SouthCrest Financial Group Reports Preliminary 4Q16 Earnings
WOODSTOCK, Ga., Jan. 25, 2017 (GLOBE NEWSWIRE) — Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (PinkSheets:SCSG) announced today that the Company reported preliminary net income of $315,000 or $0.04/share for the fourth quarter ended Dec. 31, 2016.
“We continue to push towards our long term profit goals after what I view as a very successful fourth quarter for SouthCrest. We grew loans by over 20% annualized, we absorbed the cost of selling two newly closed locations, and we continue to make progress towards better customer relationships, a higher level of employee satisfaction and higher, more consistent profitability for our shareholders,” Schmitt said.
“The quarter included one-time, pre-tax expenses of approximately $700,000,” Schmitt continued. “This was primarily due to the sale of two buildings and costs related to benefits and incentive plans. Excluding these one-time expenses, earnings for the quarter would have been $0.10/share.
“While we may have additional one-time expenses during the next few quarters as a result of additional building sales to improve our facilities costs, the goal is to have each individual sale meet a two-year earn-back hurdle,” Schmitt added. “At this time, we believe the largest of the potential losses have occurred, but we will use the two-year period to make each decision.”
Core pre-tax earnings for the quarter were $1.14 million, with net unusual items during the quarter totaling $700,000 of pre-tax expenses. On a core basis, expenses for the quarter were $4.4 million, flat with 3Q16 and down from approximately $5.6 million in 4Q15. The Company continues to have a long-term ROA target of 1.0% after tax.
Loan growth was very strong, with balances increasing by nearly $16 million from 3Q16, a 23% annualized rate. The Company added one new lender during the quarter, but actually achieved the loan growth with two fewer lenders net than the Company had in 3Q16. Management currently expects significant loan growth to continue, although perhaps at a slightly slower pace than in the fourth quarter. The Company is also currently targeting additional lending hires for the metro Atlanta market in 1Q17.
Deposits were lower year over year by 3%, which was primarily a result of an upwardly adjusted fee schedule and deposit pricing discipline. Deposits increased from 3Q16 by over 4% or 17% annualized, which is consistent with historic seasonality. Balances in DDAs and interest bearing checking increased 4% year over year, with a 12% year over year decline in CD balances.
The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank was 9.20%. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.06 per share, with the decline completely driven by the decrease in the investment portfolio that occurred late in the quarter. 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 continued its multi-quarter improvement trend, however the Company did move $2.8 million of bank buildings that are projected to be sold over the next several months to OREO. Excluding these buildings 4Q16 NPAs/total assets declining to 0.83% of assets, including the buildings, the number level was 1.33%. The sale of two of these buildings is expected to occur in 1Q17. Excluding the impact of the Bank building OREO, NPAs stood at the lowest level since March, 2008, with OREO totaling only $667,000.
ABOUT SOUTHCREST
SouthCrest Financial Group, Inc. is a $550 million asset bank holding company headquartered in Woodstock, Ga. 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) | |||||||||||||||||||
| 2015 | 2016 | ||||||||||||||||||
| Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||||||||
| Interest Income | |||||||||||||||||||
| Loans | |||||||||||||||||||
| Construction and Development | $ | 205 | $ | 206 | $ | 143 | $ | 153 | $ | 150 | |||||||||
| Commercial Real Estate | 1,512 | 1,465 | 1,479 | 1,537 | 1,645 | ||||||||||||||
| Commercial Loans | 275 | 280 | 280 | 276 | 291 | ||||||||||||||
| Multi Family | 27 | 26 | 18 | 18 | 31 | ||||||||||||||
| Residential Mortgage | 1,454 | 1,415 | 1,337 | 1,289 | 1,230 | ||||||||||||||
| Consumer Loans | 178 | 166 | 156 | 139 | 122 | ||||||||||||||
| County/Municipal Loans | 65 | 29 | 28 | 29 | 42 | ||||||||||||||
| Loss Share Loans | 140 | 116 | 132 | 132 | 119 | ||||||||||||||
| Investment Securities | |||||||||||||||||||
| Federal Funds/Overnight Funds | $ | 22 | $ | 38 | $ | 27 | $ | 42 | $ | 28 | |||||||||
| Bank Owned CDs | 8 | 7 | 8 | 6 | 6 | ||||||||||||||
| Investment Securities | 916 | 1,030 | 1,083 | 933 | 1039 | ||||||||||||||
| Total Interest Income | $ | 4,803 | $ | 4,779 | $ | 4,685 | $ | 4,556 | $ | 4,703 | |||||||||
| Total Interest Expense | $ | 302 | $ | 299 | $ | 267 | $ | 246 | $ | 247 | |||||||||
| Net Interest Income | $ | 4,501 | $ | 4,480 | $ | 4,417 | $ | 4,311 | $ | 4,456 | |||||||||
| Provision for Loan Losses | 150 | 50 | 0 | 0 | 94 | ||||||||||||||
| Net Interest Income after Loan Losses | $ | 4,351 | $ | 4,430 | $ | 4,417 | $ | 4,311 | $ | 4,362 | |||||||||
| Other Income | |||||||||||||||||||
| Service Charges on Deposits | $ | 110 | $ | 105 | $ | 215 | $ | 245 | $ | 228 | |||||||||
| NSF/Overdraft Fees | 525 | 475 | 515 | 575 | 542 | ||||||||||||||
| Other Service Charges | 93 | 74 | 79 | 96 | 83 | ||||||||||||||
| ATM/Billpay/DR Card Income | 370 | 293 | 336 | 302 | 303 | ||||||||||||||
| Other Income | 475 | 829 | (47 | ) | 339 | -386 | |||||||||||||
| Total Other Income | $ | 1,573 | $ | 1,776 | $ | 1,098 | $ | 1,560 | $ | 768 | |||||||||
| Non-Interest Expense | |||||||||||||||||||
| Salaries, Other Comp (+ FAS123R) | $ | 2,257 | $ | 2,006 | $ | 1,772 | $ | 1,705 | $ | 2,014 | |||||||||
| Employee Benefits | 645 | 591 | 360 | 707 | 463 | ||||||||||||||
| Occupancy & FF&E Expense | 919 | 933 | 848 | 860 | 764 | ||||||||||||||
| Professional Fees | 263 | 174 | 209 | 212 | 190 | ||||||||||||||
| Data Processing | 321 | 305 | 521 | 536 | 525 | ||||||||||||||
| OREO/Credit related Exp. | 146 | 41 | 36 | 36 | 36 | ||||||||||||||
| Other Expense | 1,409 | 1,243 | 927 | 861 | 694 | ||||||||||||||
| Total Noninterest Expenses | $ | 5,960 | $ | 5,293 | $ | 4,673 | $ | 4,917 | $ | 4,687 | |||||||||
| Pre-Tax Income (Loss) | ($ | 36 | ) | $ | 913 | $ | 842 | $ | 954 | $ | 443 | ||||||||
| Income Taxes | – | – | (10,592 | ) | 274 | 128 | |||||||||||||
| Net Income | ($ | 36 | ) | $ | 913 | $ | 11,434 | $ | 680 | $ | 315 | ||||||||
| Preferred Dividends | $ | 125 | $ | 125 | $ | 125 | $ | 125 | $ | 125 | |||||||||
| Balance Sheet ($000s, Unaudited) | |||||||||||||||||||
| 2015 | 2016 | ||||||||||||||||||
| Assets | Q4 | Q1 | Q2 | Q3 | Q4 | ||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash & Due from Bank | $ | 44,157 | $ | 30,427 | $ | 34,838 | $ | 31,268 | $ | 33,015 | |||||||||
| Federal Funds/Overnight Funds | 2,186 | 3,306 | 569 | 0 | 4,299 | ||||||||||||||
| Bank Owned CDs | 1,815 | 1,815 | 1,716 | 1,218 | 1,069 | ||||||||||||||
| Investment Securities | 174,998 | 191,905 | 161,177 | 182,614 | 176,723 | ||||||||||||||
| Mortgage Loans Held for Sale | 899 | 0 | 0 | 0 | 0 | ||||||||||||||
| Total Current Assets | $ | 224,055 | $ | 227,452 | $ | 198,300 | $ | 215,100 | $ | 215,106 | |||||||||
| Loans | |||||||||||||||||||
| Construction and Development | $ | 16,229 | $ | 13,692 | $ | 11,285 | $ | 9,776 | $ | 15,159 | |||||||||
| Commercial Real Estate | 118,780 | 116,175 | 119,419 | 121,609 | 138,155 | ||||||||||||||
| Commercial Loans | 21,246 | 21,296 | 21,863 | 21,247 | 23,462 | ||||||||||||||
| Multi Family | 2,117 | 1,450 | 1,419 | 1,401 | 2,281 | ||||||||||||||
| Residential Mortgage | 114,803 | 110,094 | 107,270 | 102,512 | 97,194 | ||||||||||||||
| Consumer Loans | 9,657 | 7,096 | 7,977 | 7,363 | 6,893 | ||||||||||||||
| County/Municipal Loans | 3,911 | 3,537 | 4,501 | 6,456 | 3,387 | ||||||||||||||
| Loss Share Loans | 9,543 | 9,360 | 7,689 | 7,589 | 7,123 | ||||||||||||||
| Total Loans | $ | 296,286 | $ | 282,700 | $ | 281,425 | $ | 277,952 | $ | 277,952 | |||||||||
| Allowance for Loss | (3,052 | ) | (3,021 | ) | (2,817 | ) | (2,701 | ) | (2,766 | ) | |||||||||
| Net Loans | $ | 293,234 | $ | 279,679 | $ | 278,608 | $ | 275,251 | $ | 290,888 | |||||||||
| OREO | 2,421 | 1,500 | 1,769 | 936 | 3,581 | ||||||||||||||
| FDIC Indemnification | 474 | 419 | 433 | 425 | 304 | ||||||||||||||
| BOLI | 20,265 | 20,391 | 20,548 | 20,683 | 20,816 | ||||||||||||||
| Fixed Assets, net | $ | 18,214 | $ | 17,671 | $ | 17,362 | $ | 16,967 | $ | 13,717 | |||||||||
| Intangible Assets | 618 | 583 | 555 | 507 | 468 | ||||||||||||||
| Other Assets | 6,983 | 6,651 | 33,982 | 16,476 | 17,953 | ||||||||||||||
| Total Assets | $ | 566,264 | $ | 554,346 | $ | 551,557 | $ | 546,385 | $ | 562,833 | |||||||||
| Liabilities & Stockholders’ Equity | |||||||||||||||||||
| Liabilities | |||||||||||||||||||
| Deposits | |||||||||||||||||||
| DDAs | $ | 130,877 | $ | 119,343 | $ | 112,974 | $ | 111,290 | $ | 125,459 | |||||||||
| Interest Bearing Demand | 62,784 | 61,172 | 55,248 | 54,552 | 65,654 | ||||||||||||||
| Celebration Checking | 97,316 | 108,076 | 110,894 | 111,544 | 112,355 | ||||||||||||||
| Money Market Accts | 38,643 | 35,289 | 33,858 | 33,956 | 32,271 | ||||||||||||||
| Savings | 55,550 | 55,831 | 53,397 | 52,061 | 50,495 | ||||||||||||||
| CDs Less Than $100k | 81,930 | 79,221 | 76,301 | 73,964 | 72,091 | ||||||||||||||
| CDs Greater than $100k | 44,080 | 39,576 | 40,585 | 39,832 | 38,922 | ||||||||||||||
| Total Deposits | $ | 511,180 | $ | 498,508 | $ | 483,257 | $ | 477,388 | $ | 497,247 | |||||||||
| Other Liabilities | 2,690 | 1,988 | 1,919 | 2,281 | 1,252 | ||||||||||||||
| Net Borrowings (Wholesale Funding) | – | – | – | 317 | – | ||||||||||||||
| Total Liabilities | $ | 513,870 | $ | 500,496 | $ | 485,176 | $ | 479,797 | $ | 498,499 | |||||||||
| Total Equity | 52,394 | 53,850 | 66,381 | 66,548 | 64,334 | ||||||||||||||
| Total Liabilities & Stockholders’ Equity | $ | 566,264 | $ | 554,346 | $ | 551,557 | $ | 546,345 | $ | 562,833 | |||||||||
| Ratios | |||||||||||||||||||
| 4Q 2015 | 1Q 2016 | 2Q 2016 | 3Q 2016* | 4Q 2016* | |||||||||||||||
| ROAA | -0.01 | % | 0.66 | % | 8.29 | % | 0.53 | % | 0.22 | % | |||||||||
| ROAE | -0.1 | % | 6.8 | % | 76.1 | % | 4.74 | % | 1.96 | % | |||||||||
| NPAs/Assets (Core) | 1.4 | % | 1.18 | % | 1.08 | % | 0.91 | % | 0.83 | % | |||||||||
| Est. Tier 1 Leverage | 8.87 | % | 8.94 | % | 9.54 | % | 9.84 | % | 9.73 | % | |||||||||
| Total Common Equiv. Shares | 8,380,337 | 8,380,337 | 8,380,337 | 8,380,337 | 8,389,954 | ||||||||||||||
| NIM | 3.57 | % | 3.47 | % | 3.59 | % | 3.59 | % | 3.67 | % | |||||||||
| Cost of Funds | 0.24 | % | 0.24 | % | 0.22 | % | 0.20 | % | 0.20 | % | |||||||||
| Loan/Deposit | 57.9 | % | 56.6 | % | 58.2 | % | 58.2 | % | 59.0 | % | |||||||||
| Employees | 153 | 129 | 127 | 123 | 122 | ||||||||||||||
| *3Q2016 and later ROAA and ROAE are after tax vs. pre-tax prior to 2Q 2016. 2Q 2016 includes DTA valuation allowance recovery. | |||||||||||||||||||
Contact: Andy Borrmann Chief Financial Officer 678.734.3505
