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State Bank Corp. Reports Record Earnings of $1.84 Million, or $0.23 per Diluted Share, in 3Q17

LAKE HAVASU CITY, Ariz., Oct. 30, 2017 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPink:SBAZ) (“Company”), the holding company for Mohave State Bank (“Bank”), today announced net income increased 24.5% to $1.84 million, or $0.23 per diluted share, for the third quarter ended September 30, 2017, compared to $1.48 million, or $0.18 per diluted share, in the second quarter of 2017, and increased 54.8% compared to $1.19 million, or $0.16 per diluted share, for the third quarter of 2016.

For the nine months of 2017, net income grew 66.0% to $4.75 million, or $0.59 per diluted share, compared to $2.86 million, or $0.45 per diluted share, for the same period of 2016.

“We produced record financial results during the third quarter, with strong revenue growth, robust mortgage production, 5% annualized loan growth and an improving net interest margin,” stated Brian M. Riley, President and Chief Executive Officer. “Our focus on gathering core deposits, growing the loan portfolio and expanding our customer base throughout Arizona continues to gain momentum. Our performance metrics continue to improve with a return on average assets of 1.20%, a return on average equity of 12.71% and an improved efficiency ratio of 59.57%, for the third quarter of 2017. This solid financial performance is a reflection of the hard work of our employees and their commitment to our customers.”

Third Quarter 2017 Financial Highlights:

  • Reported record earnings of $1.84 million, or $0.23 per diluted share
  • Mortgage originations totaled 129 loans, funding $29.4 million and generating an operating profit of $243,000.
  • Return on average assets, excluding merger related expenses, was 1.23%.
  • Return on average equity, excluding merger related expenses, was 13.06%.
  • Core deposits represent nearly 89% of total deposits.
  • Total 2017 loan and deposit growth was $22 million and $45 million, respectively.

Net interest margin was 3.99% in the third quarter 2017 compared to 3.84% in the preceding quarter and 4.14 % in the third quarter a year ago.

The provision for loan losses was $50,000 during the third quarter of 2017, with net credit losses of $19,000. The allowance for loan losses totaled $3.0 million at September 30, 2017, or 0.87% of total loans. Excluding acquired loans, the reserve ratio was 1.06%, which is 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 $632.1 million at September 30, 2017, an increase of $28.7 million, or 4.8%, from $603.4 million at June 30, 2017, and an increase of $32.0 million, or 5.3%, compared to $600.1 million a year ago. Total loans held for investment were $345.2 million as compared to $335.5 million at June 30, 2017, and $329.2 million at September 30, 2016.

Total deposits were $561.1 million at quarter-end, an increase of $27.1 million, or 5.1%, from $534.0 million at June 30, 2017, and an increase of $28.3 million, or 5.3%, compared to $532.8 million a year ago. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 8.6% compared to September 30, 2016. Core deposits now comprise 88.5% of total deposits.

Non-performing assets were $3.0 million at September 30, 2017, a 19.0% decrease from $3.8 million at June 30, 2017 and a 54.7% decrease compared to $6.7 million at September 30, 2016. Nonperforming assets represented 0.48% of total assets at September 30, 2017, which represents its lowest level since fourth quarter 2007.

Shareholder equity increased to $58.2 million at September 30, 2017, from $54.5 million a year ago. At September 30, 2017, tangible book value per share was $6.31 per share compared to $5.79 per share a year ago.

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 September 30, 2017. The Bank reported the following capital ratios at September 30, 2017:

Common Equity Tier 1 Capital Ratio 13.91%
Tier 1 Leverage Ratio 9.64%
Tier 1 Capital Ratio 13.91%
Total Capital Ratio 14.63%

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, as well as a loan production office in Sedona, 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 Year to Date
Dollars in thousands - Unaudited9/30/20176/30/20179/30/2016 9/30/20179/30/2016
Statements of Operations
Interest income
Loans, including fees$ 5,033 $ 4,816 $ 4,594 $ 14,614 $ 10,530
Securities 753 653 394 1,988 830
Fed funds and other 124 89 71 283 165
Total interest income 5,910 5,558 5,059 16,885 11,525
Interest expense
Deposits 177 171 198 532 512
Borrowings 108 105 96 315 225
Total interest expense 285 276 294 847 737
Net interest income 5,625 5,282 4,765 16,038 10,788
Provision for loan losses 50 (440) - (390) -
Net interest income after loan loss provision 5,575 5,722 4,765 16,428 10,788
Noninterest income
Service charges on deposits 151 138 116 428 273
Mortgage loan fees 461 380 272 1,184 736
Gain on sale of loans 449 400 306 1,296 836
(Loss)/Gain on securities - - - (2)
Other income 336 457 274 1,076 638
Total noninterest income 1,397 1,375 968 3,984 2,481
Noninterest expense
Salaries and employee benefits 2,521 2,586 2,004 7,590 4,764
Net occupancy expense 197 154 87 510 196
Equipment expense 101 100 70 294 149
Data processing 413 429 261 1,270 743
Director fees & expenses 77 78 37 198 114
Insurance 32 32 33 96 93
Marketing & promotion 147 139 119 414 251
Professional fees 110 129 103 332 308
Office expense 33 34 25 132 102
Regulatory assessments 56 47 58 182 169
OREO and repossessed assets 29 594 109 648 204
Other expenses 389 437 425 1,268 766
4,105 4,759 3,331 12,934 7,859
Acquisition related costs 78 40 378 170 697
Total noninterest expense 4,183 4,799 3,709 13,104 8,556
Income (loss) before provision (benefit) for income taxes 2,789 2,298 2,024 7,308 4,713
Provision (benefit) for income taxes 947 818 834 2,554 1,849
Net Income (Loss)$ 1,842 $ 1,480 $ 1,190 $ 4,754 $ 2,864
Per Share Data
Basic EPS $ 0.23 $ 0.18 $ 0.16 $ 0.59 $ 0.45
Diluted EPS $ 0.23 $ 0.18 $ 0.16 $ 0.59 $ 0.45
Average shares outstanding
Basic 8,043,938 8,039,567 7,292,583 8,037,784 6,329,153
Effect of dilutive shares 27,253 19,767 - 15,773
Diluted 8,071,191 8,059,334 7,292,583 8,053,557 6,329,153

State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited9/30/20176/30/201712/31/20169/30/2016
Consolidated Balance Sheets
Assets
Cash and cash equivalents$ 3,195 $ 3,023 $ 5,202 $ 6,595
Interest bearing deposits 8,254 10,292 24,524 30,151
Overnight Funds 28,865 43,860 33,680 49,520
Held for maturity securities 1 1 2 2
Available for sale securities 204,396 169,125 147,574 135,773
Total cash and securities 244,711 226,301 210,982 222,041
Loans held for sale, before reserves 4,289 3,205 5,870 5,987
Gross loans held for investment 345,202 335,454 323,210 329,208
Loan loss reserve (3,032) (3,001) (3,058) (3,046)
Total net loans 346,459 335,658 326,022 332,149
Premises and equipment, net 14,732 14,828 15,071 15,140
Other real estate owned 577 836 3,955 4,398
Federal Home Loan Bank and other stock 3,867 3,867 3,308 3,308
Company owned life insurance 11,477 11,410 11,275 11,190
Other assets 10,255 10,451 12,554 11,923
Total Assets$ 632,078 $ 603,351 $ 583,167 $ 600,149
Liabilities
Non interest bearing demand$ 138,629 $ 119,116 $ 116,696 $ 129,993
Money market, NOW and savings 357,867 346,022 326,269 327,216
Time deposits <$250K 59,804 62,948 67,845 30,037
Time deposits >$250K 4,777 5,933 5,688 45,598
Total Deposits 561,077 534,019 516,498 532,844
Securities sold under repurchase agreements 2,932 3,263 4,188 3,752
Federal Home Loan Bank advances - - - -
Subordinated debt, net of debt issuance costs 7,354 7,348 7,336 7,329
Total Debt 10,286 10,611 11,524 11,081
Other Liabilities 2,480 1,826 1,366 1,736
Total Liabilities 573,843 546,456 529,388 545,661
Shareholders' Equity
Common stock 39,260 39,255 39,146 39,146
Accumulated retained earnings 19,660 18,140 15,791 15,161
Accumulated other comprehensive income (685) (500) (1,158) 181
Total shareholders equity 58,235 56,895 53,779 54,488
Total liabilities and shareholders' equity$ 632,078 $ 603,351 $ 583,167 $ 600,149

State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
Dollars in thousands - Unaudited9/30/20176/30/20173/31/201712/31/20169/30/2016
Performance Highlights
Earnings:
Total revenue (Net int. income + nonint. income)$ 7,307 $ 6,657 $ 6,349 $ 6,303 $ 5,733
Net interest income$ 5,625 $ 5,282 $ 5,137 $ 5,070 $ 4,765
Provision for loan losses$ 50 $ (440)$ - $ - $ -
Noninterest income$ 1,397 $ 1,375 $ 1,212 $ 1,233 $ 968
Noninterest expense$ 4,183 $ 4,799 $ 4,128 $ 4,911 $ 3,709
Net income (loss)$ 1,842 $ 1,480 $ 1,433 $ 911 $ 1,190
Per Share Data:
Net income (loss), basic $ 0.23 $ 0.18 $ 0.18 $ 0.11 $ 0.16
Net income (loss), diluted $ 0.23 $ 0.18 $ 0.18 $ 0.11 $ 0.16
Cash dividends declared$ 0.04 $ 0.035 $ 0.035 $ 0.04 $ -
Book value$ 7.24 $ 7.07 $ 6.86 $ 6.70 $ 6.79
Tangible book value$ 6.31 $ 6.13 $ 5.90 $ 5.72 $ 5.79
Performance Ratios:
Return on average assets 1.20% 0.99% 0.98% 0.62% 0.91%
Return on average equity 12.71% 10.51% 10.48% 6.77% 9.69%
Net interest margin, taxable equivalent 3.99% 3.84% 3.89% 3.85% 4.14%
Average cost of funds 0.20% 0.21% 0.21% 0.23% 0.29%
Average yield on loans 5.83% 5.94% 5.73% 5.81% 6.68%
Efficiency ratio 59.57% 72.09% 65.02% 77.92% 64.70%
Non-interest income to total revenue 19.89% 20.65% 19.09% 19.56% 16.88%
Capital & Liquidity:
Total equity to total assets (EOP) 9.21% 9.43% 9.34% 9.22% 9.08%
Tangible equity to tangible assets 8.12% 8.27% 8.13% 7.98% 7.85%
Total loans to total deposits 62.29% 63.41% 64.23% 63.71% 62.91%
Mohave State Bank
Common equity tier 1 ratio 13.91% 13.56% 13.24% 13.17% 12.95%
Tier 1 leverage ratio 9.64% 9.65% 9.63% 9.40% 10.55%
Tier 1 risk based capital 13.91% 13.56% 13.24% 13.17% 12.95%
Total risk based capital 14.63% 14.27% 13.95% 13.90% 13.67%
Asset Quality:
Gross charge-offs$ 27 $ 59 $ 84 $ - $ 67
Net charge-offs (NCOs)$ 19 $ (456)$ 73 $ (11)$ 56
NCO to average loans, annualized 0.02% -0.54% 0.09% -0.01% 0.08%
Non-accrual loans/securities$ 2,467 $ 2,923 $ 1,872 $ 2,185 $ 2,321
Other real estate owned$ 577 $ 836 $ 3,261 $ 3,955 $ 4,398
Repossessed assets $ - $ - $ - $ - $ -
Non-performing assets (NPAs)$ 3,044 $ 3,759 $ 5,133 $ 6,140 $ 6,719
NPAs to total assets 0.48% 0.62% 0.87% 1.05% 1.12%
Loans >90 days past due$ 3 $ - $ - $ - $ -
NPAs + 90 days past due$ 3,047 $ 3,759 $ 5,133 $ 6,140 $ 6,719
NPAs + loans 90 days past due to total assets 0.48% 0.62% 0.87% 1.05% 1.12%
Allowance for loan losses to total loans 0.87% 0.90% 0.89% 0.93% 0.91%
Allowance for loan losses to NPAs 99.61% 80.66% 58.17% 49.80% 45.51%
Period End Balances:
Assets$ 632,078 $ 603,351 $ 590,276 $ 583,167 $ 600,320
Total Loans (before reserves)$ 349,491 $ 338,635 $ 335,563 $ 329,080 $ 335,195
Deposits$ 561,077 $ 534,019 $ 522,463 $ 516,498 $ 532,844
Stockholders' equity$ 58,235 $ 56,895 $ 55,110 $ 53,779 $ 54,488
Common stock market capitalization$ 66,284 $ 65,957 $ 63,033 $ 61,427 $ 55,003
Full-time equivalent employees 117 127 127 120 114
Shares outstanding 8,044,184 8,043,517 8,029,691 8,029,691 8,029,691
Average Balances:
Assets$ 616,175 $ 598,933 $ 583,909 $ 589,896 $ 523,785
Earning assets$ 567,105 $ 552,731 $ 534,369 $ 530,112 $ 462,668
Total Loans (before reserves)$ 345,042 $ 339,062 $ 332,487 $ 331,806 $ 288,558
Deposits$ 545,944 $ 522,443 $ 516,107 $ 514,366 $ 411,676
Other borrowings$ 10,622 $ 11,028 $ 11,198 $ 11,446 $ 11,628
Stockholders' equity$ 57,968 $ 56,305 $ 54,673 $ 53,800 $ 49,134
Shares outstanding, basic - wtd 8,043,938 8,039,567 8,029,691 8,029,691 7,292,583
Shares outstanding, diluted - wtd 8,071,191 8,059,334 8,029,691 8,029,691 7,292,583

NON-GAAP FINANCIAL INFORMATION
(Unaudited)
Three Months Ended
NON-GAAP PERFORMANCE MEASURESSep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017
Return on average common equity, excluding acquisition related costs, net (1) 13.06% 10.70% 10.73%
Return on average assets, excluding acquisition related costs, net (1) 1.23% 1.01% 1.00%
Efficiency ratio, excluding acquisition related costs, net (2) 56.18% 71.49% 64.20%
NON-GAAP EARNINGS PER SHARE
Basic (3)$ 0.24 $ 0.19 $ 0.18
Diluted (3)$ 0.23 $ 0.19 $ 0.18
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
Sep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017
(in thousands)
Net income$ 1,842 $ 1,480 $ 1,433
Acquisition related costs, net 78 40 52
Tax effect on acquisition related costs, net (27) (14) (18)
Net income, excluding acquisition related costs, net (3)$ 1,893 $ 1,506 $ 1,467
Three Months Ended
Sep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017
(in thousands)
Total non-interest expenses$ 4,183 $ 4,799 $ 4,128
Acquisition related costs, net 78 40 52
Total non-interest expenses, excluding acquisition related costs, net (3)$ 4,105 $ 4,759 $ 4,076
(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


Source:State Bank Corp.