SouthCrest Financial Group Reports Preliminary 4Q15 Earnings

PEACHTREE CITY, Ga., Feb. 09, 2016 -- Andrew Borrmann, Chief Financial Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary net income of -$36,000 or $0.00/share.  Core net income for the fourth quarter of 2015 was $509,000 or $0.06 per share prior to $545,000 one-time items including $416,000 in severance.  Mr. Borrmann said, “In the fourth quarter we furthered our cost control efforts, bringing down core expenses to a run rate under $22 million/year in December.  At this time we believe the run rate entering 3Q16 will be under $18 million/year due to additional technology, occupancy, and personnel savings.  Most of the personnel savings will come from the elimination of the mortgage division, which was effectively break even during 2015.  Mortgage produced just under $250,000 in gain on sale in 4Q.  We believe 2016 will be slightly better on a net income basis without the division.”   Speaking on the balance sheet Borrmann said, “The decline in loans was disappointing and more than we were projecting.  We did see the expected growth in deposits versus the third quarter and the overall mix continues to shift away from CD’s into core categories.” 

Loan growth in 4Q15 was weak with a decline of $13.6 million from 3Q15 with tax revenue related loans to municipalities falling by $8.4 million.  The municipal related decline was expected, however traditional commercial lending was weaker than projected as pricing competition remained substantial.  Total loan balances were up 6% year over year.

Deposits were up significantly during the quarter with a continued improvement in the product mix and cost of funds.  This is a seasonal effect for SouthCrest due to municipal deposits in our rural communities.  Year over year deposits increased by 1%, with transaction accounts increasing to 57% of total deposits from 50% at the end of 2014.  Time deposits declined over the same period from 29% of deposits to 25% of deposits. 

The estimated Tier 1 Leverage ratio at the end of the quarter was 8.87%.  On a fully converted basis (including the conversion of all preferred equity) TBV/share ended the quarter at $5.59 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 deferred tax asset valuation allowance that totals approximately $1.36/fully converted share.

Asset quality improved from 3Q15 with NPAs/total assets declining by 28 basis points to 1.40%.  This was primarily due to the sale of the Company’s largest single OREO property during the quarter.  Other real estate owned fell 46% year over year and now stands at $2.4 million.

SouthCrest Financial Group, Inc. is a $565 million asset bank holding company headquartered in Peachtree City, Georgia.  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, SBA lending, and online banking services. 

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