SOURCE: Stonegate Bank

Stonegate Bank

April 12, 2012 16:38 ET

Stonegate Bank Reports Net Income of $2.2 Million for First Quarter 2012

FORT LAUDERDALE, FL--(Marketwire - Apr 12, 2012) - Stonegate Bank (OTCBB: SGBK) reported a 55% increase in net income in the first quarter of 2012. Net income was $2,242,000 or 27.2 cents per share for the first quarter of 2012, as compared to net income of $1,447,000 or 17.5 cents per share in the first quarter of 2011.

First Quarter 2012 Highlights:

  • Net income of $2,242,000 for the first quarter of 2012, up 55% quarter over quarter
  • Total assets grew to $899 million from $761 million year over year
  • 25 straight quarters of profitability
  • 4.0% March net interest margin
  • Tier 1 risk based capital ratio of 16.8% at March 31, 2012
  • Non-interest bearing deposits grew 17% in the first quarter of 2012
  • Total organic loan growth of 5.0% in the first quarter of 2012

Income and Expenses:
Total interest income increased from $7.9 million in the first quarter of 2011 to $9.8 million in the first quarter of 2012. This $1.9 million increase is largely due to an increase of $121 million in total loans period to period. Total interest expense remained largely unchanged at $1.88 million in the first quarter of 2012 compared to $1.9 million in the first quarter of 2011. This occurred even though total deposits increased $121 million period to period. Further, the Bank's cost of funds decreased 30 basis points period to period. This resulted in net interest income improving from $6.0 million in the first quarter of 2011 to $7.9 million in the first quarter of 2012. Total non-interest income increased slightly to $1,079,000 in the first quarter of 2012 from $1,019,000 in the first quarter of 2011. However, if the bargain purchase gain of $406,000 is excluded in 2011, there would have been an increase in non-interest income of 76% period to period.

The Bank realized security gains of $1.3 million in the first quarter of 2012. These gains were taken largely to reduce the overall size of the investment portfolio and to shorten the duration of the portfolio. Non-interest expense increased to $5.8 million for the first quarter of 2012 from $4.4 million for the first quarter of 2011. This increase is related to the addition of the Tampa Bay office and the addition of two offices related to the Southwest Capital Bank merger in 2011.

Margin and Cost of Funds:
Total cost of funds declined from a 1.11% December 2011 month-to-date average to 1.03% March 2012 month-to-date average. Stonegate Bank's net interest margin remained flat from a December 2011 month-to-date average of 4.06% to March 2012 month-to-date average of 4.00%.

Balance Sheet and Capital:
Total assets grew from $761 million on March 31, 2011 to $899 million on March 31, 2012, a $138 million increase. Total loans increased $121 million from $512 million on March 31, 2011 to $633 million on March 31, 2012. Total deposits increased $121 million from $591 million on March 31, 2011 to $712 million on March 31, 2012. Non-interest bearing deposits represent 16.7% of total deposits. Total capital grew from $104.2 million on March 31, 2011 to $119.7 million on March 31, 2012. The undiluted book value of common shares of Stonegate Bank was $14.54 per share on March 31, 2012.

Asset Quality:

Total Stonegate Bank

(In Thousands) June 30, 2011 Sept. 30, 2011 Dec. 31, 2011 Mar. 31, 2012
Total loans $575,480 $584,093 $600,583 $633,660
30 days past due 374 685 656 1,034
60 - 89 days 736 0 0 0
NPAs 13,617 11,639 10,379 9,834
REO 8,208 6,680 5,956 5,400

In order to better illustrate trends in asset quality, the chart above shows the various categories and ending balances over the last four quarters. This is presented to provide additional clarity on the portfolio trends as well as the Bank's progress in reducing non-performing loans and REO. The Bank's non-performing loans decreased slightly from $10.3 million on December 31, 2011 to $9.8 million on March 31, 2012. Overall, non-performing loans represent 1.55% of total loans and 1.09% of total assets. Approximately half of the $9.8 million in non-performing loans are in the acquired First Commercial Bank of Tampa Bay portfolio.

Management believes all non-performing assets and REO are written down to fair market value. Real estate owned decreased from $5.9 million on December 31, 2011 to $5.4 million on March 31, 2012.

The Bank's loan loss reserve was $15 million on March 31, 2012. This reserve represents 153% of all non-performing loans and 2.36% of total loans. Total loans past due more than 30 days increased slightly from $656,000 on December 31, 2011 to $1 million on March 31, 2012.

Management Comments:
"To start the year with an exceptional quarter is very encouraging. Organic growth continues to be our top priority, and this is best illustrated by our loan growth. If the first quarter loan growth is annualized, the Bank would grow its loan portfolio 20% in 2012," said Dave Seleski, President and Chief Executive Officer. "While this has not yet been achieved, we are outperforming our peers that are struggling to achieve any growth at all. In addition to loan growth, Stonegate Bank continues to increase the percentage of non-interest bearing deposits to total deposits, and asset quality continues to improve as we see more buyers and faster resolutions on problem assets. We expect these problem assets to continue their downward trend in 2012. We also anticipate there will be an increase in merger activity in Florida as banks experience improved asset quality. As such, Stonegate Bank continues to evaluate merger opportunities that would increase both market share and increase long-term shareholder value."

The Bank cautions that certain statements contained in this press release are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995, which statements are made pursuant to the "safe harbor" provisions of such Act. These forward-looking statements describe future plans or strategies and may include the Bank's expectations of future financial results. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements. The Bank's ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes is inherently uncertain. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, changes in general market interest rates, changes in general economic conditions and those specific to the Bank's market area, legislative/regulatory changes, monetary and fiscal policies of the U.S. Treasury and the Federal Reserve, changes in the quality or composition of the Bank's loan portfolios, demand for loan products, changes in deposit flows, real estate values, and competition and other economic, competitive, governmental, regulatory and technological factors affecting the Bank's operations, pricing, products and services. The Bank makes periodic filings to the Federal Deposit Insurance Corporation which contain various Bank financial information, copies of which are available from the Bank without charge. The Bank disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments.

STONEGATE BANK
Balance Sheet
As of March 31, 2012
(In Thousands)
Assets
Cash and Due From Banks $ 98,750
Federal Funds Sold -
Investment Securities 126,895
Commercial Loans 74,677
Commercial Real Estate Loans - Owner Occupied 161,863
Commercial Real Estate Loans - Other 205,794
Construction Loans 59,401
Residential 1-4 Family Loans 97,056
HELOCs 25,914
Consumer Loans 8,955
Gross Loans 633,660
Allowance for Loan Losses (15,091 )
Net Loans 618,569
Fixed Assets 12,410
Other Assets 43,311
Total Assets $ 899,935
Liabilities
Non-Interest Bearing Deposits $ 119,205
NOW Accounts 63,855
Money Market Accounts 375,540
Savings Accounts 9,225
CDARS Reciprocal Deposits 35,320
Certificates of Deposits 109,168
Total Deposits 712,313
Repurchase Agreements 31,119
FHLB and Other Borrowings 20,180
Other Liabilities 16,536
Total Liabilities 780,148
Total Capital 119,787
Total Liabilities and Capital $ 899,935
STONEGATE BANK
Income Statement
For Period Ended March 31, 2012
(In Thousands)
Interest Income $ 9,841
Interest Expense 1,883
Net Interest Income 7,958
Less: Provision for Loan Losses 956
Net Interest Income after Provision for Loan Losses 7,002
Non-Interest Income 1,079
Realized Gains (Losses) on AFS Securities 1,303
Less: Salaries and Benefits Expense 3,304
Occupancy and Equipment Expense 911
Data Processing Expense 206
Legal and Professional Expense 393
FDIC Assessments 191
Loan and OREO Expenses 183
Other Expense 637
Total Non-Interest Expense 5,825
Net Income Before Income Taxes 3,559
Income Taxes 1,317
Net Income $ 2,242

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