Stonegate Bank 2008 Third Quarter Earnings Release
FORT LAUDERDALE, Fla., Oct 17, 2008 (BUSINESS WIRE) -- Stonegate Bank (0TCBB:SGBK):
3rd Quarter 2008 highlights:
- $317 million in assets
- 11 straight quarters of profitability
- 13 straight quarters of asset and loan growth
- Non-performing assets of 1.0% of total loans
- Net income of $397,000 year to date 2008
- Tier 1 capital ratio of 14.7%
- $442,000 increase in non-interest income from prior year
Stonegate Bank (0TCBB:SGBK) reported net income in the first nine months of 2008 of $397,000 or 10 cents a share. This represented a 54% decrease from the same period in 2007. Total net income for the third quarter of 2008 was $107,000. This represents an increase of 106% over the third quarter 2007 net income of $41,000.
Income and Expenses:
Total interest income decreased from $13.3 million in the in the first 9 months of 2007 to $12.1 million in the first 9 months of 2008. This was largely due to the Federal Reserve aggressively lowering rates in this time period. Total interest expense decreased from $6.0 million in the first 9 months of 2007 to $4.9 million in the first 9 months of 2008 for the same reason. This led to net interest income decreasing slightly from $7.2 million in the first 9 months of 2007 to $7.1 million in the first 9 months of 2008. Total non interest income increased from $380,000 in the first 9 months of 2007 to $822,000 in the first 9 months of 2008, an increase of a 116%. Total non interest expense increased from $6.2 million in the first 9 months of 2007 to $7.0 million in the first 9 months of 2008, but decreased from $2.4 million in the third quarter of 2007 to $2.1 million in the third quarter of 2008.
Balance Sheet and Capital Strength:
Total assets grew to $317 million on 9/30/08, a $30 million increase from 6/30/08 and an increase from $252 million on 9/30/07. Total loans increased $66 million or 37% from $179 million on 9/30/07 to $245 million on 9/30/08. Total deposits increased $34 million or 18% from $188 million at 9/30/07 to $222 million on 9/30/08. A large part of the deposit growth was in the Bank's CDARS program which represented $33 million of the total deposit base at 9/30/08. Total capital was $41 million at 9/30/08. This resulted in an undiluted book value of $10.26 a share at 9/30/08.
The Bank had three non-performing loans totaling $2.4 million at 9/30/08. This represents 1.0% of total loans and .75% of total assets. Stonegate Bank has charged off $915,000 against these assets and believes it is adequately reserved on the balance. These loans are secured by real estate. The Bank's loan loss reserve increased to $2.5 million largely as a result of increased loan growth. This reserve represents 1.03% of total loans and more than 100% of all non-performing assets.
According to David Seleski, President and CEO, "In prior press releases I mentioned that while our economy is clearly in trouble, there are opportunities for a Bank as well capitalized as Stonegate to benefit. The third quarter was really the first time we saw this benefit. Most of our competition is made up of the large regional banks that seem to be attempting to shrink their balance sheets. We have taken that opportunity to move some larger relationships to Stonegate. This led to asset growth of $30 million and loan growth of $15 million in the third quarter. We are continuing to see that trend in October as well."
"Asset quality remains relatively good. The decision to exit the residential land and construction business in 2006 has so far eliminated any large defaults that some banks are currently experiencing," stated Seleski.
"While we earned less than we hoped in the 3rd quarter, this can largely be attributed to two factors. First, the Bank realized $15 million in loan growth very late in the quarter. This resulted in an increase in our general reserve without the interest income to support this expense. Second, income taxes for the third quarter appear higher than expected, although the overall year-to-date rate is about 23%. The Bank has charged down two of the problem assets and the impact to this position was reflected in the increased tax expense in the third quarter. Overall, expenses continue to decline relative to the increased asset base of the Bank. This is reflected in the Bank's efficiency ratio improving from 92% in January of 2008 to 70% in September of 2008. This should only improve as we continue to grow into our expenses. Our relatively good asset quality, strong capital and expense controls will help to improve efficiencies in the future. In addition, I am very proud of our team for continuing to bring in low cost deposits. Our total cost of funds has stabilized at 2.65%. This is relatively low for a Bank our size and maturity," stated David Seleski, President and CEO.
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.
As of September 30, 2008
Cash and Due From Banks $ 6,508
Federal Funds Sold 18,336
Investment Securities 35,678
Gross Loans 245,387
Allowance for Loan Losses (2,518 )
Net Loans 242,869
Fixed Assets 2,703
Other Assets 11,164
Total Assets $ 317,258
Non-Interest Bearing Deposits $ 23,636
Interest Bearing Deposits 199,217
Repurchase Agreements 28,199
FHLB Borrowings 24,000
Other Liabilities 1,128
Total Liabilities 276,180
Total Capital 41,078
Total Liabilities and Capital $ 317,258
For Period Ended September 30, 2008
Net Interest Income $ 7,184
Less: Allowance for Loan Losses 1,041
Non-Interest Income 822
Realized Gains (Losses) on AFS Securities 569
Less: Salaries and Benefits Expense 4,083
Occupancy and Equipment Expense 1,503
Other Expense 1,434
Net Income Before Income Taxes 514
Income Taxes 117
Net Income $ 397
SOURCE: Stonegate Bank