LAKE HAVASU CITY, Ariz., Feb. 2, 2009 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ), the holding company for Mohave State Bank ("Bank"), announced net income for 2008 of $2.34 million, or $0.61 per diluted share, as compared to $5.52 million, or $1.42 per diluted share, in 2007. The decrease is primarily attributable to an $826,000 drop in net interest income and a $3.95 million increase in the provision for loan losses. During the fourth quarter of 2008, the Company reported a net operating loss of ($594,000), or ($0.15) per diluted share, as compared to net income of $1.29 million, or $0.33 per diluted share, in the same period of 2007. The quarterly loss was primarily attributable to an increase in the Company's provision for loan losses to $3.0 million in the fourth quarter of 2008 in response to rising nonperforming assets and continued softening of economic and credit environment conditions.
Fourth quarter 2008 highlights include:
* Continued success of the Certificate of Deposit Account Registry
Service ("CDARS") product - CDARS accounted for $33.5 million, or
12.7 percent of total deposits, at December 31, 2008. The CDARS
product has been helpful in retaining large key relationships given
recent depositor concern over FDIC insurance maximization.
* Moderation of loan growth - Total loans decreased $9.7 million, or
3.4 percent, during the fourth quarter. The Company took steps to
curb loan growth in order to bolster sources of balance sheet
liquidity.
* Growth in deposits - Deposits increased $10.8 million, or 4.3
percent, during the fourth quarter to $263.3 million. The increase
was driven largely by a retail time deposit acquisition strategy.
* Reduction in other borrowings - With the creation of balance sheet
liquidity, the Company was able to retire $5.4 million of Federal
Home Loan Bank advances.
President and CEO Ralph Tapscott stated, "During the fourth quarter, we took very important and proactive steps to address the challenging credit environment in front of us. We remain vigilant and continue to monitor market conditions relative to the impact on our loan portfolio. We were pleased to see deposit growth in the fourth quarter and a reduction in FHLB borrowings. In recent quarters, banking system liquidity has become more challenging within our primary markets."
The returns on average assets and equity were 0.65 percent and 6.43 percent, respectively, in 2008 as compared to 1.55 percent and 16.34 percent, respectively, in 2007. For the fourth quarter, returns on average assets and equity were (0.65) percent and (6.47) percent, respectively, in 2008 and 1.47 percent and 14.74 percent, respectively, in 2007.
Results from Operations
Total revenue, consisting of net interest income and noninterest income, was $17.0 million in 2008, down $725,000, or 4.1 percent, from $17.7 million in 2007. Net interest income decreased $837,000, or 5.3 percent, to $15.1 million as the net interest margin contracted to 4.34 percent in the fourth quarter of 2008 from 4.88 percent in the same period of 2007. In addition to lower market interest rates, the Company's net interest income was impacted by $1.1 million as non-accrual loan activity increased in 2008.
Noninterest income in 2008 was $1.9 million as compared to $1.8 million in 2007. The increase was primarily a result of higher service charges on deposit accounts. For 2008, mortgage banking revenue decreased by $219,000, 23.3 percent, as the volume of loans originated for sale decreased to $28.8 million in 2008 from $38.4 million in 2007. For the fourth quarter, noninterest income was down $49,000, or 10.0 percent, on falling mortgage banking revenue. The volume of mortgage loans originated for sale decreased to $5.5 million in the fourth quarter of 2008 from $9.6 million in the same period of 2007.
The Company provided $4.5 million to its loan loss reserve in 2008 as compared to $520,000 in 2007. This increase primarily reflects growth in nonperforming assets and the current challenges in the credit market. During the fourth quarter, the Company provided $3.0 million to the loan loss reserve, compared to $65,000 during the same period in 2007. Real estate conditions in the Company's primary markets continue to show weakness, which is having an impact on loan portfolio performance and credit quality.
Noninterest expense in 2008 increased $491,000, or 5.5 percent, to $9.3 million from $8.8 million in 2007. The primary reasons for this increase were the addition of a second Kingman office at the end of 2007 and costs attributable to loan collection. During the fourth quarter, noninterest expense was $2.4 million virtually unchanged from the same period of 2007. "With demanding economic times, expense management continues to be a key discipline and focus for our organization," commented Mr. Tapscott.
Balance Sheet
Total assets were $360.8 million at December 31, 2008, up $8.5 million, or 2.4 percent, from the $352.2 million reported at December 31, 2007. Total loans increased $21.8 million or 8.2 percent year over year, to $287.8 million. The largest growth category was in residential real estate loans, which increased $12.5 million, or 35.9 percent, to $47.5 million. Commercial real estate loans totaled $127.4 million, or 44.2 percent, of the overall loan portfolio at December 31, 2008. "During the fourth quarter, loans outstanding decreased by $9.0 million as the Company strategically slowed its production of new loans given market weakness. We expect to see minimal loan growth over the next twelve months," stated Mr. Tapscott.
Nonperforming assets at December 31, 2008 were $19.9 million, or 5.5 percent of total assets as compared to $585,000, or 0.16 percent of total assets, at December 31, 2007. The Company's primary markets continue to be hard hit by challenges in construction and commercial real estate. Of the nonperforming assets at December 31, 2008, 77 percent is comprised of five large credits, all of which are secured by real estate. Net charge-offs in 2008 were $710,000, or 27 basis points of beginning loans. Fourth quarter net charge-offs were $360,000, compared to $46,000 in the same period of 2007. The allowance for loan and lease losses totaled $7.4 million, or 2.56 percent of total loans, at December 31, 2008 as compared to $3.6 million, or 1.36 percent of total loans, at December 31, 2007. Given weak economic performance in the local markets, the Company felt it was necessary and prudent to increase the level of loss reserves.
Deposits at December 31, 2008 were $263.3 million, an increase of $2.1 million, or 0.8 percent from the $261.3 million at December 31, 2007. During the fourth quarter of 2008, total deposits increased by $10.8 million, or 4.3 percent. The Company deployed a retail time deposit strategy to increase deposit funding resources. "We are pleased to see deposit balances increase again. According to the FDIC, Mohave County experienced a 5 percent reduction in market deposits from June 2007 to June 2008. This has intensified the need to attract new deposit sources and open new deposit acquisition channels. The CDARS program has definitely played a large role in deposit retention," stated Mr. Tapscott.
Shareholder equity increased 4.5 percent to $36.2 million at December 31, 2008 from $34.7 million at December 31, 2007. Mohave State Bank exceeds regulatory standards to qualify as a "well-capitalized" institution at December 31, 2008 with a risk-based capital ratio of 12.42 percent.
Mr. Tapscott concluded, "While a difficult environment to manage through, the Company has been able to earn its way through a substantial increase in loan loss provisioning. Our capital remains strong, which provides us with a great degree of flexibility in resolving problems as they arise in our balance sheet. As the government stimulus package takes hold, we are well positioned to benefit from an upswing in regional economic activity. We treasure our customer relationships and know that true value comes from attracting, retaining and growing the number of satisfied Mohave State Bank customers."
About the Company
State Bank Corp., headquartered in Lake Havasu City, Arizona, is the parent company of Mohave State Bank, the largest locally-owned bank in Mohave County. Mohave State Bank 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. The Bank has six full-service branches: two in Lake Havasu City, two in Kingman, one in Bullhead City, and one in Yuma, Arizona. The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.mohavestbank.com.
Forward-looking Statements
This press release may include forward-looking statements about State Bank Corp. and its subsidiary Mohave State Bank (the "Company") for which the Company 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.
COMPARATIVE FINANCIAL STATEMENT FOLLOW
State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
-----------------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2008 12/31/2007
---------------------------------------------------------------------
Performance
Highlights
Earnings:
Total
revenue
(Net int
income +
nonint.
income) $ 4,070 $ 4,411 $ 4,447 $ 4,108 $ 4,384
Net
interest
income $ 3,630 $ 3,933 $ 3,898 $ 3,638 $ 3,895
Provision
for loan
losses $ 3,000 $ 1,145 $ 195 $ 130 $ 65
Non-
interest
income $ 440 $ 478 $ 549 $ 470 $ 489
Non-
interest
expense $ 2,352 $ 2,309 $ 2,364 $ 2,314 $ 2,324
Net
income $ (594) $ 621 $ 1,245 $ 1,064 $ 1,285
Per Share
Data:
Net
income,
basic $ (0.15) $ 0.16 $ 0.32 $ 0.28 $ 0.33
Net
income
before
extra-
ordinary
items,
diluted $ (0.15) $ 0.16 $ 0.32 $ 0.28 $ 0.33
Net
income,
diluted $ (0.15) $ 0.16 $ 0.32 $ 0.28 $ 0.33
Cash
dividends
de-
clared $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.16
Book
value $ 9.55 $ 9.54 $ 9.40 $ 9.33 $ 9.09
Tangible
book
value $ 9.55 $ 9.54 $ 9.40 $ 9.33 $ 9.09
Performance
Ratios:
Return on
average
assets -0.65% 0.68% 1.40% 1.21% 1.47%
Return on
average
equity -6.47% 6.77% 13.78% 11.91% 14.74%
Net
interest
margin,
taxable
equivalent 4.34% 4.60% 4.78% 4.56% 4.88%
Average
cost
of funds 1.98% 2.12% 2.18% 2.71% 2.91%
Average
yield
on loans 6.44% 6.99% 7.55% 7.70% 8.48%
Efficiency
ratio 57.79% 52.35% 53.16% 56.33% 53.31%
Non-
interest
income to
total
revenue 10.81% 10.84% 12.35% 11.44% 11.15%
Capital &
Liquidity:
Total
equity
to total
assets
(EOP) 10.04% 9.85% 10.11% 10.06% 9.84%
Tangible
equity to
tangible
assets 10.04% 9.85% 10.11% 10.06% 9.84%
Total
loans
to total
deposits 109.29% 117.52% 98.94% 97.74% 101.55%
Mohave
State
Bank
--------
Regulatory
Capital 9.63% 9.88% 9.92% 9.85% 9.73%
Tier 1
Capital 11.16% 10.95% 11.57% 11.51% 11.44%
Risk Based
Capital 12.42% 12.20% 12.81% 12.74% 12.67%
Asset
Quality:
Gross
charge-
offs $ 360 $ 195 $ 108 $ 88 $ 55
Net
charge-
offs
(NCOs) $ 360 $ 190 $ 72 $ 88 $ 46
NCO to
average
loans,
annual-
ized 0.49% 0.26% 0.11% 0.13% 0.07%
Non-
accrual
loans $ 17,151 $ 15,333 $ 4,087 $ 4,475 $ 585
Other
real
estate
owned $ 2,765 $ -- $ 205 $ -- $ --
Repossessed
assets $ -- $ -- $ -- $ -- $ --
Non-
per-
forming
assets
(NPAs) $ 19,916 $ 15,333 $ 4,292 $ 4,475 $ 585
NPAs to
total
assets 5.52% 4.16% 1.20% 1.24% 0.16%
Loans
greater
than 90
days
past
due $ -- $ -- $ -- $ -- $ --
NPAs + 90
days
past
due $ 19,916 $ 15,333 $ 4,292 $ 4,475 $ 585
NPAs +
loans
90 days
past
due to
total
assets 5.52% 4.16% 1.20% 1.24% 0.16%
Allowance
for loan
losses
to total
loans 2.56% 1.60% 1.35% 1.36% 1.36%
Allowance
for loan
losses
to NPAs 37.03% 30.87% 88.05% 81.68% 617.61%
Period End
Balances:
Assets $ 360,814 $ 368,446 $ 359,081 $ 359,886 $ 352,236
Total
Loans
(before
re-
serves) $ 287,784 $ 296,778 $ 279,155 $ 268,143 $ 265,298
Deposits $ 263,312 $ 252,528 $ 282,138 $ 274,349 $ 261,256
Stock-
holders'
equity $ 36,228 $ 36,304 $ 36,318 $ 36,202 $ 34,658
Common
stock
market
capital-
ization $ 46,150 $ 63,456 $ 71,109 $ 69,164 $ 94,758
Full-time
equivalent
employees 93 90 90 91 92
Shares
out-
standing 3,845,808 3,845,808 3,843,754 3,831,819 3,836,351
Average
Balances:
Assets $ 367,079 $ 363,509 $ 355,081 $ 351,318 $ 349,664
Earning
assets $ 342,258 $ 349,526 $ 336,165 $ 329,444 $ 328,981
Total
Loans
(before
re-
serves) $ 292,292 $ 291,363 $ 264,493 $ 264,493 $ 260,492
Deposits $ 255,843 $ 257,766 $ 270,768 $ 266,946 $ 277,858
Other
borrow-
ings $ 73,211 $ 67,296 $ 46,640 $ 46,981 $ 41,270
Stock-
holders'
equity $ 36,718 $ 36,705 $ 36,139 $ 35,737 $ 34,873
Shares
out-
standing,
basic -
wtd 3,845,808 3,844,178 3,842,544 3,831,528 3,863,930
Shares
out-
standing,
diluted
- wtd 3,859,688 3,855,583 3,856,640 3,845,028 3,877,530
State Bank Corp.
Balance Sheets
For the Quarter Ended
Dollars in -------------------------------- Qrt/Qrt Yr/Yr
thousands 12/31/2008 9/30/2008 12/31/2007 Change Change
-------------------------------------------------- -----------------
Consolidated
Balance Sheets
Assets
Cash and cash
equivalents $ 4,265 $ 5,336 $ 5,458 -20.1% -21.9%
Held for
maturity
securities 1,909 1,919 10,033 -0.5% -81.0%
Available for
sale securities 47,507 48,746 54,275 -2.5% -12.5%
--------- --------- ---------
Total cash and
securities 53,681 56,001 69,766 -4.1% -23.1%
Loans held for
sale, before
reserves 1,329 259 295 -4.1% 350.5%
Gross loans held
for investment 285,949 295,916 265,003 -3.4% 7.9%
Loan loss reserve (7,374) (4,734) (3,613) 55.8% 104.1%
--------- --------- ---------
Total net loans 279,904 291,441 261,685 -4.0% 7.0%
Premises and
equipment, net 11,348 10,161 10,125 11.7% 12.1%
Deferred taxes 2,808 1,301 1,585 115.8% 77.2%
Federal Home Loan
Bank and other
stock 3,158 2,524 1,677 25.1% 88.3%
Company owned
life insurance 4,961 4,915 4,775 0.9% 3.9%
Other real estate
owned 2,765 -- --
Other assets 2,188 2,103 2,623 4.0% -16.6%
--------- --------- ---------
Total Assets $ 360,813 $ 368,446 $ 352,236 -2.1% 2.4%
========= ========= =========
Liabilities
Non interest
bearing demand $ 41,553 $ 49,429 $ 48,966 -15.9% -15.1%
Money market, NOW
and savings 107,626 119,717 131,830 -10.1% -18.4%
Time deposits
less than $100K 76,306 42,923 50,055 77.8% 52.4%
Time deposits
greater than
$100K 37,827 40,459 30,405 -6.5% 24.4%
--------- --------- ---------
Total Deposits 263,312 252,528 261,256 4.3% 0.8%
--------- --------- ---------
Securities sold
under repurchase
agreements 15,678 28,392 23,027 -44.8% -31.9%
Federal Home Loan
Bank advances 44,100 49,466 31,185 -10.8% 41.4%
--------- --------- ---------
Total Debt 59,778 77,858 54,212 -23.2% 10.3%
Other Liabilities 1,495 1,756 2,110 -14.9% -29.1%
--------- --------- ---------
Total
Liabilities 324,585 332,142 317,578 -2.3% 2.2%
Shareholders'
Equity
Common stock $ 21,527 $ 21,616 $ 21,206 -0.4% 1.5%
Accumulated
retained
earnings 14,116 14,493 13,477 -2.6% 4.7%
Accumulated other
comprehensive
income (loss) 585 195 (25) 200.0% -2440.0%
--------- --------- ---------
Total
shareholders
equity $ 36,228 $ 36,304 $ 34,658 -0.2% 4.5%
Total
liabilities
and
shareholders'
equity $ 360,813 $ 368,446 $ 352,236 -2.1% 2.4%
========= ========= =========
State Bank Corp.
Income Statements
For the Quarter Ended Year Ended
---------------------- ----------------------
Dollars in thousands 12/31/2008 12/31/2007 12/31/2008 12/31/2007
-------------------------------------------- ----------------------
Condensed Statements
of Income
Interest income
Loans, including
fees $ 4,703 $ 5,581 $ 19,881 $ 22,085
Securities 535 679 2,303 2,904
Fed funds and other 23 38 131 552
---------- ---------- ---------- ----------
Total interest
income 5,261 6,298 22,315 25,541
---------- ---------- ---------- ----------
Interest expense
Deposits 1,290 1,992 5,869 7,929
Borrowings 341 411 1,347 1,676
---------- ---------- ---------- ----------
Total interest
expense 1,631 2,403 7,216 9,605
---------- ---------- ---------- ----------
Net interest
income 3,630 3,895 15,099 15,936
---------- ---------- ---------- ----------
Provision for
loan losses 3,000 65 4,470 520
---------- ---------- ---------- ----------
Net interest
income after
loan loss
provision 630 3,830 10,629 15,416
---------- ---------- ---------- ----------
Noninterest income
Service charges on
deposits 201 182 731 607
Mortgage loan fees (3) 40 134 162
Gain/losses on sale
of loans 150 180 676 740
Other income 92 87 396 316
---------- ---------- ---------- ----------
Total noninterest
income 440 489 1,937 1,825
---------- ---------- ---------- ----------
Noninterest expense
Salaries and
employee benefits 1,176 1,322 5,018 5,349
Net occupancy
expense 94 83 435 292
Equipment expense 66 71 284 231
Data processing 309 345 1,340 1,250
Director fees &
expenses 100 116 441 436
Insurance 20 16 62 51
Marketing &
promotion 175 137 557 466
Professional fees 146 57 284 178
Office expense 60 75 266 256
Regulatory
assessments 60 31 194 51
Other expenses 146 71 457 287
---------- ---------- ---------- ----------
Total noninterest
expense 2,352 2,324 9,338 8,847
---------- ---------- ---------- ----------
Income before
income taxes (1,282) 1,995 3,228 8,394
---------- ---------- ---------- ----------
Income taxes (688) 710 892 2,873
---------- ---------- ---------- ----------
Net Income $ (594) $ 1,285 $ 2,336 $ 5,521
========== ========== ========== ==========
Per Share Data
Basic EPS $ (0.15) $ 0.33 $ 0.61 $ 1.43
Diluted EPS $ (0.15) $ 0.33 $ 0.61 $ 1.42
Average shares
outstanding -
CHECK
Basic 3,845,808 3,863,930 3,841,167 3,872,562
Effect of dilutive
shares 13,880 13,600 14,090 13,509
---------- ---------- ---------- ----------
Diluted 3,859,688 3,877,530 3,855,257 3,886,071
---------- ---------- ---------- ----------
State Bank Corp.
Deposit and Loan Mix
For the Quarter Ended
------------------------------------------------------
Dollars in
thousands 12/31/2008 9/30/2008 6/30/2008 3/31/2007 12/31/2007
---------------------------------------------------------------------
Deposit and
Loan Mix
Deposit
Breakout
Non interest
bearing
demand $ 41,553 $ 49,429 $ 72,833 $ 53,670 $ 48,966
Interest
bearing NOW 3,982 4,013 4,292 4,133 4,112
Savings 3,894 3,989 4,195 3,738 3,802
Money market 99,751 111,715 121,258 130,439 123,916
Time deposits
less than
$100K 76,305 42,923 32,819 33,330 30,405
Time deposits
greater than
$100K 37,827 40,459 46,741 49,039 50,055
-------- -------- -------- -------- --------
Total
deposits $263,312 $252,528 $282,138 $274,349 $261,256
Loan Breakout
Commercial and
industrial $ 33,059 $ 32,578 $ 33,716 $ 33,100 $ 33,912
Real estate -
construction 78,409 80,755 79,881 77,212 74,917
Real estate -
residential 47,508 47,590 43,076 36,891 34,958
Real estate -
commercial 127,415 134,202 121,339 119,872 120,371
Consumer 1,393 1,653 1,762 1,745 1,860
-------- -------- -------- -------- --------
Total loans $287,784 $296,778 $279,774 $268,820 $266,018
Less unearned
fees and
interest 506 603 619 677 720
-------- -------- -------- -------- --------
Total loans
net of
unearned
fees and
interest $287,278 $296,175 $279,155 $268,143 $265,298
Less allowance
for loan
losses 7,374 4,734 3,779 3,655 3,613
-------- -------- -------- -------- --------
Loans, net $279,904 $291,441 $275,376 $264,488 $261,685
Nonperforming
Loans/OREO
Commercial and
industrial $ 52 $ 68 $ 8 $ -- $ --
Real estate -
construction 11,890 8,219 4,284 4,475 585
Real estate -
residential 718 694 -- -- --
Real estate -
commercial 7,256 6,317 -- -- --
Consumer -- 35 -- -- --
-------- -------- -------- -------- --------
Total
non-
performing
loans $ 19,916 $ 15,333 $ 4,292 $ 4,475 $ 585