Market Overview

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

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LAKE HAVASU CITY, Ariz., Oct. 30, 2017 (GLOBE NEWSWIRE) -- State Bank Corp. (OTC: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 - Unaudited 9/30/2017 6/30/2017 9/30/2016   9/30/2017 9/30/2016
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 - Unaudited 9/30/2017 6/30/2017 12/31/2016 9/30/2016  
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 - Unaudited 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016  
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 MEASURES Sep. 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


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