Market Overview

State Bank Financial Corporation Reports Second Quarter 2018 Financial Results

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  • Net income of $18.8 million, or $.48 per diluted share, in the second quarter of 2018
  • Return on assets of 1.52% and return on equity of 11.56%
  • Noninterest-bearing deposit growth of $97.4 million, a 9% linked-quarter increase
  • Announced definitive merger agreement with Cadence Bancorporation in May
  • Merger-related expenses of $2.6 million in the second quarter of 2018

ATLANTA, July 24, 2018 (GLOBE NEWSWIRE) -- State Bank Financial Corporation (NASDAQ:STBZ) today announced unaudited financial results for the second quarter of 2018.  Net income for the second quarter of 2018 was $18.8 million, compared to $17.4 million in the first quarter of 2018, and $15.2 million in the second quarter of 2017. Fully diluted earnings per share were $.48 in the second quarter of 2018, compared to $.44 in the first quarter of 2018 and $.39 in the second quarter of 2017.

Joe Evans, Chairman of State Bank Financial, commented, "Our team is doing a great job of taking care of business while also working diligently to make our announced merger with Cadence Bancorporation a success. I am excited about the $16 billion regional bank we are building that will be a formidable competitor in our markets."

Operating Highlights

Interest income on loans improved to $50.4 million in the second quarter of 2018, a $2.0 million increase from the first quarter of 2018 and a $15.5 million increase from the second quarter of 2017.  Net interest income of $56.1 million in the second quarter of 2018 increased from $54.9 million in the first quarter of 2018 and $46.5 million in the second quarter of 2017.  Accretion income on loans was $6.6 million in the second quarter of 2018, up from $5.9 million in the first quarter of 2018, but down from $9.2 million in the second quarter of 2017.

Noninterest income was $10.9 million in the second quarter of 2018, compared to $10.5 million in the first quarter of 2018 and $10.5 million in the second quarter of 2017.  Revenues from mortgage banking and SBA increased $200,000 and $60,000, respectively, in the second quarter of 2018, compared to the first quarter of 2018. Gain on sale of securities totaled $250,000 in the second quarter of 2018.

Total noninterest expense for the second quarter of 2018 was $40.0 million, compared to $39.3 million in the first quarter of 2018 and $32.0 million in the second quarter of 2017.  The increase was primarily due to $2.6 million in merger-related expenses, a $1.3 million increase compared to the first quarter of 2018. Merger expenses increased as a result of the pending merger with Cadence Bancorporation that was announced during the second quarter of 2018. Salaries and employee benefit expenses decreased $1.8 million compared to the first quarter of 2018.

Financial Condition

Total assets at June 30, 2018, were $5.0 billion, up from $4.9 billion at March 31, 2018.  Total loans were $3.6 billion at June 30, 2018, down $13.2 million from the first quarter of 2018.  Period-end organic loans increased to $2.7 billion at June 30, 2018, an increase of $148.4 million from the first quarter of 2018.  Purchased non-credit impaired loans decreased to $793.1 million at June 30, 2018, a $152.6 million linked-quarter decline.  Purchased credit impaired loans decreased to $148.5 million at June 30, 2018, a $9.1 million linked-quarter decline.

Past due organic and purchased non-credit impaired loans were .16% and .36% of their respective portfolios at June 30, 2018. The provision for loan losses on organic and purchased non-credit impaired loans was $2.6 million in the second quarter of 2018 and was primarily attributable to organic loan growth in the quarter. The organic allowance as a percent of organic loans was .99% at the end of the second quarter of 2018.

Total deposits at June 30, 2018, were $4.3 billion, up $118.3 million from March 31, 2018. Noninterest-bearing demand deposits represented 27.6% of total deposits as of June 30, 2018. Period-end and average noninterest-bearing demand deposits were $1.2 billion and $1.1 billion, respectively, a $97.4 million and $66.4 million increase from the first quarter of 2018.

Tom Wiley, Vice Chairman and CEO, commented, "We experienced solid growth in total deposits in the second quarter, which increased 3% from the first quarter, including 9% growth in noninterest-bearing deposits. We continue to focus on growing low-cost core deposits and delivering an exceptional experience for our clients."

Tangible book value per share was $14.38 at the end of the second quarter of 2018.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 11.75% and a Tier I risk-based capital ratio of 12.79%.

Detailed Results

Supplemental tables displaying financial results for the second quarter of 2018, the previous four quarters, and the first half of 2018 are included with this press release.

Non-GAAP Financial Measures

This press release contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP").  For more information on these non-GAAP financial measures, please refer to 2Q18 Financial Supplement: Table 8, Reconciliation of Non-GAAP Measures.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ:STBZ), with approximately $5.0 billion in assets as of June 30, 2018, is an Atlanta-based bank holding company for State Bank and Trust Company.  State Bank operates a full service banking business and offers a broad range of commercial and retail banking products to our customers throughout seven of Georgia's eight largest MSAs.

To learn more about State Bank, visit www.statebt.com

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release and other information that we make publicly available from time to time are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "intend," "anticipate," "plan," "seek," "believe," "expect," "focus," "strategy," "future," "likely," "project," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements regarding our pending merger with Cadence Bancorporation ("Cadence"). Such forward-looking statements are subject to risks, uncertainties, and other factors, including a downturn in the economy, particularly in our markets; volatile credit and financial markets both domestic and foreign; potential deterioration in real estate values; regulatory changes and excessive loan losses; the occurrence of any event, change or other circumstances that could give rise to the right of Cadence or us to terminate the definitive merger agreement; the outcome of any legal proceedings that may be instituted against Cadence or us; the failure to obtain necessary regulatory approvals for our merger with Cadence (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction), and approval of our shareholders or to satisfy any of the other conditions to the merger on a timely basis or at all; the possibility that the anticipated benefits of the merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Cadence and State Bank do business; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the merger; Cadence's ability to complete the acquisition and integration of State Bank successfully; and other factors that may affect ours or Cadence's future results, as well as additional risks and uncertainties contained in the "Risk Factors" and forward-looking statements disclosure contained in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, any or all of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Important Additional Information

In connection with the proposed transaction between Cadence and State Bank Financial Corporation, Cadence has filed with the SEC a Registration Statement on Form S-4 (Registration Statement No. 333-225587 (the "Registration Statement") including a joint information statement of Cadence and proxy statement of State Bank Financial Corporation and a prospectus of Cadence, as well as other relevant documents concerning the proposed transaction. The proposed transaction will be submitted to State Bank Financial Corporation's shareholders for their consideration. Cadence Bancorp, LLC, the controlling stockholder of Cadence, has delivered a written consent approving the proposed transaction. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Stockholders of Cadence and shareholders of State Bank Financial Corporation are urged to read the Registration Statement, information statement, proxy statement and prospectus regarding the transaction and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain important information about the transaction.

Shareholders are able to obtain a free copy of the Registration Statement, information statement, proxy statement and prospectus, as well as other filings containing information State Bank Financial Corporation and Cadence, without charge, at the SEC's website (http://www.sec.gov). Copies of the Registration Statement, information statement, proxy statement and prospectus and the filings with the SEC that are incorporated by reference therein can also be obtained, without charge, by directing a request to State Bank Financial Corporation, 3399 Peachtree Road NE, Suite 1900, Atlanta, Georgia 30326, Attention: Corporate Secretary or Cadence Bancorporation, 2800 Post Oak Boulevard, Suite 3800, Houston, Texas 77056, Attention: Corporate Secretary.

Participants in the Solicitation

State Bank Financial Corporation, Cadence and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding State Bank Financial Corporation's directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 12, 2018, and certain of its Current Reports on Form 8-K. Information regarding Cadence's directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 30, 2018, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Registra

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