SouthCrest Financial Group Reports Closure of $17.5 Million Capital Raise and Charter Consolidation Application With Preliminary 3Q13 Financial Results

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| Source: SouthCrest Financial Group, Inc.

PEACHTREE CITY, Ga., Oct. 24, 2013 (GLOBE NEWSWIRE) -- Kenneth H. Maloy, President and CEO of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the company reported preliminary results for the third quarter of 2013, as well as the completion of the previously disclosed $17.5 million capital raise. On September 27th, SouthCrest funded investments with affiliates of Castle Creek Capital and other institutional investors that total $17.5 million in a mix of voting common and non-voting preferred securities at a price of $5.05 per share. "We are beyond enthusiastic about our partnership with Castle Creek Capital and our other new investors," stated Mr. Maloy.  "Their experience and involvement enables us to capitalize on our already building momentum and internal loan growth. We look forward to taking the fundamental dynamics we've developed into future growth opportunities in our Georgia and Alabama markets."

"The influx of this new capital enhances the Company's ability to help our customers thrive, empower our employees with training and technology, and continue to build value for our shareholders over time," continued Mr. Maloy.

The Company intends to use the proceeds for general corporate purposes, including the potential redemption of the TARP preferred shares and other strategic initiatives.

The Company also announced the approval by the Board of Directors to make the necessary applications to consolidate the charters of the four banks in the holding company. Charter consolidation has been a long term goal of the Company, and management expects to complete and file the application over the next few weeks. "The profitability improvements created by combining the charters should approach 0.20% ROAA. We expect to completely phase in these improvements within six to twelve months after we receive the required regulatory approvals," said Mr. Maloy.

During the quarter the company produced a net loss of $0.9 million, a large portion of which was due to the restructuring of the mortgage division that started in late 2Q13 and was completed in mid-3Q13.  Total assets at the end of the quarter were up 1.7% linked quarter annualized (LQA) to $561.9 million from 2Q13, while total core loans increased 7.7% LQA, constituting the Company's strongest loan growth since before the financial crisis.

The deposit mix continued to improve, with total non-CD funding increasing to 66% in 3Q13 from 65% the prior quarter, although total deposits did decline somewhat. Given the current loan to deposit ratio, the Company is maintaining at or below market deposit pricing at this time which has led to the decline in total deposits. The improvement in deposit mix and disciplined pricing continued to drive the cost of funds down. The total cost of funds in 3Q13 was just 0.32%, vs. 0.52% during 3Q12.

Credit costs remained controlled with no loan loss provision expense, although OREO costs of $293,000 were up slightly from $178,000 in the prior quarter. 

Finally, the completion of the capital raise during the quarter caused a significant increase in the capital ratios. The estimated Tier 1 Leverage ratio at the end of the quarter was 11.68%, up from 8.72% for 2Q13 and 8.83% at the end of 2012. The capital raise was modestly dilutive from a tangible book value perspective. On a fully diluted basis (including the conversion of all Series AAA Preferred and Series C Convertible Preferred equity) TBV/share ended the quarter at $6.26 per share. The current fully diluted, fully converted share count at the end of the quarter is 8.380 million shares. Not reflected in the current TBV/share is a deferred tax asset valuation allowance of $9.482 million.

The Company also continued to work through its FDIC loss share covered assets, with the net loan balance shrinking by 21% LQA. The FDIC Indemnification Asset declined by $422,000 or 5.5% from 2Q13 to 3Q13 (22% LQA), and now stands at $7.3 million with approximately 6 quarters remaining on the commercial portfolio loss sharing agreement. 

SouthCrest Financial Group, Inc. is a $560 million asset bank holding company headquartered in Peachtree City, Georgia. The company operates a 14 branch network throughout Georgia and Alabama through its four subsidiary banks: SouthCrest Bank, The First National Bank of Polk County, Peachtree Bank and Bank of Chickamauga. The banks provide 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.

 Income Statement 2013
  Q1 Q2 Q3 YTD
 Interest Income        
 Loans         
 Construction and Development  $ 201  $ 199  $ 213  $ 613
 Commercial Real Estate  974  1,012  1,004  2,990
 Commercial Loans  155  151  156  461
 Multi Family  18  16  19  53
 Residential Mortgage   1,468  1,432  1,426  4,326
 Consumer Loans  482  458  471  1,411
 SCM Loans  110  100  84  294
 Loss Share Loans  347  313  299  959
   $ 3,754  $ 3,680  $ 3,673  $ 11,107
 Investment Securities        
 Federal Funds/Overnight Funds  $ 80  $ 80  $ 74  $ 234
 Bank Owned CDs  14  13  18  45
 Investment Securities   557  604  665  1,826
 Total Interest Income  $ 4,405  $ 4,377  $ 4,430  $ 13,212
         
 Total Interest Expense  $ 484  $ 436  $ 397  $ 1,316
 Net Interest Income  $ 3,922  $ 3,941  $ 4,033  $ 11,896
 Provision for Loan Losses  400  --  --  400
 Net Interest Income after Loan Losses  $ 3,522  $ 3,941  $ 4,033  $ 11,496
         
 Service Charges on Deposits  $ 122  $ 112  $ 112  $ 346
 NSF/Overdraft Fees  552  571  611  1,734
 Other Service Charges  86  104  94  284
 ATM/Billpay/DR Card Income  322  362  354  1,038
 Gain on Sale of loans  415  322  159  896
 Other Income  757  699  1,032  2,488
 Total Other Income  $ 2,254  $ 2,170  $ 2,362  $ 6,786
 Non Interest Expense        
 Salaries, Other Comp (+ FAS123R) (- FAS 91)  $ 2,623  $ 2,560  $ 2,838  $ 8,021
 Employee Benefits  658  524  574  1,756
 Occupancy & FF& E Expense  676  760  757  2,193
 Professional Fees  355  587  524  1,466
 Data Processing  254  398  291  943
 OREO and Credit related Exp.  451  178  293  922
 Other Expense  1,847  1,886  2,052  5,785
 Total Other Expenses  $ 6,864  $ 6,893  $ 7,329  $ 21,086
 Pre-Tax Income (Loss)  $ (1,088)  $ (782)  $ (934)  $ (2,804)
 Income Taxes  --  --  --  --
 Net Income  $ (1,088)  $ (782)  $ (934)  $ (2,804)
   
 Balance Sheet  
 Assets  1Q 2013 2Q 2013  3Q 2013
 Current Assets      
 Cash & Due from Bank  $ 16,468  $ 15,412  $ 29,665
 Federal Funds/Overnight Funds  108,342  114,068  92,064
 Bank Owned CDs  5,909  6,888  5,914
 Investment Securities   116,360  113,784  122,132
 Mortgage Loans Held for Sale  4,239  3,713  2,803
 Total Current Assets  $ 251,318  $ 253,865  $ 252,578
 Loans      
 Construction and Development  $ 13,110  $ 12,696  $ 13,424
 Commercial Real Estate  79,046  76,646  76,705
 Commercial Loans  9,910  9,566  8,985
 Multi Family  2,281  2,216  2,278
 Residential Mortgage    103,762  102,786  104,186
 Consumer Loans  20,735  19,916  20,464
 SCM Loans  9,978  9,410  11,665
 Loss Share Loans  14,670  14,372  13,622
 Total Loans  $ 253,492  $ 247,608  $  251,329
 Allowance for Loss  (5,486)  (4,745)  (4,444)
 Net Loans  $ 248,006  $ 242,863  $ 246,885
 Core Loans  $ 238,822  $ 233,236  $ 237,707
 OREO  $ 8,245  $ 11,441  $ 9,966
 FDIC Indemnification  8,562  7,688  7,266
 BOLI  18,725  18,886  19,021
 Technology, Software, & FFE   17,224  17,200  18,742
 Accumulated Depreciation  --   --   -- 
 Intangible Assets  1,135  1,080  1,002
 Accrued Interest Receivable  --   --   -- 
 Other Assets  6,411  6,440  6,405
 Total Assets  $ 559,626  $ 559,463  $ 561,865
 Liabilities & Stockholders' Equity      
 Liabilities      
 Deposits      
 DDAs  $ 114,063  $ 119,096  $ 115,614
 Interest Bearing Demand  48,914  50,914  50,218
 Rewards Checking  35,131  32,981  32,352
 Money Market Accts  58,152  58,500  57,197
 Savings  64,131  64,823  63,820
 CDs Less Than $100k  120,310  116,326  112,421
 CDs Greater than $100k   56,520  56,191  53,389
 Total Deposits  $ 497,221  $ 498,831  $ 485,011
       
 Other Liabilities  $ 9,642  $ 10,053  $ 10,289
 Net Borrowings (Wholesale Funding)  275  --   330
 Total Liabilities  $ 507,138  $ 508,884  $ 495,630
 Total Equity  $ 52,488  $ 50,579  $ 66,235
 Total Liabilities & Stockholders' Equity  $ 559,626  $ 559,463  $ 561,865
   
Ratios  
   1Q 2013 2Q 2013  3Q 2013
ROAA -0.79% -0.56% -.67%
ROAE -8.23% -6.08% -6.80%
NPAs/Assets (Core) 2.72% 2.27% 2.31%
Tier 1 Leverage  8.93% 8.67% 11.67%
Total Common Equiv. Shares 4,914,991 4,914,991 8,380,337
NIM 3.27% 3.23% 3.38%
Cost of Funds 0.39% 0.35% 0.32%
Loan/Deposit 51.0% 49.6% 51.8%
Andy Borrmann, 678-734-3505
SVP Finance, SouthCrest Financial Group