State Bank Corp. Reports Third Quarter 2008 Results LAKE HAVASU CITY, Ariz., Oct. 27, 2008 (GLOBE NEWSWIRE)
-- State Bank Corp. (OTC BB:SBAZ.OB - News), the holding company for
Mohave State Bank (``Bank''), announced third quarter 2008
net income of $621,000, a decrease of $908,000, or 59.4
percent, from the $1.52 million reported for same period
of 2007. Earnings per diluted share were $0.16 compared
with $0.39 for the prior-year third quarter, a decrease
of 58.9 percent. For the nine months of 2008, net income
was $2.93 million, or $0.76 per diluted share, compared
to $4.22 million, or $1.08 per diluted share for the same
period of 2007, down 30.6 percent and 29.6 percent, respectively.
The decrease in net income for both periods was primarily
attributable to increased loan loss provisions. Third quarter 2008 highlights include:
* The successful launch of the Certificate of Deposit Account
Registry Service ("CDARS") product. CDARS accounted for $12.7
million, or 5.0 percent of total deposits, at September 30, 2008.
Given market concern surrounding FDIC insurance, the CDARS product
was helpful in retaining large key deposit relationships.
* Continued operating efficiency improvement. The Bank's efficiency
ratio fell to 52.4 percent from 53.2 percent in the linked quarter.
The Bank continues to emphasize expense control throughout its
operations.
* Strong loan growth of $42.4 million, or 16.7 percent, over the
past twelve months, and a 6.3 percent increase from the linked
quarter, to $296.8 million at September 30, 2008. Primary growth
sectors include residential real estate and commercial real
estate. The Bank has taken steps to curb loan growth and believes
that originations will slow in subsequent quarters.
President and CEO Ralph Tapscott stated, ``Our third quarter results were disappointing, but we strongly felt it was important to increase our loan loss reserves given the challenging credit environment we face. Despite the increased loss provisions, we have earned nearly $3 million so far this year. We are pleased to report that net interest income continues to show improvement during the last few quarters and operating expenses remain in check.'' The returns on average assets and equity for the third quarter of 2008 were 0.68 percent and 6.77 percent, respectively, compared with 1.70 percent and 17.39 percent for the year-ago quarter. Year-to-date, the return on average assets was 1.10 percent and the return on equity was 10.79 percent in 2008, compared to 1.58 percent and 17.15 percent in 2007, respectively. Results from Operations Total revenue, consisting of net interest income and noninterest income, was $4.41 million for the third quarter 2008, down $91,000, or 2.0 percent, from the third quarter of 2007. Year over year, net interest income decreased just $68,000, or 1.7 percent, to $3.98 million, reflecting a 42 basis point decrease in the net interest margin to 4.56 percent. This margin contraction was partially offset by a $24.1 million increase in average earning assets. Noninterest income for the third quarter of 2008 was $430,000, compared with $453,000 for the year-ago quarter, a decrease of $23,000, or 5.1 percent. This decrease resulted from a reduction in mortgage banking revenue as the volume of loans originated for sale in the third quarter fell by 6.7 percent compared to same quarter of last year. The Bank provided $1.15 million to its loan loss reserve in the third quarter of 2008, compared to $90,000 in the same quarter of 2007. This increase primarily reflects growth in nonperforming assets. Year-to-date, the Bank provided $1.47 million to the loan loss reserve, compared to $455,000 during the same period in 2007. Noninterest expense for the third quarter of 2008 was $2.31 million compared with $2.25 million for the prior-year quarter. The Bank opened its Hualapai Mountain branch in Kingman, AZ in December 2007 and the operating expenses for this office are not included in the prior year period. The 2008 third quarter efficiency ratio was 52.4 percent, compared to 53.2 percent for the linked quarter and 50.0 percent for the year-ago quarter. ``Expense management is a key discipline and focus for our organization. The third quarter 2008 noninterest expense was at the lowest level in four quarters,'' commented Mr. Tapscott. Balance Sheet Total assets were $368.4 million at September 30, 2008, up $21.9 million, or 6.3 percent, from the $346.6 million reported at September 30, 2007. Total loans increased $42.4 million or 16.7 percent year over year, to $296.8 million. Commercial real estate loans, which totaled $134.2 million or 45.2 percent of the overall loan portfolio at September 30, 2008, up $18.0 million, or 15.4 percent, over the past twelve months. Residential loans, which totaled $47.6 million or 16.0 percent of the loan portfolio at September 30, 2008, grew $17.1 million. Mr. Tapscott noted, ``With the ongoing real estate downturn, we have intentionally taken steps to control future growth. As a result, we expect minimal balance sheet growth over the next twelve months.'' Nonperforming assets at September 30, 2008 were $15.3 million, or 4.2 percent of total assets as compared to $252,000 at September 30, 2007. As with other real estate lenders throughout the country, the Bank is experiencing challenges in its construction and commercial real estate loan portfolios. The real estate market in Arizona ranks as one of the hardest hit in the nation. Of the nonperforming assets at September 30, 2008, 83% of the total is comprised of only four large credits, all of which are secured by real estate. Net charge-offs for the third quarter 2008 were $190,000, or 26 basis points of annualized average loans. This compares to net recovery of $34,000 for the year-ago quarter. The quarter-end allowance for loan losses was 1.60 percent of total loans, compared with 1.41 percent for prior-year quarter end. Deposits at September 30, 2008 were $252.5 million, a decrease of $13.3 million, or 5.2 percent, from the $265.8 million reported at September 30, 2007. Recently released FDIC market share indicated that Mohave County, AZ experienced a 5.3 percent decrease in deposits between June 2007 and June 2008. In addition to general liquidity challenges within the industry, one of the Bank's large commercial customers, which had accumulated funds in a deposit account at June 2008, full deployed these funds in the operation of its business during the past quarter. ``The third quarter was a very difficult period for bank deposits. We were fortunate to have had the CDARS product and training to help our customers with their individual FDIC insurance needs,'' stated Mr. Tapscott. Shareholder equity increased 7.6 percent to $36.3 million at September 30, 2008 from $33.8 million at September 30, 2007. Mohave State Bank exceeds regulatory standards to qualify as a ``well-capitalized'' institution at September 30, 2008 with a risk-based capital ratio of 12.20 percent. Mr. Tapscott concluded, ``Even with the current market difficulties, the strength of Mohave State Bank's capital position and earnings potential provide us with great flexibility in resolving the few problems we have within our balance sheet. We continue to be diligent in identifying loan portfolio weakness and will take whatever steps necessary to resolve these credit concerns. The commitment of Mohave State Bank has always been to deliver quality service and competitive financial products within our communities. We value the long-term relationships that we have with our customers and believe this is a source of strength during difficult times.'' 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 six full-service branches: two in Lake Havasu City, two in Kingman, one in Bullhead City, and one in Yuma, Arizona. The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: http://www.mohavestbank.com. Forward-looking Statements This press release may include forward-looking statements about State Bank Corp. (the ``Company'') for which the Company claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the corporation'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, credit quality of borrowers, 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.
COMPARATIVE FINANCIAL STATEMENT FOLLOW
State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
--------------------------------------------------------
Dollars in
thousands 9/30/2008 6/30/2008 3/31/2008 12/31/2007 9/30/2007
---------------------------------------------------------------------
Performance
Highlights
Earnings:
Total revenue
(Net int
income +
nonint
income) $ 4,411 $ 4,446 $ 4,109 $ 4,382 $ 4,502
Net interest
income $ 3,981 $ 3,943 $ 3,639 $ 3,893 $ 4,049
Provision for
loan losses $ 1,145 $ 195 $ 130 $ 65 $ 90
Noninterest
income $ 430 $ 503 $ 470 $ 489 $ 453
Noninterest
expense $ 2,309 $ 2,363 $ 2,315 $ 2,336 $ 2,253
Net income $ 621 $ 1,245 $ 1,064 $ 1,285 $ 1,463
Per Share
Data:
Net income,
basic $ 0.16 $ 0.32 $ 0.28 $ 0.33 $ 0.39
Net income
before
extra-
ordinary
items,
diluted $ 0.16 $ 0.32 $ 0.28 $ 0.33 $ 0.39
Net income,
diluted $ 0.16 $ 0.32 $ 0.28 $ 0.33 $ 0.39
Cash
dividends
declared $ 0.10 $ 0.10 $ 0.10 $ 0.16 $ 0.10
Book value $ 9.54 $ 9.40 $ 9.33 $ 9.09 $ 8.67
Tangible
book value $ 9.54 $ 9.40 $ 9.33 $ 9.09 $ 8.67
Performance
Ratios:
Return on
average
assets 0.68% 1.40% 1.21% 1.47% 1.70%
Return on
average
equity 6.77% 13.78% 11.91% 14.74% 17.39%
Net interest
margin,
taxable
equivalent 4.56% 4.69% 4.42% 4.73% 4.98%
Average cost
of funds 2.12% 2.18% 2.71% 2.91% 3.08%
Average yield
on loans 6.99% 7.55% 7.70% 8.48% 8.91%
Efficiency
ratio 52.35% 53.15% 56.34% 53.31% 50.04%
Non-interest
income to
total revenue 9.75% 11.31% 11.44% 11.16% 10.06%
Capital &
Liquidity:
Total equity
to total
assets (EOP) 9.85% 10.11% 10.06% 9.84% 9.69%
Tangible
equity to
tangible
assets 9.85% 10.11% 10.06% 9.84% 9.69%
Total loans
to total
deposits 117.52% 98.94% 97.74% 101.55% 95.69%
Mohave State Bank
-----------------
Regulatory
Capital 9.88% 9.92% 9.85% 9.73% 9.71%
Tier 1
Capital 10.95% 11.57% 11.51% 11.44% 11.88%
Risk Based
Capital 12.20% 12.81% 12.74% 12.67% 13.13%
Asset Quality:
Gross charge-
offs $ 195 $ 108 $ 88 $ 55 $ --
Net charge-
offs
(NCOs) $ 190 $ 72 $ 88 $ 46 $ (34)
NCO to
average
loans,
annualized 0.26% 0.11% 0.13% 0.07% -0.05%
Non-accrual
loans $ 15,333 $ 4,087 $ 4,475 $ 585 $ 252
Other real
estate
owned $ -- $ 205 $ -- $ -- $ --
Repossessed
assets $ -- $ -- $ -- $ -- $ --
Non-
performing
assets
(NPAs) $ 15,333 $ 4,292 $ 4,475 $ 585 $ 252
NPAs to
total
assets 4.16% 1.20% 1.24% 0.16% 0.07%
Loans
greater
than 90
days
past due $ -- $ -- $ -- $ -- $ --
NPAs + 90
days
past due $ 15,333 $ 4,292 $ 4,475 $ 585 $ 252
NPAs + loans
90 days
past due
to total
assets 4.16% 1.20% 1.24% 0.16% 0.07%
Allowance for
loan losses
to total
loans 1.60% 1.35% 1.36% 1.36% 1.41%
Allowance
for loan
losses to
NPAs 30.87% 88.05% 81.68% 617.61% 1429.76%
Period End
Balances:
Assets $ 368,446 $ 359,081 $ 359,886 $ 352,236 $ 346,586
Total Loans
(before
reserves) $ 296,778 $ 279,155 $ 268,143 $ 265,298 $ 254,386
Deposits $ 252,528 $ 282,138 $ 274,349 $ 261,256 $ 265,841
Stockholders'
equity $ 36,304 $ 36,318 $ 36,202 $ 34,658 $ 33,567
Common stock
market
capitaliza-
tion $ 63,456 $ 71,109 $ 69,164 $ 94,758 $ 93,164
Full-time
equivalent
employees 90 90 91 92 85
Shares
outstanding 3,845,808 3,843,754 3,831,819 3,836,351 3,881,844
Average
Balances:
Assets $ 363,509 $ 355,081 $ 351,318 $ 349,664 $ 345,045
Earning
assets $ 349,526 $ 336,165 $ 329,444 $ 328,981 $ 325,474
Total Loans
(before
reserves) $ 291,363 $ 264,493 $ 264,493 $ 260,492 $ 252,455
Deposits $ 257,766 $ 270,768 $ 266,946 $ 277,858 $ 271,650
Other
borrowings $ 67,296 $ 46,640 $ 46,981 $ 41,270 $ 37,446
Stockholders'
equity $ 36,705 $ 36,139 $ 35,737 $ 34,873 $ 33,649
Shares
outstanding,
basic - wtd 3,844,178 3,842,544 3,831,528 3,863,930 3,884,355
Shares
outstanding,
diluted
- wtd 3,855,583 3,856,640 3,838,528 3,871,383 3,891,808
State Bank Corp.
Income Statements
For the Quarter Ended Year to Date
--------------------- --------------------
Dollars in thousands 9/30/2008 9/30/2007 9/30/2008 9/30/2007
----------------------------------------------- --------------------
Condensed Statements of
Income
Interest income
Loans, including fees $ 5,090 $ 5,626 $ 15,178 $ 16,504
Securities 615 772 1,995 2,421
Fed funds 1 36 22 446
--------- --------- --------- ---------
Total interest income 5,706 6,434 17,195 19,371
--------- --------- --------- ---------
Interest expense
Deposits 1,320 1,983 4,579 5,936
Borrowings 405 400 1,006 1,265
--------- --------- --------- ---------
Total interest expense 1,725 2,383 5,585 7,201
--------- --------- --------- ---------
Net interest income 3,981 4,051 11,610 12,170
--------- --------- --------- ---------
Provision for loan
losses 1,145 90 1,470 455
--------- --------- --------- ---------
Net interest income
after loan loss
provision 2,836 3,961 10,140 11,715
--------- --------- --------- ---------
Noninterest income
Service charges on
deposits 193 161 530 425
Mortgage loan fees 18 40 90 180
Gain/losses on sale of
loans 168 141 573 502
Other income 51 28 163 102
--------- --------- --------- ---------
Total noninterest
income 430 370 1,356 1,209
--------- --------- --------- ---------
Noninterest expense
Salaries and employee
benefits 1,273 1,287 3,842 4,027
Net occupancy expense 117 75 332 202
Equipment expense 68 57 227 167
Data processing 314 340 1,031 905
Director fees & expenses 106 69 341 320
Insurance 31 11 59 35
Marketing & promotion 124 114 382 328
Professional fees -- (15) 90 99
Office expense 61 55 206 181
Regulatory assessments 50 5 135 20
Other expenses 165 108 342 242
--------- --------- --------- ---------
Total noninterest
expense 2,309 2,106 6,987 6,526
--------- --------- --------- ---------
Income before income
taxes 957 2,225 4,509 6,398
--------- --------- --------- ---------
Income taxes 336 696 1,579 2,177
--------- --------- --------- ---------
Net Income $ 621 $ 1,529 $ 2,930 $ 4,221
========= ========= ========= =========
Per Share Data
Basic EPS $ 0.16 $ 0.39 $ 0.76 $ 1.09
Diluted EPS $ 0.16 $ 0.39 $ 0.76 $ 1.08
Average shares outstanding
Basic 3,844,178 3,884,355 3,839,608 3,886,061
Effect of dilutive shares 11,405 7,453 11,600 11,353
--------- --------- --------- ---------
Diluted 3,855,583 3,891,808 3,851,208 3,897,414
--------- --------- --------- ---------
State Bank Corp.
Balance Sheets
For the Quarter Ended
--------------------------------
Dollars in thousands 9/30/2008 6/30/2008 9/30/2007
----------------------------------------------------------------
Consolidated Balance Sheets
Assets
Cash and cash equivalents $ 5,336 $ 7,275 $ 8,499
Held for maturity securities 1,542 5,498 12,548
Available for sale securities 49,123 50,188 55,812
--------- --------- ---------
Total cash and securities 56,001 62,961 76,859
Loans held for sale, before
reserves $ 259 $ 1,653 $ 533
Gross loans held for investment 295,916 277,502 253,855
Loan loss reserve (4,734) (3,779) (3,603)
--------- --------- ---------
Total net loans 291,441 275,376 250,785
Premises and equipment, net $ 10,161 $ 10,239 $ 8,716
Deferred taxes 1,301 1,356 1,549
Federal Home Loan Bank and
other stock 2,524 1,801 1,658
Company owned life insurance 4,915 4,868 4,729
Other assets 2,103 2,480 2,290
--------- --------- ---------
Total Assets $ 368,446 $ 359,081 $ 346,586
========= ========= =========
Liabilities
Non interest bearing demand $ 49,429 $ 72,833 $ 56,395
Money market, NOW and savings 119,717 129,745 129,061
Time deposits less than $100K 42,923 32,819 32,305
Time deposits greater than
$100K 40,459 46,741 48,051
--------- --------- ---------
Total Deposits 252,528 282,138 265,812
--------- --------- ---------
Securities sold under
repurchase agreements 28,392 18,282 30,067
Federal Home Loan Bank advances 49,466 20,850 14,800
--------- --------- ---------
Total Debt 77,858 39,132 44,867
Other Liabilities 1,756 1,493 2,155
--------- --------- ---------
Total Liabilities 332,142 322,763 312,834
Shareholders' Equity
Common stock $ 21,616 $ 21,589 $ 21,459
Accumulated retained earnings 14,493 14,642 12,580
Accumulated other comprehensive
income (loss) 195 87 (287)
--------- --------- ---------
Total shareholders equity $ 36,304 $ 36,318 $ 33,752
Total liabilities and
shareholders' equity $ 368,446 $ 359,081 $ 346,586
========= ========= =========
State Bank Corp.
Deposit and Loan Mix
For the Quarter Ended
------------------------------------------------
Dollars in 9/30/ 6/30/ 3/31/ 12/31/ 9/30/
thousands 2008 2008 2007 2007 2007
---------------------------------------------------------------------
Deposit and Loan Mix
Deposit Breakout
Non interest bearing
demand $ 49,429 $ 72,833 $ 53,670 $ 48,966 $ 56,424
Interest bearing
NOW 4,013 4,292 4,133 4,112 3,608
Savings 3,989 4,195 3,738 3,802 4,041
Money market 111,715 121,258 130,439 123,916 121,411
Time deposits less
than $100K 42,923 32,819 33,330 30,405 32,305
Time deposits
greater than $100K 40,459 46,741 49,039 50,055 48,052
-------- -------- -------- -------- --------
Total deposits $252,528 $282,138 $274,349 $261,256 $265,841
Loan Breakout
Commercial and
industrial $ 32,578 $ 33,716 $ 33,100 $ 33,912 $ 30,513
Real estate -
construction 80,755 79,881 77,212 74,917 75,816
Real estate -
residential 47,590 43,076 36,891 34,958 30,530
Real estate -
commercial 134,202 121,339 119,872 120,371 116,252
Consumer 1,653 1,762 1,745 1,860 1,976
-------- -------- -------- -------- --------
Total loans $296,778 $279,774 $268,820 $266,018 $255,087
Less unearned fees
and interest 603 619 677 720 701
-------- -------- -------- -------- --------
Total loans net of
unearned fees and
interest $296,175 $279,155 $268,143 $265,298 $254,386
Less allowance for
loan losses 4,734 3,779 3,655 3,613 3,603
-------- -------- -------- -------- --------
Loans, net $291,441 $275,376 $264,488 $261,685 $250,783
Nonperforming Loans
Commercial and
industrial $ 68 $ 8 $ -- $ -- $ --
Real estate -
construction 8,219 4,284 4,475 585 252
Real estate -
residential 694 -- -- -- --
Real estate -
commercial 6,317 -- -- -- --
Consumer 35 -- -- -- --
-------- -------- -------- -------- --------
Total nonperforming
loans $ 15,333 $ 4,292 $ 4,475 $ 585 $ 252
Contact: State Bank Corp.
Ralph E. Tapscott, President and CEO
rtapscott@mohavestbank.com
Brian M. Riley, EVP and CFO
briley@mohavestbank.com
(928) 855-0000
Source: State Bank Corp.
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