State Bank Corp. Earns $2.25 million, or $0.28 per Diluted Share, in Second Quarter 2019


LAKE HAVASU CITY, Ariz., July 31, 2019 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPINK: SBAZ) (“Company”), the holding company for State Bank of Arizona (“Bank”), today announced net income increased 23.6% to $2.25 million, or $0.28 per diluted share, for the second quarter ended June 30, 2019, compared to $1.82 million, or $0.22 per diluted share, for the first quarter of 2019, and increased 5.14% compared to $2.14 million, or $0.26 per diluted share, for the second quarter of 2018.  For the first six months of 2019, net income grew 2.26% to $4.08 million, or $0.50 per diluted share, compared to $3.99 million, or $0.49 per diluted share, for the same period of 2018. 

“Solid top line growth, combined with improving operating efficiencies, contributed to one of the most profitable periods since the Company was founded for both the second quarter and first six months of 2019,” stated Brian M. Riley, President and Chief Executive Officer.  “These factors supported a return on average assets of 1.25% and a return on average equity of 13.07% for the quarter.  Our focus in the coming year remains on expanding market share in the Arizona markets we serve, while continuing to look for growth opportunities.”

Second Quarter 2019 Financial Highlights:

  • Net income increased 23.6% to $2.25 million, or $0.28 per diluted share, compared to $1.82 million, or $0.22 per diluted share, in 1Q19.

  • Return on average assets of 1.25%.

  • Return on average equity of 13.07%.

  • Core deposits comprised 85.1% of total deposits.

  • Tangible book value increased 20.9% to $7.86 per share, compared to $6.50 a year ago.

Net interest margin was 3.84% in the second quarter 2019, compared to 3.95% in the preceding quarter, and 3.93% in the second quarter a year ago.  Average cost of funds rose to 61 basis points, as the Company increased overall deposit rates to remain competitive in the market place.

The provision for loan losses was $50,000 during the second quarter of 2019, with net recoveries of $357,000.  The allowance for loan losses totaled $4.5 million at June 30, 2019, or 1.10% of total loans.  Excluding acquired loans, the reserve ratio was 1.18%, which is in line with industry peers.  On the acquired portfolio, the credit component of the loan purchase discount remains greater than an imputed reserve.

Total assets were $678.6 million at June 30, 2019, an increase of $23.3 million, or 3.56%, from $655.3 million at December 31, 2018, and an increase of $36.9 million, or 5.75%, compared to $641.7 million a year ago.  Total loans held for investment were $406.3 million at June 30, 2019, as compared to $407.3 million at December 31, 2018 and $362.3 million at June 30, 2018. 

Total deposits were $592.0 million, an increase of $34.2 million, or 6.13%, from $557.8 million at December 31, 2018, and an increase of $30.1 million, or 5.36%, compared to $561.9 million a year ago.  Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 1.17% compared to six months earlier and decreased 0.68% compared to a year earlier to $503.5 million at June 30, 2019.  Core deposits now comprise 85.1% of total deposits. 

Nonperforming assets were $2.4 million at June 30, 2019, a 50.0% increase from $1.6 million at December 31, 2018.  Nonperforming assets represented 0.36% of total assets at June 30, 2019. 

Shareholder equity increased to $70.5 million at June 30, 2019, from $64.4 million at December 31, 2018, and compared to $59.7 million a year ago.  At June 30, 2019, tangible book value per share was $7.86 per share compared to $7.10 per share at December 31, 2018 and $6.50 per share at June 30, 2018.

Capital Management

Community banking organizations, including State Bank Corp. and State Bank of Arizona, became subject to increased 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 June 30, 2019.  The Bank reported the following capital ratios at June 30, 2019:

Common Equity Tier 1 Capital Ratio13.91%
Tier 1 Leverage Ratio10.40%
Tier 1 Capital Ratio13.91%
Total Capital Ratio14.83%

About the Company

State Bank Corp., headquartered in Lake Havasu City, Arizona, is the parent company of State Bank of Arizona, the largest locally-owned bank in Arizona.  State Bank of Arizona 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.  Specializing in providing exceptional customer service and investing in its local communities, State Bank of Arizona was named 2018 Bank of the Year by Western Independent Bankers.  The Bank has ten full-service branches: two in Lake Havasu City, two in Kingman, two in Prescott, one in Bullhead City, one in Prescott Valley, one in Phoenix, and one in Cottonwood, Arizona.  The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.statebankaz.com

In June 2019, State Bank Corp. was ranked #69 on the American Banker Magazine’s list of Top 200 Publicly Traded Community Banks and Thrifts with Assets Under $2 Billion list for 2019 based on three-year average return on equity (“ROE”) as of 12/31/18.

Forward-looking Statements

This press release may include forward-looking statements about State Bank Corp. and State Bank of Arizona.  These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. 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.           
Statement of Operations           
             
   For the Quarter Ended   Year to Date 
Dollars in thousands - Unaudited 6/30/2019 3/31/2019 6/30/2018  6/30/2019 6/30/2018
Statements of Operations           
 Interest income           
 Loans, including fees$5,905$5,926$5,249 $11,831$10,091
 Securities 861 809 897  1,670 1,793
 Fed funds and other 236 166 99  403 190
 Total interest income 7,002 6,901 6,245  13,904 12,074
             
 Interest expense           
 Deposits 789 544 229  1,333 436
 Borrowings 142 262 143  404 247
 Total interest expense 931 806 372  1,737 683
             
 Net interest income 6,071 6,095 5,873  12,167 11,391
             
 Provision for loan losses 50 300 158  350 193
 Net interest income after loan loss provision 6,021 5,795 5,715  11,817 11,198
             
 Noninterest income           
 Service charges on deposits 168 178 140  346 288
 Mortgage loan fees 329 233 296  563 544
 Gain on sale of loans 483 390 576  873 1,019
 Other income 398 483 374  880 921
 Total noninterest income 1,378 1,284 1,386  2,662 2,772
             
 Noninterest expense           
 Salaries and employee benefits 2,807 2,919 2,677  5,725 5,372
 Net occupancy expense 187 192 171  379 354
 Equipment expense 66 71 83  137 175
 Data processing 514 532 437  1,046 877
 Director fees & expenses 85 76 77  161 158
 Insurance 36 35 37  71 75
 Marketing & promotion 101 160 124  261 253
 Professional fees 98 81 239  257 388
 Office expense 69 81 33  72 71
 Regulatory assessments 56 56 57  112 121
 OREO and repossessed assets 42 82 (29)  124 13
 Other expenses 463 481 397  945 900
 Total noninterest expense 4,524 4,766 4,303  9,290 8,757
             
             
 Income (loss) before provision (benefit) for income taxes   2,875   2,313 2,798  5,189 5,213
             
 Provision (benefit) for income taxes 623 489 661  1,112 1,227
 Net Income (Loss)$2,252$1,824$2,137 $4,077$3,986
             
             
 Per Share Data            
 Basic EPS$0.28$0.23$0.27 $0.50$0.49
 Diluted EPS$0.28$0.22$0.26 $0.50$0.49
             
 Average shares outstanding           
 Basic 8,090,000 8,075,764 8,062,225  8,082,921 8,056,069
 Effect of dilutive shares 25,299 32,659 30,799  28,941 34,220
 Diluted 8,115,299 8,108,423 8,093,024  8,111,862 8,090,289



State Bank Corp.            
Balance Sheets            
           
              
Dollars in thousands - Unaudited 6/30/2019  3/31/2019  12/31/2018  6/30/2018 
Consolidated Balance Sheets            
              
Assets            
 Cash and cash equivalents$5,040 $4,319 $4,061 $4,251 
 Interest bearing deposits 5,575  8,376  4,106  4,966 
 Overnight Funds 39,485  34,030  17,960  31,950 
 Available for sale securities   176,068    170,374    179,589    194,788 
 Total cash and securities 226,168  217,099  205,716  235,955 
              
 Loans held for sale, before reserves 7,294  6,174  2,375  4,817 
 Gross loans held for investment 406,342  411,159  407,264  362,308 
 Loan loss reserve   (4,546)   (4,139)   (3,824)   (3,647)
 Total net loans 409,090  413,194  405,815  363,478 
              
 Premises and equipment, net 15,093  15,171  14,315  14,180 
 Other real estate owned -  174  266  398 
 Federal Home Loan Bank and other stock 6,117  6,183  6,249  4,518 
 Company owned life insurance 11,424  11,360  11,802  11,672 
 Other assets   10,678    10,155    11,174    11,481 
              
   Total Assets$678,570 $673,336 $655,337 $641,682 
              
              
Liabilities            
 Non interest bearing demand$141,698 $136,761 $135,485 $125,877 
 Money market, NOW and savings 361,810  371,021  362,202  381,090 
 Time deposits <$250K 66,263  60,417  51,845  49,154 
 Time deposits >$250K   22,218    17,533    8,299    5,781 
 Total Deposits   591,989    585,732    557,831    561,902 
              
 Securities sold under repurchase agreements 6,260  5,176  5,001  4,064 
 Federal Home Loan Bank advances -  6,000  18,000  6,000 
 Subordinated debt, net of debt issuance costs   6,806    6,953    7,045    7,257 
 Total Debt 13,066  18,129  30,046  17,321 
              
 Other Liabilities   3,001    2,556    3,086    2,795 
   Total Liabilities 608,056  606,417  590,963  582,018 
              
              
Shareholders' Equity            
   Common stock 39,813  39,762  39,597  39,513 
   Accumulated retained earnings 30,695  29,049  27,831  24,204 
   Accumulated other comprehensive income   6    (1,892)   (3,054)   (4,053)
 Total shareholders equity 70,514  66,919  64,374  59,664 
              
   Total liabilities and shareholders' equity$678,570 $673,336 $655,337 $641,682 


State Bank Corp.
Five-Quarter Performance Summary
                
  For the Quarter Ended
Dollars in thousands - Unaudited 6/30/2019  3/31/2019  12/31/2018  9/30/2018  6/30/2018 
Performance Highlights               
                 
Earnings:               
 Total revenue (Net int. income + nonint. income)$7,449 $7,379 $7,622 $7,542 $7,259 
 Net interest income$6,071 $6,095 $6,060 $6,190 $5,873 
 Provision for loan losses$50 $300 $137 $160 $158 
 Noninterest income$1,378 $1,284 $1,562 $1,352 $1,386 
 Noninterest expense$4,524 $4,766 $4,744 $4,473 $4,303 
 Net income (loss)$2,252 $1,824 $2,283 $2,312 $2,137 
                 
Per Share Data:               
 Net income (loss), basic $0.28 $0.23 $0.28 $0.29 $0.27 
 Net income (loss), diluted $0.28 $0.22 $0.28 $0.29 $0.26 
 Cash dividends declared$0.075 $0.075 $0.06 $0.06 $0.06 
 Book value$8.71 $8.28 $7.98 $7.56 $7.40 
 Tangible book value$7.86 $7.42 $7.10 $6.67 $6.50 
                 
Performance Ratios:               
 Return on average assets  1.25% 1.02% 1.41% 1.44% 1.33%
 Return on average equity  13.07% 11.06% 14.53% 15.19% 14.48%
 Net interest margin, taxable equivalent 3.84% 3.95% 4.01% 4.12% 3.93%
 Average cost of funds 0.61% 0.54% 0.38% 0.29% 0.29%
 Average yield on loans 5.68% 5.70% 5.61% 5.87% 5.68%
 Efficiency ratio 60.73% 64.59% 62.24% 59.31% 59.28%
 Non-interest income to total revenue 18.50% 17.40% 20.49% 17.93% 19.09%
                 
Capital & Liquidity:               
 Total equity to total assets (EOP) 10.39% 9.94% 9.82% 9.48% 9.30%
 Tangible equity to tangible assets 9.47% 9.00% 8.84% 8.47% 8.26%
 Total loans to total deposits 69.87% 71.25% 73.43% 68.72% 65.34%
 Mohave State Bank               
 Common equity tier 1 ratio 13.91% 13.49% 13.18% 13.49% 13.83%
 Tier 1 leverage ratio 10.40% 10.39% 10.42% 10.23% 9.99%
 Tier 1 risk based capital 13.91% 13.49% 13.18% 13.49% 13.83%
 Total risk based capital  14.83% 14.32% 13.94% 14.26% 14.63%
                 
Asset Quality:               
 Gross charge-offs$15 $88 $- $77 $- 
 Net charge-offs (NCOs)$(357)$(15)$(2)$71 $(82)
 NCO to average loans, annualized -0.34% -0.01% 0.00% 0.08% -0.14%
 Non-accrual loans/securities$2,415 $1,302 $1,391 $657 $2,389 
 Other real estate owned$- $174 $266 $266 $399 
 Repossessed assets $- $- $- $- $- 
 Non-performing assets (NPAs)$2,415 $1,476 $1,657 $923 $2,788 
 NPAs to total assets 0.36% 0.22% 0.25% 0.14% 0.43%
 Loans >90 days past due$- $- $- $- $- 
 NPAs + 90 days past due$2,415 $1,476 $1,657 $923 $2,788 
 NPAs + loans 90 days past due to total assets 0.36% 0.22% 0.25% 0.14% 0.43%
 Allowance for loan losses to total loans 1.10% 0.99% 0.93% 0.97% 0.99%
 Allowance for loan losses to NPAs 188.24% 280.42% 230.78% 404.77% 134.00%
                 
Period End Balances:               
 Assets$678,570 $673,336 $655,337 $642,963 $641,682 
 Total Loans (before reserves)$413,636 $417,333 $409,639 $385,489 $367,125 
 Deposits$591,989 $585,732 $557,831 $560,952 $561,902 
 Stockholders' equity$70,514 $66,919 $64,374 $60,975 $59,664 
 Common stock market capitalization$97,120 $104,646 $99,208 $117,759 $126,632 
 Full-time equivalent employees 120  122  124  121  122 
 Shares outstanding 8,093,299  8,080,791  8,065,709  8,065,709  8,065,709 
                 
Average Balances:               
 Assets$717,839 $715,225 $649,673 $644,250 $640,327 
 Earning assets$634,681 $620,445 $607,149 $603,271 $599,968 
 Total Loans (before reserves)$415,774 $415,998 $400,116 $377,752 $369,705 
 Deposits$596,079 $562,399 $560,343 $562,683 $562,942 
 Other borrowings$12,457 $33,995 $17,649 $17,596 $16,622 
 Stockholders' equity$68,902 $65,986 $62,844 $60,901 $59,034 
 Shares outstanding, basic - wtd 8,090,000  8,075,764  8,065,709  8,065,709  8,062,225 
 Shares outstanding, diluted - wtd 8,115,299  8,108,423  8,092,290  8,092,983  8,093,024 


Contact:
Brian M. Riley, President & CEO
Craig Wenner, EVP & CFO
928 855 0000
www.mohavestbank.com