Market Overview

State Bank Financial Corporation Reports Third Quarter 2018 Financial Results

Share:
  • Net income of $18.0 million, or $.46 per diluted share, in the third quarter of 2018
  • Return on assets of 1.43% and return on equity of 10.76%
  • Organic and PNCI loan growth of $56 million
  • Merger-related expenses of $11.0 million in the third quarter of 2018
  • Received shareholder approval for merger with Cadence Bancorporation

ATLANTA, Oct. 22, 2018 (GLOBE NEWSWIRE) -- State Bank Financial Corporation (NASDAQ:STBZ) today announced unaudited financial results for the third quarter of 2018.  Net income for the third quarter of 2018 was $18.0 million, compared to $18.8 million in the second quarter of 2018, and $14.4 million in the third quarter of 2017.  Fully diluted earnings per share were $.46 in the third quarter of 2018, compared to  $.48 in the second quarter of 2018 and $.37 in the third quarter of 2017.  The third quarter of 2018 included pre-tax merger-related expenses of $11.0 million.

On September 18, 2018, State Bank's shareholders approved the pending merger with Cadence Bancorporation.  The completion of the merger remains subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions.  Shares of restricted stock that vested upon shareholder approval of the merger resulted in $9.8 million of merger-related expense in the quarter.  The effective tax rate for the third quarter was 9.30% due to the tax benefit resulting from the vesting of the restricted stock.  Merger-related expenses, including the restricted stock vesting and tax adjustments, reduced fully diluted earnings per share by $.14 after-tax.

Joe Evans, Chairman of State Bank Financial, commented, "I am pleased with our strong financial performance in the third quarter and our shareholders' overwhelming approval of our pending merger  with Cadence.  Our two banks are highly complementary and I expect the combined entity to produce exceptional results."

Operating Highlights

Interest income on loans improved to $51.6 million in the third quarter of 2018, a $1.1 million increase from the second quarter of 2018 and a $16.2 million increase from the third quarter of 2017.  Net interest income of $58.6 million in the third quarter of 2018 increased from $56.1 million in the second quarter of 2018 and $44.3 million in the third quarter of 2017.  Accretion income on loans was $8.2 million in the third quarter of 2018, up from $6.6 million in the second quarter of 2018 and $6.5 million in the third quarter of 2017.  Accretion income includes $4.1 million in recovery income during the third quarter of 2018 compared to $2.7 million in the second quarter of 2018 and $2.3 million in the third quarter of 2017.

Noninterest income was $9.7 million in the third quarter of 2018, compared to $10.9 million in the second quarter of 2018 and $9.7 million in the third quarter of 2017.  Mortgage banking revenues declined $1.3 million in the third quarter of 2018 compared to the second quarter of 2018.  In late September 2018, State Bank announced the transition of the majority of its mortgage employees to another financial institution.

Total noninterest expense for the third quarter of 2018 was $46.3 million, compared to $40.0 million in the second quarter of 2018 and $31.6 million in the third quarter of 2017.  The increase was primarily due to $11.0 million in merger-related expenses, of which $9.8 million was related to the vesting of restricted stock in September 2018.  Salaries and employee benefit expenses decreased $1.1 million compared to the second quarter of 2018.  Total noninterest expense excluding merger-related expenses declined $2.0 million from the second quarter of 2018.

Tom Wiley, Vice Chairman and CEO, commented, "I am proud of our positive operating trends.  While the mortgage transition impacted noninterest income during the third quarter, the reduction of associated expenses will measurably improve our efficiency going forward."

Financial Condition

Total assets at September 30, 2018, were $4.9 billion, down from $5.0 billion at June 30, 2018.  Total loans were $3.6 billion at September 30, 2018, up $32.1 million from the second quarter of 2018.  Period-end organic loans increased to $2.8 billion at September 30, 2018, an increase of $123.1 million from the second quarter of 2018.  Purchased non-credit impaired loans decreased to $725.7 million at September 30, 2018, a $67.3 million linked-quarter decline.  Purchased credit impaired loans decreased to $124.8 million at September 30, 2018, a $23.7 million linked-quarter decline.

Past due organic and purchased non-credit impaired loans were .34% and 2.73% of their respective portfolios at September 30, 2018. The increase in past due purchased non-credit impaired loans was due to one relationship that was recorded as nonaccrual in the second quarter of 2018.  The provision for loan losses on organic and purchased non-credit impaired loans was $2.1 million in the third quarter of 2018. The organic allowance as a percent of organic loans was .98% at the end of the third quarter of 2018.

Total deposits at September 30, 2018, were $4.2 billion, down $115.8 million from June 30, 2018, although average deposits increased $54.8 million from the second quarter of 2018. Noninterest-bearing demand deposits represented 27.5% of total deposits as of September 30, 2018. Period-end noninterest-bearing demand deposits were $1.2 billion, a $35.5 million decrease, while average noninterest-bearing demand deposits increased $40.9 million from the second quarter of 2018.

Tangible book value per share was $14.70 at the end of the third quarter of 2018.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 11.85% and a Tier I risk-based capital ratio of 12.89%.

Detailed Results

Supplemental tables displaying financial results for the third quarter of 2018, the previous four quarters and year-to-date 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 3Q18 Financial Supplement: Table 8, Reconciliation of Non-GAAP Measures.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ:STBZ), with approximately $4.9 billion in consolidated assets as of September 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") and the impact the transition of our mortgage employees to another financial institution will have on expenses going forward. 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 the remaining 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), 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.

State Bank Financial Corporation
3Q18 Financial Supplement: Table 1
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
                        3Q18 change vs
(Dollars in thousands, except per share amounts)   3Q18   2Q18   1Q18   4Q17   3Q17   2Q18   3Q17
                             
Income Statement Highlights                            
Interest income on loans   $ 51,553     $ 50,416     $ 48,444     $ 46,926     $ 35,400     $ 1,137     $ 16,153  
Accretion income on loans   8,154     6,595     5,946     10,671     6,520     1,559     1,634  
Interest income on invested funds   6,917     6,677     6,171     6,034     5,782     240     1,135  
Total interest income   66,624     63,688     60,561     63,631     47,702     2,936     18,922  
Interest expense   8,039     7,558     5,705     5,614     3,370     481     4,669  
Net interest income   58,585     56,130     54,856     58,017     44,332     2,455     14,253  
Provision for loan and lease losses (organic & PNCI loans)   2,100     2,556     2,650     2,050     1,300     (456 )   800  
Provision for loan and lease losses (purchased credit impaired loans)   109     (163 )   558     798     (885 )   272    
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com