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State Bank Corp. Reports Record Second Quarter Results

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LAKE HAVASU CITY, Ariz., July 25, 2014 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ) ("Company"), the holding company for Mohave State Bank ("Bank"), today announced net income of $3,798,000, or $0.65 per diluted share, for the quarter ended June 30, 2014, as compared to net income of $354,000, or $0.06 per diluted share, for the same period of 2013. For the six months ended June 30, 2014, the Company reported net income of $4,268,000, or $0.73 per diluted share, as compared to a net income of $681,000, or $0.12 per diluted share, for the same period of 2013.

Second Quarter 2014 Highlights include:

  • The Company recorded an income tax benefit in the amount of $3.24 million. This resulted from a reduction in the Company's deferred tax valuation allowance as it is more likely than not to utilize the tax benefit in the future. Excluding this item, pre-tax income for the quarter was $558,000, an increase of 57.6 percent when compared to the same period of 2013. Pre-tax income for the six months ended June 30, 2014 was $1,028,000, an increase of 51.0 percent from the same period of 2013.
  • Non-performing assets decreased by another $3.0 million, lowering the Bank's classified asset ratio to 59.83%.
  • The Bank had $17.6 million in new loans funded.
  • The Bank had a $3.6 million increase in core deposits.

"State Bank Corp. and Mohave State Bank continue to make headway on nearly all of their business goals. Core earnings are improving, the loan portfolio is beginning to grow, and non-performing asset levels continue to moderate," commented Brian M. Riley, President & CEO.

The Company provided $250,000 to its loan loss reserve during the second quarter of 2014. Net credit losses during the second quarter of 2014 were $1.025 million as compared to $304,000 for the same period of 2013. The increase in net credit losses resulted from the sale of one non-performing loan prior to foreclosure and the workout arrangement on one other credit relationship. Both of these losses were previously provided for in the Bank's loan impairment process.

Nonperforming assets were $17.8 million at June 30, 2014, a decrease of $5.6 million from $23.4 million at December 31, 2013. Nonperforming assets represented 5.91 percent of total assets at June 30, 2014 as compared to 8.15 percent at December 31, 2013. The allowance for loan and lease losses totaled $2.9 million, or 1.44 percent of total loans, at June 30, 2014. The Company continues to carefully monitor its level of loss reserves and will proactively make additions as necessary to protect against an uncertain economic environment.

The Company's net interest margin continues to remain strong with second quarter results of 4.29 percent. The main component to this trend continues to be the decline in costs of funds, which decreased to 0.22 percent for the three months ended June 30, 2014.

As of June 30, 2014, total assets were $301.8 million, an increase of $13.9 million from $287.9 million at December 31, 2013. Total loans were $202.0 million at June 30, 2014 as compared to $199.4 million at December 31, 2013. Total deposits were $262.3 million at June 30, 2014 as compared to $252.0 million at December 31, 2013.

Shareholder equity increased to $34.0 million at June 30, 2014 from $29.6 million at December 31, 2013. This resulted from core net operating income and the income tax benefit. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. The following table provides the Bank's capital ratio at June 30, 2014:

Ratio to be
Actual well
Ratio capitalized
Leverage Ratio 10.72% 5.00%
Tier 1 Capital to Risk-Weighted Assets 13.23% 6.00%
Total Capital to Risk-Weighted Assets 14.47% 10.00%

About the Company

State Bank Corp., headquartered in Lake Havasu City, Arizona, is the parent company of Mohave State Bank, the largest locally-owned bank in Mohave County. Mohave State Bank is a full-service bank providing deposit and loan products, and convenient on-line banking to individuals, businesses and professionals. The Bank was established in October 1991, and the holding company was formed in 2004. The Bank has six full-service branches: two in Lake Havasu City, two in Kingman, one in Bullhead City, and one in Yuma, Arizona. The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.mohavestbank.com.

Forward-looking Statements

This press release may include forward-looking statements about State Bank Corp. and its subsidiary, Mohave State Bank, for which the Company claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, borrower capacity to repay, operational factors and competition in the geographic and business areas in which the Company conducts its operations. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement.

UNAUDITED FINANCIAL STATEMENTS FOLLOW

State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
Dollars in thousands - Unaudited 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
Performance Highlights
Earnings:
Total revenue (Net int. income + nonint. income) $ 3,286 $ 3,278 $ 3,221 $ 3,324 $ 3,496
Net interest income $ 2,720 $ 2,781 $ 2,653 $ 2,608 $ 2,681
Provision for loan losses $ 250 $ 120 $ -- $ -- $ 225
Noninterest income $ 566 $ 497 $ 568 $ 716 $ 815
Noninterest expense $ 2,478 $ 2,688 $ 2,767 $ 2,920 $ 2,917
Net income (loss) $ 3,798 $ 470 $ 454 $ 404 $ 354
Per Share Data:
Net income (loss), basic $ 0.65 $ 0.08 $ 0.08 $ 0.07 $ 0.06
Net income (loss), diluted $ 0.65 $ 0.08 $ 0.08 $ 0.07 $ 0.06
Cash dividends declared $ -- $ -- $ -- $ -- $ --
Book value $ 5.79 $ 5.12 $ 5.04 $ 4.96 $ 4.92
Tangible book value $ 5.79 $ 5.12 $ 5.04 $ 4.96 $ 4.92
Performance Ratios:
Return on average assets 5.16% 0.65% 0.64% 0.56% 0.49%
Return on average equity 48.09% 6.28% 6.18% 5.57% 4.90%
Net interest margin, taxable equivalent 4.29% 4.35% 4.24% 4.16% 4.33%
Average cost of funds 0.22% 0.24% 0.27% 0.33% 0.38%
Average yield on loans 5.18% 5.50% 5.23% 5.68% 5.53%
Efficiency ratio 75.41% 82.00% 85.90% 87.85% 83.44%
Non-interest income to total revenue 17.22% 15.16% 17.63% 21.54% 23.31%
Capital & Liquidity:
Total equity to total assets (EOP) 11.25% 10.32% 10.28% 10.16% 9.93%
Tangible equity to tangible assets 11.25% 10.32% 10.28% 10.16% 9.93%
Total loans to total deposits 77.36% 76.17% 79.45% 78.31% 74.61%
Mohave State Bank
Tier 1 leverage ratio 10.72% 10.52% 10.50% 10.20% 9.89%
Tier 1 risk based capital 13.23% 13.66% 13.33% 13.17% 13.05%
Total risk based capital 14.47% 14.91% 14.58% 14.42% 14.31%
Asset Quality:
Gross charge-offs $ 1,045 $ 110 $ 50 $ 65 $ 315
Net charge-offs (NCOs) $ 1,025 $ 45 $ (115) $ 62 $ 304
NCO to average loans, annualized 2.01% 0.09% -0.23% 0.13% 0.61%
Non-accrual loans/securities $ 6,147 $ 8,617 $ 10,968 $ 9,924 $ 9,297
Other real estate owned $ 11,693 $ 12,196 $ 12,465 $ 14,386 $ 16,430
Repossessed assets $ -- $ -- $ -- $ -- $ --
Non-performing assets (NPAs) $ 17,840 $ 20,813 $ 23,433 $ 24,310 $ 25,727
NPAs to total assets 5.91% 7.14% 8.14% 8.48% 8.86%
Loans >90 days past due $ -- $ -- $ 39 $ -- $ 100
NPAs + 90 days past due $ 17,840 $ 20,813 $ 23,472 $ 24,310 $ 25,827
NPAs + loans 90 days past due to total assets 5.91% 7.14% 8.15% 8.48% 8.89%
Allowance for loan losses to total loans 1.44% 1.90% 1.81% 1.78% 1.86%
Allowance for loan losses to NPAs 16.39% 17.77% 15.47% 14.44% 13.88%
Period End Balances:
Assets $ 301,877 $ 291,419 $ 287,857 $ 286,625 $ 290,377
Total Loans (before reserves) $ 202,897 $ 194,789 $ 200,220 $ 196,888 $ 191,601
Deposits $ 262,275 $ 255,722 $ 252,004 $ 251,426 $ 256,810
Stockholders' equity $ 33,961 $ 30,065 $ 29,584 $ 29,120 $ 28,842
Common stock market capitalization $ 30,396 $ 32,274 $ 26,113 $ 20,538 $ 20,538
Full-time equivalent employees 76 75 77 80 80
Shares outstanding 5,868,038 5,868,038 5,868,038 5,868,038 5,868,038
Average Balances:
Assets $ 294,282 $ 288,913 $ 284,506 $ 287,844 $ 291,305
Earning assets $ 260,383 $ 255,530 $ 250,250 $ 251,041 $ 254,341
Total Loans (before reserves) $ 203,858 $ 198,953 $ 202,641 $ 193,317 $ 199,577
Deposits $ 257,282 $ 252,563 $ 248,511 $ 253,239 $ 258,199
Other borrowings $ 3,872 $ 5,584 $ 5,642 $ 4,719 $ 3,426
Stockholders' equity $ 31,592 $ 29,951 $ 29,395 $ 29,008 $ 28,918
Shares outstanding, basic - wtd 5,868,038 5,868,038 5,868,038 5,868,038 5,868,038
Shares outstanding, diluted - wtd 5,868,038 5,868,038 5,868,038 5,868,038 5,868,038
State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited 6/30/2014 12/31/2013
Consolidated Balance Sheets
Assets
Cash and cash equivalents $ 2,381 $ 1,634
Interest bearing deposits 3,665 3,360
Overnight Funds 20,875 24,395
Held for maturity securities 32 37
Available for sale securities 38,406 27,420
Total cash and securities 65,359 56,846
Loans held for sale, before reserves 2,201 2,554
Gross loans held for investment 202,099 199,444
Loan loss reserve (2,924) (3,624)
Total net loans 201,376 198,374
Premises and equipment, net 9,962 10,107
Other real estate owned 11,693 12,465
Federal Home Loan Bank and other stock 1,317 1,268
Company owned life insurance 5,789 5,709
Other assets 6,381 3,088
Total Assets $ 301,877 $ 287,857
Liabilities
Non interest bearing demand $ 57,126 $ 58,822
Money market, NOW and savings 144,137 132,082
Time deposits <$100K 29,821 27,599
Time deposits >$100K 31,191 33,501
Total Deposits 262,275 252,004
Securities sold under repurchase agreements 4,039 4,864
Federal Home Loan Bank advances -- --
Subordinated debt 675 675
Total Debt 4,714 5,539
Other Liabilities 927 730
Total Liabilities 267,916 258,273
Shareholders' Equity
Common stock 25,037 25,037
Accumulated retained earnings 8,737 4,470
Accumulated other comprehensive income 187 77
Total shareholders equity 33,961 29,584
Total liabilities and shareholders' equity $ 301,877 $ 287,857
State Bank Corp.
Statement of Operations
For the Quarter Ended Year to Date
Dollars in thousands - Unaudited 6/30/2014 6/30/2013 6/30/2014 6/30/2013
Statements of Operations
Interest income
Loans, including fees $ 2,641 $ 2,758 $ 5,376 $ 5,442
Securities 210 154 398 314
Fed funds and other 13 19 27 35
Total interest income 2,864 2,931 5,801 5,791
Interest expense
Deposits 130 236 272 483
Borrowings 14 14 28 30
Total interest expense 144 250 300 513
Net interest income 2,720 2,681 5,501 5,278
Provision for loan losses 250 225 370 225
Net interest income after loan loss provision 2,470 2,456 5,131 5,053
Noninterest income
Service charges on deposits 105 97 209 201
Mortgage loan fees 90 125 168 234
Gain on sale of loans 155 289 323 544
(Loss)/Gain on securities -- -- (42) 33
Other income 216 304 405 485
Total noninterest income 566 815 1,063 1,497
Noninterest expense
Salaries and employee benefits 1,299 1,314 2,607 2,599
Net occupancy expense 93 79 186 172
Equipment expense 39 44 76 87
Data processing 253 280 521 553
Director fees & expenses 55 50 100 96
Insurance 30 66 60 132
Marketing & promotion 59 120 168 224
Professional fees 108 85 303 172
Office expense 24 25 51 59
Regulatory assessments 107 161 261 314
OREO and repossessed assets 249 613 540 1,266
Other expenses 162 80 293 195
Total noninterest expense 2,478 2,917 5,166 5,869
Income (loss) before provision (benefit) for income taxes 558 354 1,028 681
Provision (benefit) for income taxes (3,240) -- (3,240) --
Net Income (Loss) $ 3,798 $ 354 $ 4,268 $ 681
Per Share Data
Basic EPS $ 0.65 $ 0.06 $ 0.73 $ 0.12
Diluted EPS $ 0.65 $ 0.06 $ 0.73 $ 0.12
Average shares outstanding
Basic 5,868,038 5,868,038 5,868,038 5,868,038
Effect of dilutive shares -- -- -- --
Diluted 5,868,038 5,868,038 5,868,038 5,868,038

CONTACT: Brian M. Riley, President & CEO Craig Wenner, EVP/Chief Financial Officer Phone: (928) 855-0000

Source:State Bank Corp.