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State Bank Corp. Earnings Increase 39% to $974,000, or $0.17 per Share, in 2Q16 from 1Q16

LAKE HAVASU CITY, Ariz., July 22, 2016 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCQB:SBAZ) (“Company”), the holding company for Mohave State Bank (“Bank”), today announced net income increased 39.1% to $974,000, or $0.17 per diluted share, for the second quarter ended June 30, 2016, compared to $700,000, or $0.12 per diluted share, in the first quarter of 2016, and increased 26.2% compared to $772,000, or $0.13 per diluted share, for the second quarter of 2015.

For the first six months of 2016, net income grew 15.2% to $1.67 million, or $0.29 per diluted share, compared to $1.45 million, or $0.25 per diluted share, for the same period of 2015.

“Our second quarter performance continued to reflect the success of our client relationship building. This process helped us realize strong operating results and improved key metrics,” stated Brian M. Riley, President and Chief Executive Officer. “Our return on average assets was well above average at 1.13% and return on average equity was 10.0% in the second quarter. We are continuing to generate strong loan and deposit growth in our primary markets and are focused on building the premier community banking franchise in Arizona.

“With the pending acquisition of Country Bank, expected to close at the end of the month, we will have assets in excess of $500 million. Following the acquisition, State Bank will become the largest of the 13 community banks headquartered in Arizona. We are positioning ourselves to expand our geographic footprint and build our earnings capacity,” Riley said.

Second Quarter 2016 Financial Highlights:

  • Net income increased 26.2% to $974,000 million in the second quarter, compared to $772,000 in the second quarter 2015.
  • Received regulatory and shareholder approval for the merger with Country Bank. The transaction is expected to close on July 31, 2016.
  • Return on average assets at 1.13%.
  • Return on average equity of 10.07%.
  • Tangible book value per share increased 9.5% to $6.71 per share, compared to $6.13 a year ago.

Net interest margin was 3.85% in the second quarter 2016 compared to 4.08% in the preceding quarter and 4.22% in the second quarter a year ago. The decrease is the result of a fully drawn $7.5 million loan that is being used to facilitate the merger with Country Bank and high levels of balance sheet liquidity

There was no provision for loan losses in the second quarter reflecting a small net recovery of $5,000. The allowance for loan losses totaled $3.1 million at June 30, 2016, or 1.40% of total loans. “We continue to carefully monitor our level of reserves, and as asset quality continues to improve, our need to make additions to reserves continues to diminish,” noted Riley.

Total assets were $346.4 million at June 30, 2016, an increase of $21.1 million, or 6.5%, from $325.3 million at December 31, 2015, and an increase of $7.3 million, or 2.2%, compared to $339.1 million a year ago. Total loans held for investment were $216.0 million as compared to $216.4 million at December 31, 2015, and $235.9 million at June 30, 2015. Total loan comparisons were affected by the sale of loans from the Yuma branch in the third quarter of 2015 of $11.1 million.

Total deposits were $295.0 million, an increase of $12.2 million, or 4.3%, from $282.8 million at December 31, 2015 and a decrease of $2.9 million compared to a year ago. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 5.3% compared to six months earlier and increased slightly compared to a year earlier to $235.7 million at June 30, 2016. Total deposits and core deposit comparisons were affected by the sale of deposits from the Yuma branch of $16.5 million and $12.8 million, respectively. Core deposits now comprise 79.9% of total deposits.

Nonperforming assets were $6.7 million at June 30, 2016, a 4.7% increase compared to $6.4 million at December 31, 2015, and a 35.6% decrease compared to $10.4 million at June 30, 2016. Nonperforming assets represented 1.94% of total assets at June 30, 2016, down from 1.97% at December 31, 2015, and from 3.08% a year ago.

Shareholder equity increased to $39.2 million at June 30, 2016, from $37.8 million at December 31, 2015, and $36.0 million a year earlier. At June 30, 2016, tangible book value per share improved to $6.71 per share compared to $6.47 per share at December 31, 2015 and $6.13 a year earlier.

Recent Developments

The merger of Country Bank into Mohave State Bank received all regulatory and shareholder approval and is expected to close on July 31, 2016.

Capital Management

Community banking organizations, including State Bank Corp. and Mohave State Bank, became subject to new capital requirements on January 1, 2015, and certain provisions of the new rules will be phased in from 2015 through 2019. The Company’s consolidated capital ratios and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III and Dodd Frank Wall Street Reform requirements at June 30, 2016. The Bank reported the following capital ratios at June 30, 2016:

Common Equity Tier 1 Capital Ratio 14.62%
Tier 1 Leverage Ratio 11.08%
Tier 1 Capital Ratio 14.62%
Total Capital Ratio 15.81%

Use of Non-GAAP Financial Information

This press release contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These 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.

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 five full-service branches: two in Lake Havasu City, two in Kingman, and one in Bullhead City, 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., Mohave State Bank, Country Bank and the proposed merger. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; regulatory approvals of the merger may not be obtained or adverse regulatory conditions may be imposed in connection with such regulatory approvals; and conditions to the closing of the merger may not be satisfied. Annualized, pro forma, projected and estimated numbers in this press release are used for illustrative purposes only, are not forecasts and may not reflect actual results. All forward-looking statements included in this press release are based on information available at the time of the release, and State Bank Corp., Mohave State Bank and Country Bank assume no obligation to update any forward-looking statements.

UNAUDITED FINANCIAL STATEMENTS FOLLOW

State Bank Corp.
Statement of Operations
For the Quarter Ended Year to Date
Dollars in thousands - Unaudited6/30/20163/31/20166/30/2015 6/30/20166/30/2015
Statements of Operations
Interest income
Loans, including fees$ 2,980 $ 2,956 $ 3,031 $ 5,936 $ 5,813
Securities 221 215 224 436 437
Fed funds and other 59 35 17 94 33
Total interest income 3,260 3,206 3,272 6,466 6,283
Interest expense
Deposits 162 153 143 315 276
Borrowings 95 34 11 128 25
Total interest expense 257 187 154 443 301
Net interest income 3,003 3,019 3,118 6,023 5,982
Provision for loan losses - - 350 - 460
Net interest income after loan loss provision 3,003 3,019 2,768 6,023 5,522
Noninterest income
Service charges on deposits 78 79 88 157 184
Mortgage loan fees 291 174 304 464 497
Gain on sale of loans 357 173 405 530 1,059
(Loss)/Gain on securities - - - - (8)
Other income 196 167 208 364 374
Total noninterest income 922 593 1,005 1,515 2,106
Noninterest expense
Salaries and employee benefits 1,430 1,330 1,457 2,760 2,985
Net occupancy expense 56 53 96 109 175
Equipment expense 39 40 43 79 84
Data processing 241 242 292 483 580
Director fees & expenses 33 44 63 77 111
Insurance 30 30 26 61 52
Marketing & promotion 54 78 81 132 207
Professional fees 95 159 80 255 171
Office expense 27 50 30 77 65
Regulatory assessments 52 60 100 111 214
OREO and repossessed assets 43 53 111 96 397
Other expenses 152 216 209 368 368
2,252 2,355 2,588 4,608 5,409
Acquisition related costs 63 178 - 241 -
Total noninterest expense 2,315 2,533 2,588 4,849 5,409
Income (loss) before provision (benefit) for income taxes 1,610 1,079 1,185 2,689 2,219
Provision (benefit) for income taxes 636 379 413 1,015 766
Net Income (Loss)$ 974 $ 700 $ 772�� $ 1,674 $ 1,453
Per Share Data
Basic EPS$ 0.17 $ 0.12 $ 0.13 $ 0.29 $ 0.25
Diluted EPS$ 0.17 $ 0.12 $ 0.13 $ 0.29 $ 0.25
Average shares outstanding
Basic 5,842,145 5,842,145 5,868,038 5,842,145 5,868,038
Effect of dilutive shares - - - - -
Diluted 5,842,145 5,842,145 5,868,038 5,842,145 5,868,038


State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited6/30/201612/31/20156/30/2015
Consolidated Balance Sheets
Assets
Cash and cash equivalents$ 2,650 $ 1,899 $ 2,169
Interest bearing deposits 2,047 4,167 3,710
Overnight Funds 46,265 29,250 13,930
Held for maturity securities 15 19 23
Available for sale securities 52,366 46,881 50,809
Total cash and securities 103,343 82,216 70,641
Loans held for sale, before reserves 5,626 4,457 5,785
Gross loans held for investment 216,002 216,357 235,881
Loan loss reserve (3,103) (3,089) (2,969)
Total net loans 218,525 217,725 238,697
Premises and equipment, net 8,083 8,195 9,830
Other real estate owned 4,039 4,247 6,696
Federal Home Loan Bank and other stock 2,281 2,126 2,126
Company owned life insurance 6,114 6,034 5,952
Other assets 4,073 4,776 5,167
Total Assets$ 346,458 $ 325,319 $ 339,109
Liabilities
Non interest bearing demand$ 75,295 $ 70,648 $ 69,170
Money market, NOW and savings 160,436 153,156 164,910
Time deposits <$100K 26,067 25,703 27,691
Time deposits >$100K 33,212 33,329 36,157
Total Deposits 295,010 282,836 297,928
Securities sold under repurchase agreements 3,767 3,653 4,169
Federal Home Loan Bank advances - - -
Subordinated debt 7,500 - -
Total Debt 11,267 3,653 4,169
Other Liabilities 952 1,047 1,061
Total Liabilities 307,229 287,536 303,158
Shareholders' Equity
Common stock 24,927 24,927 25,037
Accumulated retained earnings 13,971 12,881 10,908
Accumulated other comprehensive income 331 (25) 6
Total shareholders equity 39,229 37,783 35,951
Total liabilities and shareholders' equity$ 346,458 $ 325,319 $ 339,109


State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
Dollars in thousands - Unaudited6/30/20163/31/201612/31/20159/30/20156/30/2015
Performance Highlights
Earnings:
Total revenue (Net int. income + nonint. income)$ 3,925 $ 3,612 $ 3,800 $ 4,651 $ 4,123
Net interest income$ 3,003 $ 3,019 $ 3,098 $ 3,255 $ 3,118
Provision for loan losses$ - $ - $ - $ 425 $ 350
Noninterest income$ 922 $ 593 $ 702 $ 1,396 $ 1,005
Noninterest expense$ 2,315 $ 2,533 $ 2,500 $ 2,568 $ 2,588
Net income (loss)$ 974 $ 700 $ 946 $ 1,067 $ 772
Per Share Data:
Net income (loss), basic $ 0.17 $ 0.12 $ 0.16 $ 0.18 $ 0.13
Net income (loss), diluted $ 0.17 $ 0.12 $ 0.16 $ 0.18 $ 0.13
Cash dividends declared$ - $ 0.10 $ - $ - $ -
Book value$ 6.71 $ 6.52 $ 6.47 $ 6.34 $ 6.13
Tangible book value$ 6.71 $ 6.52 $ 6.47 $ 6.34 $ 6.13
Performance Ratios:
Return on average assets 1.13% 0.86% 1.17% 1.26% 0.93%
Return on average equity 10.05% 7.40% 10.04% 11.63% 8.59%
Net interest margin, taxable equivalent 3.85% 4.08% 4.29% 4.31% 4.22%
Average cost of funds 0.34% 0.26% 0.21% 0.21% 0.21%
Average yield on loans 5.38% 5.34% 5.45% 5.42% 5.30%
Efficiency ratio 58.98% 70.13% 65.79% 55.21% 62.77%
Non-interest income to total revenue 23.49% 16.42% 18.47% 30.02% 24.38%
Capital & Liquidity:
Total equity to total assets (EOP) 11.32% 11.26% 11.61% 11.43% 10.60%
Tangible equity to tangible assets 11.32% 11.26% 11.61% 11.43% 10.60%
Total loans to total deposits 75.13% 76.60% 78.07% 78.00% 78.83%
Mohave State Bank
Common equity tier 1 ratio 14.62% 14.62% 14.70% 14.10% 12.71%
Tier 1 leverage ratio 11.08% 11.51% 11.61% 10.83% 10.72%
Tier 1 risk based capital 14.62% 14.62% 14.70% 14.10% 12.71%
Total risk based capital 15.81% 15.82% 15.91% 15.27% 13.77%
Asset Quality:
Gross charge-offs$ 4 $ - $ 4 $ 373 $ 449
Net charge-offs (NCOs)$ (5)$ (9)$ (65)$ 370 $ 415
NCO to average loans, annualized -0.01% -0.02% -0.12% 0.63% 0.73%
$ 2,683 $ 2,229 $ 2,154 $ 4,570 $ 3,732
Other real estate owned$ 4,039 $ 3,995 $ 4,246 $ 6,141 $ 6,696
Repossessed assets $ - $ - $ - $ - $ -
Non-performing assets (NPAs)$ 6,722 $ 6,224 $ 6,400 $ 10,711 $ 10,428
NPAs to total assets 1.94% 1.84% 1.97% 3.29% 3.08%
Loans >90 days past due$ - $ - $ - $ - $ -
NPAs + 90 days past due$ 6,722 $ 6,224 $ 6,400 $ 10,711 $ 10,428
NPAs + loans 90 days past due to total assets 1.94% 1.84% 1.97% 3.29% 3.08%
Allowance for loan losses to total loans 1.40% 1.40% 1.40% 1.37% 1.26%
Allowance for loan losses to NPAs 46.16% 49.78% 48.27% 28.23% 28.47%
Period End Balances:
Assets$ 346,458 $ 338,205 $ 325,319 $ 325,104 $ 339,109
Total Loans (before reserves)$ 221,628 $ 221,046 $ 220,814 $ 220,768 $ 241,666
Deposits$ 295,010 $ 288,565 $ 282,836 $ 283,035 $ 297,928
Stockholders' equity$ 39,229 $ 38,088 $ 37,783 $ 37,166 $ 35,951
Common stock market capitalization$ 37,390 $ 37,974 $ 36,981 $ 35,166 $ 27,873
Full-time equivalent employees 75 72 77 76 81
Shares outstanding 5,842,145 5,842,145 5,842,145 5,861,000 5,868,038
Average Balances:
Assets$ 345,348 $ 327,228 $ 323,157 $ 337,463 $ 333,387
Earning assets$ 318,415 $ 301,084 $ 294,500 $ 307,376 $ 301,427
Total Loans (before reserves)$ 221,608 $ 221,499 $ 221,705 $ 235,051 $ 228,847
Deposits$ 294,645 $ 282,123 $ 280,558 $ 295,327 $ 291,980
Other borrowings$ 10,933 $ 6,105 $ 3,846 $ 4,327 $ 4,817
Stockholders' equity$ 38,753 $ 37,855 $ 37,686 $ 36,689 $ 35,947
Shares outstanding, basic - wtd 5,842,145 5,842,145 5,849,444 5,866,038 5,868,038
Shares outstanding, diluted - wtd 5,842,145 5,842,145 5,849,444 5,866,038 5,868,038


NON-GAAP FINANCIAL INFORMATION
(Unaudited)
Three Months Ended
NON-GAAP PERFORMANCE MEASURESJun. 30, 2016 March 31, 2016 Jun. 30, 2015
Return on average common equity, excluding acquisition related costs, net (1) 10.47% 8.62% 7.68%
Return on average assets, excluding acquisition related costs, net (1) 1.18% 1.00% 0.85%
Efficiency ratio, excluding acquisition related costs, net (2) 57.38% 65.20% 71.15%
NON-GAAP EARNINGS PER SHARE
Basic (3)$ 0.17 $ 0.14 $ 0.13
Diluted (3)$ 0.17 $ 0.14 $ 0.13
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
Jun. 30, 2016 March 31, 2016 Jun. 30, 2015
(in thousands)
Net income$ 974 $ 700 $ 772
Acquisition related costs, net 63 178 -
Tax effect on acquisition related costs, net (22) (62) -
Net income, excluding acquisition related costs, net (3)$ 1,015 $ 878 $ 772
Three Months Ended
Jun. 30, 2016 March 31, 2016 Jun. 30, 2015
(in thousands)
Total non-interest expenses$ 2,315 $ 2,533 $ 2,588
Acquisition related costs, net 63 178 -
Total non-interest expenses, excluding acquisition related costs, net (3)$ 2,252 $ 2,355 $ 2,586
(1) The Company believes these non-GAAP ratios provide a useful metric with which to analyze and evaluate the financial condition of the Company
(2) The Company believes this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company
(3) The Company believes these non-GAAP measurements are a key indicator of the ongoing earnings power of the Company

Contact: Brian M. Riley, President & CEO Craig Wenner, EVP & CFO 928 855 0000 www.mohavestbank.com The Cereghino Group IR CONTACT: 206-388-5785

Source:State Bank Corp.