SouthCrest Financial Group Reports Charter Consolidation Progress With Preliminary 4Q13 Financial Results

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| Source: SouthCrest Financial Group, Inc.

PEACHTREE CITY, Ga., Feb. 5, 2014 (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 fourth quarter of 2013, and provided additional information regarding the consolidation of the Company's four banking charters. "We are currently right on schedule to consolidate into an OCC charter named SouthCrest Bank NA on February 28th," said Mr. Maloy. "Our teams are thrilled to have the opportunity to work more efficiently as one bank and pass that value on to our customers and shareholders. We're working hard at bringing the best we have to offer to every corner of our footprint."

During the quarter the Company produced a net loss of $2.3 million, of which $1.0 million was due to one-time expenses, the majority of which were related to the upcoming charter consolidation. There were also $0.3 million of OREO expense as the Company was able to exit its largest NPA, a $4.2 million shopping center, lowering the total NPA levels to 1.64% of total assets, the lowest level since 2Q08. Net interest income after provision for loan losses increased for the third quarter in a row. Core loans were effectively flat even though the company had a $6.0 million payoff in its low rate municipal lending area. Total assets at the end of the quarter were down 1.8% linked quarter annualized (LQA) to $559.3 million from 3Q13. "Our results are far from where they need to be," stated Mr. Maloy. "The underlying post provision net interest income and loan growth trends are beginning to show improvement, but we also have significant work to do on the expense side in the first half of 2014. Consolidation will be a huge step in that direction." 

The deposit mix continued to improve, with total non-CD funding increasing to 67% in 4Q13 from 66% the prior quarter and 63% at the end of 2012, with total deposits declining slightly. 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 4Q13 was just 0.29%, vs. 0.45% during 4Q12.

The estimated Tier 1 Leverage ratio at the end of the quarter was 11.02%, up from and 8.83% at the end of 2012 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 $5.93 per share. The current fully converted share count at the end of the quarter is 8.380 million shares.

The Company also continued to work through its FDIC loss share covered assets, with the net covered loan balance shrinking by 6% LQA. The FDIC Indemnification Asset declined by $892,000 or 12% from 3Q13 to 4Q13, and now stands at $6.4 million with approximately 5 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 13 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.

Statement of Operations (dollars in thousands) 2013
  Q1 Q2 Q3 Q4
Interest Income        
Loans        
Construction and Development $201 $199 $213 $186
Commercial Real Estate 974 1,012 1,004 1,058
Commercial Loans 155 151 156 175
Multi Family 18 16 19 14
Residential Mortgage 1,468 1,432 1,426 1,408
Consumer Loans 482 458 471 436
SCM Loans 110 100 84 72
Loss Share Loans 347 313 299 288
         
Investment Securities        
Federal Funds/Overnight Funds $80 $80 $74 $59
Bank Owned CDs 14 13 13 14
Investment Securities 557 604 665 686
Total Interest Income $4,405 $4,377 $4,425 $4,396
         
Total Interest Expense $484 $436 $397 $357
Net Interest Income $3,922 $3,941 $4,028 $4,039
Provision for Loan Losses 400 -- -- --
Net Interest Income after Loan Losses $3,522 $3,941 $4,028 $4,039
Other Income        
Service Charges on Deposits $122 $112 $112 $109
NSF/Overdraft Fees 552 571 611 587
Other Service Charges 86 104 94 88
ATM/Billpay/DR Card Income 322 362 354 369
Gain on Sale of loans 415 322 159 295
Other Income 757 699 1,032 851
Total Other Income $2,254 $2,170 $2,362 $2,299
Non Interest Expense        
Salaries, Other Comp (+ FAS123R) $2,623 $2,560 $2,838 $3,061
Employee Benefits 658 524 574 628
Occupancy & FF& E Expense 676 760 757 852
Professional Fees 355 587 524 757
Data Processing 254 398 291 292
OREO and Credit related Exp. 451 178 293 276
Other Expense 1,847 1,886 2,052 2,746
Total Noninterest Expenses $6,864 $6,893 $7,329 $8,612
Pre-Tax Income (Loss) $(1,088) $(782) $(939) $(2,274)
Income Taxes -- -- -- --
Net Loss $(1,088) $(782) $(939) $(2,274)
         
Balance Sheets (Dollars in Thousands)        
Assets Q1 Q2 Q3 Q4
Current Assets        
Cash & Due from Bank $16,468 $15,412 $29,665 $24,467
Federal Funds/Overnight Funds 108,342 114,068 92,064 99,080
Bank Owned CDs 5,909 6,888 5,914 3,247
Investment Securities 116,360 113,784 122,132 123,685
Mortgage Loans Held for Sale 4,239 3,713 2,803 4,642
Total Current Assets $251,318 $253,865 $252,578  $255,121
Loans        
Construction and Development $13,110 $12,696 $13,424  $14,404
Commercial Real Estate 79,046 76,646 76,705 82,492
Commercial Loans 9,910 9,566 8,985 9,977
Multi Family 2,281 2,216 2,278 2,155
Residential Mortgage 103,762 102,786 104,186 105,496
Consumer Loans 20,735 19,916 20,464 19,352
SCM Loans 9,978 9,410 11,665 3,845
Loss Share Loans 14,670 14,372 13,622 13,426
Total Loans $253,492 $247,608 $251,329  $251,147
Allowance for Loss   (5,486)   (4,745)   (4,444)   (4,443)
Net Loans $248,006 $242,863 $246,885  $246,704
Core Loans $238,822 $233,236 $237,707  $237,721
OREO $8,245 $11,441 $9,966  $5,283
FDIC Indemnification 8,562 7,688 7,266 6,374
BOLI 18,725 18,886 19,021 19,156
Fixed Assets, net 17,224 17,200 18,742 18,617
  -- -- -- --
Intangible Assets 1,135 1,080 1,002 920
Accrued Interest Receivable -- -- -- --
Other Assets 6,411 6,440 6,405 7,141
Total Assets $559,626 $559,463 $561,865  $559,316
Liabilities & Stockholders' Equity        
Liabilities        
Deposits        
DDAs $114,063 $119,096 $115,614  $127,477
Interest Bearing Demand 48,914 50,914 50,218 48,950
Rewards Checking 35,131 32,981 32,352 32,596
Money Market Accts 58,152 58,500 57,197 54,704
Savings 64,131 64,823 63,820 61,960
CDs Less Than $100k 120,310 116,326 112,421 107,989
CDs Greater than $100k 56,520 56,191 53,389 50,623
Total Deposits $497,221 $498,831 $485,011  $484,299
         
Other Liabilities $9,642 $10,053 $10,289  $11,576
Net Borrowings (Wholesale Funding) 275 -- 330 --
Total Liabilities $507,138 $508,884 $495,630  $495,875
Total Equity $52,488 $50,579 $66,235  $63,441
Total Liabilities & Stockholders' Equity $559,626 $559,463 $561,865  $559,316
     
Ratios    
  1Q 2013 2Q 2013 3Q 2013 4Q 2013
ROAA -0.79% -0.56% -0.67% -1.62%
ROAE -8.23% -6.08% -6.80% -14.02%
NPAs/Assets (Core) 2.72% 2.27% 2.31% 1.64%
Tier 1 Leverage 8.93% 8.67% 11.67% 11.02%
Total Common Equiv. Shares 4,914,991 4,914,991 8,380,337 8,380,337
NIM 3.27% 3.23% 3.38% 3.36%
Cost of Funds 0.39% 0.35% 0.32% 0.29%
Loan/Deposit 51.0% 49.6% 51.8% 51.9%
For more information, contact:

Andy Borrmann, 678-734-3505
SVP Finance, SouthCrest Financial Group