1.2% from 2Q16, but with the refocus on lending directly in the Atlanta market, management expects to make significant progress on balances.
Service fee income, including all deposit fees, NSF/Overdraft and ATM/Card related income was up 12% from 2Q15, an annual run rate increase of over $500,000.
The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank was 9.00%. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.27 per share. The current fully converted share count at the end of the quarter is 8.380 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, with 3Q16 NPAs/total assets declining to 0.91% of assets, the lowest level since March, 2008. Other real estate owned decreased from 2Q16 and now stands at just $936,000, down from over $3.3 million in 3Q15.
ABOUT SOUTHCREST
SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, Ga. The company operates a 12 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 | |||||||||||||||||||
| Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||
| Interest Income | ||||||||||||||||||||
| Loans | ||||||||||||||||||||
| Construction and Development | $ | 261 | $ | 205 | $ | 206 | $ | 143 | $ | 153 | ||||||||||
| Commercial Real Estate | 1,483 | 1,512 | 1,465 | 1,479 | 1,537 | |||||||||||||||
| Commercial Loans | 301 | 275 | 280 | 280 | 276 | |||||||||||||||
| Multi Family | 29 | 27 | 26 | 18 | 18 | |||||||||||||||
| Residential Mortgage | 1,521 | 1,454 | 1,415 | 1,337 | 1,289 | |||||||||||||||
| Consumer Loans | 197 | 178 | 166 | 156 | 139 | |||||||||||||||
| County/Municipal Loans | 59 | 65 | 29 | 28 | 29 | |||||||||||||||
| Loss Share Loans | 214 | 140 | 116 | 132 | 132 | |||||||||||||||
| Investment Securities | ||||||||||||||||||||
| Federal Funds/Overnight Funds | $ | 11 | $ | 22 | $ | 38 | $ | 27 | $ | 42 | ||||||||||
| Bank Owned CDs | 7 | 8 | 7 | 8 | 6 | |||||||||||||||
| Investment Securities | 904 | 916 | 1,030 | 1,083 | 933 | |||||||||||||||
| Total Interest Income | $ | 4,987 | $ | 4,803 | $ | 4,779 | $ | 4,685 | $ | 4,556 | ||||||||||
| Total Interest Expense | $ | 308 | $ | 302 | $ | 299 | $ | 267 | $ | 246 | ||||||||||
| Net Interest Income | $ | 4,679 | $ | 4,501 | $ | 4,480 | $ | 4,417 | $ | 4,311 | ||||||||||
| Provision for Loan Losses | 0 | 150 | 50 | 0 | 0 | |||||||||||||||
| Net Interest Income after Loan Losses | $ | 4,679 | $ | 4,351 | $ | 4,430 | $ | 4,417 | $ | 4,311 | ||||||||||
| Other Income | ||||||||||||||||||||
| Service Charges on Deposits | $ | 113 | $ | 110 | $ | 105 | $ | 215 | $ | 245 | ||||||||||
| NSF/Overdraft Fees | 543 | 525 | 475 | 515 | 575 | |||||||||||||||
| Other Service Charges | 78 | 93 | 74 | 79 | 96 | |||||||||||||||
| ATM/Billpay/DR Card Income | 352 | 370 | 293 | 336 | 302 | |||||||||||||||
| Other Income | 973 | 475 | 829 | (47 | ) | 339 | ||||||||||||||
| Total Other Income | $ | 2,059 | $ | 1,535 | $ | 1,776 | $ | 1,098 | $ | 1,560 | ||||||||||
| Non-Interest Expense | ||||||||||||||||||||
| Salaries, Other Comp (+ FAS123R) | $ | 2,419 | $ | 2,257 | $ | 2,006 | $ | 1,772 | $ | 1,705 | ||||||||||
| Employee Benefits | 424 | 645 | 591 | 360 | 707 | |||||||||||||||
| Occupancy & FF&E Expense | 1,020 | 919 | 933 | 848 | 860 | |||||||||||||||
| Professional Fees | 206 | 263 | 174 | 209 | 212 | |||||||||||||||
| Data Processing | 244 | 321 | 305 | 521 | 536 | |||||||||||||||
| OREO and Credit related Exp. | 156 | 146 | 41 | 36 | 36 | |||||||||||||||
| Other Expense | 1,608 | 1,409 | 1,243 | 927 | 724 | |||||||||||||||
| Total Noninterest Expenses | $ | 6,077 | $ | 5,927 | $ | 5,293 | $ | 4,673 | $ | 4,917 | ||||||||||
| Pre-Tax Income (Loss) | $ | 661 | $ | (36 | ) | $ | 913 | $ | 842 | $ | 954 | |||||||||
| Income Taxes | - | - | - | (10,592 | ) | 274 | ||||||||||||||
| Net Income | $ | 661 | $ | (36 | ) | $ | 913 | $ | 11,434 | $ | 680 | |||||||||
| Preferred Dividends | $ | 125 | $ | 125 | $ | 125 | $ | 125 | $ | 125 | ||||||||||
| Balance Sheet ($000s, Unaudited) | ||||||||||||||||||||
| 2015 | 2016 | |||||||||||||||||||
| Assets | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||
| Current Assets | ||||||||||||||||||||
| Cash & Due from Bank | $ | 20,355 | $ | 44,157 | $ | 30,427 | $ | 34,838 | $ | 31,268 | ||||||||||
| Federal Funds/Overnight Funds | 14,171 | 2,186 | 3,306 | 569 | 0 | |||||||||||||||
| Bank Owned CDs | 1,815 | 1,815 | 1,815 | 1,716 | 1,218 | |||||||||||||||
| Investment Securities | 145,247 | 174,998 | 191,905 | 161,177 | 182,614 | |||||||||||||||
| Mortgage Loans Held for Sale | 3,011 | 899 | 0 | 0 | 0 | |||||||||||||||
| Total Current Assets | $ | 184,599 | $ | 224,055 | $ | 227,452 | $ | 198,300 | $ | 215,100 | ||||||||||
| Loans | ||||||||||||||||||||
| Construction and Development | $ | 16,165 | $ | 16,229 | $ | 13,692 | $ | 11,285 | $ | 9,776 | ||||||||||
| Commercial Real Estate | 119,888 | 118,780 | 116,175 | 119,419 | 121,609 | |||||||||||||||
| Commercial Loans | 21,236 | 21,246 | 21,296 | 21,863 | 21,247 | |||||||||||||||
| Multi Family | 2,152 | 2,117 | 1,450 | 1,419 | 1,401 | |||||||||||||||
| Residential Mortgage | 116,969 | 114,803 | 110,094 | 107,270 | 102,512 | |||||||||||||||
| Consumer Loans | 10,814 | 9,657 | 7,096 | 7,977 | 7,363 | |||||||||||||||
| County/Municipal Loans | 12,293 | 3,911 | 3,537 | 4,501 | 6,456 | |||||||||||||||
| Loss Share Loans | 10,345 | 9,543 | 9,360 | 7,689 | 7,589 | |||||||||||||||
| Total Loans | $ | 309,862 | $ | 296,286 | $ | 282,700 | $ | 281,425 | $ | 277,952 | ||||||||||
| Allowance for Loss | (2,881 | ) | (3,052 | ) | (3,021 | ) | (2,817 | ) | (2,701 | ) | ||||||||||
| Net Loans | $ | 306,981 | $ | 293,234 | $ | 279,679 | $ | 278,608 | $ | 275,251 | ||||||||||
| OREO | 3,331 | 2,421 | 1,500 | 1,769 | 936 | |||||||||||||||
| FDIC Indemnification | 498 | 474 | 419 | 433 | 425 | |||||||||||||||
| BOLI | 20,130 | 20,265 | 20,391 | 20,548 | 20,683 | |||||||||||||||
| Fixed Assets, net | $ | 18,553 | $ | 18,214 | $ | 17,671 | $ | 17,362 | $ | 16,967 | ||||||||||
| Intangible Assets | 648 | 618 | 583 | 555 | 507 | |||||||||||||||
| Other Assets | 6,339 | 6,983 | 6,651 | 33,982 | 16,476 | |||||||||||||||
| Total Assets | $ | 541,079 | $ | 566,264 | $ | 554,346 | $ | 551,557 | $ | 546,385 | ||||||||||
| Liabilities & Stockholders' Equity | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Deposits | ||||||||||||||||||||
| DDAs | $ | 114,345 | $ | 130,877 | $ | 119,343 | $ | 112,974 | $ | 111,290 | ||||||||||
| Interest Bearing Demand | 50,965 | 62,784 | 61,172 | 55,248 | 54,552 | |||||||||||||||
| Celebration Checking | 90,893 | 97,316 | 108,076 | 110,894 | 111,544 | |||||||||||||||
| Money Market Accts | 41,731 | 38,643 | 35,289 | 33,858 | 33,956 | |||||||||||||||
| Savings | 56,517 | 55,550 | 55,831 | 53,397 | 52,061 | |||||||||||||||
| CDs Less Than $100k | 84,510 | 81,930 | 79,221 | 76,301 | 73,964 | |||||||||||||||
| CDs Greater than $100k | 46,603 | 44,080 | 39,576 | 40,585 | 39,832 | |||||||||||||||
| Total Deposits | $ | 485,564 | $ | 511,180 | $ | 498,508 | $ | 483,257 | $ | 477,388 | ||||||||||
| Other Liabilities | 2,414 | 2,690 | 1,988 | 1,919 | 2,281 | |||||||||||||||
| Net Borrowings (Wholesale Funding) | - | - | - | - | 317 | |||||||||||||||
| Total Liabilities | $ | 487,978 | $ | 513,870 | $ | 500,496 | $ | 485,176 | $ | 479,797 | ||||||||||
| Total Equity | 53,101 | 52,394 | 53,850 | 66,381 | 66,548 | |||||||||||||||
| Total Liabilities & Stockholders' Equity | $ | 541,079 | $ | 566,264 | $ | 554,346 | $ | 551,557 | $ | 546,345 | ||||||||||
| Ratios | ||||||||||||||||||||
| 3Q 2015 | 4Q 2015 | 1Q 2016 | 2Q 2016 | 3Q 2016* | ||||||||||||||||
| ROAA | 0.48 | % | -0.01 | % | 0.66 | % | 8.29 | % | 0.53 | % | ||||||||||
| ROAE | 5.01 | % | -0.10 | % | 6.80 | % | 76.1 | % | 4.74 | % | ||||||||||
| NPAs/Assets (Core) | 1.68 | % | 1.40 | % | 1.18 | % | 1.08 | % | 0.91 | % | ||||||||||
| Est. Tier 1 Leverage | 9.12 | % | 8.87 | % | 8.94 | % | 9.54 | % | 9.84 | % | ||||||||||
| Total Common Equiv. Shares | 8,380,337 | 8,380,337 | 8,380,337 | 8,380,337 | 8,380,337 | |||||||||||||||
| NIM | 3.76 | % | 3.57 | % | 3.47 | % | 3.59 | % | 3.59 | % | ||||||||||
| Cost of Funds | 0.25 | % | 0.24 | % | 0.24 | % | 0.22 | % | 0.20 | % | ||||||||||
| Loan/Deposit | 63.8 | % | 57.9 | % | 56.6 | % | 58.2 | % | 58.2 | % | ||||||||||
| Employees | 163 | 153 | 129 | 127 | 123 | |||||||||||||||
| *3Q2016 ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery. | ||||||||||||||||||||
Contact: Andrew Bowen, APR [email protected] 404-822-3309 Andy Borrmann Chief Financial Officer 678.734.3505
