Stonegate Bank Announces Fourth Quarter 2014 Operating Results
(firmenpresse) - POMPANO BEACH, FL -- (Marketwired) -- 01/26/15 -- (NASDAQ: SGBK) ("Stonegate") reported net income of $5.2 million for the fourth quarter of 2014 or $0.49 per diluted common share ($0.42 per share net operating income, a non-GAAP measurement described below), as compared to the third quarter of 2014 earnings of $3.6 million or $0.34 per diluted common share ($0.37 per share net operating income).
Net operating income is a non-GAAP financial measurement used by management to evaluate and monitor financial results of operations excluding certain non-recurring items such as merger and acquisition related expenses. A table reconciling GAAP to non-GAAP measures is presented below under the caption Non-GAAP Financial Measures - Reconciliation of GAAP to non-GAAP Measures.
Total loans, net of discounts and deferred fees, grew $75.7 million during the fourth quarter of 2014 to $1.31 billion at December 31, 2014. Organic loan growth for the year ended December 31, 2014 was approximately $152 million or 13%. Loan growth in the fourth quarter was largely due to the origination of $167.9 million in loans. Based on the December 31, 2014 outstanding balance for new loan originations, commercial real estate ("CRE") accounted for approximately 46% of the originations, 23% was in commercial and industrial ("C&I"), 16% in construction and land development, 13% in residential and 2% in consumer and other loans. The production for the current quarter was 38% fixed rate loans and 62% variable rate loans, mostly tied to the prime index rate.
Total loans past due 30 - 89 days, excluding nonaccrual loans, were $276,000 at December 31, 2014 as compared to $889,000 at September 30, 2014. Nonaccrual loans were $3.7 million at December 31, 2014, or 0.28% of total loans, down from $5.0 million at September 30, 2014, or 0.40% of total loans. Other real estate owned was $258,000 at December 31, 2014.
Net interest income, on a tax equivalent basis, increased $700,000 for the three months ended December 31, 2014 as compared to the three months ended September 30, 2014. Net interest income totaled $14.8 million for the three months ended December 31, 2014. The net interest margin, on a tax equivalent basis, increased 11 basis points to 3.78% for the fourth quarter of 2014 from 3.67% for the third quarter of 2014. The increase in the margin is primarily a result of the use of lower yielding excess balances on deposits held at the Federal Reserve Bank and other correspondent banks to fund new loan originations during the fourth quarter.
Noninterest expense decreased to $9.2 million for the three months ended December 31, 2014 from $9.4 million for the three months ended September 30, 2014. This change was primarily due to the decrease in salaries and employee benefits.
Stonegate remained well-capitalized as of December 31, 2014 with capital of $200.8 million. Stonegate's total risk-based capital ratio was 14.4%; Stonegate's Tier 1 capital ratio was 13.1%; and Stonegate's leverage capital ratio was 10.9%.
Loans outstanding at December 31, 2014 were $1.31 billion as compared to $1.23 billion at September 30, 2014, an increase of $75.7 million during the fourth quarter of 2014. This net increase is a result of organic loan growth.
The loan portfolio consists primarily of loans to individuals and small- and medium-sized businesses within our primary market areas of South and West Florida. The table below shows the loan portfolio composition:
New loan originations were $167.9 million during the fourth quarter of 2014. As of December 31, 2014, outstanding commitments were approximately $284 million with approximately $50 million representing new approved loan originations and approximately $111 million in unfunded construction and land development commitments.
Deposits increased to $1.45 billion at December 31, 2014 from $1.41 billion at September 30, 2014. Noninterest-bearing deposits remained virtually unchanged at $235.0 million at December 31, 2014 as compared to $234.9 million at September 30, 2014. NOW accounts increased to $226.7 million as of December 31, 2014 from $210.4 million as of September 30, 2014. Money market deposits grew from $776.8 million at September 30, 2014 to $816.4 million at December 31, 2014. During the fourth quarter Stonegate experienced $13.2 million in expected runoff of certificates of deposit that were priced above market and were largely from the acquired banks.
The following table shows the composition of deposits as of December 31, 2014 and September 30, 2014:
As of December 31, 2014 Stonegate's past due and nonaccrual loans totaled $3.9 million and were 0.30% of total loans as compared to $5.9 million or 0.50% at September 30, 2014 and $6.8 million or 0.84% at December 31, 2013. Loans past due 30-89 days were $276,000 versus $889,000 at September 30, 2014, a decrease of $613,000. Legacy loans past due totaled $11,000 at December 31, 2014. Nonaccrual loans stood at $3.7 million at December 31, 2014, a decrease of $1.3 million from $5.0 million at September 30, 2014. This decrease was primarily the result of the payoff of two loans totaling $633,000. Legacy nonaccrual loans were approximately $68,000 at December 31, 2014 and were virtually unchanged from September 30, 2014. Acquired nonaccrual loans with a nonaccretable discount were $1.7 million as of December 31, 2014, net of the $1.4 million discount. Commercial real estate loans classified as nonaccrual were $2.7 million or 73.0% of the nonaccrual loans as of December 31, 2014. As of December 31, 2014, Stonegate did not have any loans past due 90 days or more that were still accruing. As of December 31, 2014, there remained approximately $9.0 million in nonaccretable discounts on loans acquired. Stonegate does not have any loans under which it participates in a loss share arrangement.
Nonperforming assets were $3.9 million as of December 31, 2014, a decline of $1.1 million from September 30, 2014 and a decline of $4.3 million from June 30, 2014. Other real estate owned increased to $258,000 as of December 31, 2014 as compared to $33,000 as of September 30, 2014. The increase was the result of the transfer of one parcel of vacant land from non-performing loans during the quarter.
The following outlines nonperforming assets for the periods ended:
Loans modified as troubled debt restructuring were $11.4 million and $12.0 million at December 31, 2014 and September 30, 2014, respectively. Loans classified as troubled debt restructuring and on nonaccrual totaled $1.3 million as of December 31, 2014, a decrease of $600,000 from September 30, 2014. There were no loans modified as troubled debt restructuring during the fourth quarter of 2014. Specific reserves allocated to loans modified as troubled debt restructuring decreased from $1.1 million at September 30, 2014 to $650,000 at December 31, 2014.
At December 31, 2014, the allowance for loan losses was $16.6 million, a decrease of $677,000 from December 31, 2013. During the fourth quarter of 2014 Stonegate recorded a negative provision for loan loss expense of $1.6 million, and had $449,000 in charge-offs and recoveries of $225,000. Specific reserves decreased from $1.5 million at December 31, 2013, to $850,000 at December 31, 2014. The negative provision for loan losses in the fourth quarter was a result of the favorable change in Stonegate's past due loans, impaired loans and net charge-offs during 2014 as well as the strengthening U.S. and local economies. The allowance for loan losses represented 1.27% and 2.13% of total loans as of December 31, 2014 and December 31, 2013, respectively. Additionally, the allowance represented 1.65% of total legacy loans as of December 31, 2014. Only legacy loans are covered by the allowance as acquired loans are recorded at their fair value on the date of acquisition and have not experienced significant deterioration above their initial estimate.
The following table shows the activity in the allowance for loan losses for the years ended:
The table below reflects the allowance allocation per loan category and percent of loans in each category to total loans for the periods indicated:
The following is a summary of information pertaining to impaired loans for the three months ended:
As a result of the Community Bank of Broward acquisition completed on January 8, 2015, we anticipate the percentage of total classified and nonaccrual loans will be marginally higher in the first quarter of 2015 than our recent historical levels. We also expect this trend will likely continue through 2015 while we continue working to resolve problem loans.
On a tax equivalent basis Stonegate's net interest income for the three months ended December 31, 2014 was $14.8 million, which was an increase of approximately $700,000 from the third quarter of 2014 and an increase of $5.1 million from the fourth quarter 2013. The increase from the third quarter of 2014 was a result of net loan growth while the increase over the fourth quarter of 2013 was due primarily to an increase in loans of $346 million from the Florida Shores Bancorp acquisition and organic growth. Average loans for the fourth quarter of 2014 were $1.28 billion as compared to $1.22 billion for the third quarter of 2014 and $785 million for the fourth quarter of 2013. Due to the growth in net loans, deposits with interest at the Federal Reserve Bank and other correspondent banks declined $25.1 million from September 2014.
The net interest margin on a tax equivalent basis was 3.78% for the fourth quarter of 2014 as compared to 3.67% for the third quarter of 2014 and 3.82% for the fourth quarter of 2013. This represented an increase of 11 basis points from the third quarter of 2014. The yield on total earning assets was 4.25% for the fourth quarter of 2014 versus 4.14% for the third quarter of 2014 with the increase due primarily to an increase in average loans outstanding during the fourth quarter while the lower yielding excess balances held at the Federal Reserve Bank and other correspondent banks decreased. The yield on loans for the fourth quarter decreased from 5.03% to 5.01% from the prior quarter. The average yield on paying liabilities remained unchanged at 0.58% from the third quarter of 2014 but is 18 basis points lower than the fourth quarter of 2013 which was 0.76%. The decline from the fourth quarter of 2013 was primarily due to the decrease in the cost of funds of legacy deposits and as a result of lower cost deposits assumed with the Florida Shores Bancorp acquisition. Stonegate's cost of funds has declined from 0.61% for the December 2013 month-to-date average to 0.49% for the December 2014 month-to-date average.
The following table recaps yields and costs by various interest-earning asset and interest bearing liability account types for the current quarter, the previous quarter and the same quarter last year.
Noninterest income of $1.2 million for the fourth quarter of 2014 was a slight increase from $1.1 million for the quarter ended September 30, 2014. While total noninterest income did not change quarter over quarter, it bears noting that service charges and fees on deposit accounts increased by approximately 7.0% during the fourth quarter of 2014 over the third quarter of 2014 as a result of management's continued emphasis to reduce waived fees and increase noninterest income.
Noninterest expense for the three months ended December 31, 2014 declined from $9.4 million at September 30, 2014 to $9.2 million but was greater than the $6.5 million for the three months ended December 31, 2013.
Salaries and employee benefits declined from $5.3 million during the third quarter of 2014 to $5.1 million for the fourth quarter of 2014. For the three months ended September 30, 2013 salaries and employee benefits were $3.6 million. The increase over December 31, 2013 was primarily the result of adding additional staff from the Florida Shores Bancorp acquisition.
Occupancy and equipment expenses were $1.4 million, $1.6 million and $836,000 for the three months ended December 31, 2014, September 30, 2014 and December 31, 2013, respectively. The increase when compared to the fourth quarter of 2013 was due to the expense associated with the additional branches added from the Florida Shores Bancorp acquisition.
Professional fees declined slightly for the three months ended December 31, 2014 to $682,000. This compared to professional fees of $692,000 for the three months ended September 30, 2014 and $1.1 million for the three months ended December 31, 2013. During the fourth quarter of 2014 Stonegate incurred approximately $125,000 in legal and other professional fees for merger related expenses as compared to $210,000 in the third quarter of 2014. Included in professional fees for the quarter ended December 31, 2013 was approximately $570,000 of merger related costs.
The increase in loan and other real estate expenses during the quarter ended December 31, 2014 from the prior quarter was a result of the reversal of an accrual for real estate taxes associated with delinquent loans and other real estate owned during the third quarter. This is a direct result of the improvement in Stonegate's nonperforming assets.
The table below outlines the expenses for the quarters ended:
We anticipate that merger and conversion costs associated with the recent Community Bank of Broward acquisition will be expensed by the end of the second quarter of 2015 and we estimate that the realization of the associated cost saves will begin fully in the third quarter of 2015.
Stonegate Bank is a full-service commercial bank, providing a wide range of business and consumer financial products and services through its 22 banking offices in its target marketplaces of South and West Florida, which are comprised primarily of Broward, Charlotte, Collier, Hillsborough, Lee, Miami-Dade, Palm Beach and Sarasota Counties in Florida. Stonegate's principal executive office and mailing address is 400 North Federal Highway, Pompano Beach, Florida 33062 and its telephone number is (954) 315-5500.
In conjunction with this earnings report the Company will offer a live participatory conference call to discuss the financial results for the fourth quarter of 2014. This telephone conference call will be held on Tuesday, January 27, 2015, beginning at 2:30 p.m. EST. The call-in toll-free telephone number is 1-855-837-2944. There is no Conference ID required. Participants will be asked for their First Name, Last Name and Company Name. An audio replay of the conference call will be available until February 26, 2015, and may be accessed telephonically at 1-855-859-2056 using Conference ID# 66967682.
Any non-historical statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The following factors, among others, could cause our actual results to differ: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our need and ability to incur additional debt or equity financing; our ability to execute our growth strategy through expansion; our ability to comply with the extensive laws and regulations to which we are subject; changes in the securities and capital markets; changes in general market interest rates; legislative and regulatory changes; monetary and fiscal policies of the U.S. Treasury and the Federal Reserve; changes in the quality or composition of our loan portfolios; demand for loan products; changes in deposit flows, real estate values, and competition and other economic, competitive, and technological factors affecting our operations, pricing, products and services; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our filings with the FDIC, which are available at the FDIC's internet site (). Forward-looking statements in this press release speak only as of the date of the press release and Stonegate Bank assumes no obligation to update any forward-looking statements or the reasons why actual results could differ.
This press release contains financial information determined by methods other than in accordance with GAAP. Stonegate's management uses these non-GAAP financial measures in their analysis of Stonegate's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that in management's opinion can distort period-to-period comparisons of Stonegate's performance. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of Stonegate's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release. Refer to press release supplemental table below for this reconciliation.
Dave Seleski
Stonegate Bank
(954) 315-5510
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Datum: 26.01.2015 - 23:56 Uhr
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