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Stonegate Bank Reports Net Income of $2.1 Million for Fourth Quarter 2012

FORT LAUDERDALE, FL -- (Marketwire) -- 01/28/13 -- Stonegate Bank (OTCBB: SGBK)

Fourth Quarter 2012 Highlights:

  • Net income of $2,164,000 for the fourth quarter of 2012
  • Total assets grew to $945 million from $855 million year over year
  • 28 straight quarters of profitability
  • 4.76% fourth quarter net interest margin
  • Tier 1 risk based capital ratio of 16% at December 31, 2012
  • Total organic loan growth of 22% in 2012
  • 0.99% return on assets in 2012

Stonegate Bank (OTCBB: SGBK) reported net income of $2,164,000 or 26.2 cents per share for the fourth quarter of 2012, as compared to net income of $2,800,000 or 34 cents per share in the fourth quarter of 2011. The Bank earned $9,082,000 or $1.10 per share in 2012, as compared to $11,544,000 or $1.40 per share in 2011.

Income and Expenses:
Total interest income increased from $10.5 million in the fourth quarter of 2011 to $12.2 million in the fourth quarter of 2012. This was the result of an increase in $132 million in total loans period to period. Total interest expense declined from $1.94 million in the fourth quarter of 2011 to $1.87 million in the fourth quarter of 2012. This occurred even though total deposits increased $72 million period to period. Net interest income improved from $8.6 million in the fourth quarter of 2011 to $10.3 million in the fourth quarter of 2012.

Excluding bargain purchase gains in 2011, total non-interest income decreased to $697,000 in the fourth quarter of 2012 from $835,000 in the fourth quarter of 2011. Year to date non-interest income increased from $2,680,000 in 2011 to $3,625,000 in 2012, excluding 2011 bargain purchase gains. The Bank realized security gains of $234,000 in the fourth quarter of 2012. Per plan, these gains were taken largely to reduce the overall size of the investment portfolio and to shorten the duration of the overall portfolio.

Non-interest expense decreased from $6.4 million for the fourth quarter of 2011 to $5.8 million for the fourth quarter of 2012. Total year to date non-interest expense decreased from $23.6 million in 2011 to $23.1 million in 2012.

Margin and Cost of Funds:
Total cost of funds, as compared to the September month-to date average, remained flat at a .92% December month-to-date average. Stonegate Bank's net interest margin increased from a third quarter 2012 average of 4.25% to a fourth quarter average of 4.76%. The increase was primarily the result of the Bank's realization of various fair market value discounts on acquired assets.

Balance Sheet and Capital:
Total assets grew from $855 million on December 31, 2011 to $945 million on December 31, 2012, a $90 million increase. Total loans increased $132 million from $600 million on December 31, 2011 to $732 million on December 31, 2012. Total deposits increased $72 million from $674 million on December 31, 2011 to $746 million on December 31, 2012. Non-interest bearing deposits represent 16.9% of total deposits. Total capital grew from $118 million on December 31, 2011 to $127 million on December 31, 2012. The undiluted book value of common shares of Stonegate Bank was $15.37 per share on December 31, 2012.

Asset Quality:

Total Stonegate Bank

                                                                  Legacy Dec
In thousands       Mar 2012    Jun 2012   Sept 2012    Dec 2012      2012
                 ----------- ----------- ----------- -----------
Total loans      $   633,659 $   676,480 $   691,590 $   732,898 $   589,000
30 days past due       1,304         979       1,811       2,115           0
60 - 89 days               0         890         304       1,131           0
NPAs                   9,850       6,746       6,128       6,198         402
REO                    5,400       6,402       6,942       3,257          15

In order to better illustrate trends in asset quality the chart above shows the various categories and ending balances over the last four quarters, along with a comparison to the legacy portfolio at year end. 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 remained relatively level from $6.1 million on September 30, 2012 to $6.2 million on December 31, 2012. Overall, non-performing loans represent 0.85% of total loans and 0.65% of total assets. Total non-performing legacy loans (originated by Stonegate Bank and not through acquisition) were $402,000 at December 31, 2012.

Real estate owned decreased significantly from $6.9 million on September, 30 2012 to $3.2 million on December 31, 2012. Total legacy REO was $15,000 at December 31, 2012.

The Bank's loan loss reserve was $17 million on December 31, 2012. This reserve represents 364% of all non-performing loans and 2.32% of total loans. Total loans past due more than 30 days increased from $2.1 million on September 30, 2012 to $3.2 million on December 31, 2012. At December 31, 2012, there were no past due loans in the legacy portfolio.

Management Comments:
"As I look back at 2012, several trends at Stonegate and the Florida economy are evident," said Dave Seleski, President and Chief Executive Officer. "Real estate, particularly residential, continues to improve in all the markets we serve. We have seen significant appreciation in home prices as evidenced by the median price of homes increasing year over year in all of our markets. In addition, most of our markets had reduced commercial vacancies and rental rates appear to be increasing as well. This is very encouraging.

"I think the public views the State of Florida as an excellent place to invest and expand their businesses. All of this certainly contributed to our 22% loan growth in 2012. We ramped up our loan production by adding additional lenders and without sacrificing our credit quality. In the asset quality section above I have added, for comparative purposes, a column showing only loans originated by Stonegate. This shows we have virtually no problems in our legacy portfolio. Our credit culture is and will always continue to be the foundation of our Bank.

"Our goal in 2013 is to continue to grow organically without sacrificing margin and credit quality. In addition, the bank will continue to evaluate potential mergers or strategic alliances that will enhance shareholder value," 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 December 31, 2012
(In Thousands)

Cash and Due From Banks                                         $    57,930
Federal Funds Sold                                                        -
Investment Securities                                               112,625

Commercial Loans                                                     99,764
Commercial Real Estate Loans - Owner Occupied                       185,167
Commercial Real Estate Loans - Other                                238,360
Construction Loans                                                   46,185
Residential 1-4 Family Loans                                        118,040
HELOCs                                                               32,923
Consumer Loans                                                       12,459
Gross Loans                                                         732,898
Allowance for Loan Losses                                           (17,016)
Net Loans                                                           715,882
Fixed Assets                                                         13,075
Other Assets                                                         45,265
Total Assets                                                    $   944,777

Non-Interest Bearing Deposits                                   $   126,551
NOW Accounts                                                         72,533
Money Market Accounts                                               327,850
Core Reciprocal Deposits                                            124,622
Savings Accounts                                                      7,170
Certificates of Deposits                                             87,442
Total Deposits                                                      746,168
Repurchase Agreements                                                34,660
FHLB and Other Borrowings                                            20,060
Other Liabilities                                                    17,180
Total Liabilities                                                   818,068

Total Capital                                                       126,709
Total Liabilities and Capital                                   $   944,777

                         STONEGATE BANK
                        Income Statement
               For Period Ended December 31, 2012

(In Thousands)

Interest Income                                                $      42,915
Interest Expense                                                       7,447
Net Interest Income                                                   35,468
Less: Provision for Loan Losses                                        4,378
Net Interest Income after Provision for Loan Losses                   31,090
Non-Interest Income                                                    3,626
Realized Gains (Losses) on AFS Securities                              2,975
Less: Salaries and Benefits Expense                                   13,283
  Occupancy and Equipment Expense                                      3,497
  Data Processing Expense                                                787
  Legal and Professional Expense                                       1,455
  FDIC Assessments                                                       580
  Loan and OREO Expenses                                                 991
  Other Expense                                                        2,550
Total Non-Interest Expense                                            23,143
Net Income Before Income Taxes                                        14,548
Income Taxes                                                           5,466
Net Income                                                     $       9,082

Sissy DeMaria
Email Contact
Suzanne Schmidt
Email Contact
Kreps DeMaria
(305) 663-3543

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

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