SouthCrest Financial Group Reports Preliminary 4Q18 Earnings

ATLANTA, Jan. 24, 2019 — 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 2017Q1 2018Q2 2018Q3 2018Q4 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)  
AssetsQ4 2017 Q1 2018 Q2 2018  Q3 2018Q4 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 2017Q1 2018Q2 2018Q3 2018Q4 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. Shares8,413,372 8,413,372 8,413,372 8,421,992 8,421,992 
NIM3.68%3.83%3.73%3.78%3.79%
Cost of Deposits0.24%0.24%0.25%0.33%0.44%
Loan/Deposit65.3%68.3%68.0%72.5%68.8%
Employees115 116 115 110 106 

 

SouthCrest Financial Group Reports Preliminary 4Q18 Earnings 1

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