SouthCrest Financial Group Reports Preliminary 4Q18 Earnings

ATLANTA, Jan. 24, 2019 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary earnings of $1.27MM or $0.15/share for the third quarter ended December 31, 2018.  Excluding the impact of one-time items, net income would have been $1.4MM or $0.17/share vs. $0.9MM or 0.11/share in 4Q17.  For the full year 2018, preliminary earnings were $4.0MM or $0.47/ share, with core earnings of $4.8MM or $0.57/share vs. 2017 core of $3.8MM or $0.45/share.

“We are pleased to say we have completed the vast majority of the transformational change that we have been striving towards for several years at SouthCrest.  During 2018 the Company continued to improve its efficiency, exited its loss share agreement, grew loans 10%, grew deposits 4% while maintaining its cost of deposit advantage versus peers, reduced wholesale borrowings by $10MM, and increased its Atlanta MSA concentrations in both loans (65%, up from 62% at YE 2017) and deposits (30%, up from 27% at YE 2017).  We expect both trends to continue.  In addition, 80% of the loan growth in 2018 was due to the increase in small business relationships.  With this said, management is still focused on executing additional operational and financial improvements and finding ways to enhance overall shareholder value, including increasing our Atlanta presence.

“We are also proud to announce that we will be increasing the divided to $0.04/share in the first quarter of 2019.  These dividends will be payable February 15, 2019 to holders of record on February 1, 2019.”

Total assets were up from 3Q at $550.5MM vs. $544.0MM in 3Q18, and up slightly vs. $545.4MM in 4Q17 even after the $10MM reduction in borrowings in the quarter.

Deposit balance growth was very strong even after excluding seasonal factors, sequentially up 6% from 3Q18, and continued to be well above internal projections.  Total deposits were up 4.3% from 4Q17, with a 7% YOY increase in non-interest bearing deposits from the previous year. 

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank increased to 9.16%.  On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $6.57 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 -$0.38/share vs. -$0.55/share as of 3Q18.  Excluding the OCI impact, TBV/share grew $0.12 during the quarter.  The current fully converted share count at the end of the quarter was 8.42 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 down slightly to 0.92% from 1.11%, excluding the $540,000 of a former bank building in OREO.  Including this building, 4Q18 NPAs/total assets were 1.02% of assets vs. 1.21% in 3Q18. Excluding the impact of the Bank buildings in OREO, OREO balances were just $281,000.   

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

Statement of Operations ($000s, Unaudited)
			Q4 2017									Q1 2018				Q2 2018		Q3 2018						Q4 2018
Interest Income
Loans
Construction and Development			$	360								$	535			$	479		$	560					$	633
Commercial Real Estate				1,669									1,667				1,696			1,776						1,819
Commercial Loans				368									341				370			454						401
Multi Family				30									28				28			27						20
Residential Mortgage				1,117									1,087				1,116			1,119						1,167
Consumer Loans				68									57				56			51						48
County/Municipal Loans				24									23				23			23						25
Loss Share Loans				81									80				79			70						64
Investment Securities
Federal Funds/Overnight Funds			$	99								$	98			$	48		$	41					$	65
Bank Owned CDs				7									6				6			7						7
Investment Securities				1,036									1,187				1,214			1,181						1,187
Total Interest Income			$	4,859								$	5,109			$	5,115		$	5,311					$	5,436
Total Interest Expense			$	393								$	460			$	506		$	586					$	728
Net Interest Income			$	4,466								$	4,649			$	4,609		$	4,725					$	4,708
Provision for Loan Losses				0									125				0			46						0
Net Interest Income after Loan Losses			$	4,466								$	4,524			$	4,609		$	4,679					$	4,708
Other Income
Service Charges on Deposits			$	174								$	168			$	165		$	169					$	164
NSF/Overdraft Fees				393									350				334			350						396
Other Service Charges				63									64				63			62						65
ATM/Billpay/DR Card Income				266									262				280			273						260
Other Income				(969							)		227				125			316						172
Total Other Income			$	(73							)	$	1,071			$	967		$	1,170					$	1,057
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)			$	1,977								$	1,948			$	1,969		$	1,889					$	1,822
Employee Benefits				409									473				524			435						458
Occupancy & FF&E Expense				934									653				590			621						588
Professional Fees				154									161				156			305						136
Data Processing				488									480				489			485						476
Other Expense				825									883				832			693						724
Total Noninterest Expenses			$	4,787								$	4,598			$	4,560		$	4,428					$	4,204
Pre-Tax Income (Loss)			$	(394							)	$	997			$	1,016		$	1,421					$	1,561
Income Taxes				4,192									197				210			319						289
Net Income			$	(4,586							)	$	800			$	806		$	1,102					$	1,272

Balance Sheet ($000s, Unaudited)
Assets	Q4 2017					Q1 2018				Q2 2018					Q3 2018					Q4 2018
Current Assets
Cash & Due from Bank	$	42,146				$	24,603			$	18,408				$	14,189				$	20,168
Federal Funds/Overnight Funds		2,356					0				5,446					0					6,070
Bank Owned CDs		1,319					1,319				1,319					1,322					1,322
Investment Securities		165,203					182,569				169,924					166,632					162,936
Total Current Assets	$	211,024				$	208,491			$	195,097				$	182,143					190,496
Loans
Construction and Development	$	31,184				$	31,475			$	34,157				$	43,113				$	40,420
Commercial Real Estate		133,191					138,931				134,653					148,219					144,329
Commercial Loans		26,681					28,048				29,873					29,997					29,452
Multi Family		2,283					2,150				2,230					1,518					1,466
Residential Mortgage		87,001					92,973				92,346					88,357					94,199
Consumer Loans		3,304					5,738				3,361					2,143					2,579
County/Municipal Loans		2,771					2,511				2,480					2,459					2,438
Loss Share Loans		4,593					4,536				4,480					3,466					4,030
Total Loans	$	291,008				$	306,362			$	303,581				$	319,272				$	318,914
Allowance for Loss		(2,820			)		(3,028		)		(3,037			)		(3,060			)		(3,042
Net Loans	$	288,188				$	303,334			$	300,544				$	316,212				$	315,872
OREO		2,760					2,697				879					720					821
FDIC Indemnification		112					112				112					0					0
BOLI		21,359					21,490				21,640					21,773					21,909
Fixed Assets, net		9,915					10,166				9,970					9,733					9,511
Intangible Assets		242					197				152					126					116
Other Assets		11,754					13,228				12,880					13,365					11,759
Total Assets	$	545,354				$	559,715			$	541,274				$	544,072				$	550,484
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs	$	99,906				$	95,714			$	97,587				$	88,768				$	106,821
Interest Bearing Demand		73,555					76,198				81,262					64,684					62,829
Celebration Checking		102,368					105,247				105,358					101,474					99,694
Money Market Accts		29,699					29,673				30,402					47,286					55,836
Savings		43,147					44,030				43,862					44,139					43,574
CDs Less Than $100k		59,273					57,827				57,600					57,349					56,864
CDs Greater than $100k		36,723					37,232				30,477					34,795					38,007
Total Deposits	$	444,671				$	445,921			$	446,548				$	438,495				$	463,625

Other Liabilities		7,067			1,639			1,874			2,115			1,493
Net Borrowings (Wholesale Funding)		40,000			59,666			40,000			50,641			30,000
Total Liabilities	$	491,738		$	507,226		$	488,422		$	491,251		$	495,118
Total Equity		53,616			52,489			52,852			52,821			55,366
Total Liabilities & Stockholders' Equity	$	545,354		$	559,715		$	541,274		$	544,072		$	550,484

Ratios
	Q4 2017		Q1 2018		Q2 2018		Q3 2018		Q4 2018
ROAA	-0.84	%	0.58	%	0.59	%	0.81	%	0.93	%
ROAE	-7.81	%	6.03	%	6.12	%	8.35	%	9.40	%
NPAs/Assets (Core)	1.05	%	0.99	%	1.25	%	1.11	%	0.92	%
Est. T1 Leverage (Bank)	8.27	%	8.42	%	8.56	%	8.94	%	9.16	%
Total Common Equiv. Shares	8,413,372		8,413,372		8,413,372		8,421,992		8,421,992
NIM	3.68	%	3.83	%	3.73	%	3.78	%	3.79	%
Cost of Deposits	0.24	%	0.24	%	0.25	%	0.33	%	0.44	%
Loan/Deposit	65.3	%	68.3	%	68.0	%	72.5	%	68.8	%
Employees	115		116		115		110		106