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Stonegate Bank Reports Net Income of $2.5 Million for Fourth Quarter 2013

FORT LAUDERDALE, FL -- (Marketwired) -- 01/17/14 -- Stonegate Bank (OTCBB: SGBK)

Fourth Quarter 2013 Highlights:

  • $1.1 billion in total assets at December 31, 2013
  • Net income of $2,540,000 for the fourth quarter of 2013
  • Net income of $9,317,000 for fiscal year 2013
  • 32 consecutive quarters of profitability
  • 2013 fourth quarter average net interest margin of 3.74%
  • Tier 1 risk based capital ratio of 15.3% at December 31, 2013
  • Closed Florida Shores acquisition on January 15, 2014 creating a $1.7 billion bank
  • Total loan growth of 11.0% in 2013

Stonegate Bank (OTCBB: SGBK) reported net income of $2,540,000, or 30.8 cents per share in the fourth quarter of 2013, as compared to net income of $2,164,000 or 26.2 cents per share in the fourth quarter of 2012. The Bank increased earnings year over year even though merger related expenses in 2013 were approximately $900,000. The Bank earned $9,317,000 in 2013 or $1.13 per share, as compared to $9,082,000 or $1.10 per share in 2012.

Income and Expenses:
Total interest income decreased from $12.2 million in the fourth quarter of 2012 to $11.0 million in the fourth quarter of 2013. Total interest expense decreased from $1.8 million in the fourth quarter of 2012 compared to $1.5 million in the fourth quarter of 2013. This occurred even though total deposits increased $189 million during 2013. Further, the Bank's cost of funds decreased 30 basis points since December 2012. Net interest income decreased from $10.3 million in the fourth quarter of 2012 to $9.5 million in the fourth quarter of 2013.

Total non-interest income increased to $2,146,000 in the fourth quarter of 2013 from $697,000 in the fourth quarter of 2012. Total non-interest income improved from $3,625,000 in 2012 to $4,532,000, or 25%, in 2013. The largest components of this improvement were increased service charges and overdraft fees, recovery on the sale of REO, and other loan related fees.

Non-interest expense increased to $6.5 million for the fourth quarter of 2013 from $5.8 million for the fourth quarter of 2012. But for merger related expenses in the fourth quarter of 2013, non-interest expenses would have remained unchanged.

Margin and Cost of Funds:
Total cost of funds declined from a 0.68% September 2013 month-to-date average to a 0.61% December 2013 month-to-date average. Stonegate Bank's net interest margin declined from a fourth quarter 2012 average of 4.76% to 3.74% fourth quarter 2013 average. The increase in cash of nearly $142 million and a decrease of $41 million in the investment portfolio largely accounted for the decrease in the net interest margin as well as timing differences on the realization of accretable discounts.

Balance Sheet and Capital:
Total assets grew organically from $944 million on December 31, 2012 to $1.119 billion on December 31, 2013, a $175 million increase. Total loans increased $80 million from $732 million on December 31, 2012 to $812 million on December 31, 2013. Total deposits increased $189 million from $746 million on December 31, 2012 to $935 million on December 31, 2013. Non-interest bearing deposits represented 19.4% of total deposits. Total capital grew from $126.7 million on December 31, 2012 to $131.4 million on December 31, 2013. The undiluted book value of common shares of Stonegate Bank was $15.95 per share on December 31, 2013.

Asset Quality:

Total Stonegate Bank

(dollars in thousands)             September 30, 2013    December 31, 2013
Total loans                      $             780,207 $             812,009
30 days past due                                   578                   202
60 - 89 days                                       757                     0
NPAs*                                            8,423                 6,627
REO                                              2,962                 2,120


* 34% of the nonaccrual loans are currently making 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 0.81% of total loans and 0.59% of total assets.

Management believes all non-performing assets and REO are written down or reserved to fair market value. Real estate owned declined from $2.9 million on September 30, 2013 to $2.1 million on December 31, 2013. The Bank's loan loss reserve was $17.3 million on December 31, 2013. This reserve represents 261% of all non-performing loans and 2.13% of total loans. Total loans past due more than 30 days decreased from $1,335,000 on September 30, 2013 to $202,000 on December 31, 2013.

Management Comments:

"First, I would like to welcome all the customers and investors of Florida Shores Southeast and Southwest to Stonegate Bank. The closing of the Florida Shores merger earlier this week creates some exciting opportunities for the combined bank as we move forward together in 2014," said Dave Seleski, President and Chief Executive Officer. "As for Stonegate, we ended the year with our strongest quarter. After a very slow start, including negative loan growth in the first quarter, we were able to achieve all of our goals in 2013 which included 11% loan growth, an improvement in percentage of non-interest bearing deposits to total deposits, higher earnings, and improved credit quality. Some of this is a reflection of the continued improvement in the Florida economy but most of the credit goes to the employees that really stepped up to the plate. Even more remarkable is that this was achieved with the distraction and the cost of the merger with Florida Shores which could have tempered our overall performance."

"The two biggest challenges and opportunities for Stonegate in 2014 are the data processing conversion of Florida Shores on April 25th and our pending NASDAQ listing. These are exciting times at Stonegate and I look forward to continuing to build our franchise in 2014," added 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, 2013
                               (In Thousands)
Cash and due from banks                               $             190,226
Federal funds sold                                                   10,000
Investment securities                                                71,639

Commercial loans                                                    128,654
Commercial real estate loans - owner occupied                       179,643
Commercial real estate loans - other                                265,223
Construction loans                                                   64,805
Residential 1 - 4 family loans                                      122,351
HELOCs                                                               40,691
Consumer and other loans                                             10,642
  Gross loans                                                       812,009
Allowance for loan losses                                           (17,307)
  Net loans                                                         794,702

Fixed assets                                                         12,310
Other assets                                                         40,856
  Total assets                                        $           1,119,733

Non-interest bearing deposits                         $             181,281
NOW accounts                                                        127,124
Money market accounts                                               392,108
Core reciprocal deposits                                            146,206
Savings accounts                                                      6,543
Certificates of deposit                                              82,215
  Total deposits                                                    935,477
Repurchase Agreements                                                22,733
FHLB and other borrowings                                            20,000
Other Liabilities                                                    10,061
  Total liabilities                                                 988,271

Total capital                                                       131,462
  Total liabilities and capital                       $           1,119,733

                               STONEGATE BANK
                              Income Statement
                     For Period Ended December 31, 2013
(In Thousands)
Interest income                                        $              42,692
Interest expense                                                       6,672
  Net interest income                                                 36,020
Less: Provision for loan losses                                        2,444
  Net interest income after provision for loan losses                 33,576
Non-interest income                                                    4,532
Realized gains (losses) on AFS securities                                902

Less: Salaries and benefits expense                                   13,909
    Occupancy and equipment expense                                    3,646
    Data processing expense                                              553
    Legal and professional expenses                                    2,777
    Loan and OREO expenses                                               346
    Other expense                                                      3,172
  Total non-interest income                                           24,403

Net income before income taxes                                        14,607
Income taxes                                                           5,290
  Net income                                           $               9,317

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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