ATLANTA, July 21, 2020 (GLOBE NEWSWIRE) -- Brian D. Schmitt, Chief Executive Officer of SouthCrest Financial Group, Inc. (SCSG:PK) announced today that the Company reported preliminary earnings of $1.63 million or $0.21/share for the second quarter ended June 30, 2020. Excluding non-core items, primarily securities gains, core earnings were $1.21 million, or $0.15/share. Total core net income is up effectively flat from 2Q19, but core EPS increased by 20% from 1Q20.
“I would like to start with saying how proud I remain in the efforts of all of our team members who have operated at the highest standard possible during this remarkably difficult time. Our SouthCrest family has gone above and beyond in taking care of each other, our customers and the communities we have the privilege to serve and live in.”
“Financially, we are comfortable with where we stand today but we continue to be diligent on the credit front. The earnings run rate at SouthCrest has recovered to pre-COVID levels as expenses have declined slightly while the balance sheet adjustments made during the past four months have offset the negative interest margin impact of the first quarter FOMC rate cuts. Loan deferrals appear to have hit a peak in June at approximately $58 million or 18% of loans. As of this writing, based on communication with nearly every deferred borrower, and using the standard of payments actually occurring to signify the end of deferral, we expect deferrals at the end of July to be down 60% to $23MM or 7% of loans, and decline further in August to just 2% of loans. As a result, we currently believe that our allowance for loan losses and future provisioning expense should be manageable for the rest of 2020. We also believe that our strong earnings performance and significantly increased unrealized gain in our investment portfolio will provide additional capital if necessary.”
The Company is also announcing that it will pay a regular quarterly dividend of $0.05/share on August 13, 2020 to shareholders of record July 30, 2020.
Total assets increased to $622.4 million vs. $577.7 million in 1Q20 and $528.5MM in the year ago quarter. Loan growth was modest during the quarter finishing at $338.6 million vs. $334.5 million at the end of 1Q20 and $316.0 million 2Q19. None of the loan growth during the quarter was the result of PPP loans as the Company partnered with a third party for that product. The ALLL grew from $3.2MM (0.95% of loans) to $4.0MM (1.18% of loans) in the quarter with the elevated provision expense and a significant recovery that occurred in June. Excess liquidity was reinvested into the investment portfolio which increased by $34MM during the quarter.
Interest income increased 4.3% from 1Q20 due to both the increase in loan balances and the larger investment portfolio. Interest expense declined 3.8% during the quarter as well which increased the overall net interest income by 5.7% or $260,000 versus the first quarter. During the second quarter, the cost of deposits declined by 8bps to 0.46%. Provision expense increased to $450,000 from $150,000 in the first three months of 2020.
Non-interest income, excluding the $548,000 of securities gains, was down from the prior three months with NSF and overdraft fees declining by 48% as the primary driver. Non-interest expense declined by 9% from the previous quarter with the majority of the decline resulting from the temporary elimination of bonus accruals.
The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.99% from 9.62% as a result of the deposit growth during the quarter. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $7.84 per share, up from $6.83 at the end of 2019 and $7.09 at the end of 1Q20. This is directly a result of the timely securities purchases made during the past four months. This metric will continue to be influenced by OCI changes resulting from the swings in interest rates. Currently, the positive impact to TBV by OCI is $0.86/share vs. $0.09/share at the end of 4Q19 and $0.28/share as of 1Q20. The current fully converted share count at the end of the quarter was 7.841 million shares, comprised of 5.786 million common shares and 2.055 million preferred shares.
Asset quality ratios improved slightly from the prior quarter, with NPAs to assets declining to 0.71% vs. 0.80% in 1Q20. As of June 30, 2020 the Company’s OREO balances were $447,000.
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. You should not rely upon forward-looking statements, as they are inherently unlikely to occur, and we do not assume any liability to update or correct any forward-looking statements that we make.
Andy Borrmann
Chief Financial Officer
678.734.3505
| Statement of Operations ($000s, Unaudited) | ||||||||||
| Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | ||||||
| Interest Income | ||||||||||
| Loans | ||||||||||
| Construction and Development | $ | 603 | $ | 636 | $ | 669 | $ | 744 | $ | 758 |
| Commercial Real Estate | 1,834 | 2,037 | 2,030 | 1,856 | 1,974 | |||||
| Commercial Loans | 429 | 446 | 645 | 553 | 567 | |||||
| Multi Family | 32 | 27 | 28 | 21 | 21 | |||||
| Residential Mortgage | 1,101 | 991 | 1,029 | 904 | 750 | |||||
| Consumer Loans | 41 | 41 | 34 | 36 | 29 | |||||
| County/Municipal Loans | 22 | 22 | 24 | 34 | 41 | |||||
| Loss Share Loans | 61 | 61 | 58 | 46 | 37 | |||||
| Investment Securities | ||||||||||
| Federal Funds/Overnight Funds | $ | 88 | $ | 107 | $ | 77 | $ | 129 | $ | 6 |
| Bank Owned CDs | 6 | 6 | 2 | 0 | 0 | |||||
| Investment Securities | 1,111 | 950 | 996 | 1023 | 1393 | |||||
| Total Interest Income | $ | 5,329 | $ | 5,324 | $ | 5,592 | $ | 5,346 | $ | 5,576 |
| Total Interest Expense | $ | 759 | $ | 658 | $ | 699 | $ | 769 | $ | 741 |
| Net Interest Income | $ | 4,570 | $ | 4,666 | $ | 4,893 | $ | 4,577 | $ | 4,835 |
| Provision for Loan Losses | 0 | 39 | 0 | 150 | 450 | |||||
| Net Interest Income after Loan Losses | $ | 4,570 | $ | 4,627 | $ | 4,893 | $ | 4,427 | $ | 4,385 |
| Other Income | ||||||||||
| Service Charges on Deposits | $ | 153 | $ | 148 | $ | 144 | $ | 138 | $ | 132 |
| NSF/Overdraft Fees | 310 | 356 | 348 | 305 | 158 | |||||
| Other Service Charges | 70 | 78 | 95 | 64 | 71 | |||||
| ATM/Billpay/DR Card Income | 284 | 278 | 271 | 247 | 277 | |||||
| Other Income | 131 | 308 | 268 | 238 | 664 | |||||
| Total Other Income | $ | 947 | $ | 1,169 | $ | 1,186 | $ | 992 | $ | 1,303 |
| Non-Interest Expense | ||||||||||
| Salaries, Other Comp (+ FAS123R) | $ | 1,842 | $ | 1,856 | $ | 2,140 | $ | 1,940 | $ | 1,711 |
| Employee Benefits | 370 | 391 | 379 | 412 | 341 | |||||
| Occupancy & FF&E Expense | 570 | 564 | 529 | 503 | 506 | |||||
| Professional Fees | 274 | 152 | 149 | 141 | 143 | |||||
| Data Processing | 488 | 497 | 502 | 488 | 385 | |||||
| Other Expense | 613 | 505 | 667 | 632 | 661 | |||||
| Total Noninterest Expenses | $ | 4,157 | $ | 3,963 | $ | 4,366 | $ | 4,116 | $ | 3,747 |
| Pre-Tax Income (Loss) | $ | 1,360 | $ | 1,832 | $ | 1,713 | $ | 1,303 | $ | 1,941 |
| Income Taxes | 315 | 417 | 389 | 265 | 316 | |||||
| Net Income | $ | 1,045 | $ | 1,414 | $ | 1,323 | $ | 1,038 | $ | 1,625 |
| | ||||||||||
| Balance Sheet ($000s, Unaudited) | |||||||||||||||
| Assets | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | ||||||||||
| Current Assets | |||||||||||||||
| Cash & Due from Bank | $ | 30,930 | $ | 13,758 | $ | 38,555 | $ | 19,845 | $ | 22,520 | |||||
| Federal Funds/Overnight Funds | 0 | 0 | 5,215 | 0 | 7,873 | ||||||||||
| Bank Owned CDs | 1,322 | 1,069 | 77 | 0 | 0 | ||||||||||
| Investment Securities | 141,013 | 139,907 | 139,880 | 184,377 | 318,680 | ||||||||||
| Total Current Assets | $ | 173,265 | $ | 154,733 | $ | 183,727 | $ | 204,222 | $ | 249,072 | |||||
| Loans | |||||||||||||||
| Construction and Development | $ | 40,040 | $ | 43,661 | $ | 47,593 | $ | 56,430 | $ | 64,320 | |||||
| Commercial Real Estate | 153,527 | 155,397 | 146,287 | 142,610 | 139,407 | ||||||||||
| Commercial Loans | 28,036 | 42,921 | 53,833 | 53,383 | 56,860 | ||||||||||
| Multi Family | 1,970 | 1,939 | 1,611 | 1,601 | 1,590 | ||||||||||
| Residential Mortgage | 85,064 | 80,391 | 77,772 | 73,778 | 66,810 | ||||||||||
| Consumer Loans | 1,384 | 1,022 | 830 | 2,144 | 2,472 | ||||||||||
| County/Municipal Loans | 2,037 | 2,037 | 3,109 | 3,732 | 4,851 | ||||||||||
| Loss Share Loans | 3,933 | 3,859 | 3,601 | 2,451 | 2,315 | ||||||||||
| Total Loans | $ | 315,991 | $ | 331,227 | $ | 334,635 | $ | 336,129 | $ | 338,625 | |||||
| Allowance for Loss | (3,022 | ) | (3,073 | ) | (3,039 | ) | (3,184 | ) | (3,984 | ) | |||||
| Net Loans | $ | 312,698 | $ | 328,154 | $ | 331,596 | $ | 332,946 | $ | 334,641 | |||||
| OREO | 575 | 0 | 497 | 529 | 447 | ||||||||||
| FDIC Indemnification | 0 | 0 | 0 | 0 | 0 | ||||||||||
| BOLI | 22,186 | 22,323 | 22,456 | 22,583 | 22,737 | ||||||||||
| Fixed Assets, net | 9,180 | 8,982 | 8,862 | 8,705 | 8,697 | ||||||||||
| Intangible Assets | 100 | 96 | 84 | 80 | 68 | ||||||||||
| Other Assets | 10,083 | 9,424 | 8,740 | 8,604 | 6,731 | ||||||||||
| Total Assets | $ | 528,503 | $ | 523,711 | $ | 555,960 | $ | 577,669 | $ | 622,383 | |||||
| Liabilities & Stockholders' Equity | |||||||||||||||
| Liabilities | |||||||||||||||
| Deposits | |||||||||||||||
| DDAs | $ | 98,229 | $ | 94,680 | $ | 103,154 | $ | 96,517 | $ | 114,554 | |||||
| Interest Bearing Demand | 59,606 | 63,386 | 87,685 | 85,746 | 96,141 | ||||||||||
| Celebration Checking | 100,950 | 97,277 | 98,558 | 103,718 | 111,421 | ||||||||||
| Money Market Accts | 33,080 | 32,382 | 33,888 | 37,693 | 38,650 | ||||||||||
| Savings | 44,407 | 44,383 | 44,370 | 44,516 | 47,674 | ||||||||||
| CDs Less Than $100k | 56,256 | 56,543 | 54,228 | 53,616 | 52,709 | ||||||||||
| CDs Greater than $100k | 38,854 | 41,846 | 43,404 | 47,259 | 47,049 | ||||||||||
| Total Deposits | $ | 431,382 | $ | 430,497 | $ | 465,288 | $ | 469,064 | $ | 508,198 | |||||
| Other Liabilities | 2,583 | 2,516 | 2,143 | 2,415 | 2,184 | ||||||||||
| Net Borrowings (Wholesale Funding) | 33,795 | 33,429 | 34,697 | 50,228 | 50,546 | ||||||||||
| Total Liabilities | $ | 467,760 | $ | 466,443 | $ | 502,127 | $ | 521,708 | $ | 560,918 | |||||
| Total Equity | 60,743 | 57,268 | 53,833 | 55,961 | 61,465 | ||||||||||
| Total Liabilities & Stockholders' Equity | $ | 528,503 | $ | 523,711 | $ | 555,960 | $ | 577,669 | $ | 622,393 | |||||
| Ratios | ||||||||||
| Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | ||||||
| ROAA | 0.78 | % | 1.09 | % | 0.98 | % | 0.75 | % | 1.05 | % |
| ROAE | 7.04 | % | 10.10 | % | 9.52 | % | 7.30 | % | 10.87 | % |
| NPAs/Assets (Core) | 1.09 | % | 1.00 | % | 0.77 | % | 0.80 | % | 0.71 | % |
| Est. T1 Leverage (Bank) | 9.95 | % | 9.65 | % | 9.63 | % | 9.62 | % | 8.99 | % |
| Total Common Shares | 6,360,273 | 5,849,101 | 5,832,793 | 5,832,793 | 5,786,288 | |||||
| Total Preferred Shares | 2,061,719 | 2,058,121 | 2,054,759 | 2,054,759 | 2,054,759 | |||||
| Total Common Equiv. Shares | 8,421,992 | 7,907,222 | 7,887,552 | 7,887,552 | 7,841,047 | |||||
| NIM (Bank) | 3.74 | % | 3.92 | % | 4.03 | % | 3.65 | % | 3.37 | % |
| Cost of Deposits (Bank) | 0.51 | % | 0.54 | % | 0.53 | % | 0.54 | % | 0.46 | % |
| Loan/Deposit | 73.0 | % | 76.7 | % | 71.9 | % | 71.6 | % | 66.6 | % |
| Employees | 106 | 103 | 105 | 104 | 102 | |||||
| Loans in Atlanta MSA | 67.4 | % | 76.8 | % | 77.5 | % | 78.2 | % | 79.1 | % |