LAKE HAVASU CITY, Ariz., Feb. 01, 2019 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPink:SBAZ) (“Company”), the holding company for State Bank of Arizona (“Bank”), today reported that net income increased by 48.2% to $2.28 million, or $0.28 per diluted share, for the fourth quarter ended December 31, 2018, as compared to $1.54 million, or $0.19 per diluted share, for the fourth quarter of 2017.  In the preceding quarter, the Company reported earnings of $2.31 million, or $0.29 per diluted share. 

For the year ended December 31, 2018, net income grew by 36.3% to a record $8.58 million, or $1.06 per diluted share, compared to $6.29 million, or $0.78 per diluted share, for 2017. 

“2018 was a banner year for State Bank Corp. We produced record earnings for the year, highlighted by double digit loan growth, solid net interest income and a healthy net interest margin,” stated Brian M. Riley, President and Chief Executive Officer.  “Overall, these factors contributed to a return on average assets of 1.41% and a return on average equity of 14.53% for the quarter.  We have been successful at keeping operating expenses in check while growing the franchise, and now have both the infrastructure and banking teams in place to continue to grow. 

“Earlier this week, we opened our first full service branch in Phoenix, following the success of our loan production office opened there in May.  Our focus in the coming year remains on expanding market share in Phoenix, while continuing to look for growth opportunities in other Arizona markets,” added Riley.

Fourth Quarter 2018 Financial Highlights:

• Fourth quarter net income increased 48.2% to $2.28 million, or $0.28 per diluted share.
• Loans grew $23.0 million to $407.3 million.
• The net interest margin remained healthy at 4.01%.
  
• Return on average assets was 1.41%.
  
• Return on average equity was 14.53%.
  
• Tangible book value increased 11.5% to $7.10 per share from $6.37 per share a year earlier.
  

Net interest margin was 4.01% in the fourth quarter 2018 compared to 4.12% in the preceding quarter and 3.86% in the fourth quarter a year ago.  The decreased margin was a result of the recognition of interest income from a resolution of a large nonaccrual loan relationship in the previous quarter.

The provision for loan losses was $137,000 during the fourth quarter of 2018, with net recoveries of $2,000.  The allowance for loan losses totaled $3.8 million at December 31, 2018, or 0.93% of total loans.  Excluding acquired loans, the reserve ratio was 1.02%.  On the acquired portfolio, the credit component of the loan purchase discount remains greater than an imputed reserve.

Total assets were $655.3 million at December 31, 2018, an increase of $34.7 million, or 5.6%, from $620.6 million at December 31, 2017.  Total loans held for investment were $407.3 million as compared to $347.9 million at December 31, 2017, reflecting an increase of 17.0%. 

Total deposits were $557.8 million at year-end, an increase of $8.4 million, or 1.54%, from $549.4 million at December 31, 2017.  Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased to $497.7 million at December 31, 2018, or 2.3%, from $486.8 million at December 31, 2017.  Core deposits now comprise 89.2% of total deposits. 

Nonperforming assets were $1.7 million at December 31, 2018, a decrease from $6.9 million at December 31, 2017.  The decrease primarily consists of two loan relationships that the Company favorably resolved.  Nonperforming assets represented 0.25% of total assets at December 31, 2018. 

Shareholder equity increased to $64.4 million at December 31, 2018, from $58.7 million at December 31, 2017.  At December 31, 2018, tangible book value per share was $7.10 per share compared to $6.37 per share at December 31, 2017. 

Capital Management

State Bank Corp., and State Bank of Arizona, have consolidated capital ratios and Bank capital ratios that exceed the regulatory guidelines for a well-capitalized financial institution under the Basel III and Dodd Frank Wall Street Reform requirements.  The Bank reported the following capital ratios at December 31, 2018:

Common Equity Tier 1 Capital Ratio	13.18%
Tier 1 Leverage Ratio	10.42%
Tier 1 Capital Ratio	13.18%
Total Capital Ratio	13.94%

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 Bank also operates a loan production office in Sedona, AZ.  The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.statebankaz.com

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. Such risks and uncertainties include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the completed merger might not be realized within the expected time frames or at all. 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. and State Bank of Arizona 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		12/31/2018			9/30/2018			12/31/2017			12/31/2018			12/31/2017
Statements of Operations
	Interest income
	Loans, including fees	$	5,612		$	5,548		$	4,926		$	21,251		$	19,539
	Securities		891			904			855			3,588			2,844
	Fed funds and other		100			156			87			446			371
	Total interest income		6,603			6,608			5,868			25,285			22,754
	Interest expense
	Deposits		338			259			181			1,033			713
	Borrowings		205			159			108			611			424
	Total interest expense		543			418			289			1,644			1,137
	Net interest income		6,060			6,190			5,579			23,641			21,617
	Provision for loan losses		137			160			100			490			(290	)
	Net interest income after loan loss provision		5,923			6,030			5,479			23,151			21,907
	Noninterest income
	Service charges on deposits		190			170			147			648			575
	Mortgage loan fees		394			287			294			1,225			1,477
	Gain on sale of loans		360			366			605			1,744			1,902
	Other income		618			529			174			2,069			1,250
	Total noninterest income		1,562			1,352			1,220			5,686			5,204
	Noninterest expense
	Salaries and employee benefits		2,892			2,644			2,529			10,907			10,121
	Net occupancy expense		195			234			161			783			671
	Equipment expense		91			82			91			348			385
	Data processing		525			470			413			1,871			1,852
	Director fees & expenses		133			64			152			355			350
	Insurance		36			25			51			136			146
	Marketing & promotion		82			234			116			570			531
	Professional fees		98			177			93			726			425
	Office expense		62			70			30			141			162
	Regulatory assessments		53			54			55			228			237
	OREO and repossessed assets		(95	)		29			8			(53	)		656
	Other expenses		672			390			403			1,962			1,671
	Total noninterest expense		4,744			4,473			4,102			17,974			17,207
	Income (loss) before provision (benefit) for income taxes		2,741			2,909			2,597			10,863			9,904
	Provision (benefit) for income taxes		458			597			1,056			2,282			3,610
	Net Income (Loss)	$	2,283		$	2,312		$	1,541		$	8,581		$	6,294
Per Share Data
	Basic EPS	$	0.28		$	0.29		$	0.19		$	1.06		$	0.78
	Diluted EPS	$	0.28		$	0.29		$	0.19		$	1.06		$	0.78
	Average shares outstanding
	Basic		8,065,709			8,065,709			8,044,184			8,060,929			8,039,397
	Effect of dilutive shares		26,581			27,274			26,340			30,352			18,382
	Diluted		8,092,290			8,092,983			8,070,524			8,091,281			8,057,779

 

State Bank Corp.
Balance Sheets
Dollars in thousands - Unaudited		12/31/2018			9/30/2018			12/31/2017
Consolidated Balance Sheets
Assets
	Cash and cash equivalents	$	4,061		$	4,185		$	3,558
	Interest bearing deposits		4,106			5,027			6,835
	Overnight Funds		17,960			21,321			15,111
	Available for sale securities		179,589			186,291			206,137
	Total cash and securities		205,716			216,824			231,641
	Loans held for sale, before reserves		2,375			1,256			3,400
	Gross loans held for investment		407,264			384,233			347,951
	Loan loss reserve		(3,824	)		(3,736	)		(3,306	)
	Total net loans		405,815			381,753			348,045
	Premises and equipment, net		14,315			14,284			14,561
	Other real estate owned		266			266			691
	Federal Home Loan Bank and other stock		6,249			6,512			3,867
	Company owned life insurance		11,802			11,737			11,543
	Goodwill and Core Deposit Intangible		7,054			7,141			7,402
	Other assets		4,120			4,446			2,887
	Total Assets	$	655,337		$	642,963		$	620,637
Liabilities
	Non interest bearing demand	$	135,485		$	130,901		$	128,870
	Money market, NOW and savings		362,202			374,492			357,880
	Time deposits <$250K		51,845			48,014			58,214
	Time deposits >$250K		8,299			7,545			4,431
	Total Deposits		557,831			560,952			549,395
	Securities sold under repurchase agreements		5,001			4,404			3,616
	Federal Home Loan Bank advances		18,000			6,000			-
	Subordinated debt, net of debt issuance costs		7,045			7,151			7,361
	Total Debt		30,046			17,555			10,977
	Other Liabilities		3,086			3,481			1,608
	Total Liabilities		590,963			581,988			561,980
Shareholders' Equity
	Common stock		39,597			39,556			39,333
	Accumulated retained earnings		27,831			26,032			21,185
	Accumulated other comprehensive income		(3,054	)		(4,613	)		(1,861	)
	Total shareholders equity		64,374			60,975			58,657
	Total liabilities and shareholders' equity	$	655,337		$	642,963		$	620,637

 

State Bank Corp.
Five-Quarter Performance Summary
		For the Quarter Ended
Dollars in thousands - Unaudited		12/31/2018			9/30/2018			6/30/2018			3/31/2018			12/31/2017
Performance Highlights
Earnings:
	Total revenue (Net int. income + nonint. income)	$	7,622		$	7,542		$	7,259		$	6,903		$	6,799
	Net interest income	$	6,060		$	6,190		$	5,873		$	5,518		$	5,579
	Provision for loan losses	$	137		$	160		$	158		$	35		$	100
	Noninterest income	$	1,562		$	1,352		$	1,386		$	1,385		$	1,220
	Noninterest expense	$	4,744		$	4,473		$	4,303		$	4,453		$	4,102
	Net income (loss)	$	2,283		$	2,312		$	2,137		$	1,849		$	1,541
Per Share Data:
	Net income (loss), basic	$	0.28		$	0.29		$	0.27		$	0.23		$	0.19
	Net income (loss), diluted	$	0.28		$	0.29		$	0.26		$	0.23		$	0.19
	Cash dividends declared	$	0.06		$	0.06		$	0.06		$	0.06		$	0.04
	Book value	$	7.98		$	7.56		$	7.40		$	7.25		$	7.29
	Tangible book value	$	7.10		$	6.67		$	6.50		$	6.34		$	6.37
Performance Ratios:
	Return on average assets		1.41	%		1.44	%		1.33	%		1.18	%		0.98	%
	Return on average equity		14.53	%		15.19	%		14.48	%		12.64	%		10.52	%
	Net interest margin, taxable equivalent		4.01	%		4.12	%		3.93	%		3.78	%		3.86	%
	Average cost of funds		0.38	%		0.29	%		0.29	%		0.22	%		0.20	%
	Average yield on loans		5.61	%		5.87	%		5.68	%		5.44	%		5.63	%
	Efficiency ratio		62.24	%		59.31	%		59.28	%		64.51	%		60.33	%
	Non-interest income to total revenue		20.49	%		17.93	%		19.09	%		20.06	%		17.94	%
Capital & Liquidity:
	Total equity to total assets (EOP)		9.82	%		9.48	%		9.30	%		9.26	%		9.45	%
	Tangible equity to tangible assets		8.47	%		8.47	%		8.26	%		8.20	%		8.36	%
	Total loans to total deposits		73.43	%		68.72	%		65.34	%		64.73	%		63.95	%
	State Bank of Arizona
	Common equity tier 1 ratio		13.18	%		13.49	%		13.83	%		13.98	%		14.03	%
	Tier 1 leverage ratio		10.42	%		10.23	%		9.99	%		9.91	%		9.73	%
	Tier 1 risk based capital		13.18	%		13.49	%		13.83	%		13.98	%		14.03	%
	Total risk based capital		13.94	%		14.26	%		14.63	%		14.75	%		14.80	%
Asset Quality:
	Gross charge-offs	$	-		$	77		$	-		$	-		$	26
	Net charge-offs (NCOs)	$	(2	)	$	71		$	(82	)	$	(15	)	$	(173	)
	NCO to average loans, annualized		0.00	%		0.08	%		-0.14	%		-0.02	%		-0.20	%
	Non-accrual loans/securities	$	1,391		$	657		$	2,389		$	5,899		$	6,219
	Other real estate owned	$	266		$	266		$	399		$	529		$	691
	Repossessed assets	$	-		$	-		$	-		$	-		$	-
	Non-performing assets (NPAs)	$	1,657		$	923		$	2,788		$	6,428		$	6,910
	NPAs to total assets		0.25	%		0.14	%		0.43	%		1.02	%		1.11	%
	Loans >90 days past due	$	-		$	-		$	-		$	-		$	-
	NPAs + 90 days past due	$	1,657		$	923		$	2,788		$	6,428		$	6,910
	NPAs + loans 90 days past due to total assets		0.25	%		0.14	%		0.43	%		1.02	%		1.11	%
	Allowance for loan losses to total loans		0.93	%		0.97	%		0.99	%		0.93	%		0.94	%
	Allowance for loan losses to NPAs		230.78	%		404.77	%		134.00	%		52.21	%		47.84	%
Period End Balances:
	Assets	$	655,337		$	642,963		$	641,682		$	630,360		$	620,637
	Total Loans (before reserves)	$	409,639		$	385,489		$	367,125		$	361,435		$	351,351
	Deposits	$	557,831		$	560,952		$	561,902		$	558,414		$	549,395
	Stockholders' equity	$	64,374		$	60,975		$	59,664		$	58,381		$	58,657
	Common stock market capitalization	$	99,208		$	117,759		$	126,632		$	97,023		$	88,084
	Full-time equivalent employees		124			121			122			117			114
	Shares outstanding		8,065,709			8,065,709			8,065,709			8,051,677			8,044,184
Average Balances:
	Assets	$	649,673		$	644,250		$	640,327		$	627,504		$	626,759
	Earning assets	$	607,149		$	603,271		$	599,968		$	585,574		$	582,297
	Total Loans (before reserves)	$	400,116		$	377,752		$	369,705		$	355,848		$	349,866
	Deposits	$	560,343		$	562,683		$	562,942		$	556,608		$	556,169
	Other borrowings	$	17,649		$	17,596		$	16,622		$	11,028		$	10,226
	Stockholders' equity	$	62,844		$	60,901		$	59,034		$	58,519		$	58,609
	Shares outstanding, basic - wtd		8,065,709			8,065,709			8,062,225			8,049,845			8,044,184
	Shares outstanding, diluted - wtd		8,092,290			8,092,983			8,093,024			8,087,524			8,070,524

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

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