WOODSTOCK, Ga., July 28, 2016 (GLOBE NEWSWIRE) -- Andrew Borrmann, Chief Financial Officer of SouthCrest Financial Group, Inc. (PinkSheets:SCSG) announced today that the company reported preliminary net income of $11.4 million or $1.36/share for the second quarter ended June 30, 2016. “As we expected, we were able to reverse $10.6 million of the valuation allowance against our deferred tax asset during the second quarter. This has long been the focus of the Company and we are proud to clear another significant hurdle in the ongoing improvement of SouthCrest.” Borrmann continued “The efforts of all our employees to achieve these goals cannot be over emphasized. We continue to improve our operating expenses and now expect the expense run rate to fall under $17.5 million/year during the next several months.”
Core pre-tax earnings for the quarter were $1.4 million. Unusual items during the quarter included $403,000 of securities losses, and $164,000 of one time payments for contract buyouts and incentives. This equates to an approximate 1.0% pre-tax ROA for the quarter. On a core basis, expenses for the quarter were $4.5 million, down from approximately $6.0 million in 2Q15.
Loans were effectively flat and deposits fell approximately 3% during the second quarter. The decline in deposits is due to an update of the service fee schedule that is improving non-interest income by well over $500,000 year. These have been some deposit accounts close due the fee reset, but the Company took this possibility into account when analyzing the potential impact of the change.
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 $7.25 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 2Q16 NPAs/total assets declining to 1.08% of assets. Noncurrent loans/total loans is now just 1.22%, down from 1.97% in the year ago period. Other real estate owned increased slightly from 1Q16 and now stands at $1.77 million.
SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, 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.
| Statement of Operations ($000s, Unaudited) | ||||||||||||||||
| 2015 | 2016 | |||||||||||||||
| Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||
| Interest Income | ||||||||||||||||
| Loans | ||||||||||||||||
| Construction and Development | $ | 231 | $ | 261 | $ | 205 | $ | 206 | $ | 143 | ||||||
| Commercial Real Estate | 1,374 | 1,483 | 1,512 | 1,465 | 1,479 | |||||||||||
| Commercial Loans | 261 | 301 | 275 | 280 | 280 | |||||||||||
| Multi Family | 26 | 29 | 27 | 26 | 18 | |||||||||||
| Residential Mortgage | 1,464 | 1,521 | 1,454 | 1,415 | 1,337 | |||||||||||
| Consumer Loans | 212 | 197 | 178 | 166 | 156 | |||||||||||
| County/Municipal Loans | 43 | 59 | 65 | 29 | 28 | |||||||||||
| Loss Share Loans | 324 | 214 | 140 | 116 | 132 | |||||||||||
| Investment Securities | ||||||||||||||||
| Federal Funds/Overnight Funds | $ | 16 | $ | 11 | $ | 22 | $ | 38 | $ | 27 | ||||||
| Bank Owned CDs | 7 | 7 | 8 | 7 | 8 | |||||||||||
| Investment Securities | 960 | 904 | 916 | 1030 | 1083 | |||||||||||
| Total Interest Income | $ | 4,918 | $ | 4,987 | $ | 4,803 | $ | 4,779 | $ | 4,685 | ||||||
| Total Interest Expense | $ | 309 | $ | 308 | $ | 302 | $ | 299 | $ | 267 | ||||||
| Net Interest Income | $ | 4,611 | $ | 4,679 | $ | 4,501 | $ | 4,480 | $ | 4,417 | ||||||
| Provision for Loan Losses | 200 | 0 | 150 | 50 | 0 | |||||||||||
| Net Interest Income after Loan Losses | $ | 4,409 | $ | 4,679 | $ | 4,351 | $ | 4,430 | $ | 4,417 | ||||||
| Other Income | ||||||||||||||||
| Service Charges on Deposits | $ | 99 | $ | 113 | $ | 110 | $ | 105 | $ | 215 | ||||||
| NSF/Overdraft Fees | 513 | 543 | 525 | 475 | 515 | |||||||||||
| Other Service Charges | 95 | 78 | 93 | 74 | 79 | |||||||||||
| ATM/Billpay/DR Card Income | 392 | 352 | 370 | 293 | 336 | |||||||||||
| Other Income | 1,017 | 973 | 475 | 829 | (47 | ) | ||||||||||
| Total Other Income | $ | 2,116 | $ | 2,059 | $ | 1,535 | $ | 1,776 | $ | 1,098 | ||||||
| Non-Interest Expense | ||||||||||||||||
| Salaries, Other Comp (+ FAS123R) | $ | 2,492 | $ | 2,419 | $ | 2,257 | $ | 2,006 | $ | 1,772 | ||||||
| Employee Benefits | 440 | 424 | 645 | 591 | 360 | |||||||||||
| Occupancy & FF&E Expense | 1,004 | 1,020 | 919 | 933 | 848 | |||||||||||
| Professional Fees | 249 | 206 | 263 | 174 | 209 | |||||||||||
| Data Processing | 221 | 244 | 321 | 305 | 521 | |||||||||||
| OREO and Credit related Exp. | 67 | 156 | 146 | 41 | 36 | |||||||||||
| Other Expense | 1,575 | 1,608 | 1,409 | 1,243 | 927 | |||||||||||
| Total Noninterest Expenses | $ | 6,048 | $ | 6,077 | $ | 5,927 | $ | 5,293 | $ | 4,673 | ||||||
| Pre-Tax Income (Loss) | $ | 477 | $ | 661 | $ | (36 | ) | $ | 913 | $ | 842 | |||||
| Income Taxes | - | - | - | - | (10,592 | ) | ||||||||||
| Net Income | $ | 477 | $ | 661 | $ | (36 | ) | $ | 913 | $ | 11,434 | |||||
| Preferred Dividends | $ | 125 | $ | 125 | $ | 125 | $ | 125 | $ | 125 | ||||||
| Balance Sheet ($000s, Unaudited) | |||||||||||||||||||||
| 2015 | 2016 | ||||||||||||||||||||
| Assets | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||||||
| Current Assets | |||||||||||||||||||||
| Cash & Due from Bank | $ | 22,335 | $ | 20,355 | $ | 44,157 | $ | 30,427 | $ | 34,838 | |||||||||||
| Federal Funds/Overnight Funds | 10,736 | 14,171 | 2,186 | 3,306 | 569 | ||||||||||||||||
| Bank Owned CDs | 1,814 | 1,815 | 1,815 | 1,815 | 1,716 | ||||||||||||||||
| Investment Securities | 179,276 | 145,247 | 174,998 | 191,905 | 161,177 | ||||||||||||||||
| Mortgage Loans Held for Sale | 1,869 | 3,011 | 899 | 0 | 0 | ||||||||||||||||
| Total Current Assets | $ | 216,030 | $ | 184,599 | $ | 224,055 | $ | 227,452 | $ | 198,300 | |||||||||||
| Loans | |||||||||||||||||||||
| Construction and Development | $ | 16,495 | $ | 16,165 | $ | 16,229 | $ | 13,692 | $ | 11,285 | |||||||||||
| Commercial Real Estate | 106,549 | 119,888 | 118,780 | 116,175 | 119,419 | ||||||||||||||||
| Commercial Loans | 18,646 | 21,236 | 21,246 | 21,296 | 21,863 | ||||||||||||||||
| Multi Family | 2,187 | 2,152 | 2,117 | 1,450 | 1,419 | ||||||||||||||||
| Residential Mortgage | 116,961 | 116,969 | 114,803 | 110,094 | 107,270 | ||||||||||||||||
| Consumer Loans | 11,787 | 10,814 | 9,657 | 7,096 | 7,977 | ||||||||||||||||
| County/Municipal Loans | 7,631 | 12,293 | 3,911 | 3,537 | 4,501 | ||||||||||||||||
| Loss Share Loans | 10,815 | 10,345 | 9,543 | 9,360 | 7,689 | ||||||||||||||||
| Total Loans | $ | 291,071 | $ | 309,862 | $ | 296,286 | $ | 282,700 | $ | 281,425 | |||||||||||
| Allowance for Loss | (3,263 | ) | (2,881 | ) | (3,052 | ) | (3,021 | ) | (2,817 | ) | |||||||||||
| Net Loans | $ | 287,808 | $ | 306,981 | $ | 293,234 | $ | 279,679 | $ | 278,608 | |||||||||||
| OREO | 3,552 | 3,331 | 2,421 | 1,500 | 1,769 | ||||||||||||||||
| FDIC Indemnification | 503 | 498 | 474 | 419 | 433 | ||||||||||||||||
| BOLI | 19,995 | 20,130 | 20,265 | 20,391 | 20,548 | ||||||||||||||||
| Fixed Assets, net | $ | 18,720 | $ | 18,553 | $ | 18,214 | $ | 17,671 | $ | 17,362 | |||||||||||
| Intangible Assets | 535 | 648 | 618 | 583 | 555 | ||||||||||||||||
| Other Assets | 6,552 | 6,339 | 6,983 | 6,651 | 33,982 | ||||||||||||||||
| Total Assets | $ | 553,695 | $ | 541,079 | $ | 566,264 | $ | 554,346 | $ | 551,557 | |||||||||||
| Liabilities & Stockholders' Equity | |||||||||||||||||||||
| Liabilities | |||||||||||||||||||||
| Deposits | |||||||||||||||||||||
| DDAs | $ | 120,659 | $ | 114,345 | $ | 130,877 | $ | 119,343 | $ | 112,974 | |||||||||||
| Interest Bearing Demand | 53,979 | 50,965 | 62,784 | 61,172 | 55,248 | ||||||||||||||||
| Celebration Checking | 82,246 | 90,893 | 97,316 | 108,076 | 110,894 | ||||||||||||||||
| Money Market Accts | 42,004 | 41,731 | 38,643 | 35,289 | 33,858 | ||||||||||||||||
| Savings | 57,887 | 56,517 | 55,550 | 55,831 | 53,397 | ||||||||||||||||
| CDs Less Than $100k | 88,158 | 84,510 | 81,930 | 79,221 | 76,301 | ||||||||||||||||
| CDs Greater than $100k | 49,697 | 46,603 | 44,080 | 39,576 | 40,585 | ||||||||||||||||
| Total Deposits | $ | 494,630 | $ | 485,564 | $ | 511,180 | $ | 498,508 | $ | 483,257 | |||||||||||
| Other Liabilities | 6,684 | 2,414 | 2,690 | 1,988 | 1,919 | ||||||||||||||||
| Net Borrowings (Wholesale Funding) | - | - | - | - | - | ||||||||||||||||
| Total Liabilities | $ | 501,314 | $ | 487,978 | $ | 513,870 | $ | 500,496 | $ | 485,176 | |||||||||||
| Total Equity | 52,381 | 53,101 | 52,394 | 53,850 | 66,381 | ||||||||||||||||
| Total Liabilities & Stockholders' Equity | $ | 553,695 | $ | 541,079 | $ | 566,264 | $ | 554,346 | $ | 551,557 | |||||||||||
| Ratios | |||||||||||||||
| 2Q 2015 | 3Q 2015 | 4Q 2015 | 1Q 2016 | 2Q 2016 | |||||||||||
| ROAA | 0.34 | % | 0.48 | % | -0.01 | % | 0.66 | % | 8.29 | % | |||||
| ROAE | 3.65 | % | 5.01 | % | -0.10 | % | 6.80 | % | 76.1 | % | |||||
| NPAs/Assets (Core) | 1.71 | % | 1.68 | % | 1.40 | % | 1.18 | % | 1.08 | % | |||||
| Tier 1 Leverage | 8.81 | % | 9.12 | % | 8.87 | % | 8.94 | % | 9.42 | % | |||||
| Total Common Equiv. Shares | 8,380,337 | 8,380,337 | 8,380,337 | 8,380,337 | 8,380,337 | ||||||||||
| NIM | 3.81 | % | 3.76 | % | 3.57 | % | 3.47 | % | 3.59 | % | |||||
| Cost of Funds | 0.25 | % | 0.25 | % | 0.24 | % | 0.24 | % | 0.22 | % | |||||
| Loan/Deposit | 58.8 | % | 63.8 | % | 57.9 | % | 56.6 | % | 58.2 | % | |||||
| Employees | 170 | 163 | 153 | 129 | 127 | ||||||||||