LAKE HAVASU CITY, Ariz., April 30, 2009 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ) ("Company"), the holding company for Mohave State Bank ("Bank"), announced a net operating loss of $1.04 million, or $0.27 per diluted share, for the first quarter of 2009 as compared to net income of $1.06 million, or $0.28 per diluted share, for the same period of 2008. The net operating loss in 2009 is primarily attributable to a $2.5 million increase in the provision for loan losses. As a precaution against further real estate loan weakness, the Company added $2.6 million to the loss reserve in the first quarter of 2009 as compared to $130,000 in the same period of 2008.
First quarter 2009 highlights include:
* Continued growth in deposits -- The Company experienced a $20.8 million, or 7.9 percent, increase in deposits during the first quarter of 2009. * Reduction in FHLB borrowing -- The Company retired $19.1 million, or 43.3 percent, of its advances from the Federal Home Loan Bank during the past quarter. * Improvement in primary liquidity measures -- With continued deposit growth and moderation in lending activity, the Company's loan to deposit ratio fell to 100.6 percent at March 31, 2009 from a peak of 117.5 percent at September 30, 2008. * Increase in noninterest income -- Noninterest income increased by $66,000, or 15 percent, in the first quarter 2009 to $506,000, or 13.8 percent of total revenue, as compared to $440,000, or 10.8 percent of revenue for the fourth quarter of 2008. Mortgage banking revenue, on a sequential quarter basis, also increased by $90,000, or 61 percent, as mortgage origination volume increased 75 percent to $9.8 million.
"We are very pleased with the continued growth in deposits," commented Brian M. Riley, Chief Executive Officer. "With volatility in the stock market, many customers are seeking the safety and stability of bank deposit returns. In the third quarter, we had nearly $60 million in Federal Home Loan Bank borrowing. With recent deposit growth, we have made significant headway in reducing our reliance on alternative funding sources. Also, the current low interest rate environment has been a benefit to our mortgage banking department as production volume is starting to increase."
The returns on average assets and equity were (1.13) percent and (11.53) percent, respectively, during the first quarter of 2009 as compared to 1.21 percent and 11.91 percent, respectively, during the first quarter of 2008.
Results from Operations
Total revenue, consisting of net interest income and noninterest income, was $3.68 million in the first quarter of 2009, down $430,000, or 10.5 percent, from $4.11 million in the first quarter of 2008. This decrease was primarily attributable to lower net interest income. During the first quarter of 2009, net interest income was $3.17 million, which represented a decrease of $470,000, or 12.9 percent, from $3.64 million reported in the same period of 2008. While average earning assets increased, net interest income was impacted by a 75 basis point contraction in the net interest margin to 3.81 percent in the first quarter of 2009 from 4.56 percent in the same period of 2008. The margin contraction resulted from lower overall market interest rates and a higher level of nonaccrual loans.
Noninterest income in the first quarter of 2009 was $506,000 as compared to $470,000 in the same period of 2008. Service charges on deposit accounts increased by $13,000, or 7.6 percent, on growth in new deposit accounts. Mortgage banking revenue increased by $36,000, or 17.9 percent, as mortgage origination volume was $9.7 million in the first quarter of 2009 as compared to $8.2 million in the same period of 2008.
The Company provided $2.6 million to its loan loss reserve during the first quarter of 2009 as compared to $130,000 in the same period of 2008. This increase primarily reflects growth in nonperforming assets and the current challenges within the local credit environment. Real estate conditions in the Company's primary markets continue to show weakness, particularly within the development and commercial real estate sectors. The Company had $2.8 million in net credit losses during the first quarter of 2009 as it charged down nonperforming loans to their impaired values.
"It is critical for us to have early identification of weakness within our credit portfolio and move swiftly to resolve the credit challenges that we identify," stated Brad D. Payne, President. "Given weakness in the local market, we believe it is necessary and prudent to maintain a higher level of loss reserves today than in the past. The old industry metric of a 1 percent loss reserve no longer applies. We will continue to build reserves as we deem appropriate."
Noninterest expense in first quarter of 2009 increased by $356,000, or 15.4 percent, to $2.67 million from $2.32 million in the first quarter of 2008. The Company incurred $324,000 in costs related to other real estate owned and repossessed assets in the first quarter of 2009. In addition, the Company increased its regulatory assessment expense to $126,000 in the first quarter of 2009 from $40,000 in the same period of 2008 in anticipation of a special assessment from the Federal Deposit Insurance Corporation later in 2009. Salary expense increased slightly in the first quarter of 2009 as the Company incurred severance costs related to an 8.6 percent reduction in staffing completed in March.
Balance Sheet
Total assets were $363.9 million at March 31, 2009, an increase of $3.1 million, or 0.8 percent, from $360.8 million at December 31, 2008. Total loans held for investment decreased $3.2 million, or 1.2 percent, to $282.7 million at March 31, 2009 from $285.9 million at December 31, 2008.
Nonperforming assets at March 31, 2009 totaled $28.1 million, or 7.7 percent of total assets, as compared to $19.9 million, or 5.5 percent of total assets, at December 31, 2008. The first quarter net charge-offs were $2.79 million in 2009 as compared to $88,000 in the same period of 2008. The allowance for loan and lease losses totaled $7.2 million, or 2.51 percent of total loans, at March 31, 2009 as compared to $3.7 million, or 1.36 percent of total loans, at March 31, 2008. The Company continues to carefully monitor its level of loss reserves given the continuing weak economic environment.
Deposits at March 31, 2009 were $284.1 million, an increase of $9.8 million, or 3.6 percent from $274.3 million at March 31, 2008. During the first quarter of 2009, total deposits increased by $20.8 million, or 7.9 percent.
Shareholder equity decreased 2.2 percent to $35.4 million at March 31, 2009 from $36.2 million at December 31, 2008. To preserve and fortify the Company's capital strength, the Board of Directors elected to indefinitely suspend a quarter cash dividend of $0.10 per share. This action is projected to preserve $1.5 million per year in capital. The Bank's total risk-based capital ratio at March 31, 2009 was 12.20 percent, significantly above the 10 percent minimum for a well-capitalized bank.
"We continue to work through our current challenges and prepare for the future," commented CEO Brian Riley. "We are beginning to see signs of recovery and believe that 2010 and beyond will be much better for the banking industry as a whole."
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 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.
State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
Dollars in -----------------------------------------------------
thousands 3/31/2009 12/31/2008 9/30/2008 6/30/2008 3/31/2008
---------------------------------------------------------------------
Performance
Highlights
Earnings:
Total revenue
(Net int.
income +
nonint.
income) $ 3,675 $ 4,070 $ 4,411 $ 4,447 $ 4,108
Net interest
income $ 3,169 $ 3,630 $ 3,933 $ 3,898 $ 3,638
Provision for
loan losses $ 2,600 $ 3,000 $ 1,145 $ 195 $ 130
Noninterest
income $ 506 $ 440 $ 478 $ 549 $ 470
Noninterest
expense $ 2,671 $ 2,352 $ 2,309 $ 2,364 $ 2,314
Net income $ (1,038) $ (594) $ 621 $ 1,245 $ 1,064
Per Share Data:
Net income,
basic $ (0.27) $ (0.15) $ 0.16 $ 0.32 $ 0.28
Net income
before
extraordinary
items,
diluted $ (0.27) $ (0.15) $ 0.16 $ 0.32 $ 0.28
Net income,
diluted $ (0.27) $ (0.15) $ 0.16 $ 0.32 $ 0.28
Cash
dividends
declared $ -- $ 0.10 $ 0.10 $ 0.10 $ 0.10
Book value $ 9.36 $ 9.55 $ 9.54 $ 9.40 $ 9.33
Tangible book
value $ 9.36 $ 9.55 $ 9.54 $ 9.40 $ 9.33
Performance
Ratios:
Return on
average assets -1.13% -0.65% 0.68% 1.40% 1.21%
Return on
average equity -11.53% -6.47% 6.77% 13.78% 11.91%
Net interest
margin,
taxable
equivalent 3.81% 4.34% 4.60% 4.78% 4.56%
Average cost
of funds 1.82% 1.98% 2.12% 2.18% 2.71%
Average yield
on loans 5.82% 6.44% 6.99% 7.55% 7.70%
Efficiency
ratio 72.68% 57.79% 52.35% 53.16% 56.33%
Non-interest
income to
total revenue 13.77% 10.81% 10.84% 12.35% 11.44%
Capital &
Liquidity:
Total equity
to total
assets (EOP) 9.74% 10.04% 9.85% 10.11% 10.06%
Tangible
equity to
tangible
assets 9.74% 10.04% 9.85% 10.11% 10.06%
Total loans
to total
deposits 100.63% 109.29% 117.52% 98.94% 97.74%
Mohave State
Bank
------------
Regulatory
Capital 9.41% 9.63% 9.88% 9.92% 9.85%
Tier 1 Capital 10.94% 11.16% 10.95% 11.57% 11.51%
Risk Based
Capital 12.20% 12.42% 12.20% 12.81% 12.74%
Asset Quality:
Gross
charge-offs $ 2,793 $ 360 $ 195 $ 108 $ 88
Net
charge-offs
(NCOs) $ 2,791 $ 360 $ 190 $ 72 $ 88
NCO to
average loans,
annualized 3.89% 0.49% 0.26% 0.11% 0.13%
Non-accrual
loans $ 22,984 $ 17,151 $ 15,333 $ 4,087 $ 4,475
Other real
estate
owned $ 5,085 $ 2,765 $ -- $ 205 $ --
Repossessed
assets $ -- $ -- $ -- $ -- $ --
Non-performing
assets
(NPAs) $ 28,069 $ 19,916 $ 15,333 $ 4,292 $ 4,475
NPAs to total
assets 7.71% 5.52% 4.16% 1.20% 1.24%
Loans >90 days
past due $ -- $ -- $ -- $ -- $ --
NPAs + 90 days
past due $ 28,069 $ 19,916 $ 15,333 $ 4,292 $ 4,475
NPAs + loans
90 days past
due to total
assets 7.71% 5.52% 4.16% 1.20% 1.24%
Allowance for
loan losses
to total loans 2.51% 2.56% 1.60% 1.35% 1.36%
Allowance for
loan losses
to NPAs 25.59% 37.03% 30.87% 88.05% 81.68%
Period End
Balances:
Assets $ 363,860 $ 360,814 $ 368,446 $ 359,081 $ 359,886
Total Loans
(before
reserves) $ 285,874 $ 287,784 $ 296,778 $ 279,155 $ 268,143
Deposits $ 284,098 $ 263,312 $ 252,528 $ 282,138 $ 274,349
Stockholders'
equity $ 35,430 $ 36,228 $ 36,304 $ 36,318 $ 36,202
Common stock
market
capitaliza-
tion $ 30,190 $ 46,150 $ 63,456 $ 71,109 $ 69,164
Full-time
equivalent
employees 85 93 90 90 91
Shares
outstanding 3,845,808 3,845,808 3,845,808 3,843,754 3,831,819
Average
Balances:
Assets $ 367,340 $ 367,079 $ 363,509 $ 355,081 $ 351,318
Earning
assets $ 342,036 $ 342,258 $ 349,526 $ 336,165 $ 329,444
Total Loans
(before
reserves) $ 286,918 $ 292,292 $ 291,363 $ 264,493 $ 264,493
Deposits $ 280,841 $ 255,843 $ 257,766 $ 270,768 $ 266,946
Other
borrowings $ 49,654 $ 73,211 $ 67,296 $ 46,640 $ 46,981
Stockholders'
equity $ 36,002 $ 36,718 $ 36,705 $ 36,139 $ 35,737
Shares
outstanding,
basic - wtd 3,845,808 3,845,808 3,844,178 3,842,544 3,831,528
Shares
outstanding,
diluted - wtd 3,864,126 3,859,688 3,855,583 3,856,640 3,845,028
State Bank Corp.
Balance Sheets
For the Quarter Ended
Dollars in ----------------------------- Qrt/Qrt Yr/Yr
thousands 3/31/2009 12/31/2008 3/31/2008 Change Change
------------------------------------------------- -------------------
Consolidated
Balance Sheets
Assets
Cash and cash
equivalents $ 5,098 $ 4,265 $ 7,018 19.5% -27.4%
Fed funds sold 3,135 -- 8,000 -60.8%
Held for maturity
securities 1,900 1,909 8,515 -0.5% -77.7%
Available for
sale securities 45,825 47,507 51,687 -3.5% -11.3%
-------- -------- --------
Total cash and
securities 55,958 53,681 75,220 4.2% -25.6%
Loans held for
sale, before
reserves 2,725 1,329 523 4.2% 421.0%
Gross loans held
for investment 282,657 285,949 267,620 -1.2% 5.6%
Loan loss reserve (7,183) (7,374) (3,655) -2.6% 96.5%
-------- -------- --------
Total net loans 278,199 279,904 264,488 -0.6% 5.2%
Premises and
equipment, net 11,260 11,348 10,367 -0.8% 8.6%
Deferred taxes 2,685 2,808 1,082 -4.4% 148.2%
Federal Home Loan
Bank and other
stock 3,158 3,158 1,698 0.0% 86.0%
Company owned
life insurance 5,013 4,961 4,821 1.0% 4.0%
Other real estate
owned 5,085 2,765 -- 83.9%
Other assets 2,502 2,188 2,210 14.4% 13.2%
-------- -------- --------
Total Assets $363,860 $360,813 $359,886 0.8% 1.1%
======== ======== ========
Liabilities
Non interest
bearing demand $ 43,669 $ 41,553 $ 53,670 5.1% -18.6%
Money market,
NOW and savings 106,910 107,626 138,310 -0.7% -22.7%
Time deposits
<$100K 86,047 76,306 33,330 12.8% 158.2%
Time deposits
>$100K 47,472 37,827 49,039 25.5% -3.2%
-------- -------- --------
Total Deposits 284,098 263,312 274,349 7.9% 3.6%
-------- -------- --------
Securities sold
under repurchase
agreements 18,257 15,678 27,191 16.4% -32.9%
Federal Home Loan
Bank advances 25,000 44,100 20,490 -43.3% 22.0%
-------- -------- --------
Total Debt 43,257 59,778 47,681 -27.6% -9.3%
Other Liabilities 1,075 1,495 1,654 -28.1% -35.0%
-------- -------- --------
Total
Liabilities 328,430 324,585 323,684 1.2% 1.5%
Shareholders' Equity
Common stock $ 21,527 $ 21,527 $ 21,589 0.0% -0.3%
Accumulated
retained earnings 13,078 14,116 13,994 -7.4% -6.5%
Accumulated other
comprehensive
income (loss) 825 585 619 41.0% 33.3%
-------- -------- --------
Total
shareholders'
equity $ 35,430 $ 36,228 $ 36,202 -2.2% -2.1%
Total
liabilities
and share-
holders'
equity $363,860 $360,813 $359,886 0.8% 1.1%
======== ======== ========
State Bank Corp.
Income Statements
For the Quarter Ended
------------------------
Dollars in thousands 3/31/2009 3/31/2008
--------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 4,172 $ 5,093
Securities 498 664
Fed funds and other 2 11
---------- ----------
Total interest income 4,672 5,768
---------- ----------
Interest expense
Deposits 1,294 1,802
Borrowings 209 327
---------- ----------
Total interest expense 1,503 2,129
---------- ----------
Net interest income 3,169 3,639
---------- ----------
Provision for loan losses 2,600 130
---------- ----------
Net interest income after loan loss
provision 569 3,509
---------- ----------
Noninterest income
Service charges on deposits 183 170
Mortgage loan fees 13 55
Gain/losses on sale of loans 224 141
Other income 86 104
---------- ----------
Total noninterest income 506 470
---------- ----------
Noninterest expense
Salaries and employee benefits 1,355 1,319
Net occupancy expense 84 95
Equipment expense 62 81
Data processing 318 326
Director fees & expenses 71 128
Insurance 22 14
Marketing & promotion 102 125
Professional fees 38 28
Office expense 60 75
Regulatory assessments 126 40
OREO and repossessed assets 324 --
Other expenses 109 84
---------- ----------
Total noninterest expense 2,671 2,315
---------- ----------
Income before income taxes (1,596) 1,664
---------- ----------
Income taxes (559) 600
---------- ----------
Net Income $ (1,037) $ 1,064
========== ==========
Per Share Data
Basic EPS $ (0.27) $ 0.28
Diluted EPS $ (0.27) $ 0.28
Average shares outstanding
Basic 3,845,808 3,831,528
Effect of dilutive shares 18,328 7,000
---------- ----------
Diluted 3,864,136 3,838,528
---------- ----------
State Bank Corp.
Deposit and Loan Mix
For the Quarter Ended
Dollars in --------------------------------------------------
thousands 3/31/2009 12/31/2008 9/30/2008 6/30/2008 3/31/2008
---------------------------------------------------------------------
Deposit and Loan Mix
Deposit Breakout
Non interest
bearing demand $ 43,669 $ 41,553 $ 49,429 $ 72,833 $ 53,670
Interest bearing
NOW 3,434 3,982 4,013 4,292 4,133
Savings 3,909 3,894 3,989 4,195 3,738
Money market 99,567 99,751 111,715 121,258 130,439
Time deposits
<$100K 86,047 76,305 42,923 32,819 33,330
Time deposits
>$100K 47,472 37,827 40,459 46,741 49,039
-------- -------- -------- -------- --------
Total deposits $284,098 $263,312 $252,528 $282,138 $274,349
Loan Breakout
Commercial and
industrial $ 30,075 $ 33,059 $ 32,578 $ 33,716 $ 33,100
Real estate -
construction 75,471 78,409 80,755 79,881 77,212
Real estate -
residential 48,700 47,508 47,590 43,076 36,891
Real estate -
commercial 130,070 127,415 134,202 121,339 119,872
Consumer 1,558 1,393 1,653 1,762 1,745
-------- -------- -------- -------- --------
Total loans $285,874 $287,784 $296,778 $279,774 $268,820
Less unearned
fees and interest 492 506 603 619 677
-------- -------- -------- -------- --------
Total loans net
of unearned
fees and
interest $285,382 $287,278 $296,175 $279,155 $268,143
Less allowance
for loan losses 7,183 7,374 4,734 3,779 3,655
-------- -------- -------- -------- --------
Loans, net $278,199 $279,904 $291,441 $275,376 $264,488
Nonperforming
Loans/OREO
Commercial and
industrial $ 95 $ 52 $ 68 $ 8 $ --
Real estate -
construction 16,182 11,890 8,219 4,284 4,475
Real estate -
residential 2,641 718 694 -- --
Real estate -
commercial 9,151 7,256 6,317 -- --
Consumer -- -- 35 -- --
-------- -------- -------- -------- --------
Total
nonperforming
loans $ 28,069 $ 19,916 $ 15,333 $ 4,292 $ 4,475