SOUTHCREST FINANCIAL GROUP, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1









SouthCrest Financial Group, Inc.
and Subsidiary

Unaudited Consolidated Financial Statements

As of and for the Three and Six Months Ended June 30, 2021 and 2020


SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
(Unaudited)
June 30, 2021
(Audited)
December 31, 2020
Assets
Cash and due from banks$8,274 6,895 
Interest-bearing deposits with other banks38,802 75,533 
Federal funds sold5,224 4,912 
Investment securities available-for-sale317,766 256,478 
Investment securities held-to-maturity (fair value of $5,029 and $5,044 at
June 30, 2021 and December 31, 2020, respectively)
3,500 5,000 
Restricted equity securities, at cost3,196 4,124 
Loans, net of allowance for loan losses of $3,696 and $3,705302,240 322,979 
Bank-owned life insurance23,291 23,009 
Premises and equipment, net8,409 8,581 
Intangible assets, net1,032 1,089 
Other real estate owned516 447 
Other assets6,036 6,043 
Total assets$718,286 715,090 
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing$133,797 130,268 
Interest-bearing482,687 465,395 
Total deposits616,484 595,663 
Borrowings37,716 52,246 
Other liabilities2,897 2,302 
Total liabilities657,097 650,211 
Commitments and contingencies
Stockholders’ equity:
Series D Preferred stock, no par value, 2,500,000 shares authorized, 1,523,265 and 1,935,636 shares issued, respectively5,515 9,515 
Series AAA Preferred stock, $1 par value, 500,000 shares authorized, 115,331 and 116,881 shares issued and outstanding, respectively115 117 
Common stock, $1 par value; authorized 50,000,000 shares; 6,378,695 and 6,374,469 issued, respectively
6,379 6,374 
Additional paid-in capital – Series AAA Preferred stock1,468 1,487 
Additional paid-in capital59,256 59,238 
Accumulated deficit(11,314)(13,803)
Accumulated other comprehensive income5,418 7,557 
Treasury stock, at cost (614,849 and 609,849 shares, respectively)(5,648)(5,606)
Total stockholders’ equity61,189 64,879 
Total liabilities and stockholders’ equity$718,286 $715,090 

F-3

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except share and per share data)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Interest income:
Loans$3,681 $4,177 $7,496 $8,371 
Investment securities – taxable1,387 945 2,561 1,926 
Investment securities – nontaxable412 448 860 490 
Federal funds sold1 2 18 114 
Interest-bearing deposits in other banks9 4 3 22 
Total interest and dividend income5,490 5,576 10,938 10,923 
Interest expense:
Interest expense – deposits520 567 1,044 1,192 
Interest expense – borrowings154 173 308 317 
Total interest expense674 740 1,352 1,509 
Net interest income4,816 4,836 9,586 9,414 
Provision for loan losses— 450 — 600 
Net interest income after provision for loan losses4,816 4,386 9,586 8,814 
Other income:
Service charges on deposit accounts385 363 754 870 
Other service charges and fees354 277 680 524 
Net gain on sales of investment securities available-for-sale648 516 1,464 548 
Income on bank-owned life insurance150 154 281 281 
(Loss) gain on sales and foreclosures of other real estate owned, net11 (18)11 (16)
Other operating income48 61 112 139 
Total other income1,596 1,353 3,302 2,346 
Other expenses:
Salaries and employee benefits2,338 2,052 4,629 4,404 
Equipment and occupancy expenses
466 505 929 1,008 
Amortization of intangibles29 13 58 17 
Writedowns of other real estate owned— 50 — 50 
Other1,747 1,177 3,088 2,436 
Total other expenses4,580 3,797 8,704 7,915 
Income before income taxes1,832 1,942 4,184 3,245 
Income tax expense318 316 765 581 
Net income$1,514 $1,626 $3,419 $2,664 
Basic earnings per common share
$0.22 $0.21 $0.47 $0.34 
Diluted earnings per common share$0.22 $0.21 $0.47 $0.34 

F-4

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net income$1,514 $1,626 $3,380 $2,664 
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available-for-sale arising during period, net of taxes of $706, $1,411, ($1,103), $1,9002,085 4,165 (3,259)5,612 
Reclassification adjustments for gains included in operations, net of taxes of $152, $121,$344 and $129496 395 1,120 419 
Other comprehensive income (loss)2,581 4,560 (2,139)6,031 
Comprehensive income$4,095 $6,186 $1,241 $8,695 

F-5

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)
(Dollars in thousands)
Preferred StockCommon Stock
Series ASeries BSeries DSeries AAAAdditional Paid-In Capital Series AAA PreferredSharesPar ValueAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders’ Equity
Balance, March 31, 2021$— $— $5,515 $115 $1,468 6,376,019 $6,376 $59,259 $(5,648)$(12,375)$2,837 $57,547 
Net income— — — — — — — — — 1,514 — 1,514 
Cashless exercise of stock options— — — — — 2,676 3 (3)— — — — 
Purchase of treasury stock— — — — — — — — — — — 
Dividends declared— — — — — — — — — (453)— (453)
Other comprehensive income— — — — — — — — — — 2,581 2,581 
Balance, June 30, 2021— — 5,515 115 1,468 6,378,695 6,379 59,256 (5,648)(11,314)5,418 61,189 
Balance, March 31, 2020— — 9,515 119 1,516 6,376,793 6,368 59,161 (5,149)(17,764)2,195 55,961 
Net income— — — — — — — — 1,626 — 1,626 
Stock compensation awards— — — — — — 18 — — — 18 
Conversion of AAA preferred stock to common stock— — — — — 3,495 3 (3)— — — 
Purchase of treasury stock— — — — — — — — (300)— — (300)
Dividends declared— — — — — — — — — (400)— (400)
Other comprehensive income— — — — — — — — — — 4,560 4,560 
Balance, June 30, 2020— — 9,515 119 1,516 6,380,288 6,371 59,176 (5,449)(16,538)6,755 61,465 
Balance, December 31, 2020— — 9,515 117 1,487 6,367,469 6,374 59,238 (5,606)(13,803)7,557 64,879 
Net income— — — — — — — — — 3,419 — 3,419 
Cashless exercise of stock options— — — — — — 3 18 — — — 21 
Conversion of AAA preferred stock to common stock— — — (2)(19)1,550 2 — — — — (19)
Purchase and retirement of series D stock— — (4,000)— — — — — — — — (4,000)
Purchase of treasury stock— — — — — — — — (42)— — (42)
Dividends declared— — — — — — — — — (930)— (930)
Other comprehensive income— — — — — — — — — — (2,139)(2,139)
Balance, June 30, 2021— — 5,515 115 1,468 6,369,019 6,379 59,256 (5,648)(11,314)5,418 61,189 
— — 
Balance, December 31, 2019— — 9,515 119 1,516 6,367,793 6,368 59,141 (5,149)(18,401)724 53,833 
Net income— — — — — — — — 2,664 — 2,664 
Stock compensation awards— — — — — — — 38 — — — 38 
Conversion of AAA preferred stock to common stock— — — — — 3,495 3 (3)— — — — 
Purchase of treasury stock— — — — — — — — (300)— — (300)
Dividends declared— — — — — — — — — (801)— (801)
Other comprehensive income— — — — — — — — — — 6,031 6,031 
Balance, June 30, 2020— — 9,515 119 1,516 6,371,288 6,371 59,176 (5,449)(16,538)6,755 61,465 

F-6

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Six Months Ended June 30,
20212020
Cash flows from operating activities:
Net income$3,419 $2,664 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation403 467 
Amortization of intangibles58 17 
Other amortization757 396 
Provision for loan losses— 600 
Deferred tax expense850 620 
Stock-based compensation— 38 
Deferred compensation expense9 12 
Net gain on sales of investment securities available-for-sale(1,464)(548)
Income on bank-owned life insurance(281)(281)
(Increase) decrease in interest receivable238 (1,119)
Decrease in interest payable(147)(50)
Writedowns of other real estate owned— 50 
Gain on sale of other real estate owned11 1 (16)
Change in other assets and other liabilities352 161 
Net cash provided by operating activities4,205 3,011 
Cash flows from investing activities:
Net change in interest-bearing deposits in other banks36,732 14,840 
Net change in federal funds sold(312)(2,658)
Purchases of investment securities available-for-sale(111,471)(115,326)
Proceeds from sales of investment securities available-for-sale40,464 44,639 
Proceeds from calls, maturities and paydowns of investment securities available-for-sale9,063 696 
Purchase of restricted equity securities(1)(1,067)
Redemptions of restricted equity securities929 484 
Net decrease (increase) in loans20,681 (3,667)
Purchases of premises and equipment(232)(302)
Net cash provided by (used in) investing activities(4,147)(62,361)
F-7

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows, continued
(Unaudited)
(Dollars in thousands)
Six Months Ended June 30,
20212020
Cash flows from financing activities:
Net increase in deposits$20,821 $42,910 
Proceeds of FHLB advances— 15,000 
Repayments of FHLB advances(15,000)— 
Proceeds from long-term borrowing470 858 
Purchase of treasury stock(4,042)(300)
Common stock dividends paid(928)(801)
Net cash provided by (used in) financing activities1,321 57,667 
Net change in cash and due from banks1,379 (1,683)
Cash and due from banks at beginning of year6,895 7,792 
Cash and due from banks at end of year$8,274 $6,109 
Supplemental disclosures
Cash paid for:
Interest$1,499 $1,559 
Noncash transactions:
Principal balances of loans transferred to other real estate owned58 — 
Unrealized (loss) gain on investment securities available-for-sale, net(2,139)6,031 

F-8