LAKE HAVASU CITY, Ariz., Feb. 9, 2011 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ) ("Company"), the holding company for Mohave State Bank ("Bank"), today announced a net operating loss of $2.89 million, or $0.75 per diluted share, for the quarter ended December 31, 2010, as compared to a net operating loss of $356,000, or $0.09 per diluted share, for the same period of 2009. The Company ended 2010 with a net operating loss of $10.18 million, or $2.64 per diluted share, as compared to a net operating loss of $2.10 million, or $0.55 per diluted share, for 2009.
Results of Operations
The fourth quarter 2010 net operating loss was primarily the result of a valuation allowance of $2.0 million being placed against the Company's deferred tax asset and loan loss reserve provisions of $1.1 million. The effect of these two items was partially offset by higher mortgage banking income, reduced OREO costs, and overall lower operating expenses in the fourth quarter of 2010. Net credit losses totaled $2.2 million in the fourth quarter of 2010 as compared to $1.1 million in the same period of 2009. The pre-tax net operating loss of $902,000 in the fourth quarter of 2010 was $343,000, or 27.6 percent lower than the $1.25 million recorded in the fourth quarter of 2009.
For the year ended December 31, 2010, net interest income decreased by $1.1 million to $11.8 million from $12.9 million in 2009 on lower earning assets and a decrease in the net interest margin. The Company provided $10.0 million to its loan loss reserve in 2010 as compared to $7.4 million for 2009. The cost of selling and maintaining OREO properties increased to $5.0 million in 2010 from $2.2 million in 2009. Net credit losses totaled $10.7 million in 2010 as compared to $5.8 million in 2009.
"We dedicated 2010 to resolving issues within our credit portfolio. The Company continued to make substantial provisions to loan loss reserves as necessary and recognized losses from lower market values on foreclosed properties. We were very pleased to see our mortgage operation have a solid year as historically low interest rates favored home ownership and provided an outstanding opportunity for loan refinancing," commented Brian M. Riley, President & CEO.
Balance Sheet
During most of 2010, the Company executed a balance sheet reduction plan to supplement its core capital ratios. Total assets decreased to $302.6 million at December 31, 2010, or 18.9 percent, from $373.1 million at December 31, 2009. This reduction was accomplished by reducing FHLB borrowings and allowing higher cost time deposits to mature. These funding sources were retired from liquidity generated from fed funds sold, investment securities and loan repayments. Total deposits ended 2010 at $253.3 million, a decrease of 18.8 percent from $311.7 million at the end of 2009. Core deposits (non-time deposits) actually increased to $165.2 million at December 31, 2010 from $164.8 million at December 31, 2009.
Nonperforming assets were $41.1 million at December 31, 2010, an increase of $14.9 million from $26.2 million at December 31, 2009. Nonperforming assets represented 13.6 percent of total assets at December 31, 2010 as compared to 7.0 percent at December 31, 2009. During 2010, the last of the Bank's large construction and development loans defaulted. The Company is in the process of foreclosing and liquidating these properties. The allowance for loan and lease losses totaled $8.3 million, or 3.74 percent of total loans, at December 31, 2010. The Company continues to carefully monitor its level of loss reserves and will proactively make additions as necessary to protect against an uncertain economic environment.
Capital
Shareholder equity decreased to $23.8 million at December 31, 2010 from $34.3 million at December 31, 2009 due to operating losses. The Bank must meet certain minimum capital requirements to satisfy federal and state laws. The following table provides the Bank's capital ratio compliance at December 31, 2010:
|
Actual Ratio |
Ratio to be well capitalized |
Consent Order Requirement |
|
| Leverage Ratio | 7.80% | 5.00% | 9.25% |
| Tier 1 Capital to Risk-Weighted Assets | 9.61% | 6.00% | N/A |
| Total Capital to Risk-Weighted Assets | 10.88% | 10.00% | 12.00% |
The Company has extended its private placement common stock offering to April 15, 2011. The Company continues to evaluate other active balance sheet management strategies which will bring its capital ratios in compliance with all regulatory orders.
About the Company
State Bank Corp. is the parent company of Mohave State Bank. Mohave State Bank has six full-service branches in Lake Havasu City, Kingman, Bullhead City, and Yuma, Arizona. The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.mohavestbank.com.
The State Bank Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8162
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 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. | |||||
| Five-Quarter Performance Summary | |||||
| For the Quarter Ended | |||||
| Dollars in thousands - Unaudited | 12/31/2010 | 9/30/2010 | 6/30/2010 | 3/31/2010 | 12/31/2009 |
| Performance Highlights | |||||
| Earnings: | |||||
| Total revenue (Net int. income + nonint. income) | $ 3,406 | $ 3,330 | $ 3,660 | $ 3,767 | $ 3,749 |
| Net interest income | $ 2,827 | $ 2,796 | $ 3,185 | $ 2,979 | $ 3,290 |
| Provision for loan losses | $ 1,100 | $ 200 | $ 7,400 | $ 1,315 | $ 1,250 |
| Noninterest income | $ 579 | $ 534 | $ 475 | $ 788 | $ 459 |
| Noninterest expense | $ 3,208 | $ 2,395 | $ 5,954 | $ 2,357 | $ 3,744 |
| Net income (loss) | $ (2,893) | $ 235 | $ (7,647) | $ 129 | $ (356) |
| Per Share Data: | |||||
| Net income (loss), basic | $ (0.75) | $ 0.06 | $ (1.98) | $ 0.03 | $ (0.09) |
| Net income (loss), diluted | $ (0.75) | $ 0.06 | $ (1.98) | $ 0.03 | $ (0.09) |
| Cash dividends declared | $ -- | $ -- | $ -- | $ -- | $ -- |
| Book value | $ 6.17 | $ 7.00 | $ 6.92 | $ 8.91 | $ 8.91 |
| Tangible book value | $ 6.17 | $ 7.00 | $ 6.92 | $ 8.91 | $ 8.91 |
| Performance Ratios: | |||||
| Return on average assets | -3.63% | 0.28% | -8.39% | 0.14% | -0.38% |
| Return on average equity | -44.46% | 3.45% | -101.38% | 1.50% | -4.10% |
| Net interest margin, taxable equivalent | 4.10% | 3.72% | 3.99% | 3.67% | 4.01% |
| Average cost of funds | 0.82% | 1.03% | 1.20% | 1.46% | 1.54% |
| Average yield on loans | 5.46% | 5.49% | 6.10% | 5.92% | 6.41% |
| Efficiency ratio | 94.19% | 71.92% | 162.68% | 62.57% | 99.87% |
| Non-interest income to total revenue | 17.00% | 16.04% | 12.98% | 20.92% | 12.24% |
| Capital & Liquidity: | |||||
| Total equity to total assets (EOP) | 7.86% | 8.40% | 7.61% | 9.27% | 9.20% |
| Tangible equity to tangible assets | 7.86% | 8.40% | 7.61% | 9.27% | 9.20% |
| Total loans to total deposits | 87.30% | 83.83% | 79.63% | 80.42% | 81.55% |
| Mohave State Bank | |||||
| Tier 1 leverage ratio | 7.80% | 8.12% | 7.52% | 9.32% | 9.07% |
| Tier 1 risk based capital | 9.61% | 10.31% | 9.81% | 11.77% | 11.41% |
| Total risk based capital | 10.88% | 11.58% | 11.10% | 13.04% | 12.68% |
| Asset Quality: | |||||
| Gross charge-offs | $ 2,372 | $ 4,040 | $ 2,409 | $ 2,076 | $ 1,244 |
| Net charge-offs (NCOs) | $ 2,199 | $ 4,031 | $ 2,402 | $ 2,019 | $ 1,128 |
| NCO to average loans, annualized | 3.87% | 6.83% | 3.77% | 3.19% | 1.76% |
| Non-accrual loans | $ 23,587 | $ 23,324 | $ 14,377 | $ 9,215 | $ 6,698 |
| Other real estate owned | $ 17,467 | $ 16,130 | $ 14,893 | $ 19,328 | $ 19,501 |
| Repossessed assets | $ -- | $ 30 | $ -- | $ 50 | $ 50 |
| Non-performing assets (NPAs) | $ 41,054 | $ 39,484 | $ 29,270 | $ 28,593 | $ 26,249 |
| NPAs to total assets | 13.57% | 12.28% | 8.35% | 7.72% | 7.03% |
| Loans >90 days past due | $ -- | $ 36 | $ 379 | $ 27 | $ 523 |
| NPAs + 90 days past due | $ 41,054 | $ 39,520 | $ 24,031 | $ 28,620 | $ 26,772 |
| NPAs + loans 90 days past due to total assets | 13.57% | 12.29% | 8.45% | 7.72% | 7.17% |
| Allowance for loan losses to total loans | 3.74% | 4.07% | 5.56% | 3.26% | 3.50% |
| Allowance for loan losses to NPAs | 20.14% | 23.73% | 55.82% | 28.69% | 33.93% |
| Period End Balances: | |||||
| Assets | $ 302,637 | $ 321,438 | $ 350,723 | $ 370,592 | $ 373,143 |
| Total Loans (before reserves) | $ 221,099 | $ 230,016 | $ 237,629 | $ 251,786 | $ 254,188 |
| Deposits | $ 253,259 | $ 274,388 | $ 298,404 | $ 313,075 | $ 311,714 |
| Stockholders' equity | $ 23,777 | $ 26,994 | $ 26,675 | $ 34,346 | $ 34,312 |
| Common stock market capitalization | $ 7,170 | $ 11,526 | $ 15,342 | $ 13,491 | $ 13,483 |
| Full-time equivalent employees | 75 | 77 | 81 | 80 | 80 |
| Shares outstanding | 3,854,714 | 3,854,714 | 3,854,714 | 3,854,714 | 3,852,199 |
| Average Balances: | |||||
| Assets | $ 318,759 | $ 341,627 | $ 364,604 | $ 376,792 | $ 379,442 |
| Earning assets | $ 283,134 | $ 308,256 | $ 326,374 | $ 333,505 | $ 336,009 |
| Total Loans (before reserves) | $ 227,485 | $ 235,987 | $ 248,432 | $ 252,781 | $ 256,326 |
| Deposits | $ 268,722 | $ 290,062 | $ 308,763 | $ 315,849 | $ 314,279 |
| Other borrowings | $ 23,084 | $ 23,203 | $ 24,704 | $ 25,474 | $ 28,195 |
| Stockholders' equity | $ 26,030 | $ 27,272 | $ 30,173 | $ 34,448 | $ 34,760 |
| Shares outstanding, basic - wtd | 3,854,714 | 3,854,714 | 3,854,714 | 3,853,876 | 3,852,199 |
| Shares outstanding, diluted - wtd | 3,857,001 | 3,857,634 | 3,857,634 | 3,856,796 | 3,854,714 |
| State Bank Corp. | ||
| Consolidated Balance Sheets | ||
| Dollars in thousands - Unaudited | 12/31/2010 | 12/31/2009 |
| Assets | ||
| Cash and cash equivalents | $ 4,302 | $ 5,202 |
| Fed funds sold | 13,690 | 21,000 |
| Held for maturity securities | 684 | 1,086 |
| Available for sale securities | 32,262 | 54,740 |
| Total cash and securities | 50,938 | 82,028 |
| Loans held for sale, before reserves | 2,264 | 1,762 |
| Gross loans held for investment | 218,559 | 252,426 |
| Loan loss reserve | (8,270) | (8,907) |
| Total net loans | 212,553 | 245,281 |
| Premises and equipment, net | 10,842 | 11,218 |
| Other real estate owned | 17,467 | 19,501 |
| Federal Home Loan Bank and other stock | 2,829 | 3,158 |
| Company owned life insurance | 5,327 | 5,147 |
| Other assets | 2,681 | 6,810 |
| Total Assets | $ 302,637 | $ 373,143 |
| Liabilities | ||
| Non interest bearing demand | $ 42,894 | $ 38,409 |
| Money market, NOW and savings | 122,331 | 126,416 |
| Time deposits <$100K | 43,452 | 69,915 |
| Time deposits >$100K | 44,582 | 76,974 |
| Total Deposits | 253,259 | 311,714 |
| Securities sold under repurchase agreements | 21,051 | 17,940 |
| Federal Home Loan Bank advances | 2,000 | 7,000 |
| Subordinated debt | 1,812 | 1,112 |
| Total Debt | 24,863 | 26,052 |
| Other Liabilities | 738 | 1,065 |
| Total Liabilities | 278,860 | 338,831 |
| Shareholders' Equity | ||
| Common stock | 21,655 | 21,644 |
| Accumulated retained earnings | 1,833 | 12,009 |
| Accumulated other comprehensive income | 289 | 659 |
| Total shareholders' equity | 23,777 | 34,312 |
| Total liabilities and shareholders' equity | $ 302,637 | $ 373,143 |
| State Bank Corp. | ||||
| Consolidated Statements of Operations | ||||
| For the Quarter Ended | Year to Date | |||
| Dollars in thousands - Unaudited | 12/31/2010 | 12/31/2009 | 12/31/2010 | 12/31/2009 |
| Interest income | ||||
| Loans, including fees | $ 3,105 | $ 4,108 | $ 13,869 | $ 16,576 |
| Securities | 310 | 488 | 1,507 | 1,986 |
| Fed funds and other | 12 | 16 | 65 | 35 |
| Total interest income | 3,427 | 4,612 | 15,441 | 18,597 |
| Interest expense | ||||
| Deposits | 522 | 1,205 | 3,251 | 5,041 |
| Borrowings | 78 | 117 | 402 | 671 |
| Total interest expense | 600 | 1,322 | 3,653 | 5,712 |
| Net interest income | 2,827 | 3,290 | 11,788 | 12,885 |
| Provision for loan losses | 1,100 | 1,250 | 10,015 | 7,350 |
| Net interest income after loan loss provision | 1,727 | 2,040 | 1,773 | 5,535 |
| Noninterest income | ||||
| Service charges on deposits | 124 | 179 | 600 | 699 |
| Mortgage loan fees | -- | 17 | 23 | 67 |
| Gain on sale of loans | 312 | 134 | 924 | 850 |
| Other income | 143 | 129 | 829 | 428 |
| Total noninterest income | 579 | 459 | 2,376 | 2,044 |
| Noninterest expense | ||||
| Salaries and employee benefits | 1,140 | 1,174 | 4,515 | 4,860 |
| Net occupancy expense | 92 | 103 | 361 | 357 |
| Equipment expense | 44 | 60 | 193 | 257 |
| Data processing | 247 | 309 | 1,027 | 1,245 |
| Director fees & expenses | 59 | 72 | 244 | 276 |
| Insurance | 48 | 11 | 105 | 78 |
| Marketing & promotion | 41 | 114 | 265 | 412 |
| Professional fees | 138 | 95 | 516 | 341 |
| Office expense | 55 | 65 | 221 | 247 |
| Regulatory assessments | 223 | 233 | 1,052 | 848 |
| OREO and repossessed assets | 1,036 | 1,420 | 4,999 | 2,189 |
| Other expenses | 85 | 88 | 417 | 409 |
| Total noninterest expense | 3,208 | 3,744 | 13,915 | 11,519 |
|
Income (loss) before provision (benefit) for income taxes |
(902) | (1,245) | (9,766) | (3,940) |
| Provision (benefit) for income taxes | 1,991 | (889) | 410 | (1,833) |
| Net Income (Loss) | $ (2,893) | $ (356) | $ (10,176) | $ (2,107) |
| Per Share Data | ||||
| Basic EPS | $ (0.75) | $ (0.09) | $ (2.64) | $ (0.55) |
| Diluted EPS | $ (0.75) | $ (0.09) | $ (2.64) | $ (0.55) |
| Average shares outstanding | ||||
| Basic | 3,854,714 | 3,852,199 | 3,854,714 | 3,850,466 |
| Effect of dilutive shares | 2,494 | 2,515 | 2,494 | 5,435 |
| Diluted | 3,857,208 | 3,854,714 | 3,857,208 | 3,855,901 |