LAKE HAVASU CITY, Ariz., Feb. 06, 2018 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPink:SBAZ) (“Company”), the holding company for Mohave State Bank (“Bank”), today reported that net income increased by 69.0% to $1.54 million, or $0.19 per diluted share, for the fourth quarter ended December 31, 2017, as compared to $911,000, or $0.11 per diluted share, for the fourth quarter of 2016.  In the preceding quarter, the Company reported record earnings of $1.84 million, or $0.23 per diluted share. 

For the year ended December 31, 2017, net income grew by 66.8% to $6.29 million, or $0.78 per diluted share, compared to $3.78 million, or $0.56 per diluted share, for 2016. 

“We produced excellent financial results in 2017, which was truly a transformational year for our organization,” stated Brian M. Riley, President and Chief Executive Officer.  “The goal in 2017 was to optimize the post-merger performance of our Company.  The exceptional results speak to the efforts of our leadership team in building Arizona’s premier community bank.”

As a result of the Tax Cuts and Job Act enacted December 22, 2017, the company revalued its deferred tax assets and liabilities to account for the future impact of lower corporate tax rates and other provisions of the legislation. Based on its preliminary analysis, State Bank Corp. recorded a one-time net tax charge of $133,242, primarily related to the revaluation of these deferred tax items. This increase in income tax expense was reflected in State Bank Corp.’s operating results for the fourth quarter of 2017 and was in addition to the normal provision for income tax related to pre-tax net operating income.

“We recorded an additional tax expense of $133,242, or $.02 per share, due to the downward revision to our DTA value in the fourth quarter of 2017 because of the recently enacted tax legislation,” said Riley. “The effective tax rate for the current quarter was 35.1% (excluding the 4Q17 DTA charge). We believe our effective tax rate will decline to approximately 24.0% in 2018 and that the expected tax savings will be approximately $1.2 million on an annual basis. We plan to invest a portion of our 2018 tax savings into infrastructure, technology improvements and other strategic objectives.”

Fourth Quarter 2017 Financial Highlights:

• Fourth quarter net income increased 69.0% to $1.54 million, or $0.19 per diluted share.
  
  
• The net interest margin remained healthy compared to peer banks at 3.86%.
  
  
• Net loan loss recovery of $173,000.
  
  
• Core deposits comprised 88.6% of total deposits.
  
  
• Tangible book value increased 11.4% to $6.37 per share from $5.72 per share a year earlier.

Net interest margin was 3.86% in the fourth quarter 2017 compared to 3.99% in the preceding quarter and 3.85% in the fourth quarter a year ago.  Yield on loans decreased in the fourth quarter due to a one time interest reversal on a large non-accrual credit.  Average cost of funds remained steady at 20 basis points, even as the Company increased overall deposit rates to remain competitive in the marketplace.

The provision for loan losses was $100,000 during the fourth quarter of 2017, with net recoveries of $173,000.  The allowance for loan losses totaled $3.3 million at December 31, 2017, or 0.94% of total loans.  Excluding acquired loans, the reserve ratio was 1.12%, 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 $620.6 million at December 31, 2017, an increase of $37.5 million, or 6.4%, from $583.1 million at December 31, 2016.  Total loans held for investment were $347.9 million as compared to $323.2 million at December 31, 2016, reflecting an increase of 7.6%. 

Total deposits were $549.4 million at year-end, an increase of $33.1 million, or 6.4%, from $516.3 million at December 31, 2016.  Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased to $486.8 million at December 31, 2017, or 9.8%, from $442.9 million at December 31, 2016.  Core deposits now comprise 88.6% of total deposits. 

Nonperforming assets were $6.9 million at December 31, 2017, a slight increase from $6.1 million at December 31, 2016.  This amount primarily consists of two loan relationships that the Company is attempting to resolve in a favorable manner.  Nonperforming assets represented 1.11% of total assets at December 31, 2017. 

Shareholder equity increased to $58.7 million at December 31, 2017, from $53.8 million at December 31, 2016.  At December 31, 2017, tangible book value per share was $6.37 per share compared to $5.72 per share at December 31, 2016. 

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, 2017.  The Bank reported the following capital ratios at December 31, 2017:

Common Equity Tier 1 Capital Ratio				14.03%
Tier 1 Leverage Ratio				9.73%
Tier 1 Capital Ratio				14.03%
Total Capital Ratio				14.80%

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. and Mohave State Bank.  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	12/31/2017		9/30/2017			12/31/2016				12/31/2017			12/31/2016
Statements of Operations
Interest income
Loans, including fees	$	4,926		$	5,033		$	4,816		$	19,539		$	15,346
Securities		855			753			501			2,844			1,331
Fed funds and other		87			124			56			371			221
Total interest income		5,868			5,910			5,373			22,754			16,898
Interest expense
Deposits		181			177			206			713			718
Borrowings		108			108			97			424			322
Total interest expense		289			285			303			1,137			1,040
Net interest income		5,579			5,625			5,070			21,617			15,858
Provision for loan losses		100			50			-			(290	)		-
Net interest income after loan loss provision		5,479			5,575			5,070			21,907			15,858
Noninterest income
Service charges on deposits		147			151			131			575			404
Mortgage loan fees		294			461			351			1,477			1,087
Gain on sale of loans		605			449			357			1,902			1,193
(Loss)/Gain on securities		-			-			-			-			-
Other income		174			336			394			1,250			1,032
Total noninterest income		1,220			1,397			1,233			5,204			3,716
Noninterest expense
Salaries and employee benefits		2,529			2,521			2,555			10,121			7,320
Net occupancy expense		161			197			129			671			325
Equipment expense		91			101			106			385			255
Data processing		413			413			370			1,682			1,113
Director fees & expenses		152			77			75			350			189
Insurance		51			32			39			146			132
Marketing & promotion		116			147			134			531			385
Professional fees		93			110			108			425			132
Office expense		30			33			57			162			160
Regulatory assessments		55			56			13			237			182
OREO and repossessed assets		8			29			299			656			504
Other expenses		403			389			530			1,671			1,579
		4,102			4,105			4,415			17,037			12,276
Acquisition related costs		-			78			496			170			1,193
Total noninterest expense		4,102			4,183			4,911			17,207			13,469
Income (loss) before provision (benefit) for income taxes		2,597			2,789			1,392			9,904			6,105
Provision (benefit) for income taxes		1,056			947			481			3,610			2,330
Net Income (Loss)	$	1,541		$	1,842		$	911		$	6,294		$	3,775
Per Share Data
Basic EPS	$	0.19		$	0.23		$	0.11		$	0.78		$	0.56
Diluted EPS	$	0.19		$	0.23		$	0.11		$	0.78		$	0.56
Average shares outstanding
Basic		8,044,184			8,043,938			8,029,691			8,039,397			6,756,611
Effect of dilutive shares		26,340			27,253			-			18,382			-
Diluted		8,070,524			8,071,191			8,029,691			8,057,779			6,756,611

 

State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited	12/31/2017			9/30/2017			12/31/2016
Consolidated Balance Sheets
Assets
Cash and cash equivalents	$	3,558		$	3,195		$	5,202
Interest bearing deposits		6,835			8,254			24,524
Overnight Funds		15,110			28,865			33,680
Held for maturity securities		1			1			2
Available for sale securities		206,137			204,396			147,574
Total cash and securities		231,641			244,711			210,982
Loans held for sale, before reserves		3,400			4,289			5,870
Gross loans held for investment		347,951			345,202			323,210
Loan loss reserve		(3,306	)		(3,032	)		(3,058	)
Total net loans		348,045			346,459			326,022
Premises and equipment, net		14,561			14,732			15,071
Other real estate owned		691			577			3,955
Federal Home Loan Bank and other stock		3,867			3,867			3,308
Company owned life insurance		11,543			11,477			11,275
Other assets		10,289			10,255			12,554
Total Assets	$	620,637		$	632,078		$	583,167
Liabilities
Non interest bearing demand	$	128,870		$	138,629		$	116,696
Money market, NOW and savings		357,880			357,867			326,269
Time deposits <$250K		58,214			59,804			28,603
Time deposits >$250K		4,431			4,777			44,930
Total Deposits		549,395			561,077			516,498
Securities sold under repurchase agreements		3,616			2,932			4,188
Federal Home Loan Bank advances		-			-			-
Subordinated debt		7,361			7,354			7,336
Total Debt		10,977			10,286			11,524
Other Liabilities		1,608			2,480			1,366
Total Liabilities		561,980			573,843			529,388
Shareholders' Equity
Common stock		39,333			39,260			39,146
Accumulated retained earnings		21,185			19,660			15,791
Accumulated other comprehensive income		(1,861	)		(685	)		(1,158	)
Total shareholders equity		58,657			58,235			53,779
Total liabilities and shareholders' equity	$	620,637		$	632,078		$	583,167

 

State Bank Corp.
Five-Quarter Performance Summary
	For the Quarter Ended
Dollars in thousands - Unaudited	12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Performance Highlights
Earnings:
Total revenue (Net int. income + nonint. income)	$	6,799		$	7,307		$	6,657		$	6,349		$	6,303
Net interest income	$	5,579		$	5,625		$	5,282		$	5,137		$	5,070
Provision for loan losses	$	100		$	50		$	(440	)	$	-		$	-
Noninterest income	$	1,220		$	1,397		$	1,375		$	1,212		$	1,233
Noninterest expense	$	4,102		$	4,183		$	4,799		$	4,128		$	4,911
Net income (loss)	$	1,541		$	1,842		$	1,480		$	1,433		$	911
Per Share Data:
Net income (loss), basic	$	0.19		$	0.23		$	0.18		$	0.18		$	0.11
Net income (loss), diluted	$	0.19		$	0.23		$	0.18		$	0.18		$	0.11
Cash dividends declared	$	0.04		$	0.04		$	0.04		$	0.04		$	0.04
Book value	$	7.29		$	7.24		$	7.07		$	6.86		$	6.70
Tangible book value	$	7.29		$	6.31		$	6.13		$	5.90		$	5.72
Performance Ratios:
Return on average assets		0.98	%		1.20	%		0.99	%		0.98	%		0.62	%
Return on average equity		10.52	%		12.71	%		10.51	%		10.48	%		6.77	%
Net interest margin, taxable equivalent		3.86	%		3.99	%		3.84	%		3.89	%		3.85	%
Average cost of funds		0.20	%		0.20	%		0.21	%		0.21	%		0.23	%
Average yield on loans		5.63	%		5.83	%		5.94	%		5.73	%		5.81	%
Efficiency ratio		60.33	%		59.57	%		72.09	%		65.02	%		77.92	%
Non-interest income to total revenue		17.94	%		19.89	%		20.65	%		19.09	%		19.56	%
Capital & Liquidity:
Total equity to total assets (EOP)		9.45	%		9.21	%		9.43	%		9.34	%		9.22	%
Tangible equity to tangible assets		8.36	%		8.12	%		8.27	%		8.13	%		7.98	%
Total loans to total deposits		63.95	%		62.29	%		63.41	%		64.23	%		63.71	%
Mohave State Bank
Common equity tier 1 ratio		14.03	%		13.91	%		13.56	%		13.24	%		13.17	%
Tier 1 leverage ratio		9.73	%		9.64	%		9.65	%		9.63	%		9.40	%
Tier 1 risk based capital		14.03	%		13.91	%		13.56	%		13.24	%		13.17	%
Total risk based capital		14.80	%		14.63	%		14.27	%		13.95	%		13.90	%
Asset Quality:
Gross charge-offs	$	26		$	27		$	59		$	84		$	-
Net charge-offs (NCOs)	$	(173	)	$	19		$	(456	)	$	73		$	(11	)
NCO to average loans, annualized		-0.20	%		0.02	%		-0.54	%		0.09	%		-0.01	%
Non-accrual loans/securities	$	6,219		$	2,467		$	2,923		$	1,872		$	2,185
Other real estate owned	$	691		$	577		$	836		$	3,261		$	3,955
Repossessed assets	$	-		$	-		$	-		$	-		$	-
Non-performing assets (NPAs)	$	6,910		$	3,044		$	3,759		$	5,133		$	6,140
NPAs to total assets		1.11	%		0.48	%		0.62	%		0.87	%		1.05	%
Loans >90 days past due	$	-		$	3		$	-		$	-		$	-
NPAs + 90 days past due	$	6,910		$	3,047		$	3,759		$	5,133		$	6,140
NPAs + loans 90 days past due to total assets		1.11	%		0.48	%		0.62	%		0.87	%		1.05	%
Allowance for loan losses to total loans		0.94	%		0.87	%		0.90	%		0.89	%		0.93	%
Allowance for loan losses to NPAs		47.84	%		99.61	%		80.66	%		58.17	%		49.80	%
Period End Balances:
Assets	$	620,637		$	632,078		$	603,351		$	590,276		$	583,167
Total Loans (before reserves)	$	351,351		$	349,491		$	338,635		$	335,563		$	329,080
Deposits	$	549,395		$	561,077		$	534,019		$	522,463		$	516,498
Stockholders' equity	$	58,657		$	58,235		$	56,895		$	55,110		$	53,779
Common stock market capitalization	$	88,084		$	66,284		$	65,957		$	63,033		$	61,427
Full-time equivalent employees		114			117			127			127			120
Shares outstanding		8,044,184			8,044,184			8,043,517			8,029,691			8,029,691
Average Balances:
Assets	$	626,759		$	616,175		$	598,933		$	583,909		$	589,896
Earning assets	$	582,297		$	567,105		$	552,731		$	534,369		$	530,112
Total Loans (before reserves)	$	349,866		$	345,042		$	339,062		$	332,487		$	331,806
Deposits	$	556,169		$	545,944		$	522,443		$	516,107		$	514,366
Other borrowings	$	10,226		$	10,622		$	11,028		$	11,198		$	11,446
Stockholders' equity	$	58,609		$	57,968		$	56,305		$	54,673		$	53,800
Shares outstanding, basic - wtd		8,044,184			8,043,938			8,039,567			8,029,691			8,029,691
Shares outstanding, diluted - wtd		8,070,524			8,071,191			8,059,334			8,029,691			8,029,691

 

NON-GAAP FINANCIAL INFORMATION
(Unaudited)
	Three Months Ended
NON-GAAP PERFORMANCE MEASURES	Dec. 31, 2017				Sep. 30, 2017				Jun. 30, 2017
Return on average common equity, excluding acquisition related costs, net (1)		10.52	%			13.06	%			10.70	%
Return on average assets, excluding acquisition related costs, net (1)		0.98	%			1.23	%			1.01	%
Efficiency ratio, excluding acquisition related costs, net (2)		60.33	%			56.18	%			71.49	%
NON-GAAP EARNINGS PER SHARE
Basic (3)	$	0.19			$	0.24			$	0.19
Diluted (3)	$	0.19			$	0.23			$	0.19
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
	Three Months Ended
	Dec. 31, 2017				Sep. 30, 2017				Jun. 30, 2017
					(in thousands)
Net income	$	1,541			$	1,842			$	1,480
Acquisition related costs, net		-				78				40
Tax effect on acquisition related costs, net		-				(27	)			(14	)
Net income, excluding acquisition related costs, net (3)	$	1,541			$	1,893			$	1,506
	Three Months Ended
	Dec. 31, 2017				Sep. 30, 2017				Jun. 30, 2017
					(in thousands)
Total non-interest expenses	$	4,102			$	4,183			$	4,799
Acquisition related costs, net		-				78				40
Total non-interest expenses, excluding acquisition related costs, net (3)	$	4,102			$	4,105			$	4,759
(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

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