LAKE HAVASU CITY, Ariz., Nov. 5, 2007 (PRIME NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ), the holding company for Mohave State Bank, announced third quarter 2007 net income of $1.463 million, a 6.9% increase from the $1.369 million reported for the third quarter of 2006. Diluted earnings per share for the third quarter of 2007 were $0.37 compared to $0.35 for the third quarter of 2006. Year-to-date, net income was $4.221 million, up 3.15% from the $4.092 million for the 2006 nine month period; diluted earnings per share were $1.08 compared with $1.05 for the same period, an increase of 2.9% year-over-year. Loan growth continues to enhance the bank's profitability, growing $20.5 million, or 8.74% over the third quarter of 2006.
Highlights include:
* Year-over-year increase of $10.7 million in deposits from June
2006 to June 2007, resulting in deposit market share in Mohave
County increasing from 10.9% in 2006 to 11.27% in 2007,
placing the Mohave State Bank as the fourth largest bank in
our markets, trailing only the 3 large national banks.
* Increased volume of Small Business Administration (SBA)
loans, preparing for designation as an SBA Preferred Lender.
* Continuing the track record of high performance measures:
1.70% ROAA and 17.09% ROAE, based on the most recent
quarter's earnings.
* An efficiency ratio of 49.21%, based on the most recent
quarter.
* Board approved another repurchase of 50,000 shares, or 1.3%
of outstanding shares, which will continue to positively
impact the earnings per share.
* Continuing consistent quarterly cash dividends to maintain a
goal of returning 25% to 30% of earnings back to the
shareholders annually.
CEO and President Ralph Tapscott stated, "This quarter's performance provides a good example of the strength of our organization to maintain high performance in these challenging times. Our ability to be in tune with the needs of our markets has enabled us to not have to rely on high rate funding sources that have compressed margins throughout the industry."
"We recognize that this interest-rate environment, with its inverted yield curve and increased competition for core deposits, will be with us for a while," commented Mr. Tapscott. "While we are quick to identify and closely monitor asset quality in our portfolio, our lack of charge-offs in 2007 is a testament to consistent safe lending practices over the years resulting in our impressive asset quality. We have not chased lower rated credits for the sake of loan growth. In fact, we have no exposure to the mortgage sub-prime market that is putting tremendous pressure on our industry."
Income Statement
Total interest income for the third quarter of 2007 was $6.4 million compared to $5.8 million for the third quarter of 2006, an increase of 10.3%. Interest expense for the third quarter of 2007 was $2.4 million compared to $1.9 million for the same period in 2006. Net interest income was $4.0 million for the third quarter of 2007, up from $3.9 million for the third quarter of 2006, an increase of 2.6%. Growth in net interest income reflects a growth in earning assets of 7.5% and a decline in net interest margin. Compared to the third quarter of 2006, the net interest margin decreased from 4.9% to 4.7% for the third quarter of 2007, as deposit growth slowed relative to loan growth. "We have significant availability of alternative funding sources, which gives us the capability to continue to meet our loan demand," states Mr. Tapscott.
Non-interest income for the third quarter of 2007 was $410 thousand, a decline of $17 thousand, or 4.0%, from the year-ago quarter. During the third quarter in 2007, fees from mortgage loans were $180 thousand, a decrease of $49 thousand from $229 thousand for the same period in 2006. This past quarter we had $7.9 million in fundings compared to $11.2 million for the third quarter in 2006. For 2007, we funded $28.8 million in mortgage loans compared to $31.4 million for 2006 YTD. "Our mortgage fundings are affected by the overall mortgage and real estate markets. While numerous other mortgage shops have closed down or scaled their operations way back, Mohave State Bank continues to have the same level of service our customers are accustomed to, without exposure to the sub-prime market plaguing the market," emphasizes Mr. Tapscott. "The bank continues to expand its product lines, now offering FHA, VA and reverse mortgage loans."
The provision for loan losses was $90 thousand for the current quarter, compared to $120 thousand reported for the year-ago quarter. These provisions result in the bank having $3.6 million reserved for loan and lease losses, or over 1.4% of total loans and 14.3 times non-performing loans. During 2007, the bank charged off $41 thousand in loans and recovered $49.7 thousand, for a net recovery of $8.7 thousand. This compares to $172 thousand charge-offs for the same period in 2006. The bank's only non-performing loan is for $252 thousand, or 0.10% of total loans and is adequately collateralized by real estate. Of the $4.1 million total past due loans, $127 thousand are 0-30 days past due and $3.8 million are 30-90 days past due. 97% of the total is attributed a single loan that is well secured. The past due loans are at approximately 35% loan-to-value and actual losses are not expected.
Third quarter non-interest expense was $2.1 million for both 2007 and 2006. These expenses were maintained, even as the bank performed several upgrades to its information technology and incurred expenses for developing the Yuma location into a full depository and building the second Kingman branch.
Balance Sheet
Total assets were $346.6 million at September 30, 2007, up $15.0 million, or a 4.5% increase from the $331.6 million reported at September 30, 2006. Loans increased $20.5 million to $255.1 million, or 8.7% year-over-year. Throughout 2007, loans increased $4.2 million for the third quarter, $2.4 million the second quarter, and $7.3 million for the first quarter.
87% of our loans are collateralized by real property. Commercial real estate lending was strong, ending up the third quarter of 2007 at $116.6 million, or 46% of total loans, a $25.4 million increase from the third quarter of 2006 at $91.2 million. The rest of the loan portfolio is well diversified, with loans in construction projects -- 15%, residential real estate -- 12%, commercial and industrial -- 11%, land development -- 10% and other loans -- 6%.
Deposits at September 30, 2007 were $265.8 million, an increase of $10.7 million, or 4.2%, from $255.1 million at September 30, 2006. Core deposits, excluding time deposits greater than $100,000, were $218 million at both September 30, 2007 and 2006; they accounted for over 82% of total deposits in 2007. Additionally, the bank has over $30 million in repurchase agreements that have been a consistent funding source during the year.
For the twelve month period ended June 30, 2007, Mohave County total deposits increased only $15.4 million, 0.64%, to $2.4 billion. However, Mohave State Bank's deposits grew 4.05%, which is a growth rate six times greater than our market. The bank's market share grew from 10.9% to 11.3%, moving up one spot in market share to number four.
Shareholder equity increased 13.8% from $30.5 million at September 30, 2006 to $34.6 million at September 30, 2007; meanwhile, during 2007, the bank repurchased 33,500 shares of bank stock for $836 thousand. The bank is in the process of repurchasing additional shares under its current stock buyback program. The bank's capital ratios remain strong at June 30, 2007, with Tier 1 leverage ratio at 9.71%, the Tier 1 risk-based capital ratio at 11.88%, and the total risk-based capital ratio at 13.13%, in excess of the minimum to qualify as "well-capitalized".
"Mohave State Bank demonstrated its ability to respond to market conditions. While the construction lending market slowed, the bank focused on commercial real estate lending and continued strong growth in its loan portfolio. Our pick up in deposit market share is a tribute to our employees' commitment to great service levels," concludes Mr. Tapscott.
About the Company
Mohave State Bank is a full service bank providing deposit and loan products, and convenient on-line banking to individuals, businesses and professionals. Mohave State Bank was established in October 1991, in Lake Havasu City. Since then the Bank has opened another branch in north Lake Havasu City and branches in the Mohave County communities of Kingman and Bullhead City. Recently, the bank received approval to establish a full service branch in Yuma, Arizona, and will be opening its sixth branch in Kingman, Arizona during the fourth quarter of 2007.
Forward-looking Statements
This press release may include forward-looking statements about the corporation for which the corporation claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the corporation'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, credit quality of borrowers, 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.