Stonegate Bank Reports Net Income of $2.8 Million for Fourth Quarter 2011

Bank Reported Net Income of $11,544,450 for Fiscal Year 2011

Marketwired

FORT LAUDERDALE, FL--(Marketwire -01/31/12)- Stonegate Bank (OTC.BB: SGBK.OB - News)

Fourth Quarter 2011 Highlights:

  • Total assets grew to $855 million from $638 million year over year
  • 24 straight quarters of profitability
  • 4.06% December net interest margin
  • Net income of $2,800,000 for the fourth quarter of 2011, up 203% quarter over quarter
  • Net income of $11.5 million for fiscal year 2011, up 228% year over year
  • Tier 1 risk based capital ratio of 17.4% at December 31, 2011
  • Non-interest bearing deposits grew 62% in 2011
  • Total organic loan growth was 9.0% in 2011

Stonegate Bank (OTC.BB: SGBK.OB - News) reported net income of $2,800,000 or 34 cents per share for the fourth quarter of 2011, as compared to net income of $925,000 or 12 cents per share in the fourth quarter of 2010, a 203% increase. The Bank earned $11,544,000 or $1.40 per share in fiscal year 2011 as compared to $3,520,000 or 45.6 cents a share in fiscal year 2010, a 228% increase.

Income and Expenses:
Total interest income increased from $7.8 million in the fourth quarter of 2010 to $10.5 million in the fourth quarter of 2011. This $2.7 million increase is largely due to an increase of $179 million in total loans period to period. Total interest expense remained flat at $1.94 million in the fourth quarter of 2011 compared to $1.90 million in the fourth quarter of 2010. This occurred even though total deposits increased $201 million period to period. Further, the Bank's cost of funds decreased 33 basis points period to period with 25% of new deposit generation non-interest bearing. This resulted in net interest income improving from $5.9 million in the fourth quarter of 2010 to $8.6 million in the fourth quarter of 2011. During 2011, the Bank recognized bargain purchase gains of $18.8 million on the acquisitions of Southwest Capital Bank, an open bank transaction, and First Commercial Bank of Tampa Bay, an FDIC assisted transaction. This gain largely represents the difference in the purchase or bid price and the fair market value of the assets acquired. Total non-interest income, excluding the bargain purchase gain, increased to $835,000 in the fourth quarter of 2011 from $300,000 in the fourth quarter of 2010. Most of this increase came from fees associated with interest rate swaps entered into with our customers, mortgage fee income and increased service charge income. Non-interest expense increased to $6.4 million for the fourth quarter of 2011 from $4.1 million for the fourth quarter of 2010. The higher than normal expense is directly related to the Tampa Bay acquisition.

Margin and Cost of Funds:
Total cost of funds declined from a 1.20% September 2011 month to date average to 1.11% December 2011 month to date average. Stonegate Bank's net interest margin increased from a September 2011 month to date average of 3.91 % to December 2011 month to date average of 4.06%.

Balance Sheet and Capital:
Total assets grew from $638 million on December 31, 2010 to $855 million on December 31, 2011, a $217 million increase. Total loans increased $179 million from $421 million on December 31, 2010 to $600 million on December 31, 2011. Total deposits increased $201 million from $472 million on December 31, 2010 to $673 million on December 31, 2011. Slightly more than 15.0% of total deposits are non-interest bearing. Total capital grew from $95.7 million on December 31, 2010 to $118 million on December 31, 2011. This resulted in an undiluted book value of $14.32 per share on December 31, 2011.

Asset Quality:

Legacy

 
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Past Dues and Non-          March 31,     June 30,    Sept. 30,     Dec. 31,
 Performing                      2011         2011         2011         2011
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Total loans              $512,689,000 $521,107,000 $534,427,000 $552,920,000
30 days past due              474,182       23,885      436,340      120,956
60 - 89 days past due         910,890       89,121            0            0
NPAs                        8,455,370    6,793,813    5,668,825    5,865,783
REO                         6,146,038    6,990,583    5,953,234    5,755,995
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First Commercial Bank of Tampa Bay

 
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                                  June 30, 2011 Sept. 30, 2011 Dec. 31, 2011
                                 -------------------------------------------
Total loans                         $54,373,000    $49,666,000   $47,663,000
30 days past due                        349,773        248,983       535,012
60 - 89 days                            646,668              0             0
NPAs                                  6,823,745      5,969,777     4,513,708
REO                                   1,217,624        726,683       200,000
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Total Stonegate Bank

 
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                                  June 30, 2011 Sept. 30, 2011 Dec. 31, 2011
                                 -------------------------------------------
Total loans                        $575,480,000   $584,093,000  $600,583,000
30 days past due                        373,658        685,323       655,968
60 - 89 days                            735,789              0             0
NPAs                                 13,617,558     11,638,602    10,379,491
REO                                   8,208,207      6,679,917     5,955,995
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The loan quality detail is presented by showing the legacy Stonegate portfolio as well as the Bank's second quarter FDIC acquisition of First Commercial Bank of Tampa Bay. This is presented in order to provide additional clarity on the legacy portfolio trends as well as the Bank's progress in reducing non-performing loans and REO on the recent acquisition. The Bank's legacy non-performing assets increased slightly from $5.6 million on September 30, 2011 to $5.8 million on December 31, 2011. Overall, legacy non-performing assets represent 1.06% of total legacy loans. Total non-performing loans decreased from $11.6 million at September 30, 2011 to $10.3 million at December 31, 2011. Approximately half of the $10.3 million in non-performing loans are in the acquired First Commercial Bank of Tampa Bay portfolio. It should be noted that the First Commercial Bank of Tampa Bay portfolio continues to improve as reflected by the decline in non-performing loans from $6.8 million on June 30, 2011 to $4.5 million at December 31, 2011. Total Bank wide non-performing loans represent 1.21% of assets and 1.72% of total loans on December 31, 2011.

Management believes all non-performing assets and REO are written down to fair market value. Real estate owned decreased from $6.6 million on September 30, 2011 to $5.9 million on December 31, 2011.

The Bank's loan loss reserve was $14.4 million on December 31, 2011. This reserve represents 139% of all non-performing loans and 2.4% of total loans. Total loans past due more than 30 days remained relatively the same at 685,000 on September 30, 2011 and $655,000 on December 31, 2011.

"Clearly 2011 was the best year for Stonegate since our inception in 2005," said Dave Seleski, President and Chief Executive Officer. "Not only did the Bank have record earnings but some very compelling growth numbers. The Bank's assets increased $217 million. We also increased our non-interest bearing deposits 62%. Consequently, our overall non-interest bearing deposits increased to 15% of total deposits. Finally, organic loan growth was robust at 9.0%. The Bank also made significant strides in improving our asset quality in Tampa. We are going to continue to focus on organic growth in 2012 while being opportunistic in terms of acquisitions."

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 December 31, 2011

(In Thousands)

Assets
Cash and Due From Banks                                         $    70,816
Federal Funds Sold                                                    3,900
Investment Securities                                               138,079

Commercial Loans                                                     73,563
Commercial Real Estate Loans - Owner Occupied                       163,058
Commercial Real Estate Loans - Other                                181,801
Construction Loans                                                   60,567
Residential 1-4 Family Loans                                         91,255
HELOCs                                                               24,451
Consumer Loans                                                        5,888
                                                                -----------
Gross Loans                                                         600,583
Allowance for Loan Losses                                           (14,403)
                                                                -----------
Net Loans                                                           586,180

Fixed Assets                                                         12,471
Other Assets                                                         43,458
                                                                -----------
Total Assets                                                    $   854,904
                                                                ===========

Liabilities
Non-Interest Bearing Deposits                                   $   101,785
NOW Accounts                                                         58,489
Money Market Accounts                                               337,186
Savings Accounts                                                      8,679
CDARS Reciprocal Deposits                                            50,299
Certificates of Deposits                                            117,546
                                                                -----------
Total Deposits                                                      673,984
Repurchase Agreements                                                26,712
FHLB and Other Borrowings                                            20,180
Other Liabilities                                                    15,980
                                                                -----------
Total Liabilities                                                   736,856

Total Capital                                                       118,048
                                                                -----------
Total Liabilities and Capital                                   $   854,904
                                                                ===========


                               STONEGATE BANK
                              Income Statement
                     For Period Ended December 31, 2011

(In Thousands)

Interest Income                                                 $    37,783
Interest Expense                                                      7,985
                                                                -----------
Net Interest Income                                                  29,798
Less: Provision for Loan Losses                                      12,263
                                                                -----------
Net Interest Income after Provision for Loan Losses                  17,535
Non-Interest Income                                                  21,490
Realized Gains (Losses) on AFS Securities                               591

Less: Salaries and Benefits Expense                                  11,130
  Occupancy and Equipment Expense                                     3,355
  Data Processing Expense                                             1,222
  Legal and Professional Expense                                      1,960
  FDIC Assessments                                                      971
  Loan and OREO Expenses                                              2,876
  Other Expense                                                       2,171
                                                                -----------
Total Non-Interest Expense                                           23,685

Net Income Before Income Taxes                                       15,931
Income Taxes                                                          4,387
                                                                -----------
Net Income                                                      $    11,544
                                                                ===========
Contact:
INVESTOR RELATIONS:
Dave Seleski
(Email Contact)
Stonegate Bank
(954) 315-5510

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