Newsroom

Back To News & Events

Thursday, April 25, 2019

SCSG—SouthCrest Financial Group EPS Meet Expectations, Margin Expands On Limited Deposit Cost Rise


  • Reported 1Q19 EPS = $0.14 / FIG Est. = $0.14 / Consensus = $0.14
  • Steady Top-line revenues on 6 basis point NIM gain
  • Company remains positioned for success in the Atlanta, GA MSA with significant bank turnover from recent and pending mergers
  • Maintain EPS outlook for 2019 and 2020. Significant franchise value exists given SCSG’s low-cost Deposit base in metro Atlanta with commercial lending capabilities and superb credit discipline.

SCSG reached our goal for 1Q-2019 with $0.14 in EPS. This was a solid quarter with an improved NIM-Net Interest Margin, stable spread income, and a moderate rise in Deposit costs. Loan growth was flat as we antici-pated due to 1Q seasonal patterns and Deposits had a minor drop. We like the rise in the Loans-to-Deposits ratio to 69% from 68% plus the steady DDA ratio at 22% of Total Deposits. Tangible book value rose 5% and tangi-ble capital remains strong at a 10.7% TCE ratio.

We recommend shares in SCSG with an “Outperform” rating and $11.75 price objective given ongoing EPS gains and the accumulation of tangible book value over the next 8 quarters. Modest balance sheet growth com-pares with superb low-cost Deposits and strong capital that should provide downside support in the future. Also, expense operating leverage remains possible as overhead efficiency can improve to sub-70% next year. Tangible book value should rise at a 6% annual pace. Our Price Target is over 20% above the current price, plus the com-pany just raised its quarterly dividend by one penny. ROA should be 0.90% in 2019 and near 1.0% in 2020. We see a low teens Core Deposit premium as appropriate for an independent community Bank with superb low-cost Deposits in the Atlanta, GA MSA with upside on a franchise basis.

download full report

Back To News & Events

Disclaimer

You are leaving the SouthCrest Bank website. SouthCrest Bank is not responsible for and has no control over the subject matter, content, information or graphics when viewing links attached to SouthCrest Bank’s website.

×