POMPANO BEACH, FL--(Marketwired - Jul 20, 2015) - Stonegate Bank (NASDAQ: SGBK) ("Stonegate") reported net income of $6.0 million for the second quarter of 2015 or $0.46 per diluted common share ($0.53 per share net operating income, a non-GAAP measurement described below), as compared to net income of $5.0 million for the first quarter of 2015 earnings or $0.39 per diluted common share ($0.44 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.

Key highlights for the first quarter:

• Loans: Total loans, net of discounts and deferred fees, grew $47.8 million during the second quarter of 2015 to $1.78 billion at June 30, 2015, a result of net organic loan growth in the second quarter. Commercial and industrial ("C&I") and commercial real estate ("CRE") each comprised 28% of new loan originations for the second quarter of 2015, based upon the outstanding balance as of June 30, 2015, while 18% was in construction and land development, 16% in residential, and the remaining balance in consumer and other loans. The production for the current quarter was 55% variable rate loans, mostly tied to LIBOR, and 45% fixed rate loans. 
  
  
• Asset Quality: Total loans past due 30 - 89 days, excluding nonaccrual loans, were $2.7 million at June 30, 2015 unchanged from March 31, 2015. Nonaccrual loans were $4.6 million at June 30, 2015, or 0.26% of total loans, up from $4.5 million at March 31, 2015, or 0.26% of total loans. Other real estate owned was $2.4 million at June 30, 2015. 
  
  
• Net Interest Income and Margin: Net interest income, on a tax equivalent basis, increased $1.8 million for the three months ended June 30, 2015 as compared to the three months ended March 31, 2015. Net interest income totaled $22.0 million for the three months ended June 30, 2015. The net interest margin, on a tax equivalent basis, increased 16 basis points to 4.31% for the second quarter of 2015 up from 4.15% for the first quarter of 2015. The increase in the margin was primarily a result of the increase in the average yield on loans.
  
  
• Noninterest Expense: Noninterest expense decreased to $13.3 million for the three months ended June 30, 2015 from $13.5 million for the three months ended March 31, 2015. 
  
  
• Capital: Stonegate remained well-capitalized as of June 30, 2015 with capital of $267.2 million as compared to $273.9 million at March 31, 2015. During the second quarter of 2015, Stonegate redeemed $12.75 million of preferred stock issued by the U.S. Treasury through its Small Business Lending Fund program ("SBLF"). These preferred shares were issued as part of the Florida Shores Bancorp, Inc. acquisition in early 2014. As of June 30, 2015, Stonegate's total risk-based capital ratio was 11.8%; Stonegate's Tier 1 and Common Equity Tier 1 capital ratio was 10.9%; and Stonegate's leverage capital ratio was 9.9%. 
  
  

Loans and Deposits

Loans outstanding at June 30, 2015 were $1.78 billion as compared to $1.73 billion at March 31, 2015, an increase of $47.8 million during the second quarter of 2015. 

The loan portfolio consists primarily of loans to individuals and small- and medium-sized businesses within Stonegate's primary market areas of South and West Florida. The table below shows the loan portfolio composition:

(in thousands of dollars)		June 30, 2015			March 31, 2015
Commercial		$	198,304		$	182,943
Commercial real estate - owner occupied			460,830			467,512
Commercial real estate - other			548,735			539,196
Construction and land development			184,947			167,014
Residential real estate			325,866			322,743
Consumer and other loans			78,540			71,211
	Total loans		1,797,222			1,750,619
Less: discount on loans acquired			13,620			14,997
Less: net deferred fees			2,513			2,372
Recorded investment in loans			1,781,088			1,733,250
Less: Allowance for loan losses			17,414			16,768
	Net loans	$	1,763,674		$	1,716,482

New loan originations were $222.0 million during the second quarter of 2015, with fundings of $114.0 million. As of June 30, 2015, outstanding commitments were approximately $386 million with approximately $81 million representing new approved loan originations and approximately $97 million in unfunded construction and land development commitments.

Deposits increased to $1.93 billion at June 30, 2015 from $1.90 billion at March 31, 2015. Noninterest-bearing deposits increased $34.7 million to $399.5 million at June 30, 2015, which represented approximately 21% of total deposits, as compared to $364.8 million at March 31, 2015. Money market accounts increased $49.8 million to $950.0 million at June 30, 2015. Time deposits decreased approximately $34.1 million during the second quarter of 2015 due to runoff of deposits that were priced above the market.

The following table shows the composition of deposits as of June 30, 2015 and March 31, 2015:

(in thousands of dollars)		June 30, 2015			March 31, 2015
Noninterest bearing		$	399,479		$	364,793
NOW			288,590			305,576
Money market			950,019			900,268
Savings			99,425			106,153
Certificates of deposit			192,744			226,804
	Total deposits	$	1,930,257		$	1,903,594

Credit Quality and Allowance for Loan Losses

As of June 30, 2015, Stonegate's past due and nonaccrual loans totaled $7.3 million and were 0.41% of total loans as compared to $7.2 million or 0.42% of total loans at March 31, 2015. Loans past due and nonaccrual acquired from Community Bank of Broward ("CBB") totaled $2.3 million as of June 30, 2015. Loans past due 30-89 days were $2.7 million at June 30, 2015, unchanged from March 31, 2015. Nonaccrual loans stood at $4.6 million at June 30, 2015, an increase of $100,000 from $4.5 million at March 31, 2015. This increase was primarily due to the addition of two loans for $758,000 acquired from CBB that were transferred to nonaccrual status; offset by the transfer of two loans for $468,000 to Other Real Estate Owned; and the placement of two loans for approximately $170,000 on accrual status. Legacy nonaccrual loans were approximately $221,000 as of June 30, 2015, virtually unchanged from March 31, 2015. Commercial real estate loans classified as nonaccrual were $3.3 million or 70.5% of the nonaccrual loans as June 30, 2015. As of June 30, 2015, Stonegate did not have any loans past due 90 days or more that were still accruing. As of June 30, 2015, there remained approximately $12.9 million in nonaccretable discounts on loans acquired. Stonegate does not have any loans under which it participates in a loss share arrangement. 

Nonperforming assets (nonaccrual loans and other real estate owned) were $7.1 million as of June 30, 2015, an increase of $1.9 million from March 31, 2015. Other real estate owned increased to $2.4 million as of June 30, 2015 as compared to $653,000 as of March 31, 2015. The increase was the result of the transfer of four loans during the quarter.

The following table outlines nonperforming assets for the periods ended:

(in thousands of dollars)		June 30,  2015				March 31, 2015
Nonaccrual		$	4,649			$	4,480
Other real estate owned			2,402				653
	Total nonperforming assets	$	7,051			$	5,133
Nonperforming loans as a percentage of total loans			0.26	%			0.26	%
Nonperforming assets as a percentage of total assets			0.31	%			0.23	%

Loans modified as a troubled debt restructuring were $12.5 million and $11.3 million at June 30, 2015 and March 31, 2015, respectively. Loans classified as a troubled debt restructuring and on nonaccrual decreased to $1.2 million at June 30, 2015 from $1.3 million as of March 31, 2015. One loan was modified as troubled debt restructuring during the second quarter of 2015. Specific reserves allocated to loans modified as troubled debt restructuring were $894,000 at June 30, 2015, an increase from $634,000 at March 31, 2015.

At June 30, 2015, the allowance for loan losses was $17.4 million, an increase of $646,000 from March 31, 2015. During the second quarter of 2015, recoveries totaled $121,000 and charge-offs were $25,000. Additionally, $550,000 was added to the allowance for loan losses through a provision expense. Specific reserves decreased to $894,000 at June 30, 2015 from $928,000 at March 31, 2015. The allowance for loan losses represented 0.98% and 0.97% of total loans as of June 30, 2015 and March 31, 2015, respectively. Additionally, the allowance represented 1.47% of total legacy loans as of June 30, 2015. 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 quarters ended:

(in thousands of dollars)	June 30, 2015				March 31, 2015
Balance At Beginning Of Period	$	16,768			$	16,630
Charge-Offs		(25	)			-
Recoveries		121				138
Provision For Loan Losses		550				-
Balance At End Of Period	$	17,414			$	16,768

The table below reflects the allowance allocation per loan category and percent of loans in each category to total loans for the periods indicated:

(in thousands of dollars)		June 30, 2015							March 31, 2015
		Amount				%			Amount			%
Commercial		$	1,885			10.8			$	1,670		10.0
Commercial real estate			11,353			65.2				10,674		63.6
Construction and land development			1,910			11.0				1,606		9.6
Residential real estate			2,239			12.8				2,124		12.6
Consumer and other loans			353			2.1				314		1.9
Unallocated			(326	)		(1.9	)			380		2.3
	Total	$	17,414			100.0			$	16,768		100.0

The following is a summary of information pertaining to impaired loans for the three months ended:

(in thousands of dollars)	June 30, 2015			March 31, 2015			June 30, 2014
Impaired loans without a valuation allowance	$	6,785		$	7,489		$	8,150
Impaired loans with a valuation allowance		7,990			8,034			10,414
Total impaired loans	$	14,775		$	15,523		$	18,564
Valuation allowance related to impaired loans	$	894		$	928		$	1,495

Net Interest Income and Margin

On a tax equivalent basis, Stonegate's net interest income for the three months ended June 30, 2015 was $22.0 million, an increase of approximately $1.8 million from the first quarter of 2015 and an increase of $8.0 million from the second quarter 2014. The increase from the first quarter of 2015 was a result of net organic loan growth while the increase from the second quarter of 2014 was primarily a result of the loans and other interest-earning assets acquired from CBB and organic growth. Average loans for the second quarter of 2015 were $1.74 billion as compared to $1.68 billion for the first quarter of 2015 and $1.19 billion for the second quarter of 2014. 

The net interest margin on a tax equivalent basis was 4.31% for the second quarter of 2015 as compared to 4.15% for the first quarter of 2015 and 3.61% for the second quarter of 2014. This represented an increase of 16 basis points from the first quarter of 2015. However, during the second quarter of 2015, Stonegate recognized approximately $130,000 in time deposit fair value amortization from the CBB acquisition that will not be repeated going forward. The net interest margin would have been 4.28% had this reduction in interest expense not occurred during the second quarter of 2015. Additionally, the net interest margin for the second quarter of 2015 was slightly higher due to recognition of nonaccretable discounts on several acquired loans. The average yield on total earning assets was 4.68% for the second quarter of 2015 versus 4.59% for the first quarter of 2015. This increase was due primarily to the increased average yield on loans from 5.24% for the first quarter 2015 to 5.36% for the quarter ended June 30, 2015. The average yield on paying liabilities decreased 7 basis points from 0.55% from the first quarter of 2015 to 0.48% for the second quarter of 2015. The yield on paying liabilities would have been 4 basis points higher at 0.52% if the reduction of interest expense had not occurred during the second quarter. Stonegate's cost of funds has declined from 0.50% for the June 2014 month-to-date average to 0.41% for the June 2015 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. 

Yield and cost table (unaudited)
(in thousands of dollars)
		2nd Quarter 2015									1st Quarter 2015									2nd Quarter 2014
		Average Balance			Interest			Rate			Average Balance			Interest			Rate			Average Balance			Interest			Rate
ASSETS
Loans, Net(1)(2)(4)		$	1,740,670		$	23,281		5.36	%		$	1,677,378		$	21,675		5.24	%		$	1,194,718		$	15,321		5.14	%
Investment Securities			107,226			420		1.57				104,809			433		1.68				85,103			302		1.42
Federal Funds Sold			20,000			15		0.30				20,147			15		0.30				16,268			19		0.47
Other Investments(3)			2,895			30		4.16				2,822			36		5.17				2,422			25		4.14
Deposits with interest at banks			174,466			141		0.32				163,596			125		0.31				256,813			183		0.29
Total Earning Assets			2,045,257			23,887		4.68	%			1,968,752			22,284		4.59	%			1,555,324			15,850		4.09	%
LIABILITIES
Savings, NOW and Money Market		$	1,332,580			1,596		0.48	%		$	1 ,265,701		$	1,481		0.47	%		$	1,011,515		$	1,350		0.54	%
Time Deposits			209,209			113		0.22				231,554			382		0.67				196,534			320		0.65
Total Interest Bearing Deposits			1,541,789			1,709		0.44				1,497,255			1,863		0.50				1,208,049			1,670		0.55
Other Borrowings			61,550			220		1.43				58,487			257		1.78				39,269			193		1.97
Total Interest Bearing Liabilities			1,603,339			1,929		0.48	%			1,555,742			2,120		0.55	%			1,247,318			1,863		0.60	%
Net interest spread (tax equivalent basis)(4)								4.20	%								4.04	%								3.49	%
Net interest margin (tax equivalent basis)(5)								4.31	%								4.15	%								3.61	%

(1)	Average balances include nonaccrual loans, and are net of unearned loan fees of $2,493, $2,372 and $1,298 for 2nd Quarter 2015, 1st Quarter 2015 and 2nd Quarter 2014, respectively.
(2)	Interest income includes fees on loans of $85, $56 and $99 for 2nd Quarter 2015, 1st Quarter 2015 and 2nd Quarter 2014, respectively.
(3)	"Other investments" consists of equity stock in the Federal Home Loan Bank of Atlanta ("FHLB") that Stonegate is required to own based on its transactions with the FHLB.
(4)	Interest income and rates include the effects of a tax equivalent adjustment using applicable statutory tax rates to adjust tax exempt interest income on tax exempt loans to a fully taxable basis.
(5)	Represents net interest income divided by total interest-earning assets.

Noninterest Income

Noninterest income of $1.6 million for the second quarter of 2015 increased from $1.5 million for the quarter ended March 31, 2015. The increase was attributable to an increase in service charges on deposit accounts.

Noninterest Expense

Noninterest expense for the three months ended June 30, 2015 decreased from $13.5 million at March 31, 2015 to $13.3 million and was also greater than the $12.4 million for the three months ended June 30, 2014. Total merger related expenses were approximately $1.0 million in the second quarter of 2015 as compared to $790,000 in the first quarter of 2015 and $2.2 million in the second quarter of 2014.

Salaries and employee benefits decreased from $7.0 million for the first quarter of 2015 to $6.8 million for the second quarter of 2015. For the three months ended June 30, 2014 salaries and employee benefits were $5.7 million. The decrease over March 31, 2015 was primarily the result of cost savings recognized as the result of the CBB conversion.

Occupancy and equipment expenses were $2.4 million, $2.1 million and $2.5 million for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively. The increase, when compared to the first quarter of 2015, was due to the costs associated with a merger-related branch closing during the second quarter of 2015. Expenses for merger-related branch closures were approximately $810,000 during the second quarter of 2014.

Professional fees decreased for the three months ended June 30, 2015 to $657,000. This compared to professional fees of $965,000 for the three months ended March 31, 2015 and $725,000 for the three months ended June 30, 2014. There were no merger-related legal or professional fees during the second quarter of 2015 or 2014 as compared to approximately $434,000 during the first quarter of 2015. Legal costs and other costs associated with registering the Bank's common stock under the Securities Exchange Act of 1934, as amended, and listing the Bank's common stock for trading on the Nasdaq Stock Market were approximately $180,000 during the second quarter of 2014.

The table below outlines the expenses for the quarters ended:

	June 30, 2015			March 31, 2015			June 30, 2014
(in thousands of dollars)
Salaries and employee benefits	$	6,792		$	7,015		$	5,706
Occupancy and equipment expense		2,416			2,131			2,484
FDIC insurance and state assessments		379			380			327
Data processing		1,117			826			1,430
Loan and other real estate expense		153			54			127
Professional fees		657			965			725
Core deposit intangible amortization		448			456			327
Other operating expenses		1,341			1,639			1,271
Totals	$	13,303		$	13,466		$	12,397

The majority of merger and conversion costs associated with the CBB acquisition were expensed by the end of the second quarter of 2015 and Stonegate expects the full realization of the associated cost savings will begin in the third quarter of 2015.

About Stonegate Bank

Stonegate Bank is a full-service commercial bank, providing a wide range of business and consumer financial products and services through its 21 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 second quarter of 2015. This telephone conference call will be held on Wednesday, July 22, 2015, beginning at 2:30 p.m. Eastern Time. The call-in toll-free telephone number is 1-866-820-3585. 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 August 22, 2015, and may be accessed telephonically at 1-855-859-2056 using Conference ID# 80319629. 

Forward-Looking Statements

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 (http://www2.fdic.gov/efr). 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.

Stonegate Bank and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands of dollars, except per share data)
			June 30, 2015				December 31, 2014
Assets
Cash and due from banks			$	227,995			$	231,406
Federal funds sold				20,000				20,000
Securities held to maturity (Fair value of $109,307 at June 30, 2015 and $83,318 at December 31, 2014)				108,369				81,627
Other investments				2,895				2,422
Loans, net of allowance for loan losses of $17,414 at June30, 2015 and $16,630 at December 31, 2014				1,763,674				1,292,692
Premises and equipment, net				27,703				25,620
Bank-owned life insurance				29,382				22,832
Other real estate owned				2,402				259
Other assets				89,712				46,436
		Total assets	$	2,272,132			$	1,723,294
Liabilities and Stockholders' Equity
Liabilities
	Total deposits		$	1,930,257			$	1,452,194
	Other borrowings			61,953				56,297
	Other liabilities			12,740				13,688
		Total liabilities		2,004,950				1,522,179
Stockholders' Equity
	Senior non-cumulative perpetual preferred stock, Series A, $1,000 liquidation value; 12,750 shares authorized; no shares issued and outstanding as of June 30, 2015; 12,750 issued and outstanding as of December 31, 2014			-				12,750
	Common stock, $5 par value, 20,000,000 shares authorized; 12,643,752 issued and 12,641,094 shares outstanding as of June 30, 2015 and 10,257,163 shares issued and 10,254,505 outstanding as of December 31, 2014			63,219				51,286
	Additional paid-in capital			144,893				88,180
	Retained earnings			60,630				50,641
	Treasury Stock			(13	)			(13	)
	Accumulated other comprehensive income (loss)			(1,547	)			(1,729	)
		Total stockholders' equity		267,182				201,115
		Total liabilities and stockholders' equity	$	2,272,132			$	1,723,294

Stonegate Bank and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(in thousands of dollars, except per share data)
					For the three months ended
					June 30, 2015			March 31, 2015			June 30, 2014
Interest income:
	Interest and fees on loans				$	23,018		$	21,447		$	15,190
	Interest on securities					420			434			302
	Interest on federal funds sold and at other banks					156			139			202
	Other interest					30			36			25
		Total interest income				23,624			22,056			15,719
Interest expense:
	Interest on deposits					1,709			1,863			1,670
	Other interest					220			257			193
		Total interest expense				1,929			2,120			1,863
			Net interest income			21,695			19,936			13,856
	Provision for loan losses					550			-			-
				Net interest income after provision for loan losses		21,145			19,936			13,856
Noninterest income:
		Service charges and fees on deposit accounts				681			630			292
		Other noninterest income				952			840			771
			Total noninterest income			1,633			1,470			1,063
	Noninterest expense:
		Salaries and employee benefits				6,792			7,015			5,706
		Occupancy and equipment expenses				2,416			2,131			2,484
		Data processing				1,117			826			1,430
		Professional fees				657			965			725
		Core deposit intangible amortization				448			456			327
		Other operating expenses				1,873			2,073			1,725
			Total noninterest expense			13,303			13,466			12,397
			Income before income taxes			9,475			7,940			2,522
			Income tax			3,437			2,920			618
			Net income			6,038			5,020			1,904
			Preferred stock dividend			26			32			64
				Net income applicable to common stock	$	6,012		$	4,988		$	1,840
Earnings per common share:
Basic					$	0.48		$	0.40		$	0.18
Diluted						0.46			0.39			0.18
Common shares used in the calculation of earnings per share:
Basic						12,636,874			12,418,145			10,090,855
Diluted						12,965,834			12,739,182			10,414,438

Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars)
	As of
	June 30,  2015				March 31, 2015				June 30,  2014
BALANCE SHEET ITEMS:
Assets	$	2,272,132			$	2,256,110			$	1,656,857
Loans, net		1,763,674				1,716,482				1,193,645
Deposits		1,930,257				1,903,594				1,413,842
Stockholders' equity		267,182				273,949				191,174
CAPITAL RATIOS:
Total capital to risk weighted assets		11.8	%			12.3	%			14.8	%
Tier 1 capital to risk weighted assets		10.9				11.5				13.5
Common Equity Tier 1 to risk weighted assets		10.9				10.8				N/A
Tier 1 capital to average assets		9.9				10.6				10.4
QUARTERLY AVERAGE BALANCE SHEET ITEMS:
Assets	$	2,275,701			$	2,179,334			$	1,689,894
Interest earning assets		2,045,257				1,968,752				1,555,324
Loans, net		1,723,879				1,660,678				1,176,495
Interest bearing liabilities		1,603,339				1,555,742				1,247,318
Deposits		1,922,914				1,836,843				1,450,964
Stockholders' equity		275,906				266,608				189,755

Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars, except per share data)
	Three Months Ended
	June 30, 2015			March 31, 2015			June 30, 2014
FINANCIAL DATA:
Net interest income	$	21,695		$	19,936		$	13,856
Net interest income - tax equivalent		21,958			20,164			13,897
Noninterest income		1,633			1,470			1,063
Noninterest expense		13,303			13,466			12,397
Income tax		3,437			2,920			618
Net income		6,038			5,020			1,904
Preferred stock dividend		26			32			64
Net income attributed to common shares		6,012			4,988			1,840
Weighted average number of common shares outstanding:
Basic		12,636,874			12,418,145			10,090,855
Diluted		12,965,834			12,739,182			10,414,438
Per common share data:
Basic	$	0.48		$	0.40		$	0.18
Diluted		0.46			0.39			0.18
Cash dividend declared to common shares		505			505			407

Non-GAAP Financial Measures

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 business. 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 in this press release are set forth below.

Reconciliation of GAAP to non-GAAP Measures
(in thousands of dollars, except per share data)

	June 30, 2015			March 31, 2015
Interest income, as reported (GAAP)	$	23,624		$	22,056
Tax equivalents adjustments		263			228
Interest income (tax equivalent)	$	23,887		$	22,284
Net interest income, as reported (GAAP)	$	21,695		$	19,936
Tax equivalent adjustments		263			228
Net interest income (tax equivalent)	$	21,958		$	20,164
Net income (GAAP)	$	6,038		$	5,020
Non-interest expense adjustments:
Merger and acquisition related expenses		824			355
Branch closure expenses		228			-
Professional expenses		-			434
Tax effect using the effective tax rate for the period presented		382			293
Net operating income	$	6,708		$	5,516
Net operating income per common share	$	0.53		$	0.44