Stonegate Bank Announces Second Quarter 2016 Operating Results

POMPANO BEACH, FL--(Marketwired - Jul 26, 2016) - Stonegate Bank (NASDAQ: SGBK) ("Stonegate") reported net income of $6.7 million for the second quarter of 2016 or $0.51 per diluted common share ($0.54 per common share net operating income, a non-GAAP measurement described below), as compared to net income of $6.7 million for the first quarter of 2016 or $0.51 per diluted common share. 

Net operating income is a non-GAAP financial measurement used by management to evaluate and monitor financial results of operations excluding certain items determined by management to be unrelated to Stonegate's normal business operations, such as merger and acquisition related expenses. Information related to our use of non-GAAP financial measures and a table reconciling GAAP to non-GAAP measures used in this press release are presented below under the caption Non-GAAP Financial Measures - Reconciliation of GAAP to non-GAAP Measures.

Key highlights for the second quarter:

• Loans: Total loans, net of discounts and deferred fees, grew $78.0 million during the second quarter of 2016 to $1.96 billion at June 30, 2016, a result of net organic loan growth during the quarter. Commercial real estate ("CRE") comprised 39% of new loan originations for the first quarter of 2016, based upon the outstanding balance as of June 30, 2016. Commercial and industrial ("C&I") accounted for 29% of the new loan originations; 13% of the new originations were construction; residential loans were 11% of new originations with the remaining balance in consumer and other loans. The loan production for the second quarter was comprised of 54% variable rate loans. Approximately 43% of the variable rate loans originated in the second quarter were tied to LIBOR. On an annualized basis, organic loan growth was approximately 11.5%.
  
  
• Asset Quality: Total loans past due, excluding nonaccrual loans, were $2.8 million at June 30, 2016, an increase of $2.4 million from March 31, 2016. Nonaccrual loans were $4.1 million at June 30, 2016, or 0.21% of total loans, a decrease from $4.9 million at March 31, 2016, or 0.26% of total loans. Other real estate owned was $613,000 at June 30, 2016, an increase of $52,000 from March 31, 2016. 
  
  
• Net Interest Income and Margin: Net interest income, on a tax equivalent basis, increased $942,000 for the three months ended June 30, 2016 as compared to the three months ended March 31, 2016. Net interest income totaled $22.0 million for the three months ended June 30, 2016. The net interest margin, on a tax-equivalent basis, increased to 3.97% for the second quarter of 2016 as compared to 3.92% for the first quarter of 2016 and a decrease over the net interest margin of 4.31% for the quarter ended June 30, 2015. The increase in the margin from the first quarter of 2016 to the second quarter of 2016 was primarily a result of an increase in the amount of nonaccretable discounts that were recognized during the second quarter.
  
  
• Noninterest Expense: Noninterest expense increased slightly to $12.8 million for the three months ended June 30, 2016 from $12.5 million for the three months ended March 31, 2016. 
  
  
• Capital: Stonegate remained well-capitalized as of June 30, 2016 with capital of $297.0 million as compared to $289.5 million at March 31, 2016. As of June 30, 2016, Stonegate's total risk-based capital ratio was 12.0%; Stonegate's Tier 1 and Common Equity Tier 1 capital ratios were each 11.1%; and Stonegate's leverage capital ratio was 10.4%. 
  
  

Loans and Deposits

Loans outstanding at June 30, 2016 were $1.96 billion as compared to $1.89 billion at March 31, 2016, an increase of $78.0 million during the second quarter of 2016. 

The loan portfolio consists primarily of loans to individuals and small- and medium-sized businesses within Stonegate's primary market areas of South and West Florida. The table below shows the loan portfolio composition:

(in thousands of dollars)			June 30, 2016			March 31, 2016
Commercial			$	250,665		$	222,607
Commercial real estate - owner occupied				465,917			501,201
Commercial real estate - other				604,399			553,152
Construction and land development				217,180			188,723
Residential real estate				331,520			332,274
Consumer and other loans				107,010			101,614
	Total loans			1,976,691			1,899,571
Less: discount on loans acquired				9,204			10,421
Less: net deferred fees				3,375			3,004
Recorded investment in loans				1,964,112			1,886,146
Less: Allowance for loan losses				18,595			18,494
	Net loans		$	1,945,517		$	1,867,652

New loan originations were $221.4 million during the second quarter of 2016, with fundings of $133.5 million. As of June 30, 2016, outstanding commitments were approximately $422.8 million with approximately $142.9 million representing new approved loan originations and approximately $155.0 million in unfunded construction commitments.

Deposits decreased to $2.03 billion at June 30, 2016 from $2.09 billion at March 31, 2016. Noninterest-bearing deposits were $424.7 million at June 30, 2016, an increase from $423.9 million at March 31, 2016, and represented approximately 20.9% of total deposits. NOW accounts at June 30, 2016 decreased $38.4 million from March 31, 2016 due primarily to an anticipated closing of one account with an average balance of approximately $31.0 million. Money market accounts decreased $12.2 million to $1.09 billion at June 30, 2016, from $1.11 billion at March 31, 2016. Approximately $10.0 million of the decrease in money market accounts was due to withdrawals by one customer. Time deposits decreased approximately $5.5 million during the second quarter of 2016.

The following table shows the composition of deposits as of June 30, 2016 and March 31, 2016:

(in thousands of dollars)			June 30, 2016			March 31, 2016
Noninterest bearing			$	424,706		$	423,930
NOW				275,701			314,052
Money market				1,094,766			1,107,028
Savings				94,690			94,739
Certificates of deposit				144,349			149,851
	Total deposits		$	2,034,212		$	2,089,600

Credit Quality and Allowance for Loan Losses

Loans past due 30-89 days were $2.62 million at June 30, 2016, an increase from $454,000 at March 31, 2016. The increase in past due loans was primarily due to one loan for $1.48 million which became past due during the second quarter. Loans past due 90 days or more and still accruing were $218,000 at June 30, 2016. This represents one loan which was in the process of being renewed at quarter end. Legacy loans (i.e., loans made by Stonegate and not acquired by acquisition or otherwise) which were past due loans at June 30 2016, totaled $1.7 million, or 59%, of total loans past due. Nonaccrual loans stood at $4.1 million at June 30, 2016, a decrease from $4.9 million at March 31, 2016. This decrease was largely due to the transfer of two loans with an aggregate balance of $639,000 to OREO. Legacy nonaccrual loans were approximately $1.5 million at June 30, 2016 versus $2.1 million as of March 31, 2016. Residential loans classified as nonaccrual were $1.8 million or 43.1% of the nonaccrual loans and commercial real estate loans classified as nonaccrual were $1.3 million or 28.9% of the nonaccrual as of June 30, 2016. At June 30, 2016, there remained approximately $7.0 million in nonaccretable discounts on loans previously acquired. None of the acquired loans are subject to a loss share arrangement with the Federal Deposit Insurance Corporation. 

Nonperforming assets (nonaccrual loans and other real estate owned) were $4.7 million as of June 30, 2016, a decrease of $5.5 million from March 31, 2016. Other real estate owned increased slightly to $613,000 as of June 30, 2016 as compared to $561,000 as of March 31, 2016. The increase was the net of the transfer of two properties to OREO and the sale of two properties during the quarter. One of the properties that was sold during the second quarter was also transferred to OREO during the second quarter.

The following table outlines nonperforming assets for the periods ended:

(in thousands of dollars)			June 30,  2016				March 31,  2016
Nonaccrual			$	4,100			$	4,922
Other real estate owned				613				561
	Total nonperforming assets		$	4,713			$	5,483
Nonperforming loans as a percentage of total loans				0.21	%			0.26	%
Nonperforming assets as a percentage of total assets				0.20	%			0.22	%

Loans modified as troubled debt restructuring were $8.7 million and $9.1 million at June 30, 2016 and March 31, 2016, respectively. There were no loans classified as troubled debt restructuring and on nonaccrual status at June 30, 2016 versus $450,000 as of March 31, 2016. There were no loans modified as troubled debt restructuring during the second quarter of 2016. There was one loan for $438,000 transferred to OREO and one loan for $12,000 which was paid off during the second quarter. Specific reserves allocated to loans modified as troubled debt restructuring decreased to $67,000 at June 30, 2016, from $160,000 at March 31, 2016.

At June 30, 2016, the allowance for loan losses was $18.6 million, an increase of $101,000 from March 31, 2016. During the second quarter of 2016 recoveries totaled $165,000 and charge-offs were $64,000. Specific reserves decreased to $611,000 at June 30, 2016 from $744,000 at March 31, 2016. The allowance for loan losses represented 0.95% of total loans as of June 30, 2016 and 0.98% as of March 31, 2016. Additionally, the allowance represented 1.23% of total legacy loans as of June 30, 2016. Only legacy loans are covered by the allowance as acquired loans are recorded at their fair value on the date of acquisition and none of these loans have experienced significant deterioration above their initial estimate. 

The following table shows the activity in the allowance for loan losses for the quarters ended:

(in thousands of dollars)		June 30, 2016				March 31, 2016
Balance at beginning of period		$	18,494			$	18,149
Charge-offs			(64	)			(8	)
Recoveries			165				160
Provision for loan losses			-				193
Balance at end of period		$	18,595			$	18,494

The table below reflects the allowance allocation per loan category and percent of loans in each category to total loans for the periods indicated:

			June 30, 2016				March 31, 2016
(in thousands of dollars)
			Amount		%		Amount		%
Commercial			$ 2,584		13.9		$ 2,505		13.5
Commercial real estate			11,618		62.5		12,009		64.9
Construction and land development			1,964		10.6		1,586		8.6
Residential real estate			1,978		10.6		1,971		10.7
Consumer and other loans			451		2.4		423		2.3
	Total		$ 18,595		100.0		$ 18,494		100.0

The following is a summary of information pertaining to impaired loans for the three months ended on the date indicated:

(in thousands of dollars)		June 30, 2016			March 31, 2016			June 30, 2015
Impaired loans without a valuation allowance		$	6,609		$	6,869		$	6,785
Impaired loans with a valuation allowance			5,644			6,489			7,990
Total impaired loans		$	12,253		$	13,358		$	14,775
Valuation allowance related to impaired loans		$	611		$	744		$	894

Net Interest Income and Margin

On a tax-equivalent basis Stonegate's net interest income for the three months ended June 30, 2016 was $22.0 million, an increase of approximately $942,000 from the first quarter of 2016 and an increase of $70,000 from the second quarter 2015. Average earning assets grew $65.1 million from the first quarter of 2016 to the second quarter of 2016, primarily a result of net organic growth in loans and deposits with interest at banks. The yield on loans increased from 4.89% for the first quarter of 2016 to 5.00% for the second quarter of 2016, but decreased from the 5.36% yield for the second quarter of 2015. The increase in the loan yield in the second quarter was due to an increase in nonaccretable discounts recognized over the first quarter of 2016. 

The net interest margin on a tax-equivalent basis increased from 3.92% for the first quarter of 2015 to 3.97% for the second quarter of 2016. The net interest margin was 4.31% for the second quarter of 2015. The average yield on total earning assets was 4.42% for the second quarter of 2016 versus 4.36% for the first quarter of 2016. The average yield on paying liabilities increased two basis points from 0.57% from the first quarter of 2016 to 0.59% for the second quarter of 2016. Stonegate's cost of funds has increased from 0.41% for the June 2015 month-to-date average to 0.48% for the June 2016 month-to-date average. 

The following table recaps yields and costs by various interest-earning asset and interest-bearing liability account types for the current quarter, the previous quarter and the same quarter last year. 

Yield and cost table (unaudited)

(in thousands of dollars)

		2nd Quarter 2016									1st Quarter 2016									2nd Quarter 2015
		Average Balance			Interest			Rate			Average Balance			Interest			Rate			Average Balance			Interest			Rate
ASSETS
Loans, Net(1)(2)(4)		$	1,909,961		$	23,754		5.00	%		$	1,870,153		$	22,729		4.89	%		$	1,740,670		$	23,281		5.36	%
Investment Securities			109,352			441		1.62				108,691			449		1.66				107,226			420		1.57
Federal Funds Sold			30,000			53		0.71				30,000			54		0.72				20,000			15		0.30
Other Investments(3)			3,049			35		4.62				2,912			34		4.70				2,895			30		4.16
Deposits with interest at banks			178,622			233		0.52				154,087			221		0.58				174,466			141		0.32
Total Earning Assets			2,230,984			24,516		4.42	%			2,165,843			23,487		4.36	%			2,045,257			23,887		4.68	%
LIABILITIES
Savings, NOW and Money Market		$	1,486,766		$	2,067		0.56	%		$	1,479,261		$	1,969		0.54	%		$	1,332,580			1,596		0.48	%
Time Deposits			147,830			206		0.56				161,401			215		0.54				209,209			113		0.22
Total Interest Bearing Deposits			1,634,596			2,273		0.56				1,640,662			2,184		0.54				1,541,789			1,709		0.44
Other Borrowings			57,767			215		1.50				58,801			217		1.48				61,550			220		1.43
Total Interest Bearing Liabilities			1,692,363			2,488		0.59	%			1,699,463			2,401		0.57	%			1,603,339			1,929		0.48	%
Net interest spread (tax equivalent basis) (4)								3.83	%								3.79	%								4.20	%
Net interest margin (tax equivalent basis) (5)								3.97	%								3.92	%								4.31	%

(1)		Average balances include nonaccrual loans, and are net of unearned loan fees of $3,101, $3,005 and $2,493 for 2nd Quarter 2016, 1st Quarter 2016 and 2nd Quarter 2015, respectively.
(2)		Interest income includes fees on loans of $32, $47 and $85 for 2nd Quarter 2016, 1st Quarter 2016 and 2nd Quarter 2015, respectively.
(3)		"Other investments" consists of equity stock in the Federal Home Loan Bank of Atlanta ("FHLB") that Stonegate is required to own based on its transactions with the FHLB.
(4)		Interest income and rates include the effects of a tax equivalent adjustment using applicable statutory tax rates to adjust tax exempt interest income on tax exempt loans to a fully taxable basis.
(5)		Represents net interest income divided by total interest-earning assets.

Noninterest Income

Noninterest income of $1.7 million for the second quarter of 2016 declined from $2.3 million for the quarter ended March 31, 2016. During the first quarter of 2016 Stonegate recognized income of $258,000 from the receipt of death benefits for Bank Owned Life Insurance. Additionally, interest rate swap fees declined approximately $109,000 from the first quarter of 2016 to the second quarter of 2016.

Noninterest Expense

Noninterest expense for the three months ended June 30, 2016 increased slightly to $12.8 million from $12.5 million at March 31, 2016, and was less than the $13.3 million for the three months ended June 30, 2015. 

Salaries and employee benefits decreased to $6.9 million for the second quarter of 2016 versus $7.1 million for the first quarter of 2016. This compares with $6.8 million for the three months ended June 30, 2015. 

Occupancy and equipment expenses remained unchanged at $2.1 million for the three months ended June 30, 2016 and March 31, 2106. Occupancy and equipment expenses were $2.4 million for the three months June 30, 2015. Expenses for merger-related branch closures were approximately $228,000 during the second quarter of 2015.

Data processing expenses were $447,000 and $452,000 for the second and first quarter of 2016, respectively. This compares to $1.1 million for the quarter ended June 30, 2015 which included $625,000 in data conversion and termination costs. Professional fees for the three months ended June 30, 2016 were $954,000. This compared to professional fees of $604,000 for the three months ended March 31, 2016 and $657,000 for the three months ended June 30, 2015. During the second quarter of 2016 there was $334,000 in legal and other professional fees for merger-related expenses as compared to $114,000 in the first quarter of 2016. There were no merger-related legal or professional fees during the second quarter of 2015.

The table below outlines the expenses for the quarters ended:

		June 30, 2016			March 31, 2016			June 30, 2015
(in thousands of dollars)
Salaries and employee benefits		$	6,907		$	7,097		$	6,792
Occupancy and equipment expense			2,158			2,113			2,416
FDIC insurance and state assessments			284			383			379
Data processing			447			452			1,117
Loan and other real estate expense			102			154			153
Professional fees			954			604			657
Core deposit intangible amortization			408			414			448
Other operating expenses			1,540			1,319			1,342
Totals		$	12,800		$	12,536		$	13,304

During the second quarter of 2016, Stonegate announced that it had become a credit card issuer. Expenses associated with rolling out this new product line were approximately $115,000 in the second quarter of 2016 and total approximately $160,000 for the year. Looking forward to the third quarter of 2016, Stonegate anticipates additional costs associated with this rollout of credit cards and the Regent Bank acquisition. Additionally, Stonegate's Hallandale and Hollywood offices will be consolidated during the third quarter of 2016.

About Stonegate Bank

Stonegate Bank is a full-service commercial bank, providing a wide range of business and consumer financial products and services through its 21 banking offices in its target marketplaces of South and West Florida, which are comprised primarily of Broward, Charlotte, Collier, Hillsborough, Lee, Miami-Dade, Palm Beach and Sarasota Counties in Florida. Stonegate's principal executive office and mailing address is 400 North Federal Highway, Pompano Beach, Florida 33062 and its telephone number is (954) 315-5500.

In conjunction with this earnings report, the Company will offer a live participatory conference call to discuss the financial results for the fourth quarter of 2015. This telephone conference call will be held on Wednesday, July 27, 2016, beginning at 2:30 p.m. Eastern Time. The call-in toll-free telephone number is 1-866-820-3585. The Conference ID# is 50163014. Participants will be asked for their First Name, Last Name and Company Name. An audio replay of the conference call will be available until August 10, 2016, and may be accessed telephonically at 1-855-859-2056 using Conference ID# 50163014. 

Forward-Looking Statements

Any non-historical statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The following factors, among others, could cause our actual results to differ: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our need and ability to incur additional debt or equity financing; our ability to execute our growth strategy through expansion; our ability to comply with the extensive laws and regulations to which we are subject; changes in the securities and capital markets; changes in general market interest rates; legislative and regulatory changes; monetary and fiscal policies of the U.S. Treasury and the Federal Reserve; changes in the quality or composition of our loan portfolios; demand for loan products; changes in deposit flows, real estate values, and competition and other economic, competitive, and technological factors affecting our operations, pricing, products and services; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our filings with the FDIC, which are available at the FDIC's internet site (http://www2.fdic.gov/efr). Forward-looking statements in this press release speak only as of the date of the press release and Stonegate Bank assumes no obligation to update any forward-looking statements or the reasons why actual results could differ.

Participants in the Solicitation

This communication is not a solicitation of a proxy from any security holder of Stonegate Bank or Regent Bancorp, Inc. ("Regent"). However, Stonegate Bank, Regent, their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies from Stonegate Bank's and Regent's shareholders in respect of the anticipated merger. Information regarding the directors and executive officers of Stonegate Bank may be found in its Proxy Statement on Schedule 14A, which was filed with the FDIC on July 15, 2016, and can be obtained free of charge from Stonegate Bank's website or from the FDIC's website (http://www2.fdic.gov/efr). Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the FDIC when they become available. Investors should read the joint proxy statement/prospectus carefully, when it becomes available, before making any voting decision because it will contain important information.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger, Stonegate intends to file a joint proxy statement of Stonegate and Regent and a prospectus of Stonegate with the FDIC. Stonegate may file other documents with the FDIC regarding the proposed transaction. A definitive joint proxy statement will be mailed to the shareholders of Stonegate and Regent. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE FDIC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other documents containing information about Stonegate at the FDIC's website at www2.fdic.gov/efr. These documents may be accessed and downloaded for free at Stonegate's website at www.stonegatebank.com or by directing a request to Sharon Jones, Senior Vice President and Chief Financial Officer, Stonegate Bank at 400 N. Federal Hwy., Pompano Beach, Florida 33462, telephone (954) 315-5500.

Stonegate Bank and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands of dollars, except per share data)
				June 30, 2016				December 31, 2015
Assets
Cash and due from banks				$	170,598			$	257,934
Federal funds sold					30,000				30,000
Securities held to maturity (Fair value of $111,213 at June 30, 2016 and $107,659 at December 31, 2015)					108,139				106,619
Other investments					3,049				2,895
Loans, net of allowance for loan losses of $18,595 at June 30, 2016 and $18,149 at December 31, 2015					1,945,517				1,839,421
Premises and equipment, net					25,091				25,769
Bank-owned life insurance					31,111				29,776
Other real estate owned					613				1,390
Other assets					90,021				86,634
		Total assets		$	2,404,139			$	2,380,438
Liabilities and Stockholders' Equity
Liabilities
	Total deposits			$	2,034,212			$	2,024,367
	Other borrowings				55,819				58,638
	Other liabilities				17,147				14,869
		Total liabilities			2,107,178				2,097,874
Stockholders' Equity
	Senior non-cumulative preferred stock; no shares issued and outstanding as of June 30, 2016 and December 31, 2015				-				-
	Common stock, $5 par value, 20,000,000 shares authorized; 12,865,702 issued and 12,863,044 shares outstanding as of June 30, 2016 and 12,752,402 shares issued and 12,749,744 outstanding as of December 31, 2015				64,328				63,762
	Additional paid-in capital				149,299				146,994
	Retained earnings				84,537				73,205
	Treasury Stock				(13	)			(13	)
	Accumulated other comprehensive income (loss)				(1,190	)			(1,384	)
		Total stockholders' equity			296,961				282,564
		Total liabilities and stockholders' equity		$	2,404,139			$	2,380,438

Stonegate Bank and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(in thousands of dollars, except per share data)
					For the three months ended
					June 30, 2016			March 31, 2016			June 30, 2015
Interest income:
	Interest and fees on loans				$	23,314		$	22,280		$	23,018
	Interest on securities					441			449			420
	Interest on federal funds sold and at other banks					286			255			156
	Other interest					35			54			30
			Total interest income			24,076			23,038			23,624
Interest expense:
	Interest on deposits					2,273			2,184			1,709
	Other interest					215			217			220
		Total interest expense				2,488			2,401			1,929
			Net interest income			21,588			20,637			21,695
	Provision for loan losses					-			193			550
			Net interest income after provision for loan losses			21,588			20,444			21,145
Noninterest income:
	Service charges and fees on deposit accounts					632			707			681
		Other noninterest income				1,113			1,577			953
			Total noninterest income			1,745			2,284			1,634
Noninterest expense:
	Salaries and employee benefits					6,907			7,097			6,792
	Occupancy and equipment expenses					2,158			2,113			2,416
	Data processing					447			452			1,117
	Professional fees					954			604			657
	Core deposit intangible amortization					408			414			448
	Other operating expenses					1,926			1,856			1,874
		Total noninterest expense				12,800			12,536			13,304
		Income before income taxes				10,533			10,192			9,475
		Income tax				3,846			3,496			3,437
		Net income				6,687			6,696			6,038
		Preferred stock dividend				-			-			26
			Net income applicable to common stock		$	6,687		$	6,696		$	6,012
Earnings per common share:
Basic					$	0.52		$	0.52		$	0.48
Diluted						0.51			0.51			0.46
Common shares used in the calculation of earnings per share:
Basic						12,825,612			12,775,344			12,636,874
Diluted						13,114,761			13,088,602			12,965,834

Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars)
		As of
		June 30,  2016				December 31,  2015				June 30,  2015
BALANCE SHEET ITEMS:
Assets		$	2,404,139			$	2,380,438			$	2,272,132
Loans, net			1,945,517				1,839,422				1,763,674
Deposits			2,034,212				2,024,367				1,930,257
Stockholders' equity			296,961				282,564				267,182
CAPITAL RATIOS:
Total capital to risk weighted assets			12.0	%			11.9	%			11.5	%
Tier 1 capital to risk weighted assets			11.1				11.0				10.7
Common Equity Tier 1 to risk weighted assets			11.1				11.0				10.7
Tier 1 capital to average assets			10.4				10.0				9.7
QUARTERLY AVERAGE BALANCE SHEET ITEMS:
Assets		$	2,430,820			$	2,375,948			$	2,275,701
Interest earning assets			2,230,934				2,128,845				2,045,257
Loans, net			1,891,500				1,825,012				1,723,879
Interest bearing liabilities			1,692,363				1,674,333				1,603,339
Deposits			2,060,687				2,015,859				1,922,914
Stockholders' equity			294,362				279,466				275,906

Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars, except per share data)
		Three Months Ended
		June 30, 2016			March 31, 2016			June 30,  2015
FINANCIAL DATA:
Net interest income		$	21,588		$	20,637		$	21,695
Net interest income - tax equivalent			22,029			21,086			21,958
Noninterest income			1,745			2,284			1,633
Noninterest expense			12,800			12,536			13,303
Income tax			3,846			3,496			3,437
Net income			6,687			6,696			6,038
Preferred stock dividend			-			-			26
Net income attributed to common shares			6,687			6,696			6,012
Weighted average number of common shares outstanding:
Basic			12,825,612			12,775,344			12,636,874
Diluted			13,114,761			13,088,602			12,965,834
Per common share data:
Basic		$	0.52		$	0.52		$	0.48
Diluted			0.51			0.51			0.46
Cash dividend declared to common shares			1,028			1,023			505

Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with GAAP. Stonegate's management uses these non-GAAP financial measures in their analysis of Stonegate's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that in management's opinion can distort period-to-period comparisons of Stonegate's performance. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of Stonegate's core business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures in this press release are set forth below.

Reconciliation of GAAP to non-GAAP Measures
(in thousands of dollars, except per share data)
		June 30, 2016			March 31, 2016
Interest income, as reported (GAAP)		$	24,076		$	23,038
Tax equivalents adjustments			440			449
Interest income (tax equivalent)		$	24,516		$	23,487
Net interest income, as reported (GAAP)		$	21,588		$	20,637
Tax equivalent adjustments			440			449
Net interest income (tax equivalent)		$	22,028		$	21,086
Net income (GAAP)		$	6,687		$	6,696
Non-interest expense adjustments:
Merger and acquisition related expenses			-			-
Branch closure expenses			-			-
Professional expenses			334			114
Tax effect using the effective tax rate for the period presented			122			39
Net operating income		$	6,899		$	6,771
Net operating income per common share		$	0.54		$	0.53