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CST: 21/11/2019 10:24:14   

State Bank Corp. Earns $2.39 million, or $0.29 per Diluted Share, in Third Quarter 2019; Announces Sale to Glacier Bancorp

27 Days ago

LAKE HAVASU CITY, Ariz., Oct. 25, 2019 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPINK: SBAZ) (“Company”), the holding company for State Bank of Arizona (“Bank”), today announced net income increased 6.1% to $2.39 million, or $0.29 per diluted share, for the third quarter ended September 30, 2019, compared to $2.25 million, or $0.28 per diluted share, for the second quarter of 2019, and increased 3.4% compared to $2.31 million, or $0.29 per diluted share, for the third quarter of 2018. For the first nine months of 2019, net income grew 2.7% to $6.47 million, or $0.80 per diluted share, compared to $6.30 million, or $0.78 per diluted share, for the same period of 2018. 

On September 30, 2019, the Company entered into an agreement to merge with the Glacier Bancorp family of banks. Pending shareholder and regulatory approval, State Bank of Arizona and its affiliated bank divisions will officially be under the Glacier Bancorp umbrella late in the fourth quarter of 2019 or early in the first quarter of 2020. This acquisition will see State Bank of Arizona merge into Glacier’s current Arizona bank franchise, Foothills Bank. 

“Our core earnings remain strong, as we progress toward our merger with Glacier Bancorp. Our staff has worked extremely hard over the past several years to improve our core operations, and I am proud of their accomplishments” stated Brian M. Riley, President and Chief Executive Officer. “We believe this partnership is a natural fit, and increases our resources to serve clients with exceptional service and strengthens our commitment to continue building a community banking franchise in Arizona. Further, this alliance provides our shareholders with liquidity and significantly enhances our long-term strategic capabilities.”

Third Quarter 2019 Financial Highlights:

  • Announced sale of State Bank Corp. to Glacier Bancorp.
  • Net income increased 6.1% to $2.39 million, or $0.29 per diluted share, compared to $2.25 million, or $0.28 per diluted share, in 2Q19.
  • Return on average assets of 1.41%.
  • Return on average equity of 13.23%.

  • Core deposits comprised 84.4% of total deposits.

  • Tangible book value increased 22.0% to $8.14 per share, compared to $6.67 a year ago.

Net interest margin was 3.78% in the third quarter 2019, compared to 3.75% in the preceding quarter, and 4.01% in the third quarter a year ago. Average cost of funds decreased to 56 basis points, as the Company lowered its overall deposit rates.

There was no provision for loan losses during the third quarter of 2019, with net charge-offs of $1,000. The allowance for loan losses totaled $4.5 million at September 30, 2019, or 1.10% of total loans. Excluding acquired loans, the reserve ratio was 1.17%, 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 $676.9 million at September 30, 2019, an increase of $21.6 million, or 3.3%, from $655.3 million at December 31, 2018, and an increase of $34.0 million, or 5.3%, compared to $642.9 million a year ago. Total loans held for investment were $397.2 million at September 30, 2019, as compared to $407.3 million at December 31, 2018 and $384.2 million at September 30, 2018. 

Total deposits were $586.8 million, an increase of $29.0 million, or 5.2%, from $557.8 million at December 31, 2018, and an increase of $25.9 million, or 4.6%, compared to $560.9 million a year ago. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, decreased modestly compared to nine months earlier and decreased 2.1% compared to a year earlier to $495.0 million at September 30, 2019. Core deposits now comprise 84.4% of total deposits. 

Nonperforming assets were $2.4 million at September 30, 2019, a 50.0% increase from $1.6 million at December 31, 2018. Nonperforming assets represented 0.35% of total assets at September 30, 2019. 

Shareholder equity increased to $72.8 million at September 30, 2019, from $64.4 million at December 31, 2018, and compared to $61.0 million a year ago. At September 30, 2019, tangible book value per share improved to$8.14 per share compared to $7.10 per share at December 31, 2018 and $6.67 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 September 30, 2019. The Bank reported the following capital ratios at September 30, 2019:

Common Equity Tier 1 Capital Ratio 14.44%
   
Tier 1 Leverage Ratio 10.66%
   
Tier 1 Capital Ratio 14.44%
   
Total Capital Ratio 15.37%

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 9/30/2019     6/30/2019     9/30/2018     9/30/2019     9/30/2018
Statements of Operations                          
  Interest income                            
  Loans, including fees $  5,806   5,905    5,548   $  17,638   $  15,639
  Securities   884     861     904     2,555     2,697
  Fed funds and other   271     236     156     673     346
  Total interest income   6,961     7,002     6,608     20,866     18,682
                               
  Interest expense                            
  Deposits   730     789     259     2,063     695
  Borrowings   121     142     159     526     406
  Total interest expense   851     931     418     2,589     1,101
                               
  Net interest income   6,110     6,071     6,190     18,277     17,581
                               
  Provision for loan losses   -     50     160     350     353
  Net interest income after loan loss provision   6,110     6,021     6,030     17,927     17,228
                               
  Noninterest income                            
    Service charges on deposits   181     168     170     527     457
    Mortgage loan fees   335     329     287     897     831
    Gain on sale of loans   691     483     366     1,564     1,384
  Other income   371     398     529     1,251     1,451
  Total noninterest income   1,578     1,378     1,352     4,239     4,123
                               
  Noninterest expense                            
  Salaries and employee benefits   2,910     2,807     2,644     8,635     8,015
  Net occupancy expense   207     187     234     586     588
  Equipment expense   59     66     82     196     257
  Data processing   485     514     470     1,532     1,346
  Director fees & expenses   54     85     64     215     222
  Insurance   35     36     25     106     100
  Marketing & promotion   203     101     234     464     488
  Professional fees   247     98     177     503     599
  Office expense   32     69     70     105     107
  Regulatory assessments   9     56     54     121     175
  OREO and repossessed assets   12     42     29     136     43
  Other expenses   491     463     390     1,434     1,289
    Total noninterest expense   4,744     4,524     4,473     14,033     13,229
                               
                               
  Income (loss) before provision (benefit) for income taxes   2,944     2,875     2,909     8,133     8,122
                               
  Provision (benefit) for income taxes   554     623     597     1,666     1,824
  Net Income (Loss) 2,390   $  2,252    2,312    $  6,467    6,298
                               
                               
Per Share Data                          
  Basic EPS $  0.30   $  0.28    0.29    $  0.80    0.78
  Diluted EPS $  0.29   $  0.28    0.29    $  0.80    0.78
                               
  Average shares outstanding                            
  Basic   8,093,299     8,090,000     8,065,709     8,086,419     8,059,318
  Effect of dilutive shares   21,524     25,299     27,274     26,362     31,879
  Diluted   8,114,823     8,115,299     8,092,983     8,112,781     8,091,197


State Bank Corp.          
Balance Sheets          
           
       
Dollars in thousands - Unaudited 9/30/2019 6/30/2019 12/31/2018 9/30/2018  
Consolidated Balance Sheets          
             
Assets          
  Cash and cash equivalents $ 4,042   $ 5,040   $ 4,061   $ 4,185    
  Interest bearing deposits   6,793     5,575     4,106     5,027    
  Overnight Funds   46,030     39,485     17,960     21,320    
  Available for sale securities   168,470     176,068     179,589     186,292    
  Total cash and securities   225,335     226,168     205,716     216,824    
             
  Loans held for sale, before reserves   15,497     7,294     2,375     1,256    
  Gross loans held for investment   397,187     406,342     407,264     384,233    
  Loan loss reserve   (4,546 )   (4,546 )   (3,824 )   (3,736 )  
  Total net loans   408,138     409,090     405,815     381,753    
             
  Premises and equipment, net   14,912     15,093     14,315     14,284    
  Other real estate owned   307     -     266     266    
  Federal Home Loan Bank and other stock   6,051     6,117     6,249     6,512    
  Company owned life insurance   11,489     11,424     11,802     11,737    
  Other assets   10,680     10,678     11,174     11,587    
             
  Total Assets $ 676,912   $ 678,570   $ 655,337   $ 642,963    
             
             
Liabilities          
  Non interest bearing demand $ 136,287   $ 141,698   $ 135,485   $ 130,901    
  Money market, NOW and savings   358,733     361,810     362,202     374,492    
  Time deposits <$250K   67,717     66,263     51,845     48,014    
  Time deposits >$250K   24,079     22,218     8,299     7,545    
  Total Deposits   586,816     591,989     557,831     560,952    
             
  Securities sold under repurchase agreements   7,136     6,260     5,001     4,404    
  Federal Home Loan Bank advances       18,000     6,000    
  Subordinated debt, net of debt issuance costs   6,690     6,806     7,045     7,151    
  Total Debt   13,826     13,066     30,046     17,555    
             
  Other Liabilities   3,519     3,001     3,086     3,481    
  Total Liabilities   604,161     608,056     590,963     581,988    
             
             
Shareholders' Equity          
    Common stock   39,850     39,813     39,597     39,556    
    Accumulated retained earnings   32,478     30,695     27,831     26,032    
    Accumulated other comprehensive income   423     6     (3,054 )   (4,613 )  
  Total shareholders equity   72,751     70,514     64,374     60,975    
             
  Total liabilities and shareholders' equity $ 676,912   $ 678,570   $ 655,337   $ 642,963    


State Bank Corp.          
Five-Quarter Performance Summary          
           
    For the Quarter Ended
Dollars in thousands - Unaudited 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018
Performance Highlights          
             
Earnings:          
  Total revenue (Net int. income + nonint. income) $ 7,688   $ 7,449   $ 7,379   $ 7,622   $ 7,542  
  Net interest income $ 6,110   $ 6,071   $ 6,095   $ 6,060   $ 6,190  
  Provision for loan losses $ -   $ 50   $ 300   $ 137   $ 160  
  Noninterest income $ 1,578   $ 1,378   $ 1,284   $ 1,562   $ 1,352  
  Noninterest expense $ 4,744   $ 4,524   $ 4,766   $ 4,744   $ 4,473  
  Net income (loss) $ 2,390   $ 2,252   $ 1,824   $ 2,283   $ 2,312  
             
Per Share Data:          
  Net income (loss), basic $ 0.30   $ 0.28   $ 0.23   $ 0.28   $ 0.29  
  Net income (loss), diluted $ 0.29   $ 0.28   $ 0.22   $ 0.28   $ 0.29  
  Cash dividends declared $ 0.075   $ 0.075   $ 0.075   $ 0.06   $ 0.06  
  Book value $ 8.99   $ 8.71   $ 8.28   $ 7.98   $ 7.56  
  Tangible book value $ 8.14   $ 7.86   $ 7.42   $ 7.10   $ 6.67  
             
Performance Ratios:          
  Return on average assets   1.41 %   1.32 %   1.10 %   1.41 %   1.44 %
  Return on average equity   13.23 %   13.07 %   11.06 %   14.53 %   15.19 %
  Net interest margin, taxable equivalent   3.78 %   3.75 %   3.85 %   3.90 %   4.01 %
  Average cost of funds   0.56 %   0.61 %   0.54 %   0.38 %   0.29 %
  Average yield on loans   5.63 %   5.68 %   5.70 %   5.61 %   5.87 %
  Efficiency ratio   61.71 %   60.73 %   64.59 %   62.24 %   59.31 %
  Non-interest income to total revenue   20.53 %   18.50 %   17.40 %   20.49 %   17.93 %
             
Capital & Liquidity:          
  Total equity to total assets (EOP)   10.75 %   10.39 %   9.94 %   9.82 %   9.48 %
  Tangible equity to tangible assets   9.84 %   9.47 %   9.00 %   8.84 %   8.47 %
  Total loans to total deposits   70.33 %   69.87 %   71.25 %   73.43 %   68.72 %
  Mohave State Bank          
  Common equity tier 1 ratio   14.44 %   13.91 %   13.49 %   13.18 %   13.49 %
  Tier 1 leverage ratio   10.66 %   10.40 %   10.39 %   10.42 %   10.23 %
  Tier 1 risk based capital   14.44 %   13.91 %   13.49 %   13.18 %   13.49 %
  Total risk based capital   15.37 %   14.83 %   14.32 %   13.94 %   14.26 %
             
Asset Quality:          
  Gross charge-offs $ 2   $ 15   $ 88   $ -   $ 77  
  Net charge-offs (NCOs) $ 1   $ (356 ) $ (15 ) $ (2 ) $ 71  
  NCO to average loans, annualized   0.00 %   -0.34 %   -0.01 %   -0.00 %   0.08 %
  Non-accrual loans/securities $ 2,051   $ 2,415   $ 1,302   $ 1,391   $ 657  
  Other real estate owned $ 307   $ -   $ 174   $ 266   $ 266  
  Repossessed assets $ -   $ -   $ -   $ -   $ -  
  Non-performing assets (NPAs) $ 2,358   $ 2,415   $ 1,476   $ 1,657   $ 923  
  NPAs to total assets   0.35 %   0.36 %   0.22 %   0.25 %   0.14 %
  Loans >90 days past due $ -   $ -   $ -   $ -   $ -  
  NPAs + 90 days past due $ 2,358   $ 2,415   $ 1,476   $ 1,657   $ 923  
  NPAs + loans 90 days past due to total assets   0.35 %   0.36 %   0.22 %   0.25 %   0.14 %
  Allowance for loan losses to total loans   1.10 %   1.10 %   0.99 %   0.93 %   0.97 %
  Allowance for loan losses to NPAs   192.79 %   188.24 %   280.42 %   230.78 %   404.77 %
             
Period End Balances:          
  Assets $ 676,912   $ 678,570   $ 673,336   $ 655,337   $ 642,963  
  Total Loans (before reserves) $ 412,684   $ 413,636   $ 417,333   $ 409,639   $ 385,489  
  Deposits $ 586,816   $ 591,989   $ 585,732   $ 557,831   $ 560,952  
  Stockholders' equity $ 72,751   $ 70,514   $ 66,919   $ 64,374   $ 60,975  
  Common stock market capitalization $ 105,213   $ 97,120   $ 104,646   $ 99,208   $ 117,759  
  Full-time equivalent employees   120     120     122     124     121  
  Shares outstanding   8,093,299     8,093,299     8,080,791     8,065,709     8,065,709  
             
Average Balances:          
  Assets $ 680,038   $ 680,037   $ 664,121   $ 649,673   $ 644,250  
  Earning assets $ 649,501   $ 650,744   $ 636,755   $ 623,584   $ 619,541  
  Total Loans (before reserves) $ 412,295   $ 415,774   $ 415,998   $ 400,116   $ 377,752  
  Deposits $ 591,694   $ 596,079   $ 562,399   $ 560,343   $ 562,683  
  Other borrowings $ 13,422   $ 12,457   $ 33,995   $ 17,649   $ 17,596  
  Stockholders' equity $ 72,272   $ 68,902   $ 65,986   $ 62,844   $ 60,901  
  Shares outstanding, basic - wtd   8,093,299     8,090,000     8,075,764     8,065,709     8,065,709  
  Shares outstanding, diluted - wtd   8,114,823     8,115,299     8,108,423     8,092,290     8,092,983  
                                 


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

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