State Bank Corp. Earnings Double YOY to $1.43 million, or $0.18 per Diluted Share, in 1Q17; Non-performing Assets Decline to Lowest Levels Since 2007

LAKE HAVASU CITY, Ariz., April 28, 2017 -- State Bank Corp. (OTCPink:SBAZ)(“Company”), the holding company for Mohave State Bank (“Bank”), today announced net income increased 104.3% to $1.43 million, or $0.18 per diluted share, for the first quarter ended March 31, 2017, as compared to net income of $700,000, or $0.12 per diluted share, for the first quarter of 2016.  Excluding costs related to its acquisition of Country Bank, net income for the quarter would have been $1.47 million, a 110.0% increase compared to the first quarter one year ago. (See “Non-GAAP Financial Information” table)

“Our first quarter’s strong operating performance, improved efficiencies, growing balance sheet and decline in non-performing assets contributed to the near record first quarter net income,” stated Brian M. Riley, President and Chief Executive Officer. “The profitability of our bank is growing as the markets we serve in Arizona continue to benefit from a strong economy and a population that is rising faster than the national average.”

First Quarter 2017 Financial Highlights:

• Completion of the Bank’s core processing conversion.

• Net income, excluding merger related expenses, was $1.47 million, or $0.18 per diluted share.

• Non-performing assets fell below 1.0% of total assets for the first time since 2007.

• Return on average assets, excluding merger related expenses, was 1.00%.

• Return on average equity, excluding merger related expenses, was 10.73%.

“Our net interest margin increased four basis points compared to the preceding quarter and decreased 19 basis points compared to the first quarter a year ago. The slight increase from the prior quarter is primarily due to lower cost of funds,” said Riley.  Net interest margin was 3.89% in the first quarter 2017 compared to 3.85% in the preceding quarter and 4.08% in the first quarter a year ago. 

There was no provision for loan losses in the first quarter, with net charge-offs of $73,000.  The allowance for loan losses totaled $3.0 million at March 31, 2017, or 0.89% of total loans.  Excluding acquired loans, the reserve ratio was 1.17%, 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 $590.3 million at March 31, 2017, an increase of $7.1 million, or 1.22%, from $583.2 million at December 31, 2016, and an increase of $252.1 million, or 74.5%, compared to $338.2 million a year ago.  Total loans held for investment were $333.0 million as compared to $323.2 million at December 31, 2016, and $216.5 million at March 31, 2016.  Total loan comparisons were affected by the addition of $107.0 million in loans from the acquisition of Country Bank.

Total deposits were $522.5 million, an increase of $6.0 million, or 1.16%, from $516.5 million at December 31, 2016, and an increase of $233.9 million, or 81.1%, compared to $288.6 million a year ago.  Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 2.09% compared to three months earlier and increased 96.5% compared to a year earlier to $452.2 million at March 31, 2017.  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 86.6% of total deposits. 

Non-performing assets were $5.1 million at March 31, 2017, a 16.4% decrease from $6.1 million at December 31, 2016.  Nonperforming assets represented 0.87% of total assets at March 31, 2017, which represents its lowest level since fourth quarter 2007. 

Shareholder equity increased to $55.1 million at March 31, 2017, from $53.8 million at December 31, 2016.  At March 31, 2017, tangible book value per share was $5.90 per share compared to $5.76 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 March 31, 2017.  The Bank reported the following capital ratios at March 31, 2017:

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 this disclosure can 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 community bank headquartered in Arizona.  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. 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.; 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 Mohave State Bank assume no obligation to update any forward-looking statements.

UNAUDITED FINANCIAL STATEMENTS FOLLOW

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

The Cereghino Group
IR CONTACT: 206-388-5785