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State Bank Corp. Earnings Double YOY to $1.43 million, or $0.18 per Diluted Share, in 1Q17; Non-performing Assets Decline to Lowest Levels Since 2007

LAKE HAVASU CITY, Ariz., April 28, 2017 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPink:SBAZ)(“Company”), the holding company for Mohave State Bank (“Bank”), today announced net income increased 104.3% to $1.43 million, or $0.18 per diluted share, for the first quarter ended March 31, 2017, as compared to net income of $700,000, or $0.12 per diluted share, for the first quarter of 2016. Excluding costs related to its acquisition of Country Bank, net income for the quarter would have been $1.47 million, a 110.0% increase compared to the first quarter one year ago. (See “Non-GAAP Financial Information” table)

“Our first quarter’s strong operating performance, improved efficiencies, growing balance sheet and decline in non-performing assets contributed to the near record first quarter net income,” stated Brian M. Riley, President and Chief Executive Officer. “The profitability of our bank is growing as the markets we serve in Arizona continue to benefit from a strong economy and a population that is rising faster than the national average.”

First Quarter 2017 Financial Highlights:

  • Completion of the Bank’s core processing conversion.
  • Net income, excluding merger related expenses, was $1.47 million, or $0.18 per diluted share.
  • Non-performing assets fell below 1.0% of total assets for the first time since 2007.
  • Return on average assets, excluding merger related expenses, was 1.00%.
  • Return on average equity, excluding merger related expenses, was 10.73%.

“Our net interest margin increased four basis points compared to the preceding quarter and decreased 19 basis points compared to the first quarter a year ago. The slight increase from the prior quarter is primarily due to lower cost of funds,” said Riley. Net interest margin was 3.89% in the first quarter 2017 compared to 3.85% in the preceding quarter and 4.08% in the first quarter a year ago.

There was no provision for loan losses in the first quarter, with net charge-offs of $73,000. The allowance for loan losses totaled $3.0 million at March 31, 2017, or 0.89% of total loans. Excluding acquired loans, the reserve ratio was 1.17%, in line with industry peers. On the acquired portfolio, the credit component of the loan purchase discount remains greater than an imputed reserve.

Total assets were $590.3 million at March 31, 2017, an increase of $7.1 million, or 1.22%, from $583.2 million at December 31, 2016, and an increase of $252.1 million, or 74.5%, compared to $338.2 million a year ago. Total loans held for investment were $333.0 million as compared to $323.2 million at December 31, 2016, and $216.5 million at March 31, 2016. Total loan comparisons were affected by the addition of $107.0 million in loans from the acquisition of Country Bank.

Total deposits were $522.5 million, an increase of $6.0 million, or 1.16%, from $516.5 million at December 31, 2016, and an increase of $233.9 million, or 81.1%, compared to $288.6 million a year ago. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 2.09% compared to three months earlier and increased 96.5% compared to a year earlier to $452.2 million at March 31, 2017. Total deposits and core deposit comparisons were affected by the acquisition of Country Bank by $202.2 million and $186.6 million, respectively. Core deposits now comprise 86.6% of total deposits.

Non-performing assets were $5.1 million at March 31, 2017, a 16.4% decrease from $6.1 million at December 31, 2016. Nonperforming assets represented 0.87% of total assets at March 31, 2017, which represents its lowest level since fourth quarter 2007.

Shareholder equity increased to $55.1 million at March 31, 2017, from $53.8 million at December 31, 2016. At March 31, 2017, tangible book value per share was $5.90 per share compared to $5.76 per share at December 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 March 31, 2017. The Bank reported the following capital ratios at March 31, 2017:

Common Equity Tier 1 Capital Ratio13.24%
Tier 1 Leverage Ratio9.63%
Tier 1 Capital Ratio13.24%
Total Capital Ratio13.95%

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 this disclosure can 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 community bank headquartered in Arizona. 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 nine full-service branches: two in Lake Havasu City, two in Kingman, two in Prescott, one in Bullhead City, one in Prescott Valley, and one in Cottonwood, 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 Mohave State Bank. 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.; 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. and Mohave State Bank assume no obligation to update any forward-looking statements.

UNAUDITED FINANCIAL STATEMENTS FOLLOW

State Bank Corp.
Statement of Operations
For the Quarter Ended
Dollars in thousands - Unaudited3/31/201712/31/20163/31/2016
Statements of Operations
Interest income
Loans, including fees$4,765$4,816$2,956
Securities 582 501 215
Fed funds and other 70 56 35
Total interest income 5,417 5,373 3,206
Interest expense
Deposits 184 206 153
Borrowings 96 97 34
Total interest expense 280 303 187
Net interest income 5,137 5,070 3,019
Provision for loan losses - - -
Net interest income after loan loss provision 5,137 5,070 3,019
Noninterest income
Service charges on deposits 139 131 79
Mortgage loan fees 343 351 174
Gain on sale of loans 447 357 173
(Loss)/Gain on securities - - -
Other income 283 394 167
Total noninterest income 1,212 1,233 593
Noninterest expense
Salaries and employee benefits 2,483 2,555 1,330
Net occupancy expense 159 129 53
Equipment expense 93 106 40
Data processing 428 370 242
Director fees & expenses 43 75 44
Insurance 32 39 30
Marketing & promotion 128 134 78
Professional fees 99 108 159
Office expense 65 57 50
Regulatory assessments 79 13 60
OREO and repossessed assets 25 299 53
Other expenses 442 530 216
4,076 4,415 2,355
Acquisition related costs 52 496 178
Total noninterest expense 4,128 4,911 2,533
Income (loss) before provision (benefit) for income taxes 2,221 1,392 1,079
Provision (benefit) for income taxes 788 481 379
Net Income$ 1,433$ 911$ 700
Per Share Data
Basic EPS$0.18$0.11$0.12
Diluted EPS$0.18$0.11$0.12
Average shares outstanding
Basic 8,029,691 8,029,691 5,842,145
Effect of dilutive shares - - -
Diluted 8,029,691 8,029,691 5,842,145


State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited3/31/201712/31/20163/31/2016
Consolidated Balance Sheets
Assets
Cash and cash equivalents$3,130 $5,202 $2,949
Interest bearing deposits 17,495 24,524 2,832
Overnight Funds 33,425 33,680 37,795
Held for maturity securities 2 2 17
Available for sale securities 159,335 147,574 51,752
Total cash and securities 213,387 210,982 95,345
Loans held for sale, before reserves 2,524 5,870 4,499
Gross loans held for investment 333,039 323,210 216,547
Loan loss reserve (2,986) (3,058) (3,098)
Total net loans 332,577 326,022 217,948
Premises and equipment, net 14,965 15,071 8,134
Other real estate owned 3,261 3,955 3,995
Federal Home Loan Bank and other stock 3,307 3,308 2,126
Company owned life insurance 11,343 11,275 6,073
Other assets 11,436 12,554 4,584
Total Assets$ 590,276 $ 583,167 $ 338,205
Liabilities
Non interest bearing demand$120,191 $116,696 $71,361
Money market, NOW and savings 332,047 326,269 158,830
Time deposits <$250K 64,574 67,845 55,538
Time deposits >$250K 5,651 5,688 2,836
Total Deposits 522,463 516,498 288,565
Securities sold under repurchase agreements 3,942 4,188 3,100
Federal Home Loan Bank advances - - -
Subordinated debt 7,341 7,336 7,500
Total Debt 11,283 11,524 10,600
Other Liabilities 1,420 1,366 952
Total Liabilities 535,166 529,388 300,117
Shareholders' Equity
Common stock 39,146 39,146 24,927
Accumulated retained earnings 16,942 15,791 12,997
Accumulated other comprehensive income (978) (1,158) 164
Total shareholders equity 55,110 53,779 38,088
Total liabilities and shareholders' equity$ 590,276 $ 583,167 $ 338,205


State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
Dollars in thousands - Unaudited3/31/201712/31/20169/30/20166/30/20163/31/2016
Performance Highlights
Earnings:
Total revenue (Net int. income + nonint. income)$ 6,349 $ 6,303 $ 5,733 $ 3,925 $ 3,612
Net interest income$ 5,137 $ 5,070 $ 4,765 $ 3,003 $ 3,019
Provision for loan losses$ - $ - $ - $ - $ -
Noninterest income$ 1,212 $ 1,233 $ 968 $ 922 $ 593
Noninterest expense$ 4,128 $ 4,911 $ 3,709 $ 2,315 $ 2,533
Net income (loss)$ 1,433 $ 911 $ 1,190 $ 974 $ 700
Per Share Data:
Net income (loss), basic $ 0.18 $ 0.11 $ 0.16 $ 0.17 $ 0.12
Net income (loss), diluted $ 0.18 $ 0.11 $ 0.16 $ 0.17 $ 0.12
Cash dividends declared$ 0.035 $ 0.035 $ - $ - $ 0.10
Book value$ 6.86 $ 6.70 $ 6.79 $ 6.71 $ 6.52
Tangible book value$ 5.90 $ 5.76 $ 5.83 $ 6.71 $ 6.52
Performance Ratios:
Return on average assets 0.98% 0.62% 0.91% 1.13% 0.86%
Return on average equity 10.48% 6.77% 9.69% 10.05% 7.40%
Net interest margin, taxable equivalent 3.89% 3.85% 4.14% 3.85% 4.08%
Average cost of funds 0.21% 0.23% 0.29% 0.34% 0.26%
Average yield on loans 5.73% 5.81% 6.68% 5.38% 5.34%
Efficiency ratio 65.02% 77.92% 64.70% 58.98% 70.13%
Non-interest income to total revenue 19.09% 19.56% 16.88% 23.49% 16.42%
Capital & Liquidity:
Total equity to total assets (EOP) 9.34% 9.22% 9.08% 11.32% 11.26%
Tangible equity to tangible assets 9.34% 8.03% 7.90% 11.32% 11.26%
Total loans to total deposits 64.23% 63.71% 62.91% 75.13% 76.60%
Mohave State Bank
Common equity tier 1 ratio 13.24% 13.17% 12.95% 14.62% 14.62%
Tier 1 leverage ratio 9.63% 9.40% 10.55% 11.08% 11.51%
Tier 1 risk based capital 13.24% 13.17% 12.95% 14.62% 14.62%
Total risk based capital 13.95% 13.90% 13.67% 15.81% 15.82%
Asset Quality:
Gross charge-offs$ 84 $ - $ 67 $ 4 $ -
Net charge-offs (NCOs)$ 73 $ (11)$ 56 $ (5)$ (9)
NCO to average loans, annualized 0.09% -0.01% 0.08% -0.01% -0.02%
Non-accrual assets$ 1,872 $ 2,185 $ 2,321 $ 2,683 $ 2,229
Other real estate owned$ 3,261 $ 3,955 $ 4,398 $ 4,039 $ 3,995
Repossessed assets $ - $ - $ - $ - $ -
Non-performing assets (NPAs)$ 5,133 $ 6,140 $ 6,719 $ 6,722 $ 6,224
NPAs to total assets 0.87% 1.05% 1.12% 1.94% 1.84%
Loans >90 days past due$ - $ - $ - $ - $ -
NPAs + 90 days past due$ 5,133 $ 6,140 $ 6,719 $ 6,722 $ 6,224
NPAs + loans 90 days past due to total assets 0.87% 1.05% 1.12% 1.94% 1.84%
Allowance for loan losses to total loans 0.89% 0.93% 0.91% 1.40% 1.40%
Allowance for loan losses to NPAs 58.17% 49.80% 45.51% 46.16% 49.78%
Period End Balances:
Assets$ 590,276 $ 583,167 $ 600,320 $ 346,458 $ 338,205
Total Loans (before reserves)$ 335,563 $ 329,080 $ 335,195 $ 221,628 $ 221,046
Deposits$ 522,463 $ 516,498 $ 532,844 $ 295,010 $ 288,565
Stockholders' equity$ 55,110 $ 53,779 $ 54,488 $ 39,229 $ 38,088
Common stock market capitalization$ 63,033 $ 61,427 $ 55,003 $ 37,390 $ 37,974
Full-time equivalent employees 127 120 114 75 72
Shares outstanding 8,029,691 8,029,691 8,029,691 5,842,145 5,842,145
Average Balances:
Assets$ 583,909 $ 589,896 $ 523,785 $ 345,348 $ 327,228
Earning assets$ 534,369 $ 530,112 $ 462,668 $ 318,415 $ 301,084
Total Loans (before reserves)$ 332,487 $ 331,806 $ 288,558 $ 221,608 $ 221,499
Deposits$ 516,107 $ 514,366 $ 411,676 $ 294,645 $ 282,123
Other borrowings$ 11,198 $ 11,446 $ 11,628 $ 10,933 $ 6,105
Stockholders' equity$ 54,673 $ 53,800 $ 49,134 $ 38,753 $ 37,855
Shares outstanding, basic - wtd 8,029,691 8,029,691 7,292,583 5,842,145 5,842,145
Shares outstanding, diluted - wtd 8,029,691 8,029,691 7,292,583 5,842,145 5,842,145


NON-GAAP FINANCIAL INFORMATION
(Unaudited)
Three Months Ended
NON-GAAP PERFORMANCE MEASURESMar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
Return on average common equity, excluding acquisition related costs, net (1) 10.73% 9.15% 8.62%
Return on average assets, excluding acquisition related costs, net (1) 1.00% 0.83% 1.00%
Efficiency ratio, excluding acquisition related costs, net (2) 64.20% 70.05% 65.20%
NON-GAAP EARNINGS PER SHARE
Basic (3)$ 0.18 $ 0.15 $ 0.14
Diluted (3)$ 0.18 $ 0.15 $ 0.14
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
Mar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
(in thousands)
Net income$ 1,433 $ 911 $ 700
Acquisition related costs, net 52 496 178
Tax effect on acquisition related costs, net (18) (176) (62)
Net income, excluding acquisition related costs, net (3)$ 1,467 $ 1,231 $ 816
Three Months Ended
Mar. 31, 2017 Dec. 31, 2016 Mar. 31, 2016
(in thousands)
Total non-interest expenses$ 4,128 $ 4,911 $ 2,533
Acquisition related costs, net 52 496 178
Total non-interest expenses, excluding acquisition related costs, net (3)$ 4,076 $ 4,415 $ 2,355
(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.