Market Overview

SouthCrest Financial Group Reports Preliminary 2Q18 Earnings

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ATLANTA, July 26, 2018 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary earnings of $0.8MM or $0.10/share for the second quarter ended June 30, 2018.  Excluding the impact of one-time items, net income would have been $1.0MM or $0.12/share. 

"We believe the second quarter of 2018 generally continued the momentum SouthCrest created in the first quarter.  Loan growth was just a little below plan during the quarter, although that was not unexpected after a very strong first quarter.  We did experience over $7 million of unplanned payoffs in the last two weeks of the quarter, but we entered the third quarter with a very robust loan pipeline.  We were also able to grow deposits slightly in a quarter that has averaged significant seasonal declines over the past three years.  We believe all of these items show continued positive results as we go through 2018. 

"We are also excited to announce the $0.03/ share regular quarterly dividend will continue in the third quarter. These dividends will be payable August 15, 2018 to holders of record on August 1, 2018."

Total assets were down from 1Q, but up year over year at $541.3MM vs. 559.7MM in 1Q18 and $533.7MM in 2Q17.

Deposit balances were up sequentially 1% annualized versus seasonally weak average second quarter annualized declines of well over 10% over the past three years. Total deposits at the end of 2Q18 were $446.5MM vs. $445.9MM as of 1Q18 and $430MM as of 2Q17 (adjusted for the Alabama branch sale). 

Non-interest expenses for the quarter were $4.6 million, which was higher than plan.  There were $264,000 of one-time expenses, primarily related to the OREO mark on a former bank branch that is under contract to be sold, and benefit expenses.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank increased to 8.56%.  On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $6.28 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 -$0.45/share vs. -$0.42/share as of 1Q18.  Excluding the OCI impact, TBV/share grew $0.07 during the quarter.  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 ratios remained within a reasonable range during the quarter, with NPAs to assets moving up slightly to 1.25% from 0.99%, excluding the $825,000 of former bank buildings in OREO, one of which is under contract and expected to close in 2Q18.  Including these buildings, 2Q18 NPAs/total assets were 1.39% of assets vs. 1.44% in 1Q18. Excluding the impact of the Bank buildings in OREO, OREO balances were just $55,000.   

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. 

Andy Borrmann
Chief Financial Officer
678.734.3505

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


Statement of Operations ($000s, Unaudited)
  Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
 Interest Income          
Loans          
Construction and Development $ 198 $ 238 $ 360 $ 535 $ 479
Commercial Real Estate   1,737   1,767   1,669   1,667   1,696
Commercial Loans   341   378   368   341   370
Multi Family   26   29   30   28   28
Residential Mortgage   1,209   1,140   1,117   1,087   1,116
Consumer Loans   109   61   68   57   56
County/Municipal Loans   25   24   24   23   23
Loss Share Loans   33   89   81   80   79
Investment Securities          
Federal Funds/Overnight Funds $ 77 $ 97 $ 99 $ 98 $ 48
Bank Owned CDs   6   5   7   6   6
Investment Securities   872   922   1,036   1,187   1,214
Total Interest Income $  4,633 $  4,750 $  4,859 $  5,109 $  5,115
           
Total Interest Expense $ 250 $ 293 $ 393 $ 460 $ 506
Net Interest Income $  4,383 $  4,457 $  4,466 $  4,649 $  4,609
Provision for Loan Losses   70   0   0   125   0
Net Interest Income after Loan Losses $  4,314 $  4,457 $  4,466 $  4,524 $  4,609
 

Other Income
         
Service Charges on Deposits $ 209 $ 201 $ 174 $ 168 $ 165
NSF/Overdraft Fees   491   494   393   350   334
Other Service Charges   78   68   63   64   63
ATM/Billpay/DR Card Income   307   284   266   262   280
Other Income   541   1,920   (969)   227   1254
Total Other Income $  1,626 $  2,967 $ (73) $ 1,071 $ 967
Non-Interest Expense          
Salaries, Other Comp (+ FAS123R) $ 1,874 $ 1,869 $ 1,977 $ 1,948 $ 1,969
Employee Benefits   378   395   409   473   524
Occupancy & FF&E Expense   765   740   934   653   590
Professional Fees   157   201   154   161   156
Data Processing   549   561   488   480   489
Other Expense   707   754   825   883   832
Total Noninterest Expenses $  4,430 $  4,520
$ 4,787
$ 4,598
$ 4,560
Pre-Tax Income (Loss) $  1,510 $  2,904
$ (394)
$  997
$ 1,016
Income Taxes   488   1,036   4,192   197   210
Net Income $  1,022 $  1,868
$ (4,586)
$ 800
$  806
Preferred Dividends $ 57 $ 0 $ 0 $ 0 $ 0


Balance Sheet ($000s, Unaudited) 
 
Assets Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018  
Current Assets            
Cash & Due from Bank $  31,852 $  32,153 $  42,146 $  24,603 $  18,408  
Federal Funds/Overnight Funds   5,355   1,150   2,356   0   5,446  
Bank Owned CDs    1,069    1,319    1,319    1,319    1,319  
Investment Securities    144,740    157,261    165,203    182,569    169,924  
Total Current Assets $ 183,016 $ 191,883 $ 211,024 $ 208,491 $ 195,097  
 

Loans
           
Construction and Development $  15,604 $  14,400 $  31,184 $  31,475 $  34,157  
Commercial Real Estate    143,883    138,550    133,191    138,931    134,653  
Commercial Loans    27,884    27,719    26,681    28,048    29,873  
Multi Family    2,050    2,330    2,283    2,150    2,230  
Residential Mortgage    95,682    89,760    87,001    92,973    92,346  
Consumer Loans    5,874    14,086   3,304   5,738   3,361  
County/Municipal Loans   2,971   2,791   2,771   2,511   2,480  
Loss Share Loans    5,755    4,659    4,593    4,536    4,480  
Total Loans $  299,703 $  294,132 $ 291,008 $ 306,362 $ 303,581  
Allowance for Loss   (2,875)   (2,813)   (2,820)   (3,028)   (3,037)  
Net Loans $  296,828 $  291,482 $  288,188 $  303,334 $  300,544  
OREO   2,315   2,194   2,760   2,697   879  
FDIC Indemnification   112   112   112   112   112  
BOLI    21,094    21,227    21,359    21,490    21,640  
Fixed Assets, net    13,406   11,868   9,915   10,166   9,970  
Intangible Assets    373    326    242    197    152  
Other Assets    16,564    15,867   11,754   13,228   12,880  
Total Assets $  533,708 $  534,959 $  545,354 $  559,715 $  541,274  

Liabilities & Stockholders' Equity
           
Liabilities            
Deposits            
DDAs $  106,968 $  93,150 $  99,906 $  95,714 $  97,587  
Interest Bearing Demand   63,481   58,723   73,555   76,198   81,262  
Celebration Checking    112,731    105,514    102,368    105,247    105,358  
Money Market Accts    28,689    29,869    29,699    29,673    30,402  
Savings    51,095    44,703    43,147    44,030    43,862  
CDs Less Than $100k    67,892    61,548    59,273    57,827    57,600  
CDs Greater than $100k   38,952   36,234   36,723   37,232   30,477  
Total Deposits $  469,809 $  428,929 $  444,671 $  445,921 $  446,548  
                       
Other Liabilities   1,763   2,223   7,067   1,639   1,874  
Net Borrowings (Wholesale Funding)   -   40,000   40,000   59,666   40,000  
Total Liabilities $  471,572 $ 471,152 $  491,738 $  507,226 $ 488,422  
Total Equity   62,136   63,807   53,616   52,489   52,852  
Total Liabilities & Stockholders' Equity $  533,708 $ 534,959 $ 545,354 $ 559,715 $ 541,274  


 Ratios      
  2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018
ROAA 0.76% 1.40% -0.84% 0.58% 0.59%
ROAE 6.57% 11.86% -7.81% 6.03% 6.12%
NPAs/Assets (Core) 0.76% 0.91% 1.05% 0.99% 1.25%
Est. T1 Leverage (Bank)  9.31% 10.00% 8.27% 8.42% 8.56%
Total Common Equiv. Shares 8,395,696 8,410,332 8,413,372 8,413,372 8,413,372
NIM 3.68% 3.70% 3.68% 3.83% 3.73%
Cost of Deposits 0.21% 0.23% 0.24% 0.24% 0.25%
Loan/Deposit 63.7% 68.5% 65.3% 68.3% 68.0%
Employees 122 114 115 116 115


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