LAKE HAVASU CITY, Ariz., Jan. 26, 2017 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCQB:SBAZ) (“Company”), the holding company for Mohave State Bank (“Bank”), today reported net income of $911,000, or $0.11 per diluted share, for the fourth quarter ended December 31, 2016, as compared to $946,000, or $0.16 per diluted share, for the fourth quarter of 2015. On a linked quarter basis, net income in the fourth quarter 2016 dropped 23.4% from $1.19 million, or $0.16 per diluted share, in the third quarter of 2016. This decrease was due to higher merger related costs as well as a full quarter of combined operating expenses.
For the year ended December 31, 2016, net income grew to $3.78 million, or $0.56 per diluted share, as compared to net income of $3.47 million, or $0.59 per diluted share, for 2015.
“For the fourth quarter, we generated strong operating results driven by balance sheet expansion, core deposit growth and robust mortgage banking operations,” stated Brian M. Riley, President and Chief Executive Officer. “We are confident that our recently completed merger of Country Bank will provide opportunities for continued revenue growth going forward. The staff of the combined bank has done an amazing job integrating the two companies and with a majority of the transaction expenses behind us, we look forward to realizing the full value of our merger.”
Fourth Quarter & Full Year 2016 Financial Highlights:
- Fourth Quarter net income, excluding merger related expenses, was $1.23 million, or $0.15 per diluted share.
- Fourth quarter return on average assets, excluding merger related expenses, of 0.83%.
- Fourth quarter return on average equity, excluding merger related expenses, of 9.15%.
- Continued integration of the combined Banks following the acquisition of Country Bank. The lone outstanding item is the core processing conversion, scheduled for February 2017.
- The Bank’s Mortgage Division originated a record $72.0 million in loan production and recorded net operating profit of $665,000 in 2016. For the first time, mortgage activities generated over $2 million in gross revenue.
Net interest margin was 3.85% in the fourth quarter 2016 compared to 4.14% in the preceding quarter and 4.29% in the fourth quarter a year ago. The decrease is the result of a nonrecurring accounting adjustment to loan interest and the normalization of discount amortization on Country Bank’s acquired portfolio.
There was no provision for loan losses in the fourth quarter, with net recoveries of $11,000. The allowance for loan losses totaled $3.1 million at December 31, 2016, or 0.93% of total loans. Excluding acquired loans, the reserve ratio was 1.28%, well in line with industry peers. On the acquired portfolio, the credit component of the loan purchase discount remains greater than the imputed reserve.
Total assets were $583.2 million at December 31, 2016, an increase of $257.9 million, or 79.3%, from $325.3 million at December 31, 2015. Total loans held for investment were $323.2 million as compared to $216.4 million at December 31, 2015. Total loan comparisons were affected by the addition of $107.0 million in loans from the acquisition of Country Bank.
Total deposits were $516.5 million, an increase of $233.7 million, or 82.6%, from $282.8 million at December 31, 2015. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased to $443.0 million at December 31, 2016, or 97.9%, from $223.8 million at December 31, 2015. Total deposits and core deposit comparisons were affected by the acquisition of Country Bank by $202.2 million and $186.6 million, respectively. Core deposits now comprise 85.8% of total deposits.
Nonperforming assets were $6.1 million at December 31, 2016, a 4.7% decrease from $6.4 million at December 31, 2015. Nonperforming assets represented 1.05% of total assets at December 31, 2016.
Shareholder equity increased to $53.8 million at December 31, 2016, from $37.8 million at December 31, 2015. The significant increase is the result of issuing 2,187,546 shares of common stock at $6.50 per share to finance the acquisition of Country Bank. At December 31, 2016, tangible book value per share was $5.76 per share compared to $6.47 per share at December 31, 2015. The decrease was the result of the issuance of common stock and the formation of goodwill and intangible assets involved in the acquisition of Country Bank.
Capital Management
Community banking organizations, including State Bank Corp. and Mohave State Bank, became subject to new 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 December 31, 2016. The Bank reported the following capital ratios at December 31, 2016:
| Common Equity Tier 1 Capital Ratio | 13.17 | % | |||
| Tier 1 Leverage Ratio | 9.40 | % | |||
| Tier 1 Capital Ratio | 13.17 | % | |||
| Total Capital Ratio | 13.90 | % |
Use of Non-GAAP Financial Information
This press release contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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 nine full-service branches: two in Lake Havasu City, two in Kingman, two in Prescott, one in Bullhead City, one in Prescott Valley, and one in Cottonwood, 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., Mohave State Bank, Country Bank and the merger. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; regulatory approvals of the merger may not be obtained or adverse regulatory conditions may be imposed in connection with such regulatory approvals; and conditions to the closing of the merger may not be satisfied. Annualized, pro forma, projected and estimated numbers in this press release are used for illustrative purposes only, are not forecasts and may not reflect actual results. All forward-looking statements included in this press release are based on information available at the time of the release, and State Bank Corp., Mohave State Bank and Country Bank assume no obligation to update any forward-looking statements.
UNAUDITED FINANCIAL STATEMENTS FOLLOW
| State Bank Corp. | |||||||||||||
| Statement of Operations | |||||||||||||
| For the Quarter Ended | Year to Date | ||||||||||||
| Dollars in thousands - Unaudited | 12/31/2016 | 9/30/2016 | 12/31/2015 | 12/31/2016 | 12/31/2015 | ||||||||
| Statements of Operations | |||||||||||||
| Interest income | |||||||||||||
| Loans, including fees | $ | 4,816 | $ | 4,594 | $ | 3,019 | $ | 15,346 | $ | 12,019 | |||
| Securities | 501 | 394 | 212 | 1,331 | 858 | ||||||||
| Fed funds and other | 56 | 71 | 19 | 221 | 65 | ||||||||
| Total interest income | 5,373 | 5,059 | 3,250 | 16,898 | 12,942 | ||||||||
| Interest expense | |||||||||||||
| Deposits | 206 | 198 | 151 | 718 | 581 | ||||||||
| Borrowings | 97 | 96 | 1 | 322 | 26 | ||||||||
| Total interest expense | 303 | 294 | 152 | 1,040 | 607 | ||||||||
| Net interest income | 5,070 | 4,765 | 3,098 | 15,858 | 12,335 | ||||||||
| Provision for loan losses | - | - | - | - | 885 | ||||||||
| Net interest income after loan loss provision | 5,070 | 4,765 | 3,098 | 15,858 | 11,450 | ||||||||
| Noninterest income | |||||||||||||
| Service charges on deposits | 131 | 116 | 85 | 404 | 358 | ||||||||
| Mortgage loan fees | 351 | 272 | 190 | 1,087 | 928 | ||||||||
| Gain on sale of loans | 357 | 306 | 253 | 1,193 | 1,492 | ||||||||
| (Loss)/Gain on securities | - | - | - | (8 | ) | ||||||||
| Other income | 394 | 274 | 174 | 1,032 | 1,435 | ||||||||
| Total noninterest income | 1,233 | 968 | 702 | 3,716 | 4,205 | ||||||||
| Noninterest expense | |||||||||||||
| Salaries and employee benefits | 2,555 | 2,004 | 1,483 | 7,320 | 5,913 | ||||||||
| Net occupancy expense | 129 | 87 | 90 | 325 | 367 | ||||||||
| Equipment expense | 106 | 70 | 44 | 255 | 175 | ||||||||
| Data processing | 370 | 261 | 243 | 1,113 | 1,069 | ||||||||
| Director fees & expenses | 75 | 37 | 66 | 189 | 231 | ||||||||
| Insurance | 39 | 33 | 35 | 132 | 112 | ||||||||
| Marketing & promotion | 134 | 119 | 69 | 385 | 334 | ||||||||
| Professional fees | 108 | 103 | 180 | 132 | 434 | ||||||||
| Office expense | 57 | 25 | 70 | 160 | 163 | ||||||||
| Regulatory assessments | 13 | 58 | 32 | 182 | 353 | ||||||||
| OREO and repossessed assets | 299 | 109 | 39 | 504 | 650 | ||||||||
| Other expenses | 530 | 425 | 149 | 1,579 | 676 | ||||||||
| 4,415 | 3,331 | 2,500 | 12,276 | 10,477 | |||||||||
| Acquisition related costs | 496 | 378 | - | 1,193 | - | ||||||||
| Total noninterest expense | 4,911 | 3,709 | 2,500 | 13,469 | 10,477 | ||||||||
| Income (loss) before provision (benefit) for income taxes | 1,392 | 2,024 | 1,300 | 6,105 | 5,178 | ||||||||
| Provision (benefit) for income taxes | 481 | 834 | 354 | 2,330 | 1,712 | ||||||||
| Net Income (Loss) | $ | 911 | $ | 1,190 | $ | 946 | $ | 3,775 | $ | 3,466 | |||
| Per Share Data | |||||||||||||
| Basic EPS | $ | 0.11 | $ | 0.16 | $ | 0.16 | $ | 0.56 | $ | 0.59 | |||
| Diluted EPS | $ | 0.11 | $ | 0.16 | $ | 0.16 | $ | 0.56 | $ | 0.59 | |||
| Average shares outstanding | |||||||||||||
| Basic | 8,029,691 | 7,292,583 | 5,849,444 | 6,756,611 | 5,862,847 | ||||||||
| Effect of dilutive shares | - | - | - | - | - | ||||||||
| Diluted | 8,029,691 | 7,292,583 | 5,849,444 | 6,756,611 | 5,862,847 | ||||||||
| State Bank Corp. | ||||||||
| Balance Sheets | ||||||||
| Dollars in thousands - Unaudited | 12/31/2016 | 12/31/2015 | ||||||
| Consolidated Balance Sheets | ||||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 5,202 | $ | 1,899 | ||||
| Interest bearing deposits | 24,524 | 4,167 | ||||||
| Overnight Funds | 33,680 | 29,250 | ||||||
| Held for maturity securities | 2 | 19 | ||||||
| Available for sale securities | 147,574 | 46,881 | ||||||
| Total cash and securities | 210,982 | 82,216 | ||||||
| Loans held for sale, before reserves | 5,870 | 4,457 | ||||||
| Gross loans held for investment | 323,210 | 216,357 | ||||||
| Loan loss reserve | (3,058 | ) | (3,089 | ) | ||||
| Total net loans | 326,022 | 217,725 | ||||||
| Premises and equipment, net | 15,071 | 8,195 | ||||||
| Other real estate owned | 3,955 | 4,247 | ||||||
| Federal Home Loan Bank and other stock | 3,308 | 2,126 | ||||||
| Company owned life insurance | 11,275 | 6,034 | ||||||
| Other assets | 12,554 | 4,776 | ||||||
| Total Assets | $ | 583,167 | $ | 325,319 | ||||
| Liabilities | ||||||||
| Non interest bearing demand | $ | 116,696 | $ | 70,648 | ||||
| Money market, NOW and savings | 326,269 | 153,156 | ||||||
| Time deposits <$100K | 28,603 | 25,703 | ||||||
| Time deposits >$100K | 44,930 | 33,329 | ||||||
| Total Deposits | 516,498 | 282,836 | ||||||
| Securities sold under repurchase agreements | 4,188 | 3,653 | ||||||
| Federal Home Loan Bank advances | - | - | ||||||
| Subordinated debt | 7,336 | - | ||||||
| Total Debt | 11,524 | 3,653 | ||||||
| Other Liabilities | 1,366 | 1,047 | ||||||
| Total Liabilities | 529,388 | 287,536 | ||||||
| Shareholders' Equity | ||||||||
| Common stock | 39,146 | 24,927 | ||||||
| Accumulated retained earnings | 15,791 | 12,881 | ||||||
| Accumulated other comprehensive income | (1,158 | ) | (25 | ) | ||||
| Total shareholders equity | 53,779 | 37,783 | ||||||
| Total liabilities and shareholders' equity | $ | 583,167 | $ | 325,319 | ||||
| State Bank Corp. | |||||||||||||||||
| Five-Quarter Performance Summary | |||||||||||||||||
| For the Quarter Ended | |||||||||||||||||
| Dollars in thousands - Unaudited | 12/31/2016 | 9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | ||||||||||||
| Performance Highlights | |||||||||||||||||
| Earnings: | |||||||||||||||||
| Total revenue (Net int. income + nonint. income) | $ | 6,303 | $ | 5,733 | $ | 3,925 | $ | 3,612 | $ | 3,800 | |||||||
| Net interest income | $ | 5,070 | $ | 4,765 | $ | 3,003 | $ | 3,019 | $ | 3,098 | |||||||
| Provision for loan losses | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||
| Noninterest income | $ | 1,233 | $ | 968 | $ | 922 | $ | 593 | $ | 702 | |||||||
| Noninterest expense | $ | 4,911 | $ | 3,709 | $ | 2,315 | $ | 2,533 | $ | 2,500 | |||||||
| Net income (loss) | $ | 911 | $ | 1,190 | $ | 974 | $ | 700 | $ | 946 | |||||||
| Per Share Data: | |||||||||||||||||
| Net income (loss), basic | $ | 0.11 | $ | 0.16 | $ | 0.17 | $ | 0.12 | $ | 0.16 | |||||||
| Net income (loss), diluted | $ | 0.11 | $ | 0.16 | $ | 0.17 | $ | 0.12 | $ | 0.16 | |||||||
| Cash dividends declared | $ | 0.04 | $ | - | $ | - | $ | 0.10 | $ | - | |||||||
| Book value | $ | 6.70 | $ | 6.79 | $ | 6.71 | $ | 6.52 | $ | 6.47 | |||||||
| Tangible book value | $ | 5.76 | $ | 5.83 | $ | 6.71 | $ | 6.52 | $ | 6.47 | |||||||
| Performance Ratios: | |||||||||||||||||
| Return on average assets | 0.62 | % | 0.91 | % | 1.13 | % | 0.86 | % | 1.17 | % | |||||||
| Return on average equity | 6.77 | % | 9.69 | % | 10.05 | % | 7.40 | % | 10.04 | % | |||||||
| Net interest margin, taxable equivalent | 3.85 | % | 4.14 | % | 3.85 | % | 4.08 | % | 4.29 | % | |||||||
| Average cost of funds | 0.23 | % | 0.29 | % | 0.34 | % | 0.26 | % | 0.21 | % | |||||||
| Average yield on loans | 5.81 | % | 6.68 | % | 5.38 | % | 5.34 | % | 5.45 | % | |||||||
| Efficiency ratio | 77.92 | % | 64.70 | % | 58.98 | % | 70.13 | % | 65.79 | % | |||||||
| Non-interest income to total revenue | 19.56 | % | 16.88 | % | 23.49 | % | 16.42 | % | 18.47 | % | |||||||
| Capital & Liquidity: | |||||||||||||||||
| Total equity to total assets (EOP) | 9.22 | % | 9.08 | % | 11.32 | % | 11.26 | % | 11.61 | % | |||||||
| Tangible equity to tangible assets | 8.03 | % | 7.90 | % | 11.32 | % | 11.26 | % | 11.61 | % | |||||||
| Total loans to total deposits | 63.71 | % | 62.91 | % | 75.13 | % | 76.60 | % | 78.07 | % | |||||||
| Mohave State Bank | |||||||||||||||||
| Common equity tier 1 ratio | 13.17 | % | 12.95 | % | 14.62 | % | 14.62 | % | 14.70 | % | |||||||
| Tier 1 leverage ratio | 9.40 | % | 10.55 | % | 11.08 | % | 11.51 | % | 11.61 | % | |||||||
| Tier 1 risk based capital | 13.17 | % | 12.95 | % | 14.62 | % | 14.62 | % | 14.70 | % | |||||||
| Total risk based capital | 13.90 | % | 13.67 | % | 15.81 | % | 15.82 | % | 15.91 | % | |||||||
| Asset Quality: | |||||||||||||||||
| Gross charge-offs | $ | - | $ | 67 | $ | 4 | $ | - | $ | 4 | |||||||
| Net charge-offs (NCOs) | $ | (11 | ) | $ | 56 | $ | (5 | ) | $ | (9 | ) | $ | (65 | ) | |||
| NCO to average loans, annualized | -0.01 | % | 0.08 | % | -0.01 | % | -0.02 | % | -0.12 | % | |||||||
| Non-accrual loans/securities | $ | 2,185 | $ | 2,321 | $ | 2,683 | $ | 2,229 | $ | 2,154 | |||||||
| Other real estate owned | $ | 3,955 | $ | 4,398 | $ | 4,039 | $ | 3,995 | $ | 4,246 | |||||||
| Repossessed assets | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||
| Non-performing assets (NPAs) | $ | 6,140 | $ | 6,719 | $ | 6,722 | $ | 6,224 | $ | 6,400 | |||||||
| NPAs to total assets | 1.05 | % | 1.12 | % | 1.94 | % | 1.84 | % | 1.97 | % | |||||||
| Loans >90 days past due | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||
| NPAs + 90 days past due | $ | 6,140 | $ | 6,719 | $ | 6,722 | $ | 6,224 | $ | 6,400 | |||||||
| NPAs + loans 90 days past due to total assets | 1.05 | % | 1.12 | % | 1.94 | % | 1.84 | % | 1.97 | % | |||||||
| Allowance for loan losses to total loans | 0.93 | % | 0.91 | % | 1.40 | % | 1.40 | % | 1.40 | % | |||||||
| Allowance for loan losses to NPAs | 49.80 | % | 45.51 | % | 46.16 | % | 49.78 | % | 48.27 | % | |||||||
| Period End Balances: | |||||||||||||||||
| Assets | $ | 583,167 | $ | 600,320 | $ | 346,458 | $ | 338,205 | $ | 325,319 | |||||||
| Total Loans (before reserves) | $ | 329,080 | $ | 335,195 | $ | 221,628 | $ | 221,046 | $ | 220,814 | |||||||
| Deposits | $ | 516,498 | $ | 532,844 | $ | 295,010 | $ | 288,565 | $ | 282,836 | |||||||
| Stockholders' equity | $ | 53,779 | $ | 54,488 | $ | 39,229 | $ | 38,088 | $ | 37,783 | |||||||
| Common stock market capitalization | $ | 61,427 | $ | 55,003 | $ | 37,390 | $ | 37,974 | $ | 36,981 | |||||||
| Full-time equivalent employees | 120 | 114 | 75 | 72 | 77 | ||||||||||||
| Shares outstanding | 8,029,691 | 8,029,691 | 5,842,145 | 5,842,145 | 5,842,145 | ||||||||||||
| Average Balances: | |||||||||||||||||
| Assets | $ | 589,896 | $ | 523,785 | $ | 345,348 | $ | 327,228 | $ | 323,157 | |||||||
| Earning assets | $ | 530,112 | $ | 462,668 | $ | 318,415 | $ | 301,084 | $ | 294,500 | |||||||
| Total Loans (before reserves) | $ | 331,806 | $ | 288,558 | $ | 221,608 | $ | 221,499 | $ | 221,705 | |||||||
| Deposits | $ | 514,366 | $ | 411,676 | $ | 294,645 | $ | 282,123 | $ | 280,558 | |||||||
| Other borrowings | $ | 11,446 | $ | 11,628 | $ | 10,933 | $ | 6,105 | $ | 3,846 | |||||||
| Stockholders' equity | $ | 53,800 | $ | 49,134 | $ | 38,753 | $ | 37,855 | $ | 37,686 | |||||||
| Shares outstanding, basic - wtd | 8,029,691 | 7,292,583 | 5,842,145 | 5,842,145 | 5,849,444 | ||||||||||||
| Shares outstanding, diluted - wtd | 8,029,691 | 7,292,583 | 5,842,145 | 5,842,145 | 5,849,444 | ||||||||||||
| NON-GAAP FINANCIAL INFORMATION | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| NON-GAAP PERFORMANCE MEASURES | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |||||||||
| Return on average common equity, excluding acquisition related costs, net (1) | 9.15 | % | 11.67 | % | 10.04 | % | ||||||
| Return on average assets, excluding acquisition related costs, net (1) | 0.83 | % | 1.10 | % | 1.17 | % | ||||||
| Efficiency ratio, excluding acquisition related costs, net (2) | 70.05 | % | 58.10 | % | 65.79 | % | ||||||
| NON-GAAP EARNINGS PER SHARE | ||||||||||||
| Basic (3) | $ | 0.15 | $ | 0.20 | $ | 0.16 | ||||||
| Diluted (3) | $ | 0.15 | $ | 0.20 | $ | 0.16 | ||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| Net income | $ | 911 | $ | 1,190 | $ | 946 | ||||||
| Acquisition related costs, net | 496 | 378 | - | |||||||||
| Tax effect on acquisition related costs, net | (176 | ) | (134 | ) | - | |||||||
| Net income, excluding acquisition related costs, net (3) | $ | 1,231 | $ | 1,434 | $ | 946 | ||||||
| Three Months Ended | ||||||||||||
| Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| Total non-interest expenses | $ | 4,911 | $ | 3,709 | $ | 2,500 | ||||||
| Acquisition related costs, net | 496 | 378 | - | |||||||||
| Total non-interest expenses, excluding acquisition related costs, net (3) | $ | 4,415 | $ | 3,331 | ||||||||
| (1) The Company believes these non-GAAP ratios provide a useful metric with which to analyze and evaluate the financial condition of the Company | ||||||||||||
| (2) The Company believes this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company | ||||||||||||
| (3) The Company believes these non-GAAP measurements are a key indicator of the ongoing earnings power of the Company | ||||||||||||