PEACHTREE CITY, Ga., April 29, 2014 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (OTCBB:SCSG) announced today that the company reported preliminary results for the first quarter of 2014.
During the quarter the Company produced a net loss of $958,000, an improvement from a $1.3 million loss excluding consolidation expenses in 4Q13. "During the quarter we initiated a significant portion of the initial cost saves that we expected from the charter consolidation finalized February 28th. Total operational expenses were down $565,000 from 4Q13 in the salary, benefits, and professional fee lines. While this is a real positive, and a better result than we expected this early in the process, we plan to improve on these levels substantially over the remainder of the year." During the quarter, salaries were down $171,000 from 4Q13, benefits were up $30,000 due to an increase in unemployment insurance, and professional fees were down $424,000. "We are fully committed to returning SouthCrest to peer-level profitability through better efficiencies and higher revenues," Maloy added.
The Company's balance sheet improvement continued with $4.9 million of loan growth (8.0% annualized from 4Q13) and $3.0 million of growth in interest and non-interest bearing checking account balances (6% annualized). Total deposits grew $8.6 million, or 7% annualized while total assets grew 5% annualized. "Based on our current pipeline, we believe that our loan growth will be stronger in the second quarter, and we continue to be pleased with the overall mix shift on both sides of our balance sheet," said Maloy.
SouthCrest has a loss sharing agreement, related to the purchase of a small failed bank in 2010, which expires in March, 2015. To continue to properly manage the indemnification asset, the Company accelerated both the income accretion and the indemnification expense in the first quarter by nearly $1.0 million and expects similar levels to occur in 2Q14. Based on the current analysis, SouthCrest's accounting for the indemnification asset should align closely with related income over the remaining life of the loss share agreement which expires in March 2015, and should not cause any one time material impact in the financial reports. The indemnification asset is now down to $4.6 million from $6.4 million at the end of 2013.
The estimated Tier 1 Leverage ratio at the end of the quarter was 10.97%, down slightly from 11.02% at the end of 2013 as a result of the capital raise that occurred in 3Q13. On a fully converted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share ended the quarter at $5.83 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 totaled $10.8 million.
SouthCrest Financial Group, Inc. is a $560 million asset bank holding company headquartered in Peachtree City, Georgia. The company operates a 13 branch network throughout Georgia and Alabama through its subsidiary bank, SouthCrest Bank, N.A. The bank provides retail and commercial banking services, mortgage banking, investment management, 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) | 2013 | 2014 | |||
| Q1 | Q2 | Q3 | Q4 | Q1 | |
| Interest Income | |||||
| Loans | |||||
| Construction and Development | $201 | $199 | $213 | $186 | $215 |
| Commercial Real Estate | 974 | 1,012 | 1,004 | 1,058 | 1,081 |
| Commercial Loans | 155 | 151 | 156 | 175 | 185 |
| Multi Family | 18 | 16 | 19 | 14 | 17 |
| Residential Mortgage | 1,468 | 1,432 | 1,426 | 1,408 | 1,430 |
| Consumer Loans | 482 | 458 | 471 | 436 | 384 |
| SCM Loans | 110 | 100 | 84 | 72 | 31 |
| Loss Share Loans | 347 | 313 | 299 | 288 | 310 |
| Investment Securities | |||||
| Federal Funds/Overnight Funds | $80 | $80 | $74 | $59 | $66 |
| Bank Owned CDs | 14 | 13 | 13 | 14 | 8 |
| Investment Securities | 557 | 604 | 665 | 686 | 767 |
| Total Interest Income | $4,405 | $4,377 | $4,425 | $4,396 | 4,494 |
| Total Interest Expense | $484 | $436 | $397 | $357 | $327 |
| Net Interest Income | $3,922 | $3,941 | $4,028 | $4,039 | $4,167 |
| Provision for Loan Losses | 400 | -- | -- | -- | -- |
| Net Interest Income after Loan Losses | $3,522 | $3,941 | $4,028 | $4,039 | $4,167 |
| Other Income | |||||
| Service Charges on Deposits | $122 | $112 | $112 | $109 | $108 |
| NSF/Overdraft Fees | 552 | 571 | 611 | 587 | 526 |
| Other Service Charges | 86 | 104 | 94 | 88 | 89 |
| ATM/Billpay/DR Card Income | 322 | 362 | 354 | 369 | 394 |
| Gain on Sale of loans | 415 | 322 | 159 | 295 | 364 |
| Other Income | 757 | 699 | 1,032 | 851 | 1,676 |
| Total Other Income | $2,254 | $2,170 | $2,362 | $2,299 | $3,157 |
| Non-Interest Expense | |||||
| Salaries, Other Comp (+ FAS123R) | $2,623 | $2,560 | $2,838 | $3,061 | $2,890 |
| Employee Benefits | 658 | 524 | 574 | 628 | 658 |
| Occupancy & FF& E Expense | 676 | 760 | 757 | 852 | 857 |
| Professional Fees | 355 | 587 | 524 | 757 | 333 |
| Data Processing | 254 | 398 | 291 | 292 | 247 |
| OREO and Credit related Exp. | 451 | 178 | 293 | 276 | 295 |
| Other Expense | 1,847 | 1,886 | 2,052 | 2,746 | 2,962 |
| Total Noninterest Expenses | $6,864 | $6,893 | $7,329 | $8,612 | $8,282 |
| Pre-Tax Income (Loss) | $ (1,088) | $ (782) | $ (939) | $ (2,274) | $ (958) |
| Income Taxes | -- | -- | -- | -- | -- |
| Net Loss | $ (1,088) | $ (782) | $ (939) | $ (2,274) | $ (958) |
| Balance Sheet ($000s) | 2013 | 2014 | |||
| Assets | Q1 | Q2 | Q3 | Q4 | Q1 |
| Current Assets | |||||
| Cash & Due from Bank | $16,468 | $15,412 | $29,665 | $24,467 | $27,766 |
| Federal Funds/Overnight Funds | 108,342 | 114,068 | 92,064 | 99,080 | 75,795 |
| Bank Owned CDs | 5,909 | 6,888 | 5,914 | 3,247 | 3,762 |
| Investment Securities | 116,360 | 113,784 | 122,132 | 123,685 | 143,221 |
| Mortgage Loans Held for Sale | 4,239 | 3,713 | 2,803 | 4,642 | 7,548 |
| Total Current Assets | $251,318 | $253,865 | $252,578 | $255,121 | $258,092 |
| Loans | |||||
| Construction and Development | $13,110 | $12,696 | $13,424 | $14,404 | $17,344 |
| Commercial Real Estate | 79,046 | 76,646 | 76,705 | 82,492 | 85,158 |
| Commercial Loans | 9,910 | 9,566 | 8,985 | 9,977 | 9,352 |
| Multi Family | 2,281 | 2,216 | 2,278 | 2,155 | 2,112 |
| Residential Mortgage | 103,762 | 102,786 | 104,186 | 105,496 | 107,654 |
| Consumer Loans | 20,735 | 19,916 | 20,464 | 19,352 | 17,283 |
| SCM Loans | 9,978 | 9,410 | 11,665 | 3,845 | 3,684 |
| Loss Share Loans | 14,670 | 14,372 | 13,622 | 13,426 | 13,957 |
| Total Loans | $253,492 | $247,608 | $251,329 | 251,147 | 256,544 |
| Allowance for Loss | (5,486) | (4,745) | (4,444) | (4,443) | (4,294) |
| Net Loans | $248,006 | $242,863 | $246,885 | $246,704 | $252,250 |
| Core Loans | $238,822 | $233,236 | $237,707 | 237,721 | 242,587 |
| OREO | $8,245 | $11,441 | $9,966 | $5,283 | 4,763 |
| FDIC Indemnification | 8,562 | 7,688 | 7,266 | 6,374 | 4,642 |
| BOLI | 18,725 | 18,886 | 19,021 | 19,156 | 19,283 |
| Fixed Assets, net | 17,224 | 17,200 | 18,742 | 18,617 | $19,314 |
| -- | |||||
| Intangible Assets | 1,135 | 1,080 | 1,002 | 920 | 838 |
| Accrued Interest Receivable | -- | ||||
| Other Assets | 6,411 | 6,440 | 6,405 | 7,141 | 6,979 |
| Total Assets | $559,626 | $559,463 | $561,865 | $559,316 | $566,161 |
| Liabilities & Stockholders' Equity | |||||
| Liabilities | |||||
| Deposits | |||||
| DDAs | $114,063 | $119,096 | $115,614 | $127,477 | $126,454 |
| Interest Bearing Demand | 48,914 | 50,914 | 50,218 | 48,950 | 52,320 |
| Rewards Checking | 35,131 | 32,981 | 32,352 | 32,596 | 33,292 |
| Money Market Accts | 58,152 | 58,500 | 57,197 | 54,704 | 53,658 |
| Savings | 64,131 | 64,823 | 63,820 | 61,960 | 65,174 |
| CDs Less Than $100k | 120,310 | 116,326 | 112,421 | 107,989 | 104,808 |
| CDs Greater than $100k | 56,520 | 56,191 | 53,389 | 50,623 | 57,230 |
| Total Deposits | $497,221 | $498,831 | $485,011 | $484,299 | $492,936 |
| Other Liabilities | $9,642 | $10,053 | $10,289 | $11,576 | 10,585 |
| Net Borrowings (Wholesale Funding) | 275 | -- | 330 | -- | -- |
| Total Liabilities | $507,138 | $508,884 | $495,630 | $495,875 | $503,521 |
| Total Equity | $52,488 | $50,579 | $66,235 | $63,441 | $62,640 |
| Total Liabilities & Stockholders' Equity | $559,626 | $559,463 | $561,865 | $559,316 | $559,316 |
| Ratios | |||||
| 1Q 2013 | 2Q 2013 | 3Q 2013 | 4Q 2013 | 1Q 2014 | |
| ROAA | -0.79% | -0.56% | -0.67% | -1.62% | -0.68% |
| ROAE | -8.23% | -6.08% | -6.80% | -14.02% | -6.09% |
| NPAs/Assets (Core) | 2.72% | 2.27% | 2.31% | 1.64% | 1.84% |
| Tier 1 Leverage | 8.93% | 8.67% | 11.67% | 11.02% | 10.97% |
| Total Common Equiv. Shares | 4,914,991 | 4,914,991 | 8,380,337 | 8,380,337 | 8,380,337 |
| NIM | 3.27% | 3.23% | 3.38% | 3.36% | 3.42% |
| Cost of Funds | 0.39% | 0.35% | 0.32% | 0.29% | 0.27% |
| Loan/Deposit | 51.0% | 49.6% | 51.8% | 51.9% | 52.0% |