629 0 Kommentare Stonegate Bank Announces Third Quarter 2014 Operating Results

POMPANO BEACH, FL--(Marketwired - Oct 24, 2014) - Stonegate Bank (NASDAQ: SGBK) ("Stonegate") reported net income of $3.6 million for the third quarter of 2014 or $0.34 per diluted common share ($0.37 per share net operating income, a non-GAAP measurement described below), as compared to the second quarter of 2014 earnings of $1.9 million or $0.18 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 on page 13, Explanation of Certain Unaudited Non-GAAP Financial Measures.

Key highlights for the third quarter:

Loans: Total loans grew $21.7 million during the third quarter of 2014 to $1.23 billion at September 30, 2014. Loan growth in the third quarter was largely due to the origination of $105.8 million in loans. Commercial real estate ("CRE") and construction and land development each accounted for 33% of the loan originations, with 18% in residential mortgages, 12% in consumer and other and 4% in commercial and industrial ("C&I"). The production for the current quarter was 27% fixed rate loans and 73% variable rate loans, mostly tied to the prime index rate.
Asset Quality: Total loans past due 30 - 89 days, excluding nonaccrual loans, were $889,000 at September 30, 2014 as compared to $1.2 million at June 30, 2014. Nonaccrual loans were $5.0 million at September 30, 2014, or 0.40% of total loans, down from $7.5 million at June 30, 2014, or 0.62% of total loans. Other real estate owned declined to $33,000 as of September 30, 2014.
Net Interest Income and Margin: Net interest income, on a tax equivalent basis, increased $125,000 for the three months ended September 30, 2014 as compared to the three months ended June 30, 2014. Net interest income totaled $14.1 million for the three months ended September 30, 2014. The third quarter 2014 net interest margin, on a tax equivalent basis, increased 6 basis points to 3.67% from 3.61% on a tax equivalent basis for the second quarter 2014. The increase in the margin is primarily a result of the increase in average loans outstanding and the use of cash to fund the increase.
Noninterest Expense: Noninterest expense decreased to $9.4 million for the three months ended September 30, 2014 from $12.4 million for the three months ended June 30, 2014. This decrease was primarily due to the one-time costs in the second quarter associated with the conversion of Florida Shores Bancorp, Inc. and Subsidiaries (collectively, "Florida Shores") and related branch closure expenses. These one-time costs were approximately $2.4 million for the three months ended June 30, 2014.
Capital: The Bank remained well-capitalized as of September 30, 2014 with capital of $195.0 million. The Bank's total risk-based capital ratio was 14.7%, the Bank's Tier 1 capital ratio was 13.5% and the Bank's leverage capital ratio was 10.7%.

Loans and Deposits

Loans outstanding at September 30, 2014 were $1.23 billion as compared to $1.21 billion at June 30, 2014, an increase of $21.7 million during the third 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 area of South and West Florida. The table below shows the loan portfolio composition:



(in thousands of dollars)		September 30, 2014		June 30, 2014

Commercial		$	177,213	$	180,243
Commercial real estate - owner occupied			305,310		289,053
Commercial real estate - other			353,438		362,941
Construction and land development			104,416		100,193
Residential real estate			261,506		259,658
Consumer and other loans			42,408		31,136
	Total loans		1,244,291		1,223,224
Less: discount on loans acquired			9,209		9,895
Less: net deferred fees			1,460		1,388
Recorded investment in loans			1,233,622		1,211,941
Less: Allowance for loan losses			18,429		18,296
	Net loans	$	1,215,193	$	1,193,645

New loan originations were $105.8 million during the third quarter of 2014. As of September 30, 2014, outstanding commitments were approximately $333 million with approximately $120 million representing new approved loan originations and approximately $62 million in unfunded construction and land development commitments.

Deposits were virtually unchanged at $1.41 billion at both September 30, 2014 and June 30, 2014. Noninterest-bearing deposits grew to $234.9 million at September 30, 2014 as compared to $233.9 million at June 30, 2014. Money market deposits grew from $767.9 million at June 30, 2014 to $776.8 million at September 30, 2014. During the third quarter the Bank experienced $14.0 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 September 30, 2014 and June 30, 2014:



(in thousands of dollars)		September 30, 2014		June 30, 2014

Noninterest bearing		$	234,906	$	233,928
NOW			210,375		209,100
Money market			776,823		767,877
Savings			12,047		12,591
Certificates of deposit			176,337		190,346
	Total deposits	$	1,410,488	$	1,413,842

Credit Quality and Allowance for Loan Losses

As of September 30, 2014, the Bank's past due and nonaccrual loans totaled $5.9 million and were 0.5% of total loans as compared to $8.7 million or 0.7% at June 30, 2014 and $8.4 million or 1.07% at September 30, 2013. Loans past due 30-89 days were $889,000 versus $1.2 million at June 30, 2014, a decrease of $300,000. Legacy loans past due total $515,000 or approximately 60% of the total loans past due. Nonaccrual loans stood at $5.0 million at September 30, 2014, a decrease of $2.5 million from $7.5 million at June 30, 2014. This decrease was a result of the sale of two loans totaling $2.2 million and a loan for approximately $225,000 which was returned to accrual status during the third quarter of 2014. Legacy nonaccrual loans at September 30, 2014 are approximately $70,000 as compared to $1.9 million at June 30, 2014. Commercial real estate loans are $3.2 million or 65% of the nonaccrual loans. The Bank does not have any loans past due 90 days or more that are still accruing. As of September 30, 2014, there remains approximately $9 million in nonaccretable discounts on loans acquired. The Bank does not have any loans under which it participates in a loss share arrangement.

Nonperforming assets were $5.0 million as of September 30, 2014, a decline of $3.2 million from June 30, 2014. However, the decline from $9.8 million at March 31, 2014, the first quarter with the Florida Shores acquisition, is $5.0 million or 49% of the first quarter's total nonperforming assets. Other real estate owned is $33,000 as of September 30, 2014, down from $650,000 at June 30, 2014 and $1.5 million at March 31, 2013.

The following outlines nonperforming assets for the periods ended:



(in thousands of dollars)	September 30, 2014			June 30, 2014

Nonaccrual	$	4,963		$	7,526
Other real estate owned		33			654
Total nonperforming assets	$	4,996		$	8,180

Nonperforming loans as a percentage of total loans		0.40	%		0.67	%
Nonperforming assets as a percentage of total assets		0.30	%		0.49	%

Loans modified as troubled debt restructuring were $12.0 million and $13.9 million at September 30, 2014 and June 30, 2014, respectively. Loans classified as troubled debt restructuring and on nonaccrual totaled $1.9 million as of September 30, 2014 and were unchanged from June 30, 2014. There were no loans modified as troubled debt restructuring during the third quarter of 2014. Specific reserves allocated to loans modified as troubled debt restructuring decreased from $1.3 million on June 30, 2014 to $1.1 million on September 30, 2014.

At September 30, 2014, the allowance for loan losses was $18.4 million, an increase of $133,000 from June 30, 2014. During the third quarter of 2014 the Bank recorded no provision for loan loss expense, and had $273,000 in charge-offs and recoveries of $406,000. Specific reserves decreased from $1.5 million at June 30, 2014 to $1.3 million at September 30, 2014. The general loan loss reserve on non-impaired loans increased approximately $330,000 during the third quarter. The allowance for loan losses represents 1.49% and 1.51% of total loans as of September 30, 2014 and June 30, 2014, respectively. Additionally, the allowance represents 2.03% of total legacy loans as of September 30, 2014.

The following table shows the activity in the allowance for loan losses for the three months ended:



(in thousands of dollars)	September 30, 2014			June 30, 2014		September 30, 2013

Balance At Beginning Of Period	$	18,296		$	17,983	$	16,524
Charge-Offs		(273	)		-		(383	)
Recoveries		406			313		206
Provision For Loan Losses		-			-		380
Balance At End Of Period	$	18,429		$	18,296	$	16,727

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)	September 30, 2014			June 30, 2014			September 30, 2013
	Amount		%	Amount		%	Amount		%
Commercial	$	2,276	12.4	$	1,896	10.3	$	1,690	10.1
Commercial real estate		10,584	57.4		12,058	65.9		11,516	68.8
Construction and land development		2,356	12.8		1,844	10.1		1,435	8.6
Residential real estate		2,393	13.0		2,393	13.1		2,022	12.1
Consumer and other loans		431	2.3		105	0.6		64	0.4
Unallocated		389	2.1		-	0.0		-	0.0
Total	$	18,429	100.0	$	18,296	100.0	$	16,727	100.0

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



(in thousands of dollars)	September 30, 2014		June 30, 2014		September 30, 2013

Impaired loans without a valuation allowance	$	7,923	$	8,150	$	11,218
Impaired loans with a valuation allowance		8,658		10,414		8,865
Total impaired loans	$	16,581	$	18,564	$	20,083

Valuation allowance related to impaired loans	$	1,289	$	1,495	$	2,325

Net Interest Income and Margin

On a tax equivalent basis the Bank's net interest income for the three months ended September 30, 2014 was $14.1 million which was an increase of approximately $125,000 from the second quarter of 2014 and an increase of $4.9 million from the third quarter 2013. The increase from the second quarter of 2014 was a result of net loan growth while the increase over the third quarter of 2013 was due primarily to an increase in loans of $346 million from the Florida Shores acquisitions and organic growth. Average loans for the second quarter of 2014 were $1.19 billion as compared to $1.11 billion for the first quarter of 2014 and $726 million for the second quarter of 2013. The increase in deposits with interest at banks from June 2013 is primarily a result of the cash received with the Florida Shores acquisitions and the subsequent liquidation of the majority of their investment portfolio.

The net interest margin on a tax equivalent basis was 3.67% for the third quarter 2014 as compared to 3.61% for the second quarter 2014 and 3.67% for the second quarter of 2013. This represented an increase of 6 basis points from the second quarter of 2014 and no change from the third quarter 2013. The yield on total earning assets was 4.14% for the third quarter of 2014 versus 4.09% for the second quarter of 2014 with the increase due primarily to average loans outstanding increasing during the third quarter while the lower yielding deposits with interest at banks decreased. The yield on loans decreased from 5.14% to 5.03% from the prior quarter. The average yield on paying liabilities declined 2 basis points in the third quarter of 2014 from the second quarter of 2014 to 0.58% but is 24 basis points lower than the third quarter of 2013 which was 0.82%. The decline from the third 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 acquisitions. The Bank's cost of funds has declined from 0.68% for the September 2013 month-to-date average to 0.49% for the September 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.



Yield and cost table (unaudited)
(in thousands of dollars)
	3Q14						2Q14						3Q13
	Average Balance		Interest		Rate		Average Balance		Interest		Rate		Average Balance		Interest		Rate
ASSETS
Loans, Net^(1)(2)(4)	$	1,218,116	$	15,450	5.03	%	$	1,194,718	$	15,321	5.14	%	$	761,707	$	10,458	5.45	%
Investment Securities		88,822		300	1.34			85,103		302	1.42			77,799		314	1,60
Federal Funds Sold		20,000		10	0.20			16,268		19	0.47			10,000		8	0.32
Other Investments⁽³⁾		2,422		22	3.60			2,422		25	4.14			2,039		13	2.53
Deposits with interest at banks		194,987		143	0.29			256,813		183	0.29			147,702		97	0.26
Total Earning Assets		1,524,347		15,925	4.14	%		1,555,324		15,850	4.09	%		999,247	$	10,890	4.32	%


LIABILITIES
Savings, NOW and Money Market	$	999,423	$	1,336	0.53	%	$	1,011,515	$	1,350	0.54	%	$	637,017	$	1,170	0.73	%
Time Deposits		183,597		267	0.58			196,534		320	0.65			108,682		246	0.90
Total Interest Bearing Deposits		1,183,020		1,603	0.54			1,208,049		1,670	0.55			745,699		1,416	0.75
Other Borrowings		51,709		210	1.61			39,269		193	1.97			53,788		227	1.67
Total Interest Bearing Liabilities		1,234,729		1,813	0.58	%		1,247,318		1,863	0.60	%		799,487		1,643	0.82	%

Net interest spread (tax equivalent basis) ^{(note 4)}					3.56	%					3.49	%					3.50	%
Net interest margin (tax equivalent basis) ^(note5)					3.67	%					3.61	%					3.67	%

⁽¹⁾ Average balances include nonaccrual loans, and are net of unearned loan fees of $1,403, $1,388 and $954 for 3Q14, 2Q14 and 3Q13, respectively.

⁽²⁾ Interest income includes fees on loans of $23, $99 and $21 for 3Q14, 2Q14 and 3Q13, respectively.

⁽³⁾ "Other investments" consists of equity stock in the FHLB of Atlanta that the Bank 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 for the third quarter of 2014 of $1.1 million was unchanged from June 30, 2014 and was $740,000 for the third quarter of 2013. While total noninterest income did not change quarter over quarter, it bears noting that service charges and fees on deposit accounts increased by $100,000 during the third quarter of 2014 over the second quarter of 2014 as a result of management's initiatives to reduce waived fees and increase noninterest income. This will continue to be an emphasis in future quarters.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2014 declined from $12.4 million at June 30, 2014 to $9.4 million but was greater than the $6.1 million for the three months ended September 30, 2013. Of the $3.0 million decline, $2.4 million was due to one-time merger and conversion costs consisting of $1.4 million, costs of $810,000 associated with branch closings and $180,000 in connection with listing the Bank's common stock for trading on the Nasdaq Stock Market incurred during the second quarter.

Salaries and employee benefits were $5.3 million during the current quarter down from $5.7 million for the second quarter of 2014. This decline was due to approximately $360,000 in payments to employees associated with the Florida Shores acquisition and conversion. For the three months ended September 30, 2013 salaries and employee benefits were $3.4 million. The increase over September 30, 2013 is primarily the additional staff from the Florida Shores acquisition.

Occupancy and equipment expenses were $1.6 million, $2.5 million and $935,000 for the three months ended September 30, 2014, June 30, 2014 and September 30, 2013, respectively. The decline from the second quarter of 2014 was due to a one-time expense of $810,000 for branch closures. The increase when compared to the third quarter of 2013 is due to the expense associated with the additional branches added from the Florida Shores acquisition.

Data processing expenses for the three months ended September 2014 were $319,000 as compared to $1.4 million for the three months ended June 30, 2014. Expenses in the second quarter of 2014 included one-time core system termination fees and conversion costs of approximately $1.0 million related to the Florida Shores acquisition. Additionally, included in the results of operations for the second quarter are costs for data processing for the Florida Shores entities which was not recurring.

Professional fees declined slightly from $725,000 for the three months ended June 30, 2014 to $692,000 for the three months ended September 30, 2014 as compared to $719,000 and for the three months ended September 30, 2013. During the current quarter the Bank incurred approximately $210,000 in legal and other professional fees for merger related expenses. 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. Included in professional fees for the quarter ended September 30, 2013 was approximately $225,000 of merger related costs.

The decline in loan and other real estate expenses during the quarter ended September 30, 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. This is a direct result of the improvement in the Bank's nonperforming assets.

The table below outlines the expenses for the quarters ended:



	September 30, 2014			June 30, 2014		September 30, 2013
(in thousands of dollars)

Salaries and employee benefits	$	5,313		$	5,706	$	3,435
Occupancy and equipment expense		1,589			2,484		935
FDIC insurance and state assessments		251			327		192
Data processing		319			1,430		151
Loan and other real estate expense		(83	)		127		152
Professional fees		692			725		719
Core deposit intangible amortization		327			327		56
Other operating expenses		1,012			1,271		474
Totals	$	9,420		$	12,397	$	6,114

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 14 banking offices in its target marketplace of South and West Florida, which is 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 third quarter of 2014. This telephone conference call will be held on Monday, October 27, 2014, beginning at 2:30 p.m. EDT. The call-in toll-free telephone number is 1-800-557-0169. The Conference ID# is 19997893. Participants will be asked for their First Name, Last Name and Company Name. An audio replay of the conference call will be available until November 3, 2014, and may be accessed telephonically at 1-855-859-2056 using Conference ID# 19997893.

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)

			September 30, 2014			December 31, 2013
Assets
Cash and due from banks			$	247,874		$	190,226
Federal funds sold				20,000			10,000
Securities held to maturity (Fair value of $95,728 at September 30, 2014 and $71,781 at December 31, 2013)				94,612			71,639
Other investments				2,422			2,039
Loans, net of allowance for loan losses of $18,429 and $17,307 at September 30, 2014 and December 31, 2013, respectively				1,215,193			794,702
Premises and equipment, net				26,074			12,310
Bank-owned life insurance				22,668			17,339
Goodwill and intangible assets, net				18,353			1,101
Other real estate owned				33			2,120
Other assets				28,571			18,458
	Total assets		$	1,675,800		$	1,119,934

Liabilities and Stockholders' Equity
Liabilities
	Total deposits		$	1,410,488		$	935,477
	Other borrowings			53,156			42,733
	Other liabilities			17,204			10,262
		Total liabilities		1,480,848			988,472

Stockholders' Equity
	Preferred stock, $5 par value, 4,000,000 shares authorized;12,750 outstanding as of June 30, 2014 and none outstanding as of December 31, 2013			12,750			-
	Common stock, $5 par value, 20,000,000 shares authorized; 10,190,163 issued and 10,187,505 shares outstanding as of September 30, 2014 and 8,241,992 shares issued and 8,239,334 outstanding as of December 31, 2013			50,951			41,210
	Additional paid-in capital			87,231			52,810
	Retained earnings			45,854			39,614
	Treasury Stock			(13	)		(13	)
	Accumulated other comprehensive income (loss)			(1,821	)		(2,159	)
		Total stockholders' equity		194,952			131,462
		Total liabilities and stockholders' equity	$	1,675,800		$	1,119,934


Stonegate Bank and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(in thousands of dollars, except per share data)

					For the three months ended
					September 30, 2014		June 30, 2014		September 30, 2013
Interest income:
	Interest and fees on loans				$	15,265	$	15,190	$	10,424
	Interest on securities					300		302		314
	Interest on federal funds sold and at other banks					153		202		105
	Other interest					22		25		13
		Total interest income				15,740		15,719		10,856

Interest expense:
	Interest on deposits					1,603		1,670		1,416
	Other interest					210		193		227
		Total interest expense				1,813		1,863		1,643
			Net interest income			13,927		13,856		9,213
	Provision for loan losses					-		-		380
				Net interest income after provision for loan losses		13,927		13,856		8,833

Noninterest income:
		Service charges and fees on deposit accounts				392		292		252
	Realized gains on available for sale securities					-		-		(3	)
	Other noninterest income					710		771		493
		Total noninterest income				1,102		1,063		742
Noninterest expense:
	Salaries and employee benefits					5,313		5,706		3,435
	Occupancy and equipment expenses					1,589		2,484		935
	Data processing					319		1,430		151
	Professional fees					692		725		719
	Core deposit intangible amortization					327		327		56
	Other operating expenses					1,180		1,725		818
		Total noninterest expense				9,420		12,397		6,114
		Income before income taxes				5,609		2,522		3,461
		Income tax				2,018		618		1,242
		Net income				3,591		1,904		2,219
		Preferred stock dividend				32		64		-
			Net income applicable to common stock		$	3,559	$	1,840	$	2,219
Earnings per common share:
Basic					$	0.35	$	0.18	$	0.27
Diluted						0.34		0.18		0.26
Common shares used in the calculation of earnings per share:
Basic						10,100,763		10,090,855		8,239,334
Diluted						10,424,298		10,414,438		8,434,551


Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars)

	As of
	September 30, 2014			June 30, 2014			September 30, 2013
BALANCE SHEET ITEMS:
Assets	$	1,675,800		$	1,656,857		$	1,086,162
Total loans		1,215,193			1,193,645			763,480
Deposits		1,410,488			1,413,842			888,667
Stockholders' equity		194,952			191,174			128,943

CAPITAL RATIOS:
Total capital to risk weighted assets		14.7	%		14.8	%		17.0	%
Tier 1 capital to risk weighted assets		13.5			13.5			15.7
Tier 1 capital to average assets		10.7			10.4			11.9

AVERAGE BALANCE SHEET ITEMS:
Assets	$	1,677,992		$	1,690,678		$	1,094,659
Interest earning assets		1,524,347			1,555,324			999,247
Loans		1,218,116			1,194,718			761,707
Interest bearing liabilities		1,234,729			1,247,318			799,487
Deposits		1,416,488			1,450,124			894,069
Stockholders' equity		194,080			189,706			128,759


Stonegate Bank and Subsidiaries
CONDENSED FINANCIAL HIGHLIGHTS
(in thousands of dollars, except per share data)

	Three Months Ended
	September 30, 2014		June 30, 2014		September 30, 2013
FINANCIAL DATA:
Net interest income	$	13,927	$	13,856	$	9,213
Net interest income - tax equivalent		14,112		13,897		9,109
Noninterest income		1,102		1,063		742
Noninterest expense		9,420		12,397		6,114
Income tax		2,018		618		1,242
Net income		3,591		1,904		2,219
Preferred stock dividend		32		60		-
Net income attributed to common shares		3,559		1,840		2,219
Weighted average number of common shares outstanding:
Basic		10,100,763		10,090,855		8,239,334
Diluted		10,424,298		10,414,438		8,476,269
Per common share data:
Basic	$	0.35	$	0.18	$	0.27
Diluted		0.34		0.18		0.26
Cash dividend declared to common shares		408		406		330

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company'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 the Company'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 the Company'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 for this reconciliation.


Reconciliation of GAAP to non-GAAP Measures
(in thousands of dollars)

	September 30, 2014		June 30, 2014
Interest income, as reported (GAAP)	$	15,740	$	15,719
Tax equivalents adjustments		185		131
Interest income (tax equivalent)	$	15,925	$	15,850
Net interest income, as reported (GAAP)	$	13,927	$	13,856
Tax equivalent adjustments		185		131
Net interest income (tax equivalent)	$	14,112	$	13,987
Net income GAAP	$	3,591	$	1,904
Non-interest expense adjustments:
Merger and acquisition related expenses		89		1,426
Branch closure expenses		-		810
Professional expenses		213		180
Tax effect using the effective tax rate for the period presented		109		592
Net operating income	$	3,784	$	3,728

Net operating income per common share	$	0.37	$	0.37