Second Quarter 2013 Earnings: Stonegate Bank Exceeds $1 Billion in Assets

Marketwired

FORT LAUDERDALE, FL--(Marketwired - Jul 16, 2013) - Stonegate Bank (OTCBB: SGBK)

Second Quarter 2013 Highlights:

  • Total assets of $1.09 billion
  • Net income of $2,265,000 for the second quarter of 2013 
  • 30 straight quarters of profitability
  • Second quarter 2013 average net interest margin of 3.72% 
  • Tier 1 risk based capital ratio of 15.75% at June 30, 2013

Stonegate Bank (OTCBB: SGBK) reported an increase in net income in the second quarter of 2013 over the second quarter of 2012. Net income was $2,265,000 or 27.5 cents per share for the second quarter of 2013, as compared to net income of $2,250,000 or 27.3 cents per share in the second quarter of 2012. The Bank earned $4,558,000 or 55.3 cents per share for the first six months of 2013, as compared to $4,491,000 or 54.5 cents per share in the first six months of 2012.

Income and Expenses:
Total interest income increased from $10.1 million in the second quarter of 2012 to $10.8 million in the second quarter of 2013. Total interest expense decreased from $1.9 million in the second quarter of 2012 to $1.8 million in the second quarter of 2013. This decrease occurred even though total deposits increased $174 million period to period. Further, the Bank's cost of funds decreased 24 basis points period to period, which led to an increase in net interest income from $8.2 million in the second quarter of 2012 to $9.0 million in the second quarter of 2013.

Total non-interest income decreased to $760,000 in the second quarter of 2013 from $1.1 million in the second quarter of 2012.

The Bank realized security gains of $160,000 in the second quarter of 2013. These gains were taken largely to reduce risk and the overall size of the investment portfolio.

Non-interest expense increased slightly to $5.7 million for the second quarter of 2013 from $5.6 million for the second quarter of 2012. 

Margin and Cost of Funds:
Total cost of funds declined from a 1.00% June 2012 month to date average to a 0.76% June 2013 month to date average. Stonegate Bank's net interest margin declined from a June 2012 month to date average of 4.02% to 3.72% for June 2013 month to date average. Excess liquidity of $120 million largely accounted for the margin decrease. The Bank had approximately $9.3 million in non-accretable discounts and $6 million in unamortized discounts at June 30, 2013. 

Balance Sheet and Capital:
Total assets grew from $906 million on June 30, 2012 to $1.09 billion on June 30, 2013, a $188 million increase. Total loans increased $72 million from $676 million on June 30, 2012 to $748 million on June 30, 2013. Total deposits increased $174 million from $723 million on June 30, 2012 to $897 million on June 30, 2013. Non-interest bearing deposits represent 15.6% of total deposits. Total capital grew from $122.1 million on June 30, 2012 to $127.1 million on June 30, 2013. The undiluted book value of common shares of Stonegate Bank was $15.43 per share on June 30, 2013. 

Asset Quality:

 
Total Stonegate Bank - June 30, 2013
   
Total loans $748,250
30 days past due 2,508
60 - 89 days past due 0
NPAs* 6,868
REO 2,836
   

*Approximately 25% of the nonaccrual loans are current with their payments.

The chart above shows the various categories and ending balances of past due loans, nonaccrual loans and real estate owned. Overall, non-performing loans represent 0.92% of total loans and 0.62% of total assets. 

Management believes all non-performing assets and REO are written down to fair market value. Real estate owned decreased from $6.4 million on June 30, 2012 to $2.8 million on June 30, 2013. 

The Bank's loan loss reserve was $16.5 million on June 30, 2013. This reserve represents 240% of all non-performing loans and 2.2% of total loans. Total loans past due more than 30 days increased from $1.9 million on June 30, 2012 to $2.5 million on June 30, 2013. 

Management Comments:
"Despite industry wide declining margins Stonegate Bank has demonstrated that respectable earnings can be realized without resorting to reducing expenses or releasing loan loss reserves," said Dave Seleski, President and Chief Executive Officer. "Most banks are experiencing lackluster growth compounded by decreasing margins in this low interest rate environment. I am proud of the fact that we continue to grow and our margins remain respectable. This is even more remarkable with Stonegate's overall liquidity increasing $120 million since June 30, 2012. The goal going forward is to continue to leverage this liquidity and reduce our cost of funds to protect the bank from any significant margin compression in the future. Overall credit quality continues to improve in all of our markets. Year to date annualized net charge offs as a percentage of average loans was approximately 0.05%. I find this very encouraging. These improved credit matrices make evaluating potential acquisitions easier and will mitigate some of the risks associated with these future acquisitions," said Seleski.

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 June 30, 2013  
   
(In Thousands)    
     
Assets    
Cash and due from banks $ 201,783  
Federal funds sold   10,000  
Investment securities   94,719  
       
Commercial loans   111,059  
Commercial real estate loans - owner occupied   171,025  
Commercial real estate loans - other   248,650  
Construction loans   54,828  
Residential 1 - 4 family loans   115,821  
HELOCs   37,805  
Consumer and other loans   9,062  
  Gross loans   748,250  
Allowance for loan losses   (16,524 )
  Net loans   731,726  
       
Fixed assets   12,648  
Other assets   43,748  
  Total assets $ 1,094,624  
       
Liabilities      
Non-interest bearing deposits $ 139,949  
NOW accounts   122,056  
Money market accounts   381,500  
Core reciprocal deposits   165,495  
Savings accounts   6,446  
Certificates of deposit   81,292  
  Total deposits   896,738  
Repurchase Agreements   37,181  
FHLB and other borrowings   20,000  
Other Liabilities   13,556  
  Total liabilities   967,475  
       
Total capital   127,149  
  Total liabilities and capital $ 1,094,624  
       
       
       
STONEGATE BANK
Income Statement
For Period Ended June 30, 2013
 
(In Thousands)    
     
Interest income $ 20,848
Interest expense   3,509
  Net interest income   17,339
Less: Provision for loan losses   996
  Net interest income after provision for loan losses   16,343
Non-interest income   1,616
Realized gains (losses) on AFS securities   905
     
Less: Salaries and benefits expense   6,879
    Occupancy and equipment expense   1,855
    Data processing expense   226
    Legal and professional expenses   899
    Loan and OREO expenses   337
    Other expense   1,533
  Total non-interest income   11,729
     
Net income before income taxes   7,135
Income taxes   2,577
  Net income $ 4,558
     
Contact:
MEDIA CONTACT:
Sissy DeMaria (Email Contact)
Suzanne Schmidt (Email Contact)
Kreps DeMaria
(305) 663-3543

INVESTOR RELATIONS:
Dave Seleski (Email Contact)
Stonegate Bank
(954) 315-5510
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