SouthCrest Financial Group Reports Preliminary 1Q17 Earnings


WOODSTOCK, Ga., April 20, 2017 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary net income of $930,000 or $0.11/share for the first quarter ended March 31, 2017. 

“I think the first quarter’s results are a good barometer of where the Company stands.  On a net basis our core earnings and un-adjusted earnings are effectively the same. We were excited to recently announce the dividend expense savings created by the final Series A and Series B Preferred share redemption (former TARP shares), and we are starting to see the impact of recent Atlanta metro region lending hires as we get ready to move into our Midtown headquarters during May,” Schmitt said.

“Unfortunately, we did have a delay in the closing of our Alabama branch sale due to regulatory schedules,” Schmitt continued.  “This is a top focus of senior management, and we are very confident that the deal will be completed even if the timeline has been stretched.

“The Company has two former locations in OREO and awaiting sale, which could cause additional one-time expenses during the next several quarters. Outside of that, management continues to push on expenses while taking the next steps to improve the loan book and overall profitability of the Bank. Our long term profitability target, which could be hit on a quarterly basis as early as late 2018, remains 1.0% ROAA,” Schmitt added. 

Core pre-tax earnings for the quarter were $1.36 million, with net unusual items during the quarter totaling $32,000 of pre-tax income. On a core basis, expenses for the quarter were $4.4 million, flat with the past few quarters, but down over 15% from 1Q16.

Loan balances were down less than 1% from 4Q16 and up 3% from 1Q16, with the weakness in growth due to a slow start to the quarter combining with the welcome payoff of the largest substandard loan in the portfolio at no loss. Activity late in the quarter improved and should lead to a good second quarter result. The Company continues to look for additional bankers who can drive both loan and deposit growth in the metro Atlanta area.  

Deposits were lower year over year and linked quarter by 2%, which was consistent with historic seasonality. Overall deposit mix continues to improve with balances in transaction accounts up 3% year over year, with a 7% year over year decline in CD balances.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.82% as a result of the $3.9 million dividend to the holding company as part of the preparation to redeem the former TARP shares. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.19 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 $0.13/share. The current fully converted share count at the end of the quarter is 8.39 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 remained solid with the aforementioned payoff of a nearly $3 million substandard loan. The Company maintains $2.1 million of former bank buildings that are projected to be sold over the next several quarters in OREO. Excluding these buildings, 1Q17 NPAs/total assets was flat at 0.84% of assets, including the buildings the number level was 1.23%. Excluding the impact of the Bank buildings in OREO, OREO balances were down to $499,000.   

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, GA until May 2017, at which time it will relocate the Bank and Financial Group headquarters to Atlanta. The Company operates a 10 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, 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. 

    
Statement of Operations ($000s, Unaudited)   
 2016
2017 
 Q1Q2Q3Q4Q1 
Interest Income       
Loans      
Construction and Development$206$143 $153$150 $197 
Commercial Real Estate 1,465 1,479  1,537 1,645  1,691 
Commercial Loans  280  280   276  291   316 
Multi Family  26  18   18  31   27 
Residential Mortgage  1,415  1,337   1,289  1,230   1,190 
Consumer Loans  166  156   139  122   117 
County/Municipal Loans 29 28  29 42  25 
Loss Share Loans  116  132   132  119   111 
Investment Securities       
Federal Funds/Overnight Funds$ 38$ 27 $ 42$ 28 $ 58 
Bank Owned CDs  7  8  6 6  5 
Investment Securities 1,030 1,083  933 1039  967 
Total Interest Income $ 4,779$ 4,685 $ 4,556$ 4,703 $ 4,705 
       
Total Interest Expense $ 299$ 267 $ 246$ 247 $ 249 
 Net Interest Income $ 4,480$ 4,417 $ 4,311$ 4,456 $ 4,456 
Provision for Loan Losses  50  0   0  94   106 
Net Interest Income after Loan Losses $ 4,430$ 4,417 $ 4,311$ 4,362 $ 4,349 
       
       
Other Income      
Service Charges on Deposits$ 105$ 215 $ 245$ 228 $ 216 
NSF/Overdraft Fees  475  515   575  542   488 
Other Service Charges  74  79   96  83   75 
ATM/Billpay/DR Card Income  293  336   302  303   296 
Other Income 829 (47) 339 (386) 451 
Total Other Income $ 1,776$ 1,098 $ 1,560$ 768 $ 1,526 
Non-Interest Expense       
Salaries, Other Comp (+ FAS123R)$ 2,006$ 1,772 $ 1,705$ 2,014 $ 1,799 
Employee Benefits 591 360  707 463  438 
Occupancy & FF&E Expense 933 848  860 764  739 
Professional Fees 174 209  212 190  190 
Data Processing 305 521  536 525  498 
OREO/Credit related Exp. 41 36  36 36  50 
Other Expense 1,243 927    861  694   766   
Total Noninterest Expenses $5,293$4,673 $  4,917$4,687 $4,480   
Pre-Tax Income (Loss) $913$842 $ 954$443 $1,395   
Income Taxes - (10,592) 274  128   465   
Net Income$913$11,434 $ 680$315 $ 930   
Preferred Dividends$125$125   125$125 $125   
       
          
 Balance Sheet ($000s, Unaudited)       
 20162017
   
AssetsQ1Q2Q3Q4Q1 
Current Assets      
Cash & Due from Bank$ 30,427 $ 34,838 $ 31,268 $ 33,015 $ 41,302  
Federal Funds/Overnight Funds  3,306   569  0  4,299  6,688  
Bank Owned CDs  1,815   1,716   1,218   1,069   1,069  
Investment Securities  191,905   161,177   182,614   176,723   152,583  
Mortgage Loans Held for Sale 0  0  0  0  0  
Total Current Assets$ 227,452  $ 198,300  $ 215,100  $ 215,106  $ 201,642   
Loans      
Construction and Development$ 13,692 $ 11,285 $ 9,776 $ 15,159 $ 12,486  
Commercial Real Estate  116,175   119,419   121,609   138,155   140,003  
Commercial Loans  21,296   21,863   21,247   23,462   23,923  
Multi Family  1,450   1,419   1,401   2,281   2,093  
Residential Mortgage  110,094   107,270   102,512   97,194   98,302  
Consumer Loans  7,096   7,977   7,363   6,893   6,117  
County/Municipal Loans  3,537   4,501   6,456   3,387  2,999  
Loss Share Loans  9,360   7,689   7,589   7,123   6,626  
Total Loans$ 282,700  $ 281,425  $ 277,952  $ 293,654  $ 292,549   
Allowance for Loss  (3,021) (2,817) (2,701) (2,766) (2,797) 
Net Loans$ 279,679  $ 278,608  $ 275,251  $ 290,888  $ 289,752   
OREO  1,500   1,769  936  3,581  2,728  
FDIC Indemnification  419   433   425   304  238  
BOLI  20,391   20,548   20,683   20,816   20,947  
Fixed Assets, net$ 17,671 $ 17,362 $ 16,967 $ 13,717 $ 13,429  
Intangible Assets  583   555   507   468   420  
Other Assets  6,651    33,982    16,476    17,953    17,428   
Total Assets$ 554,346  $ 551,557  $ 546,385  $ 562,833  $ 546,584   
       
       
Liabilities & Stockholders' Equity      
Liabilities      
Deposits      
DDAs$ 119,343 $ 112,974 $ 111,290 $ 125,459 $ 112,286  
Interest Bearing Demand  61,172  55,248  54,552  65,654  63,949  
Celebration Checking  108,076   110,894   111,544   112,355   113,548  
Money Market Accts  35,289   33,858   33,956   32,271   27,942  
Savings  55,831   53,397   52,061   50,495   51,304  
CDs Less Than $100k  79,221   76,301   73,964   72,091   70,020  
CDs Greater than $100k  39,576   40,585   39,832   38,922   39,966   
Total Deposits$ 498,508  $ 483,257  $ 477,388  $ 497,247  $ 479,018   
       
Other Liabilities 1,988  1,919  2,281  1,252  1,632  
Net Borrowings (Wholesale Funding) -  -  317  -  -  
Total Liabilities$ 500,496  $485,176 $479,797 $498,499 $480,650  
Total Equity 53,850  66,381  66,548  64,334  65,934  
Total Liabilities & Stockholders' Equity$554,346 $551,557 $546,345 $562,833 $546,584  
                 
                 
Ratios                
  1Q 2016  2Q 2016  3Q 2016*  4Q 2016*  1Q 2017*  
ROAA 0.66% 8.29% 0.53% 0.22% 0.72% 
ROAE 6.80% 76.1% 4.74% 1.96% 6.52% 
NPAs/Assets (Core) 1.18% 1.08% 0.91% 0.83% 0.84% 
Est. Tier 1 Leverage 8.94% 9.54% 9.84% 9.73% 10.09% 
Total Common Equiv. Shares 8,380,337  8,380,337  8,380,337  8,389,954  8,389,954  
NIM 3.47% 3.59% 3.59% 3.67% 3.72% 
Cost of Funds 0.24% 0.22% 0.20% 0.20% 0.21% 
Loan/Deposit 56.6% 58.2% 58.2% 59.0% 60.3% 
Employees 129  127  123  122  122  
                 
*3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016.  2Q 2016 includes DTA valuation allowance recovery. 

            

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