SouthCrest Financial Group Reports Preliminary 2Q21 Earnings

Rhea-AI Summary

SouthCrest Financial Group (SCSG:PK) reported preliminary earnings of $1.63 million or $0.22/share for Q2 2021. Core earnings stood at $1.39 million or $0.19/share after excluding non-core items. Notably, the company experienced a 6% annualized growth in deposit balances from Q1 2021. However, total loan balances decreased by $8 million due to loan payoffs, ending at $305.9 million. The merger with Colony Bankcorp was approved with 74% shareholder support. Total assets grew to $717.8 million, and tangible book value rose to $8.13/share.

Positive

• Core earnings increased to $1.39 million or $0.19/share.
• Deposit balances grew by 6% annualized from Q1 2021.
• Total assets increased to $717.8 million from $707.1 million in Q1 2021.
• Tangible book value (TBV) increased to $8.13/share from $7.64/share.

Negative

• Total loan balances decreased by $8 million during the quarter.
• Non-interest income remained below pre-COVID levels.

ATLANTA, July 22, 2021 (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 $0.22/share for the second quarter ended June 30, 2021. Excluding non-core items, primarily securities gains and deal related expenses, core earnings were $1.39 million, or $0.19/share.

“Once again, I am very proud of our team’s dedication and discipline as we spent the second quarter preparing to close our previously announced merger with Colony Bankcorp (NASDAQ:CBAN). We continue to grow more excited about the potential of the combined companies and the opportunities on the horizon.”

“Like much of the industry SouthCrest experienced meaningful loan payoffs during 2Q21 which caused balances to be lower than budgeted. With that said, the loan pipeline grew progressively through the quarter, even with the distraction of the merger, which speaks to the quality of our lending and credit staff. The deposit balances grew 6% annualized from 1Q21 with nearly all of the growth occurring in one of our checking products.”

“Finally, let me say thank you to all the employees, customers and shareholders who have put their trust in the management team at SouthCrest. We look forward to serving you in the future as part of Colony Bank!”

On July 14, 2021, at the annual shareholder meeting, the shareholders of SouthCrest Financial Group approved the Merger Proposal with and into Colony Bankcorp, with 5,578,598 votes for the merger, 28,290 votes against the merger, and 416 votes abstaining. Of the shares entitled to vote, 74% of the shares were voted in favor of the merger.

Total assets increased to $717.8 million vs. $707.1 million in 1Q21 and $622.4 million in the second quarter of 2020. Loan balances declined by $8 million during the quarter, driven primarily by unscheduled pay downs, finishing at $305.9 million vs. $314.2 million at the end of 1Q21. The ALLL also remained flat at $3.7MM but increased as a percentage of loans to 1.21% from 1.18% in the prior quarter.

Interest income increased slightly from 1Q21 as an increase in investment securities income offset the lower average loan balances. Cash levels remained slightly elevated from pre-Covid standards. Interest expense remained level during the first quarter, even with significantly increased average balances. Provision expense remained at zero for the quarter.

Non-interest income remained slightly below Covid-like levels (excluding the $647,000 of securities gains in 2Q21), and it is meaningfully down as a percentage of assets, with NSF and overdraft fees driving the majority of the differential. Other non-interest expense categories remained relatively flat from 4Q20. Non-interest expense was elevated with deal expenses beginning to be recognized during the quarter. Excluding these, expenses would have been effectively flat with 1Q21.

The estimated Tier 1 Leverage ratio at the end of the quarter for SouthCrest Bank declined to 8.22% from 8.27% as result of the continued balance sheet growth during the quarter. On a fully converted basis (including the conversion of all preferred equity), TBV/share ended the quarter at $8.13 per share, up from $7.64 as of 1Q21. 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 $0.73/share vs. $0.38/share at the end of 1Q21. The current fully converted share count at the end of the quarter was 7.402 million shares, comprised of 5.764 million common shares and 1.639 million preferred shares.

Asset quality ratios remained solid, with NPAs to assets up slightly to 0.59% vs. 0.46% in 1Q21. As of June 30, 2021 the Company’s OREO balances increased to about $70,000 to $516,000, consisting of a handful of residential properties.

ABOUT SOUTHCREST

SouthCrest Financial Group, Inc. is a bank holding company with over $700 million 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 2020		Q3 2020		Q4 2020	Q1 2021	Q2 2021
Interest Income
Loans
Construction and Development	$758		$781		$761	$665	$584
Commercial Real Estate	1,974		1,846		1,824	1,845	1,939
Commercial Loans	567		542		547	494	417
Multi Family	21		25		65	65	59
Residential Mortgage	750		743		636	681	609
Consumer Loans	29		28		29	26	23
County/Municipal Loans	41		50		21	20	19
Loss Share Loans	37		33		29	26	26
Investment Securities
Federal Funds/Overnight Funds	$6		$8		$15	$10	$10
Bank Owned CDs	0		0		0	0	0
Investment Securities	1,393		1,425		1,494	1,622	1,799
Total Interest Income	$5,576		$5,481		$5,420	$5,453	$5,486
Total Interest Expense	$741		$702		$678	$678	$673
Net Interest Income	$4,835		$4,779		$4,742	$4,775	$4,813
Provision for Loan Losses	450		0		0	0	0
Net Interest Income after Loan Losses	$4,385		$4,779		$4,742	$4,775	$4,813
Other Income
Service Charges on Deposits	$132		$130		$128	$103	$122
NSF/Overdraft Fees	158		213		231	190	179
Other Service Charges	71		78		73	76	82
ATM/Billpay/DR Card Income	277		298		306	326	354
Other Income	664		1,441		207	1,011	863
Total Other Income	$1,303		$2,160		$946	$1,707	$1,600
Non-Interest Expense
Salaries, Other Comp (+ FAS123R)	$1,711		$1,985		$2,140	$1,924	$1,961
Employee Benefits	341		276		523	367	377
Occupancy & FF&E Expense	506		475		474	463	466
Professional Fees	143		197		235	232	426
Data Processing	385		353		362	389	526
Other Expense	661		672		665	754	674
Total Noninterest Expenses	$3,747		$3,958		$4,400	$4,130	$4,430
Pre-Tax Income (Loss)	$1,941		$2,981		$1,288	$2,352	$1,983
Income Taxes	316		580		160	447	357
Net Income	$1,625		$2,401		$1,127	$1,905	$1,626

Balance Sheet ($000s, Unaudited)
Assets	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
Current Assets
Cash & Due from Bank	$22,520	$39,600	$81,969	$42,699	$46,579
Federal Funds/Overnight Funds	7,873	10,101	4,192	15,720	5,224
Bank Owned CDs	0	0	0	0	0
Investment Securities	218,680	222,913	265,602	297,307	324,461
Total Current Assets	$249,072	$272,614	$352,484	$355,726	$376,265
Loans
Construction and Development	$64,320	$65,675	$54,631	$50,360	$49,063
Commercial Real Estate	139,407	134,986	140,558	155,014	158,272
Commercial Loans	56,860	55,327	47,556	38,430	34,175
Multi Family	1,590	1,714	6,346	6,191	5,340
Residential Mortgage	66,810	62,672	59,856	55,262	50,211
Consumer Loans	2,472	1,868	13,908	5,228	5,231
County/Municipal Loans	4,851	1,990	1,982	1,849	1,841
Loss Share Loans	2,315	2,152	1,848	1,828	1,801
Total Loans	$338,625	$326,383	$326,684	$314,162	$305,936
Allowance for Loss	(3,984)	(3,705)	(3,705)	(3,713)	(3,696)
Net Loans	$334,641	$322,678	$322,979	$310,449	$302,239
OREO	447	447	447	447	516
FDIC Indemnification	0	0	0	0	0
BOLI	22,737	22,872	23,009	23,140	23,291
Fixed Assets, net	8,697	8,540	8,581	8,568	8,409
Intangible Assets	68	64	1,089	1,060	1,032
Other Assets	6,731	7,030	6,501	7,681	5,999
Total Assets	$622,383	$634,245	$715,090	$707,073	$717,751
Liabilities & Stockholders' Equity
Liabilities
Deposits
DDAs	$114,554	$118,082	$130,268	$131,767	$133,798
Interest Bearing Demand	96,141	95,732	128,477	116,667	119,657
Celebration Checking	111,421	114,657	132,372	141,369	145,646
Money Market Accts	38,650	43,746	44,427	52,640	50,645
Savings	47,674	48,928	51,953	57,099	59,621
CDs Less Than $100k	52,709	51,735	58,452	57,323	57,323
CDs Greater than $100k	47,049	43,612	49,715	50,767	50,690
Total Deposits	$508,198	$516,491	$595,664	$607,631	$616,486
Other Liabilities	2,184	2,772	2,285	4,285	2,232
Net Borrowings (Wholesale Funding)	50,546	52,258	52,263	37,611	37,732
Total Liabilities	$560,918	$571,522	$650,212	$649,527	$656,450
Total Equity	61,465	62,723	64,878	57,546	61,301
Total Liabilities & Stockholders' Equity	$622,393	$634,245	$715,090	$707,073	$717,751

Ratios
	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
ROAA	1.05%	1.53%	0.69%	1.09%	0.91%
ROAE	10.87%	16.88%	6.79%	11.62%	10.14%
NPAs/Assets	0.71%	0.59%	0.55%	0.46%	0.59%
Est. T1 Leverage (Bank)	8.99%	9.41%	9.08%	8.27%	8.22%
Total Common Shares	5,786,288	5,761,439	5,761,439	5,761,170	5,763,846
Total Preferred Shares	2,054,759	2,054,759	2,054,759	1,638,596	1,638,596
Total Common Equiv. Shares	7,841,047	7,816,198	7,816,198	7,399,766	7,402,442
NIM (Bank)	3.37%	3.22%	3.17%	2.99%	2.95%
Cost of Deposits (Bank)	0.46%	0.41%	0.36%	0.36%	0.38%
Loan/Deposit	66.6%	63.1%	54.8%	51.7%	49.5%
Employees	102	98	94	99	97
Loans in Atlanta MSA	79.1%	80.5%	77.8%	80.7%	81.3%

FAQ

What were SouthCrest Financial Group's earnings for Q2 2021?

SouthCrest Financial Group reported preliminary earnings of $1.63 million or $0.22/share for Q2 2021.

How did the merger with Colony Bankcorp affect SouthCrest's shareholders?

The merger was approved by 74% of shareholders, indicating strong support for the combined company's future.

What is the total asset figure for SouthCrest as of Q2 2021?

As of Q2 2021, SouthCrest's total assets were $717.8 million.

How did deposit balances change for SouthCrest in Q2 2021?

Deposit balances grew by 6% annualized from Q1 2021.

What was the tangible book value per share at the end of Q2 2021?

The tangible book value per share increased to $8.13 at the end of Q2 2021.