Business & Finance
Business and Finance
Business and Finance
Tue, July 20, 2010
Mon, July 19, 2010 
FORT LAUDERDALE, FL--(Marketwire - July 19, 2010) - Stonegate Bank (
Second Quarter 2010 highlights:
-- $578 million in assets -- 18 straight quarters of profitability -- Opened new Private Banking Office in Miami -- Net income of $860,000 for the second quarter of 2010 -- Tier 1 capital ratio of 21.2% at June 30, 2010 -- 3.90% net interest margin
Net Income:
Stonegate Bank (
Income and Expenses:
Total interest income increased from $4.3 million in the second quarter of 2009 to $7.3 million in the second quarter of 2010. This $3.0 million increase is largely due to an increase in total loans of $74 million and in U.S. Government agencies of $85 million. Total interest expense increased from $1.7 million in the second quarter of 2009 to $2.1 million in the second quarter of 2010. This was largely due to the increase in total deposits of $162 million year to year. This increase was offset by a decrease in the overall cost of funds. Net interest income improved from $2.7 million in the second quarter of 2009 to $5.2 million in second quarter of 2010. This improvement was the direct result of the growth of the Bank and an improvement in the Bank's net interest margin. Total non-interest income increased from $331,000 in the second quarter of 2009 to $887,000 in the second quarter of 2010. This $556,000 increase was primarily fees received from interest rate swap agreements.
Non-interest expense increased from $4.6 million in the first six months of 2009 to $7.7 million in the first six months of 2010. The increase in non-interest expense was driven by several factors.
6 Months of 2009 6 Months of 2010 ---------------- ---------------- Salaries and Benefits $ 2,703,000 $ 3,825,000 FDIC Assessments $ 225,000 $ 433,000 Data Processing $ 155,000 $ 478,000 Loan Expenses $ 61,000 $ 302,000 Legal $ 156,000 $ 368,000 Occupancy $ 899,000 $ 1,372,000 ---------------- ----------------
These increases were the result of adding over $200 million in assets period to period as well as an added office in Naples. Overall expenses are expected to increase in the third quarter with the addition of the Coral Gables office.
Margin and Cost of Funds:
Total cost of funds remained flat from the prior quarter with a month to date average for June of 1.72%. Management believes that the cost of funds will remain flat over the next few quarters. Stonegate Bank's net interest margin decreased from a March 2010 month to date average of 4.42% to a June 2010 month to date average of 3.90%. This change was the combination of decreased yields on the Bank's investment portfolio and recognition of discounts on payoffs of acquired loans.
Balance Sheet and Capital:
Total assets grew from $375 million at June 30, 2009 to $578 million at June 30, 2010, a $203 million increase. Total loans increased $74 million from $294 million on June 30, 2009 to $368 million on June 30, 2010. Total deposits increased $162 million from $268 million at June 30, 2009 to $430 million at June 30, 2010. Approximately 11.8% of total deposits are non-interest bearing. Traditional brokered deposits were $3.4 million at June 30, 2010. Total capital grew from $43.2 million at June 30, 2009 to $94.0 million at June 30, 2010. This resulted in an undiluted book value of $12.20 per share at June 30, 2010.
Asset Quality:
In an effort to increase transparency, Stonegate Bank will report the asset quality of each of its acquisitions and the parent bank separately up to one year from the date of said acquisition. Stonegate Bank's original loan portfolio prior to the acquisitions will be referred as the "legacy portfolio." Total asset quality will be reported below in the following chart:
Legacy Past Dues and Non-Performing Portfolio Integrity Hillcrest Partners --------- --------- --------- --------- 30 days $ - $ - $ - $ - 60-89 days 2,267,000 - - 13,000 Over 90 days - - - - NPAs 3,707,000 - - 6,053,000 REO 2,954,000 - - 1,829,000 --------- --------- --------- ---------
The Bank's total non-performing assets decreased from $10.9 million at March 31, 2010 to $9.7 million at June 30, 2010. As evidenced by the above table, a large percentage of the non-performing assets are related to the acquisition of Partners Bank in October of 2009. For the third straight quarter non-performing loans continued to decline in the legacy portfolio, from $4.0 million at March 31, 2010 to $3.7 million at June 30, 2010. On a combined basis this represents 2.63% of total loans and 1.68% of total assets.
All of the non-performing loans are secured by real estate. Management believes that all non performing assets and REO are written down to fair market value. Real estate owned increased from $3.9 million at March 31, 2010 to $4.7 million at June 30, 2010. The Bank's loan loss reserve increased from $8.29 million at March 31, 2010 to $8.75 million at June 30, 2010. This reserve represents 90% of all non-performing loans and 2.37% total loans. Bank-wide total past due loans over 30 days increased from $1.4 million at March 31, 2010 to $2.2 million at June 30, 2010.
Management Comments:
According to David Seleski, President and CEO of Stonegate, "Overall, the operating results of the Bank in the second quarter met our expectations. We continue to have strong margins due to the repricing of liabilities and discounts on various loans via our acquisitions. Furthermore, the Bank made a conscious decision to decrease our liquidity to further improve our overall margin. This action improved our profitability while shrinking the balance sheet approximately $12 million in the second quarter.
"In addition, the Bank has opened a Private Banking Office in Coral Gables. This group will be led by veteran banker Erin Knight. Pending regulatory approval this will be a full service office. There is tremendous wealth in Dade County and we are very excited about adding this banking team. This is one example of how the Bank's improved cash flow will allow the Bank to continue to look for exciting new opportunities to grow organically in the future.
"The credit market remains challenging however the Bank's overall credit quality as measured by non-performing assets improved in the quarter. Despite the decrease in non-performing loans the Bank took a conservative position and increased overall reserves by approximately $500,000 in the second quarter.
"I think our overall plan of evaluating various acquisition opportunities and continued organic growth is working. We have a very unique opportunity to be aggressive in attracting new customers to the Bank as well looking for strategic partnerships."
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, 2010 (In Thousands) Assets Cash and Due From Banks $ 38,322 Federal Funds Sold 13,740 Investment Securities 132,067 Commercial Loans 36,733 Commercial Real Estate Loans - Owner Occupied 95,683 Commercial Real Estate Loans - Other 106,715 Construction Loans 55,683 Residential 1-4 Family Loans 54,863 HELOCs 15,268 Consumer Loans 3,760 --------- Gross Loans 368,705 Allowance for Loan Losses (8,754) --------- Net Loans 359,951 Fixed Assets 2,052 Other Assets 32,438 --------- Total Assets $ 578,570 ========= Liabilities Non-Interest Bearing Deposits $ 50,930 NOW Accounts 33,273 Money Market Accounts 145,833 Savings Accounts 1,611 CDARS Reciprocal Deposits 144,541 Certificates of Deposits 54,481 --------- Total Deposits 430,669 Repurchase Agreements 21,133 FHLB and Other Borrowings 20,000 Other Liabilities 12,742 --------- Total Liabilities 484,544 Total Capital 94,026 --------- Total Liabilities and Capital $ 578,570 ========= STONEGATE BANK Income Statement For Period Ended June 30, 2010 (In Thousands) Interest Income $ 14,637 Interest Expense 4,184 --------- Net Interest Income 10,453 Less: Provision for Loan Losses 1,242 --------- Net Interest Income after Provision for Loan Losses 9,211 Non-Interest Income 1,090 Realized Gains (Losses) on AFS Securities 23 Less: Salaries and Benefits Expense 3,825 Occupancy and Equipment Expense 1,372 Data Processing Expense 478 Legal and Professional Expense 518 FDIC Assessments 433 Loan and OREO Expenses 302 Other Expense 784 --------- Total Non-Interest Expense 7,712 Net Income Before Income Taxes 2,612 Income Taxes 922 --------- Net Income $ 1,690 =========
