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CST: 21/11/2019 09:59:57   

State Bank Corp. Earns $2.25 million, or $0.28 per Diluted Share, in Second Quarter 2019

113 Days ago

LAKE HAVASU CITY, Ariz., July 31, 2019 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPINK: SBAZ) (“Company”), the holding company for State Bank of Arizona (“Bank”), today announced net income increased 23.6% to $2.25 million, or $0.28 per diluted share, for the second quarter ended June 30, 2019, compared to $1.82 million, or $0.22 per diluted share, for the first quarter of 2019, and increased 5.14% compared to $2.14 million, or $0.26 per diluted share, for the second quarter of 2018.  For the first six months of 2019, net income grew 2.26% to $4.08 million, or $0.50 per diluted share, compared to $3.99 million, or $0.49 per diluted share, for the same period of 2018. 

“Solid top line growth, combined with improving operating efficiencies, contributed to one of the most profitable periods since the Company was founded for both the second quarter and first six months of 2019,” stated Brian M. Riley, President and Chief Executive Officer.  “These factors supported a return on average assets of 1.25% and a return on average equity of 13.07% for the quarter.  Our focus in the coming year remains on expanding market share in the Arizona markets we serve, while continuing to look for growth opportunities.”

Second Quarter 2019 Financial Highlights:

  • Net income increased 23.6% to $2.25 million, or $0.28 per diluted share, compared to $1.82 million, or $0.22 per diluted share, in 1Q19.

  • Return on average assets of 1.25%.

  • Return on average equity of 13.07%.

  • Core deposits comprised 85.1% of total deposits.

  • Tangible book value increased 20.9% to $7.86 per share, compared to $6.50 a year ago.

Net interest margin was 3.84% in the second quarter 2019, compared to 3.95% in the preceding quarter, and 3.93% in the second quarter a year ago.  Average cost of funds rose to 61 basis points, as the Company increased overall deposit rates to remain competitive in the market place.

The provision for loan losses was $50,000 during the second quarter of 2019, with net recoveries of $357,000.  The allowance for loan losses totaled $4.5 million at June 30, 2019, or 1.10% of total loans.  Excluding acquired loans, the reserve ratio was 1.18%, 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 $678.6 million at June 30, 2019, an increase of $23.3 million, or 3.56%, from $655.3 million at December 31, 2018, and an increase of $36.9 million, or 5.75%, compared to $641.7 million a year ago.  Total loans held for investment were $406.3 million at June 30, 2019, as compared to $407.3 million at December 31, 2018 and $362.3 million at June 30, 2018. 

Total deposits were $592.0 million, an increase of $34.2 million, or 6.13%, from $557.8 million at December 31, 2018, and an increase of $30.1 million, or 5.36%, compared to $561.9 million a year ago.  Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 1.17% compared to six months earlier and decreased 0.68% compared to a year earlier to $503.5 million at June 30, 2019.  Core deposits now comprise 85.1% of total deposits. 

Nonperforming assets were $2.4 million at June 30, 2019, a 50.0% increase from $1.6 million at December 31, 2018.  Nonperforming assets represented 0.36% of total assets at June 30, 2019. 

Shareholder equity increased to $70.5 million at June 30, 2019, from $64.4 million at December 31, 2018, and compared to $59.7 million a year ago.  At June 30, 2019, tangible book value per share was $7.86 per share compared to $7.10 per share at December 31, 2018 and $6.50 per share at June 30, 2018.

Capital Management

Community banking organizations, including State Bank Corp. and State Bank of Arizona, became subject to increased 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 June 30, 2019.  The Bank reported the following capital ratios at June 30, 2019:

Common Equity Tier 1 Capital Ratio 13.91%
Tier 1 Leverage Ratio 10.40%
Tier 1 Capital Ratio 13.91%
Total Capital Ratio 14.83%

About the Company

State Bank Corp., headquartered in Lake Havasu City, Arizona, is the parent company of State Bank of Arizona, the largest locally-owned bank in Arizona.  State Bank of Arizona 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.  Specializing in providing exceptional customer service and investing in its local communities, State Bank of Arizona was named 2018 Bank of the Year by Western Independent Bankers.  The Bank has ten full-service branches: two in Lake Havasu City, two in Kingman, two in Prescott, one in Bullhead City, one in Prescott Valley, one in Phoenix, and one in Cottonwood, Arizona.  The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.statebankaz.com

In June 2019, State Bank Corp. was ranked #69 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts with Assets Under $2 Billion list for 2019 based on three-year average return on equity (“ROE”) as of 12/31/18.

Forward-looking Statements

This press release may include forward-looking statements about State Bank Corp. and State Bank of Arizona.  These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, borrower capacity to repay, operational factors and competition in the geographic and business areas in which the Company conducts its operations. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement.


UNAUDITED FINANCIAL STATEMENTS FOLLOW


State Bank Corp.                      
Statement of Operations                      
                         
     For the Quarter Ended     Year to Date 
Dollars in thousands - Unaudited   6/30/2019   3/31/2019   6/30/2018     6/30/2019   6/30/2018
Statements of Operations                      
  Interest income                      
  Loans, including fees $ 5,905 $ 5,926 $ 5,249   $ 11,831 $ 10,091
  Securities   861   809   897     1,670   1,793
  Fed funds and other   236   166   99     403   190
  Total interest income   7,002   6,901   6,245     13,904   12,074
                         
  Interest expense                      
  Deposits   789   544   229     1,333   436
  Borrowings   142   262   143     404   247
  Total interest expense   931   806   372     1,737   683
                         
  Net interest income   6,071   6,095   5,873     12,167   11,391
                         
  Provision for loan losses   50   300   158     350   193
  Net interest income after loan loss provision   6,021   5,795   5,715     11,817   11,198
                         
  Noninterest income                      
  Service charges on deposits   168   178   140     346   288
  Mortgage loan fees   329   233   296     563   544
  Gain on sale of loans   483   390   576     873   1,019
  Other income   398   483   374     880   921
  Total noninterest income   1,378   1,284   1,386     2,662   2,772
                         
  Noninterest expense                      
  Salaries and employee benefits   2,807   2,919   2,677     5,725   5,372
  Net occupancy expense   187   192   171     379   354
  Equipment expense   66   71   83     137   175
  Data processing   514   532   437     1,046   877
  Director fees & expenses   85   76   77     161   158
  Insurance   36   35   37     71   75
  Marketing & promotion   101   160   124     261   253
  Professional fees   98   81   239     257   388
  Office expense   69   81   33     72   71
  Regulatory assessments   56   56   57     112   121
  OREO and repossessed assets   42   82   (29)     124   13
  Other expenses   463   481   397     945   900
  Total noninterest expense   4,524   4,766   4,303     9,290   8,757
                         
                         
  Income (loss) before provision (benefit) for income taxes     2,875     2,313   2,798     5,189   5,213
                         
  Provision (benefit) for income taxes   623   489   661     1,112   1,227
  Net Income (Loss) $ 2,252 $ 1,824 $ 2,137   $ 4,077 $ 3,986
                         
                         
 Per Share Data                       
  Basic EPS $ 0.28 $ 0.23 $ 0.27   $ 0.50 $ 0.49
  Diluted EPS $ 0.28 $ 0.22 $ 0.26   $ 0.50 $ 0.49
                         
  Average shares outstanding                      
  Basic   8,090,000   8,075,764   8,062,225     8,082,921   8,056,069
  Effect of dilutive shares   25,299   32,659   30,799     28,941   34,220
  Diluted   8,115,299   8,108,423   8,093,024     8,111,862   8,090,289



State Bank Corp.                        
Balance Sheets                        
                     
                           
Dollars in thousands - Unaudited   6/30/2019     3/31/2019     12/31/2018     6/30/2018  
Consolidated Balance Sheets                        
                           
Assets                        
  Cash and cash equivalents $ 5,040   $ 4,319   $ 4,061   $ 4,251  
  Interest bearing deposits   5,575     8,376     4,106     4,966  
  Overnight Funds   39,485     34,030     17,960     31,950  
  Available for sale securities     176,068       170,374       179,589       194,788  
  Total cash and securities   226,168     217,099     205,716     235,955  
                           
  Loans held for sale, before reserves   7,294     6,174     2,375     4,817  
  Gross loans held for investment   406,342     411,159     407,264     362,308  
  Loan loss reserve     (4,546 )     (4,139 )     (3,824 )     (3,647 )
  Total net loans   409,090     413,194     405,815     363,478  
                           
  Premises and equipment, net   15,093     15,171     14,315     14,180  
  Other real estate owned   -     174     266     398  
  Federal Home Loan Bank and other stock   6,117     6,183     6,249     4,518  
  Company owned life insurance   11,424     11,360     11,802     11,672  
  Other assets     10,678       10,155       11,174       11,481  
                           
    Total Assets $ 678,570   $ 673,336   $ 655,337   $ 641,682  
                           
                           
Liabilities                        
  Non interest bearing demand $ 141,698   $ 136,761   $ 135,485   $ 125,877  
  Money market, NOW and savings   361,810     371,021     362,202     381,090  
  Time deposits <$250K   66,263     60,417     51,845     49,154  
  Time deposits >$250K     22,218       17,533       8,299       5,781  
  Total Deposits     591,989       585,732       557,831       561,902  
                           
  Securities sold under repurchase agreements   6,260     5,176     5,001     4,064  
  Federal Home Loan Bank advances   -     6,000     18,000     6,000  
  Subordinated debt, net of debt issuance costs     6,806       6,953       7,045       7,257  
  Total Debt   13,066     18,129     30,046     17,321  
                           
  Other Liabilities     3,001       2,556       3,086       2,795  
    Total Liabilities   608,056     606,417     590,963     582,018  
                           
                           
Shareholders' Equity                        
    Common stock   39,813     39,762     39,597     39,513  
    Accumulated retained earnings   30,695     29,049     27,831     24,204  
    Accumulated other comprehensive income     6       (1,892 )     (3,054 )     (4,053 )
  Total shareholders equity   70,514     66,919     64,374     59,664  
                           
    Total liabilities and shareholders' equity $ 678,570   $ 673,336   $ 655,337   $ 641,682  


State Bank Corp.
Five-Quarter Performance Summary
                               
   For the Quarter Ended
Dollars in thousands - Unaudited   6/30/2019     3/31/2019     12/31/2018     9/30/2018     6/30/2018  
Performance Highlights                              
                                 
Earnings:                              
  Total revenue (Net int. income + nonint. income) $ 7,449   $ 7,379   $ 7,622   $ 7,542   $ 7,259  
  Net interest income $ 6,071   $ 6,095   $ 6,060   $ 6,190   $ 5,873  
  Provision for loan losses $ 50   $ 300   $ 137   $ 160   $ 158  
  Noninterest income $ 1,378   $ 1,284   $ 1,562   $ 1,352   $ 1,386  
  Noninterest expense $ 4,524   $ 4,766   $ 4,744   $ 4,473   $ 4,303  
  Net income (loss) $ 2,252   $ 1,824   $ 2,283   $ 2,312   $ 2,137  
                                 
Per Share Data:                              
  Net income (loss), basic  $ 0.28   $ 0.23   $ 0.28   $ 0.29   $ 0.27  
  Net income (loss), diluted  $ 0.28   $ 0.22   $ 0.28   $ 0.29   $ 0.26  
  Cash dividends declared $ 0.075   $ 0.075   $ 0.06   $ 0.06   $ 0.06  
  Book value $ 8.71   $ 8.28   $ 7.98   $ 7.56   $ 7.40  
  Tangible book value $ 7.86   $ 7.42   $ 7.10   $ 6.67   $ 6.50  
                                 
Performance Ratios:                              
  Return on average assets    1.25 %   1.02 %   1.41 %   1.44 %   1.33 %
  Return on average equity    13.07 %   11.06 %   14.53 %   15.19 %   14.48 %
  Net interest margin, taxable equivalent   3.84 %   3.95 %   4.01 %   4.12 %   3.93 %
  Average cost of funds   0.61 %   0.54 %   0.38 %   0.29 %   0.29 %
  Average yield on loans   5.68 %   5.70 %   5.61 %   5.87 %   5.68 %
  Efficiency ratio   60.73 %   64.59 %   62.24 %   59.31 %   59.28 %
  Non-interest income to total revenue   18.50 %   17.40 %   20.49 %   17.93 %   19.09 %
                                 
Capital & Liquidity:                              
  Total equity to total assets (EOP)   10.39 %   9.94 %   9.82 %   9.48 %   9.30 %
  Tangible equity to tangible assets   9.47 %   9.00 %   8.84 %   8.47 %   8.26 %
  Total loans to total deposits   69.87 %   71.25 %   73.43 %   68.72 %   65.34 %
  Mohave State Bank                              
  Common equity tier 1 ratio   13.91 %   13.49 %   13.18 %   13.49 %   13.83 %
  Tier 1 leverage ratio   10.40 %   10.39 %   10.42 %   10.23 %   9.99 %
  Tier 1 risk based capital   13.91 %   13.49 %   13.18 %   13.49 %   13.83 %
  Total risk based capital    14.83 %   14.32 %   13.94 %   14.26 %   14.63 %
                                 
Asset Quality:                              
  Gross charge-offs $ 15   $ 88   $ -   $ 77   $ -  
  Net charge-offs (NCOs) $ (357 ) $ (15 ) $ (2 ) $ 71   $ (82 )
  NCO to average loans, annualized   -0.34 %   -0.01 %   0.00 %   0.08 %   -0.14 %
  Non-accrual loans/securities $ 2,415   $ 1,302   $ 1,391   $ 657   $ 2,389  
  Other real estate owned $ -   $ 174   $ 266   $ 266   $ 399  
  Repossessed assets  $ -   $ -   $ -   $ -   $ -  
  Non-performing assets (NPAs) $ 2,415   $ 1,476   $ 1,657   $ 923   $ 2,788  
  NPAs to total assets   0.36 %   0.22 %   0.25 %   0.14 %   0.43 %
  Loans >90 days past due $ -   $ -   $ -   $ -   $ -  
  NPAs + 90 days past due $ 2,415   $ 1,476   $ 1,657   $ 923   $ 2,788  
  NPAs + loans 90 days past due to total assets   0.36 %   0.22 %   0.25 %   0.14 %   0.43 %
  Allowance for loan losses to total loans   1.10 %   0.99 %   0.93 %   0.97 %   0.99 %
  Allowance for loan losses to NPAs   188.24 %   280.42 %   230.78 %   404.77 %   134.00 %
                                 
Period End Balances:                              
  Assets $ 678,570   $ 673,336   $ 655,337   $ 642,963   $ 641,682  
  Total Loans (before reserves) $ 413,636   $ 417,333   $ 409,639   $ 385,489   $ 367,125  
  Deposits $ 591,989   $ 585,732   $ 557,831   $ 560,952   $ 561,902  
  Stockholders' equity $ 70,514   $ 66,919   $ 64,374   $ 60,975   $ 59,664  
  Common stock market capitalization $ 97,120   $ 104,646   $ 99,208   $ 117,759   $ 126,632  
  Full-time equivalent employees   120     122     124     121     122  
  Shares outstanding   8,093,299     8,080,791     8,065,709     8,065,709     8,065,709  
                                 
Average Balances:                              
  Assets $ 717,839   $ 715,225   $ 649,673   $ 644,250   $ 640,327  
  Earning assets $ 634,681   $ 620,445   $ 607,149   $ 603,271   $ 599,968  
  Total Loans (before reserves) $ 415,774   $ 415,998   $ 400,116   $ 377,752   $ 369,705  
  Deposits $ 596,079   $ 562,399   $ 560,343   $ 562,683   $ 562,942  
  Other borrowings $ 12,457   $ 33,995   $ 17,649   $ 17,596   $ 16,622  
  Stockholders' equity $ 68,902   $ 65,986   $ 62,844   $ 60,901   $ 59,034  
  Shares outstanding, basic - wtd   8,090,000     8,075,764     8,065,709     8,065,709     8,062,225  
  Shares outstanding, diluted - wtd   8,115,299     8,108,423     8,092,290     8,092,983     8,093,024  


Contact:
Brian M. Riley, President & CEO
Craig Wenner, EVP & CFO
928 855 0000
www.mohavestbank.com

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