State Bank Financial Corporation Reports Second Quarter 2018 Financial Results


  • Net income of $18.8 million, or $.48 per diluted share, in the second quarter of 2018
  • Return on assets of 1.52% and return on equity of 11.56%
  • Noninterest-bearing deposit growth of $97.4 million, a 9% linked-quarter increase
  • Announced definitive merger agreement with Cadence Bancorporation in May
  • Merger-related expenses of $2.6 million in the second quarter of 2018

ATLANTA, July 24, 2018 (GLOBE NEWSWIRE) -- State Bank Financial Corporation (NASDAQ:STBZ) today announced unaudited financial results for the second quarter of 2018.  Net income for the second quarter of 2018 was $18.8 million, compared to $17.4 million in the first quarter of 2018, and $15.2 million in the second quarter of 2017. Fully diluted earnings per share were $.48 in the second quarter of 2018, compared to $.44 in the first quarter of 2018 and $.39 in the second quarter of 2017.

Joe Evans, Chairman of State Bank Financial, commented, “Our team is doing a great job of taking care of business while also working diligently to make our announced merger with Cadence Bancorporation a success. I am excited about the $16 billion regional bank we are building that will be a formidable competitor in our markets.”

Operating Highlights

Interest income on loans improved to $50.4 million in the second quarter of 2018, a $2.0 million increase from the first quarter of 2018 and a $15.5 million increase from the second quarter of 2017.  Net interest income of $56.1 million in the second quarter of 2018 increased from $54.9 million in the first quarter of 2018 and $46.5 million in the second quarter of 2017.  Accretion income on loans was $6.6 million in the second quarter of 2018, up from $5.9 million in the first quarter of 2018, but down from $9.2 million in the second quarter of 2017.

Noninterest income was $10.9 million in the second quarter of 2018, compared to $10.5 million in the first quarter of 2018 and $10.5 million in the second quarter of 2017.  Revenues from mortgage banking and SBA increased $200,000 and $60,000, respectively, in the second quarter of 2018, compared to the first quarter of 2018. Gain on sale of securities totaled $250,000 in the second quarter of 2018.

Total noninterest expense for the second quarter of 2018 was $40.0 million, compared to $39.3 million in the first quarter of 2018 and $32.0 million in the second quarter of 2017.  The increase was primarily due to $2.6 million in merger-related expenses, a $1.3 million increase compared to the first quarter of 2018. Merger expenses increased as a result of the pending merger with Cadence Bancorporation that was announced during the second quarter of 2018. Salaries and employee benefit expenses decreased $1.8 million compared to the first quarter of 2018.

Financial Condition

Total assets at June 30, 2018, were $5.0 billion, up from $4.9 billion at March 31, 2018.  Total loans were $3.6 billion at June 30, 2018, down $13.2 million from the first quarter of 2018.  Period-end organic loans increased to $2.7 billion at June 30, 2018, an increase of $148.4 million from the first quarter of 2018.  Purchased non-credit impaired loans decreased to $793.1 million at June 30, 2018, a $152.6 million linked-quarter decline.  Purchased credit impaired loans decreased to $148.5 million at June 30, 2018, a $9.1 million linked-quarter decline.

Past due organic and purchased non-credit impaired loans were .16% and .36% of their respective portfolios at June 30, 2018. The provision for loan losses on organic and purchased non-credit impaired loans was $2.6 million in the second quarter of 2018 and was primarily attributable to organic loan growth in the quarter. The organic allowance as a percent of organic loans was .99% at the end of the second quarter of 2018.

Total deposits at June 30, 2018, were $4.3 billion, up $118.3 million from March 31, 2018. Noninterest-bearing demand deposits represented 27.6% of total deposits as of June 30, 2018. Period-end and average noninterest-bearing demand deposits were $1.2 billion and $1.1 billion, respectively, a $97.4 million and $66.4 million increase from the first quarter of 2018.

Tom Wiley, Vice Chairman and CEO, commented, “We experienced solid growth in total deposits in the second quarter, which increased 3% from the first quarter, including 9% growth in noninterest-bearing deposits. We continue to focus on growing low-cost core deposits and delivering an exceptional experience for our clients.”

Tangible book value per share was $14.38 at the end of the second quarter of 2018.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 11.75% and a Tier I risk-based capital ratio of 12.79%.

Detailed Results

Supplemental tables displaying financial results for the second quarter of 2018, the previous four quarters, and the first half of 2018 are included with this press release.

Non-GAAP Financial Measures

This press release contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  For more information on these non-GAAP financial measures, please refer to 2Q18 Financial Supplement: Table 8, Reconciliation of Non-GAAP Measures.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ:STBZ), with approximately $5.0 billion in assets as of June 30, 2018, is an Atlanta-based bank holding company for State Bank and Trust Company.  State Bank operates a full service banking business and offers a broad range of commercial and retail banking products to our customers throughout seven of Georgia’s eight largest MSAs.

To learn more about State Bank, visit www.statebt.com

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release and other information that we make publicly available from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “intend,” “anticipate,” “plan,” “seek,” “believe,” “expect,” “focus,” “strategy,” “future,” “likely,” “project,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements regarding our pending merger with Cadence Bancorporation (“Cadence”). Such forward-looking statements are subject to risks, uncertainties, and other factors, including a downturn in the economy, particularly in our markets; volatile credit and financial markets both domestic and foreign; potential deterioration in real estate values; regulatory changes and excessive loan losses; the occurrence of any event, change or other circumstances that could give rise to the right of Cadence or us to terminate the definitive merger agreement; the outcome of any legal proceedings that may be instituted against Cadence or us; the failure to obtain necessary regulatory approvals for our merger with Cadence (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction), and approval of our shareholders or to satisfy any of the other conditions to the merger on a timely basis or at all; the possibility that the anticipated benefits of the merger are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Cadence and State Bank do business; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the merger; Cadence’s ability to complete the acquisition and integration of State Bank successfully; and other factors that may affect ours or Cadence’s future results, as well as additional risks and uncertainties contained in the “Risk Factors” and forward-looking statements disclosure contained in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, any or all of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Important Additional Information

In connection with the proposed transaction between Cadence and State Bank Financial Corporation, Cadence has filed with the SEC a Registration Statement on Form S-4 (Registration Statement No. 333-225587 (the “Registration Statement”) including a joint information statement of Cadence and proxy statement of State Bank Financial Corporation and a prospectus of Cadence, as well as other relevant documents concerning the proposed transaction. The proposed transaction will be submitted to State Bank Financial Corporation’s shareholders for their consideration. Cadence Bancorp, LLC, the controlling stockholder of Cadence, has delivered a written consent approving the proposed transaction. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Stockholders of Cadence and shareholders of State Bank Financial Corporation are urged to read the Registration Statement, information statement, proxy statement and prospectus regarding the transaction and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain important information about the transaction.

Shareholders are able to obtain a free copy of the Registration Statement, information statement, proxy statement and prospectus, as well as other filings containing information State Bank Financial Corporation and Cadence, without charge, at the SEC’s website (http://www.sec.gov). Copies of the Registration Statement, information statement, proxy statement and prospectus and the filings with the SEC that are incorporated by reference therein can also be obtained, without charge, by directing a request to State Bank Financial Corporation, 3399 Peachtree Road NE, Suite 1900, Atlanta, Georgia 30326, Attention: Corporate Secretary or Cadence Bancorporation, 2800 Post Oak Boulevard, Suite 3800, Houston, Texas 77056, Attention: Corporate Secretary.

Participants in the Solicitation

State Bank Financial Corporation, Cadence and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding State Bank Financial Corporation’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 12, 2018, and certain of its Current Reports on Form 8-K. Information regarding Cadence’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 30, 2018, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Registration Statement, information statement, proxy statement and prospectus and other relevant materials filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

State Bank Financial Corporation
2Q18 Financial Supplement: Table 1
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
                       
                      2Q18 change vs 
(Dollars in thousands, except per share amounts) 2Q18  1Q18  4Q17  3Q17  2Q17  1Q18  2Q17 
Income Statement Highlights                            
Interest income on loans $50,416  $48,444  $46,926  $35,400  $34,872  $1,972  $15,544 
Accretion income on loans 6,595  5,946  10,671  6,520  9,228  649  (2,633)
Interest income on invested funds 6,677  6,171  6,034  5,782  5,747  506  930 
Total interest income 63,688  60,561  63,631  47,702  49,847  3,127  13,841 
Interest expense 7,558  5,705  5,614  3,370  3,369  1,853  4,189 
Net interest income 56,130  54,856  58,017  44,332  46,478  1,274  9,652 
Provision for loan and lease losses (organic & PNCI loans) 2,556  2,650  2,050  1,300  1,470  (94) 1,086 
Provision for loan and lease losses (purchased credit impaired loans) (163) 558  798  (885) 375  (721) (538)
Provision for loan and lease losses 2,393  3,208  2,848  415  1,845  (815) 548 
Total noninterest income 10,917  10,461  10,140  9,682  10,476  456  441 
Total noninterest expense 39,983  39,268  40,684  31,571  31,997  715  7,986 
Income before income taxes 24,671  22,841  24,625  22,028  23,112  1,830  1,559 
Income tax expense 5,904  5,476  19,248  7,592  7,909  428  (2,005)
Net income $18,767  $17,365  $5,377  $14,436  $15,203  $1,402  $3,564 
               
Common Share Data              
Basic earnings per share $.48  $.45  $.14  $.37  $.39  $.03  $.09 
Diluted earnings per share .48  .44  .14  .37  .39  .04  .09 
Cash dividends declared per share .20  .20  .14  .14  .14    .06 
Book value per share 16.79  16.58  16.45  16.48  16.23  .21  .56 
Tangible book value per share (1) 14.38  14.15  14.00  14.01  13.94  .23  .44 
Market price per share (quarter end) 33.40  30.01  29.84  28.65  27.12  3.39  6.28 
               
Common Shares Outstanding              
Common stock 39,121,749  39,003,412  38,992,163  38,991,022  38,967,972  118,337  153,777 
Weighted average shares outstanding:              
Basic 38,038,181  38,032,007  38,009,181  37,918,753  37,896,125  6,174  142,056 
Diluted 38,075,106  38,070,554  38,068,619  37,963,141  37,942,483  4,552  132,623 
               
Average Balance Sheet Highlights              
Loans $3,662,142  $3,598,543  $3,603,482  $2,893,187  $2,905,415  $63,599  $756,727 
Assets 4,950,453  4,860,730  4,982,451  4,178,731  4,200,843  89,723  749,610 
Deposits 4,200,187  4,084,844  4,248,553  3,437,329  3,413,831  115,343  786,356 
Equity 650,919  642,787  645,409  638,620  627,294  8,132  23,625 
Tangible equity (1) 556,403  547,620  549,564  550,002  538,153  8,783  18,250 
               


State Bank Financial Corporation
2Q18 Financial Supplement: Table 1 (continued)
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
            2Q18 change vs
(Dollars in thousands, except per share  amounts) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
               
Key Metrics (2)              
Return on average assets 1.52% 1.45% .43% 1.37% 1.45% .07% .07%
Return on average equity 11.56  10.96  3.31  8.97  9.72  .60  1.84 
Yield on earning assets 5.47  5.36  5.39  4.85  5.11  .11  .36 
Cost of funds .71  .55  .52  .38  .38  .16  .33 
Rate on interest-bearing liabilities .98  .75  .71  .54  .53  .23  .45 
Net interest margin 4.82  4.86  4.91  4.51  4.76  (.04) .06 
Leverage ratio (3) 11.75  11.69  11.24  13.37  13.23  .06  (1.48)
Tier I risk-based capital ratio (3) 12.79  12.44  12.61  12.30  15.01  .35  (2.22)
Total risk-based capital ratio (3) 13.53  13.14  13.28  12.91  15.79  .39  (2.26)
Efficiency ratio (4) 59.63  60.12  59.69  58.45  56.18  (.49) 3.45 
Average loans to average deposits 87.19  88.09  84.82  84.17  85.11  (.90) 2.08 
Noninterest-bearing deposits to total deposits 27.59  26.04  28.07  27.82  29.24  1.55  (1.65)
                      

(1)     Denotes a non-GAAP financial measure. See Reconciliation of Non-GAAP Measures (Table 8) for further information.
(2) Income statement ratios and yield/rate information are annualized for the applicable period.
(3) Current period capital ratios are estimated as of the date of this earnings release.
(4) Noninterest expense divided by net interest income plus noninterest income.
   


State Bank Financial Corporation
2Q18 Financial Supplement: Table 2
Condensed Consolidated Balance Sheets
Quarterly (Unaudited)
                     
                 2Q18 change vs
(Dollars in thousands) 2Q18
 1Q18
 4Q17
 3Q17
 2Q17
 1Q18
 2Q17
Assets                            
Cash and amounts due from depository institutions $12,974  $13,113  $17,438  $14,235  $11,284  $(139) $1,690 
Interest-bearing deposits in other financial institutions 215,360  59,620  211,142  251,115  126,390  155,740  88,970 
Federal funds sold 9,957  9,000  2,297  16,889    957  9,957 
Cash and cash equivalents 238,291  81,733  230,877  282,239  137,674  156,558  100,617 
Equity securities 1,515  1,515  1,515  1,515  1,515     
Debt securities available-for-sale 835,670  863,697  872,455  919,248  846,280  (28,027) (10,610)
Debt securities held-to-maturity 16,742  27,558  32,852  57,867  63,104  (10,816) (46,362)
Loans 3,605,273  3,618,521  3,532,193  3,572,790  2,881,000  (13,248) 724,273 
Allowance for loan and lease losses (33,335) (31,317) (28,750) (26,842) (27,988) (2,018) (5,347)
Loans, net 3,571,938  3,587,204  3,503,443  3,545,948  2,853,012  (15,266) 718,926 
Loans held-for-sale 55,096  47,482  36,211  47,743  48,895  7,614  6,201 
Other real estate owned 5,012  4,207  895  1,271  2,407  805  2,605 
Premises and equipment, net 56,965  52,410  51,794  52,120  51,170  4,555  5,795 
Goodwill 84,564  84,564  84,564  84,564  77,476    7,088 
Other intangibles, net 9,729  10,384  11,034  11,755  11,599  (655) (1,870)
SBA servicing rights 3,989  4,003  4,069  3,950  3,828  (14) 161 
Bank-owned life insurance 68,231  67,768  67,313  66,846  66,320  463  1,911 
Other assets 64,587  59,772  61,560  73,417  70,697  4,815  (6,110)
Total assets $5,012,329  $4,892,297  $4,958,582  $5,148,483  $4,233,977  $120,032  $778,352 
Liabilities and Shareholders’ Equity              
Noninterest-bearing deposits $1,187,028  $1,089,579  $1,191,106  $1,179,698  $1,009,509  $97,449  $177,519 
Interest-bearing deposits 3,115,676  3,094,853  3,052,029  3,061,387  2,443,183  20,823  672,493 
Total deposits 4,302,704  4,184,432  4,243,135  4,241,085  3,452,692  118,272  850,012 
Federal funds purchased and securities sold under agreements to repurchase 13,525  9,565  25,209  25,499  25,256  3,960  (11,731)
FHLB borrowings   15,000      80,000  (15,000) (80,000)
Notes payable 398  398  398  398  398     
Other liabilities 38,783  36,248  48,289  238,911  43,294  2,535  (4,511)
Total liabilities 4,355,410  4,245,643  4,317,031  4,505,893  3,601,640  109,767  753,770 
Total shareholders’ equity 656,919  646,654  641,551  642,590  632,337  10,265  24,582 
Total liabilities and shareholders’ equity $5,012,329  $4,892,297  $4,958,582  $5,148,483  $4,233,977  $120,032  $778,352 
               
Capital Ratios (1)              
Average equity to average assets 13.15% 13.22% 12.95% 15.28% 14.93% (.07)% (1.78)%
Leverage ratio 11.75  11.69  11.24  13.37  13.23  .06  (1.48)
CET1 risk-based capital ratio 12.79  12.44  12.61  12.30  15.01  .35  (2.22)
Tier I risk-based capital ratio 12.79  12.44  12.61  12.30  15.01  .35  (2.22)
Total risk-based capital ratio 13.53  13.14  13.28  12.91  15.79  .39  (2.26)
                      

(1)     Current period capital ratios are estimated as of the date of this earning release.
   


State Bank Financial Corporation
2Q18 Financial Supplement: Table 3
Condensed Consolidated Income Statements
Quarterly (Unaudited)
                            
                      2Q18 change vs
(Dollars in thousands, except per share amounts) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
Net Interest Income:                            
Interest income on loans $50,416  $48,444  $46,926  $35,400  $34,872  $1,972  $15,544 
Accretion income on loans 6,595  5,946  10,671  6,520  9,228  649  (2,633)
Interest income on invested funds 6,677  6,171  6,034  5,782  5,747  506  930 
Interest expense 7,558  5,705  5,614  3,370  3,369  1,853  4,189 
Net interest income 56,130  54,856  58,017  44,332  46,478  1,274  9,652 
Provision for loan and lease losses (organic & PNCI loans) 2,556  2,650  2,050  1,300  1,470  (94) 1,086 
Provision for loan and lease losses (purchased credit impaired loans) (163) 558  798  (885) 375  (721) (538)
Provision for loan and lease losses 2,393  3,208  2,848  415  1,845  (815) 548 
Net interest income after provision for loan and lease losses 53,737  51,648  55,169  43,917  44,633  2,089  9,104 
Noninterest Income:              
Service charges on deposits 1,462  1,625  1,678  1,575  1,471  (163) (9)
Mortgage banking income 3,125  2,925  2,558  2,793  3,096  200  29 
Payroll and insurance income 1,608  1,760  1,698  1,487  1,418  (152) 190 
SBA income 1,252  1,192  1,866  1,464  1,983  60  (731)
ATM income 919  870  860  826  864  49  55 
Bank-owned life insurance income 463  455  467  526  465  8  (2)
Gain (loss) on sale of investment securities 250    (1,481) 3  13  250  237 
Other 1,838  1,634  2,494  1,008  1,166  204  672 
Total noninterest income 10,917  10,461  10,140  9,682  10,476  456  441 
Noninterest Expense:              
Salaries and employee benefits 24,279  26,042  25,089  20,701  21,178  (1,763) 3,101 
Occupancy and equipment 3,421  3,496  3,576  3,187  3,329  (75) 92 
Data processing 2,696  2,896  2,596  2,587  2,382  (200) 314 
Legal and professional fees 967  739  973  700  898  228  69 
Merger-related expenses 2,601  1,264  2,588  135  372  1,337  2,229 
Marketing 940  425  693  342  403  515  537 
Federal deposit insurance premiums and other regulatory fees 589  500  498  407  398  89  191 
Loan collection costs and OREO activity (116) 166  358  181  (213) (282) 97 
Amortization of intangibles 654  651  721  701  697  3  (43)
Other 3,952  3,089  3,592  2,630  2,553  863  1,399 
Total noninterest expense 39,983  39,268  40,684  31,571  31,997  715  7,986 
Income Before Income Taxes 24,671  22,841  24,625  22,028  23,112  1,830  1,559 
Income tax expense 5,904  5,476  19,248  7,592  7,909  428  (2,005)
Net Income $18,767  $17,365  $5,377  $14,436  $15,203  $1,402  $3,564 
               
Net income allocated to participating securities $509  $435  $136  $389  $413  $74  $96 
Net income allocated to common shareholders 18,258  16,930  5,241  14,047  14,790  1,328  3,468 
               
Effective Tax Rate 23.93% 23.97% 78.16% 34.47% 34.22% (.04)% (10.29)%
Earnings Per Share              
Basic $.48  $.45  $.14  $.37  $.39  $.03  $.09 
Diluted .48  .44  .14  .37  .39  .04  .09 
Weighted Average Shares Outstanding              
Basic 38,038,181  38,032,007  38,009,181  37,918,753  37,896,125  6,174  142,056 
Diluted 38,075,106  38,070,554  38,068,619  37,963,141  37,942,483  4,552  132,623 
                      


State Bank Financial Corporation
2Q18 Financial Supplement: Table 4
Condensed Consolidated Income Statements
Year to Date (Unaudited)
  Six Months Ended June 30  
  2018 2017 Change
Net Interest Income:      
Interest income on loans $98,860  $68,932  $29,928 
Accretion income on loans 12,541  16,905  (4,364)
Interest income on invested funds 12,848  11,207  1,641 
Interest expense 13,263  6,608  6,655 
Net interest income 110,986  90,436  20,550 
Provision for loan and lease losses (organic & PNCI loans) 5,206  2,831  2,375 
Provision for loan and lease losses (purchased credit impaired loans) 395  16  379 
Provision for loan and lease losses 5,601  2,847  2,754 
Net interest income after provision for loan and lease losses 105,385  87,589  17,796 
Noninterest Income:      
Service charges on deposits 3,087  2,938  149 
Mortgage banking income 6,050  5,990  60 
Payroll and insurance income 3,368  2,913  455 
SBA income 2,444  3,161  (717)
ATM income 1,789  1,696  93 
Bank-owned life insurance income 918  949  (31)
Gain on sale of investment securities 250  25  225 
Other 3,472  2,263  1,209 
Total noninterest income 21,378  19,935  1,443 
Noninterest Expense:      
Salaries and employee benefits 50,321  42,566  7,755 
Occupancy and equipment 6,917  6,609  308 
Data processing 5,592  5,021  571 
Legal and professional fees 1,706  2,703  (997)
Merger-related expenses 3,865  2,607  1,258 
Marketing 1,365  1,067  298 
Federal deposit insurance premiums and other regulatory fees 1,089  795  294 
Loan collection costs and OREO activity 50  (1,255) 1,305 
Amortization of intangibles 1,305  1,393  (88)
Other 7,041  5,056  1,985 
Total noninterest expense 79,251  66,562  12,689 
Income Before Income Taxes 47,512  40,962  6,550 
Income tax expense 11,380  14,201  (2,821)
Net Income $36,132  $26,761  $9,371 
       
Net income allocated to participating securities $949  $706  $243 
Net income allocated to common shareholders 35,183  26,055  9,128 
       
Earnings Per Share      
Basic $.93  $.69  $.24 
Diluted .92  .69  .23 
Weighted Average Shares Outstanding      
Basic 38,035,111  37,881,999  153,112 
Diluted 38,072,919  37,934,187  138,732 
          


State Bank Financial Corporation
2Q18 Financial Supplement: Table 5
Condensed Consolidated Composition of Loans and Deposits at Period Ends
Quarterly (Unaudited)
            
            2Q18 change vs
(Dollars in thousands) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
                             
Composition of Loans                            
Organic loans (1):                            
Construction, land & land development $454,625  $442,942  $412,540  $460,368  $413,557  $11,683  $41,068 
Other commercial real estate 947,704  941,581  949,594  915,727  960,762  6,123  (13,058)
Total commercial real estate 1,402,329  1,384,523  1,362,134  1,376,095  1,374,319  17,806  28,010 
Residential real estate 222,886  208,960  196,225  175,258  167,755  13,926  55,131 
Owner-occupied real estate 270,053  253,059  260,273  261,784  244,637  16,994  25,416 
Commercial, financial & agricultural 666,572  562,566  430,205  363,551  355,629  104,006  310,943 
Leases 36,863  43,787  52,396  66,765  73,103  (6,924) (36,240)
Consumer 65,019  62,423  64,610  61,200  60,028  2,596  4,991 
Total organic loans 2,663,722  2,515,318  2,365,843  2,304,653  2,275,471  148,404  388,251 
Purchased non-credit impaired loans(2):              
Construction, land & land development 14,282  24,352  25,908  30,670  31,083  (10,070) (16,801)
Other commercial real estate 194,995  226,893  218,660  234,486  171,914  (31,898) 23,081 
Total commercial real estate 209,277  251,245  244,568  265,156  202,997  (41,968) 6,280 
Residential real estate 72,817  82,416  96,529  112,244  117,449  (9,599) (44,632)
Owner-occupied real estate 82,500  94,900  118,294  125,438  114,438  (12,400) (31,938)
Commercial, financial & agricultural 426,992  515,327  529,184  558,992  31,654  (88,335) 395,338 
Consumer 1,503  1,791  2,161  2,647  3,393  (288) (1,890)
Total purchased non-credit impaired loans 793,089  945,679  990,736  1,064,477  469,931  (152,590) 323,158 
Purchased credit impaired loans (3):              
Construction, land & land development 13,227  12,802  13,545  16,918  16,857  425  (3,630)
Other commercial real estate 73,607  77,838  86,748  102,934  46,078  (4,231) 27,529 
Total commercial real estate 86,834  90,640  100,293  119,852  62,935  (3,806) 23,899 
Residential real estate 32,087  36,747  40,332  42,190  45,513  (4,660) (13,426)
Owner-occupied real estate 18,019  18,593  20,803  26,210  23,262  (574) (5,243)
Commercial, financial & agricultural 11,440  11,436  14,051  15,139  3,617  4  7,823 
Consumer 82  108  135  269  271  (26) (189)
Total purchased credit impaired loans 148,462  157,524  175,614  203,660  135,598  (9,062) 12,864 
Total loans $3,605,273  $3,618,521  $3,532,193  $3,572,790  $2,881,000  $(13,248) $724,273 
Composition of Deposits              
Noninterest-bearing demand deposits $1,187,028  $1,089,579  $1,191,106  $1,179,698  $1,009,509  $97,449  $177,519 
Interest-bearing transaction accounts 674,205  633,542  688,150  619,156  591,038  40,663  83,167 
Savings and money market deposits 1,587,204  1,602,908  1,626,238  1,680,922  1,373,686  (15,704) 213,518 
Time deposits 698,361  713,869  715,133  731,416  419,020  (15,508) 279,341 
Brokered and wholesale time deposits 155,906  144,534  22,508  29,893  59,439  11,372  96,467 
Total deposits $4,302,704  $4,184,432  $4,243,135  $4,241,085  $3,452,692  $118,272  $850,012 
                             

(1)     Loans originated by State Bank and Trust Company.
(2) Consists of loans purchased in our acquisitions of Bank of Atlanta, First Bank of Georgia, The National Bank of Georgia, S Bank, and AloStar Bank of Commerce.
(3) Acquired loans, which at acquisition, management determined it was probable that we would be unable to collect all contractual principal and interest payments due, including all loans acquired from the FDIC.
   


State Bank Financial Corporation
2Q18 Financial Supplement: Table 6
Condensed Consolidated Asset Quality Data
Quarterly (Unaudited)
            
            2Q18 change vs
(Dollars in thousands) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
Allowance for loan and lease losses on organic loans                            
Beginning Balance $24,882  $24,039  $22,709  $22,560  $21,885  $843  $2,997 
Charge-offs (171) (664) (474) (912) (536) 493  365 
Recoveries 70  133  77  106  113  (63) (43)
Net (charge-offs) recoveries (101) (531) (397) (806) (423) 430  322 
Provision for loan and lease losses 1,585  1,374  1,727  955  1,098  211  487 
Ending Balance $26,366  $24,882  $24,039  $22,709  $22,560  $1,484  $3,806 
               
Allowance for loan and lease losses on purchased non-credit impaired loans              
Beginning Balance $2,249  $995  $900  $667  $491  $1,254  $1,758 
Charge-offs (285) (40) (273) (152) (197) (245) (88)
Recoveries 46  18  45  40  1  28  45 
Net (charge-offs) recoveries (239) (22) (228) (112) (196) (217) (43)
Provision for loan and lease losses 971  1,276  323  345  372  (305) 599 
Ending Balance $2,981  $2,249  $995  $900  $667  $732  $2,314 
               
Allowance for loan and lease losses on purchased credit impaired loans              
Beginning Balance $4,186  $3,716  $3,233  $4,761  $4,600  $470  $(414)
Charge-offs (35) (88) (315) (643) (214) 53  179 
Recoveries              
Net (charge-offs) recoveries (35) (88) (315) (643) (214) 53  179 
Provision for loan and lease losses (163) 558  798  (885) 375  (721) (538)
Ending Balance $3,988  $4,186  $3,716  $3,233  $4,761  $(198) $(773)
               
Nonperforming organic assets              
Nonaccrual loans $8,119  $9,186  $6,656  $5,482  $1,422  $(1,067) $6,697 
Accruing TDRs 490  556  566      (66) 490 
Total nonperforming organic loans 8,609  9,742  7,222  5,482  1,422  (1,133) 7,187 
Other real estate owned 4,135  3,231  153    23  904  4,112 
Total nonperforming organic assets $12,744  $12,973  $7,375  $5,482  $1,445  $(229) $11,299 
               
Nonperforming purchased non-credit impaired assets              
Nonaccrual loans $22,585  $6,356  $5,821  $5,615  $5,141  $16,229  $17,444 
Accruing TDRs 2,760  2,769        (9) 2,760 
Total nonperforming PNCI loans 25,345  9,125  5,821  5,615  5,141  16,220  20,204 
Other real estate owned              
Total nonperforming PNCI assets $25,345  $9,125  $5,821  $5,615  $5,141  $16,220  $20,204 
               
Ratios for organic assets              
Annualized QTD charge-offs (recoveries) on organic loans to average organic loans .02% .09% .07% .14% .08% (.07) % (.06) %
Nonperforming organic loans to organic loans .32  .39  .31  .24  .06  (.07) .26 
Nonperforming organic assets to organic loans + OREO .48  .52  .31  .24  .06  (.04) .42 
Past due organic loans to organic loans .16  .22  .20  .12  .09  (.06) .07 
Allowance for loan and lease losses on organic loans to organic loans .99  .99  1.02  .99  .99     
               


State Bank Financial Corporation
2Q18 Financial Supplement: Table 6 (continued)
Condensed Consolidated Asset Quality Data
Quarterly (Unaudited)
            
            2Q18 change vs
(Dollars in thousands) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
Ratios for purchased non-credit impaired loans                     
Annualized QTD charge-offs (recoveries) on PNCI loans to average PNCI loans .11% .01% .09% .10% .16% .10% (.05)%
Nonperforming PNCI loans to PNCI loans 3.20  .96  .59  .53  1.09  2.24  2.11 
Nonperforming PNCI assets to PNCI loans + OREO 3.20  .96  .59  .53  1.09  2.24  2.11 
Past due PNCI loans to PNCI loans .36  .45  .40  .48  1.05  (.09) (.69)
Allowance for loan and lease losses on PNCI loans to PNCI loans .38  .24  .10  .08  .14  .14  .24 
               
Ratios for purchased credit impaired loans (1)              
Annualized QTD charge-offs (recoveries) on PCI loans to average PCI loans .09% .21% .66% 1.95% .60% (.12)% (.51)%
Past due PCI loans to PCI loans 5.95  6.47  5.84  8.12  10.26  (.52) (4.31)
Allowance for loan and lease losses on PCI loans to PCI loans 2.69  2.66  2.12  1.59  3.51  .03  (.82)
                      

(1)     For each period presented, a portion of our purchased credit impaired loans were contractually past due; however, such delinquencies were included in our performance expectations in determining the fair values of purchased credit impaired loans at each acquisition and at subsequent valuation dates. All purchased credit impaired loan cash flows and the timing of such cash flows continue to be estimable and probable of collection and thus accretion income continues to be recognized on these assets. As such, we do not consider purchased credit impaired loans to be nonperforming assets.
   


State Bank Financial Corporation
2Q18 Financial Supplement: Table 7
Condensed Consolidated Average Balances and Yield Analysis
Quarterly (Unaudited)
            
            2Q18 change vs
(Dollars in thousands) 2Q18 1Q18 4Q17 3Q17 2Q17 1Q18 2Q17
Average Balances                            
Interest-bearing deposits in other financial institutions and federal funds sold $131,506  $93,692  $168,223  $108,546  $73,862  $37,814  $57,644 
Investment securities 880,667  893,685  924,933  913,898  947,300  (13,018) (66,633)
Loans, excluding purchased credit  impaired (1) 3,507,613  3,430,599  3,413,159  2,762,479  2,762,996  77,014  744,617 
Purchased credit impaired loans 154,529  167,944  190,323  130,708  142,419  (13,415) 12,110 
Total earning assets 4,674,315  4,585,920  4,696,638  3,915,631  3,926,577  88,395  747,738 
Total nonearning assets 276,138  274,810  285,813  263,100  274,266  1,328  1,872 
Total assets 4,950,453  4,860,730  4,982,451  4,178,731  4,200,843  89,723  749,610 
Interest-bearing transaction accounts 627,800  626,298  664,938  580,090  585,343  1,502  42,457 
Savings & money market deposits 1,568,638  1,594,724  1,685,292  1,383,326  1,380,586  (26,086) 188,052 
Time deposits 704,850  715,514  724,578  420,192  437,475  (10,664) 267,375 
Brokered and wholesale time deposits 149,956  65,749  25,911  49,675  38,353  84,207  111,603 
Other borrowings 55,344  85,788  35,353  57,988  119,652  (30,444) (64,308)
Total interest-bearing liabilities 3,106,588  3,088,073  3,136,072  2,491,271  2,561,409  18,515  545,179 
Noninterest-bearing deposits 1,148,943  1,082,559  1,147,834  1,004,046  972,074  66,384  176,869 
Other liabilities 44,003  47,311  53,136  44,794  40,066  (3,308) 3,937 
Shareholders’ equity 650,919  642,787  645,409  638,620  627,294  8,132  23,625 
Total liabilities and shareholders' equity 4,950,453  4,860,730  4,982,451  4,178,731  4,200,843  89,723  749,610 
               
Interest Margins (2)              
Interest-bearing deposits in other financial institutions and federal funds sold 1.23% .80% .86% .80% .50% .43% .73%
Investment securities, tax-equivalent basis 2.86  2.72  2.43  2.42  2.39  .14  .47 
Loans, excluding purchased credit impaired, tax-equivalent basis (3) 5.77  5.73  5.47  5.11  5.08  .04  .69 
Purchased credit impaired loans 17.12  14.36  22.24  19.79  25.99  2.76  (8.87)
Total earning assets 5.47% 5.36% 5.39% 4.85% 5.11% .11% .36%
Interest-bearing transaction accounts .16  .14  .13  .13  .12  .02  .04 
Savings & money market deposits 1.07  .76  .80  .63  .61  .31  .46 
Time deposits 1.25  1.09  1.04  .72  .69  .16  .56 
Brokered and wholesale time deposits 1.87  1.91  1.15  1.05  1.05  (.04) .82 
Other borrowings 1.59  1.31  .52  .75  .82  .28  .77 
Total interest-bearing liabilities .98% .75% .71% .54% .53% .23% .45%
Net interest spread 4.49% 4.61% 4.68% 4.31% 4.58% (.12)% (.09)%
Net interest margin 4.82% 4.86% 4.91% 4.51% 4.76% (.04)% .06%
Net interest margin contribution from accretion income on loans .57% .53% .90% .66% .94% .04% (.37)%
                      

(1) Includes average nonaccrual loans of $18.9 million for 2Q18, $12.9 million for 1Q18, $11.4 million for 4Q17, $8.0 million for 3Q17, and $9.3 million for 2Q17.
(2) Interest income or expense annualized for the applicable period.
(3) Reflects taxable equivalent adjustments using the federal statutory tax rate of 21% for all periods beginning on or after January 1, 2018 and 35% for all periods prior to January 1, 2018 in adjusting tax-exempt loan interest income to a fully taxable basis. The taxable equivalent adjustments included above amount to $6,000 for 2Q18, $57,000 for 1Q18, $128,000 for 4Q17, $177,000 for 3Q17, and $131,000 for 2Q17.
   


State Bank Financial Corporation
2Q18 Financial Supplement: Table 8
Reconciliation of Non-GAAP Measures (1)
Quarterly (Unaudited)
         
          
(dollars in thousands, except per share amounts; taxable equivalent)2Q18 1Q18 4Q17 3Q17 2Q17
Book value per common share reconciliation         
Book value per common share (GAAP)$16.79  $16.58  $16.45  $16.48  $16.23 
Effect of goodwill and other intangibles(2.41) (2.43) (2.45) (2.47) (2.29)
Tangible book value per common share$14.38  $14.15  $14.00  $14.01  $13.94 
          
Average tangible equity reconciliation         
Average equity (GAAP)$650,919  $642,787  $645,409  $638,620  $627,294 
Effect of average goodwill and other intangibles(94,516) (95,167) (95,845) (88,618) (89,141)
Average tangible equity$556,403  $547,620  $549,564  $550,002  $538,153 
          

(1)     Certain financial measures included in this press release, tangible book value per common share and average tangible equity, are financial measures that are not recognized by generally accepted accounting principles in the United States, or GAAP. These non-GAAP financial measures exclude the effect of the period end or average balance of intangible assets. Management believes that these non-GAAP financial measures provides additional useful information to investors, particularly since these measure are widely used by industry analysts for companies with prior merger and acquisition activities, such as us.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure is presented in the table above. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. These non-GAAP financial measures should not be considered as a substitute for GAAP financial measures, and we strongly encourage investors to review the GAAP financial measures included in this press release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this press release with other companies’ non-GAAP financial measures having the same or similar names.
   


            

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