State Bank Financial Corporation Reports Third Quarter 2018 Financial Results


  • Net income of $18.0 million, or $.46 per diluted share, in the third quarter of 2018
  • Return on assets of 1.43% and return on equity of 10.76%
  • Organic and PNCI loan growth of $56 million
  • Merger-related expenses of $11.0 million in the third quarter of 2018
  • Received shareholder approval for merger with Cadence Bancorporation

ATLANTA, Oct. 22, 2018 (GLOBE NEWSWIRE) -- State Bank Financial Corporation (NASDAQ: STBZ) today announced unaudited financial results for the third quarter of 2018.  Net income for the third quarter of 2018 was $18.0 million, compared to $18.8 million in the second quarter of 2018, and $14.4 million in the third quarter of 2017.  Fully diluted earnings per share were $.46 in the third quarter of 2018, compared to  $.48 in the second quarter of 2018 and $.37 in the third quarter of 2017.  The third quarter of 2018 included pre-tax merger-related expenses of $11.0 million.

On September 18, 2018, State Bank’s shareholders approved the pending merger with Cadence Bancorporation.  The completion of the merger remains subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions.  Shares of restricted stock that vested upon shareholder approval of the merger resulted in $9.8 million of merger-related expense in the quarter.  The effective tax rate for the third quarter was 9.30% due to the tax benefit resulting from the vesting of the restricted stock.  Merger-related expenses, including the restricted stock vesting and tax adjustments, reduced fully diluted earnings per share by $.14 after-tax.

Joe Evans, Chairman of State Bank Financial, commented, “I am pleased with our strong financial performance in the third quarter and our shareholders’ overwhelming approval of our pending merger  with Cadence.  Our two banks are highly complementary and I expect the combined entity to produce exceptional results.”

Operating Highlights

Interest income on loans improved to $51.6 million in the third quarter of 2018, a $1.1 million increase from the second quarter of 2018 and a $16.2 million increase from the third quarter of 2017.  Net interest income of $58.6 million in the third quarter of 2018 increased from $56.1 million in the second quarter of 2018 and $44.3 million in the third quarter of 2017.  Accretion income on loans was $8.2 million in the third quarter of 2018, up from $6.6 million in the second quarter of 2018 and $6.5 million in the third quarter of 2017.  Accretion income includes $4.1 million in recovery income during the third quarter of 2018 compared to $2.7 million in the second quarter of 2018 and $2.3 million in the third quarter of 2017.

Noninterest income was $9.7 million in the third quarter of 2018, compared to $10.9 million in the second quarter of 2018 and $9.7 million in the third quarter of 2017.  Mortgage banking revenues declined $1.3 million in the third quarter of 2018 compared to the second quarter of 2018.  In late September 2018, State Bank announced the transition of the majority of its mortgage employees to another financial institution.

Total noninterest expense for the third quarter of 2018 was $46.3 million, compared to $40.0 million in the second quarter of 2018 and $31.6 million in the third quarter of 2017.  The increase was primarily due to $11.0 million in merger-related expenses, of which $9.8 million was related to the vesting of restricted stock in September 2018.  Salaries and employee benefit expenses decreased $1.1 million compared to the second quarter of 2018.  Total noninterest expense excluding merger-related expenses declined $2.0 million from the second quarter of 2018.

Tom Wiley, Vice Chairman and CEO, commented, “I am proud of our positive operating trends.  While the mortgage transition impacted noninterest income during the third quarter, the reduction of associated expenses will measurably improve our efficiency going forward.”

Financial Condition

Total assets at September 30, 2018, were $4.9 billion, down from $5.0 billion at June 30, 2018.  Total loans were $3.6 billion at September 30, 2018, up $32.1 million from the second quarter of 2018.  Period-end organic loans increased to $2.8 billion at September 30, 2018, an increase of $123.1 million from the second quarter of 2018.  Purchased non-credit impaired loans decreased to $725.7 million at September 30, 2018, a $67.3 million linked-quarter decline.  Purchased credit impaired loans decreased to $124.8 million at September 30, 2018, a $23.7 million linked-quarter decline.

Past due organic and purchased non-credit impaired loans were .34% and 2.73% of their respective portfolios at September 30, 2018. The increase in past due purchased non-credit impaired loans was due to one relationship that was recorded as nonaccrual in the second quarter of 2018.  The provision for loan losses on organic and purchased non-credit impaired loans was $2.1 million in the third quarter of 2018. The organic allowance as a percent of organic loans was .98% at the end of the third quarter of 2018.

Total deposits at September 30, 2018, were $4.2 billion, down $115.8 million from June 30, 2018, although average deposits increased $54.8 million from the second quarter of 2018. Noninterest-bearing demand deposits represented 27.5% of total deposits as of September 30, 2018. Period-end noninterest-bearing demand deposits were $1.2 billion, a $35.5 million decrease, while average noninterest-bearing demand deposits increased $40.9 million from the second quarter of 2018.

Tangible book value per share was $14.70 at the end of the third quarter of 2018.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 11.85% and a Tier I risk-based capital ratio of 12.89%.

Detailed Results

Supplemental tables displaying financial results for the third quarter of 2018, the previous four quarters and year-to-date 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 3Q18 Financial Supplement: Table 8, Reconciliation of Non-GAAP Measures.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ: STBZ), with approximately $4.9 billion in consolidated assets as of September 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”) and the impact the transition of our mortgage employees to another financial institution will have on expenses going forward. 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 the remaining 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), 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.

State Bank Financial Corporation
3Q18 Financial Supplement: Table 1
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
            3Q18 change vs
(Dollars in thousands, except per share amounts) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
               
Income Statement Highlights              
Interest income on loans $51,553  $50,416  $48,444  $46,926  $35,400  $1,137  $16,153 
Accretion income on loans 8,154  6,595  5,946  10,671  6,520  1,559  1,634 
Interest income on invested funds 6,917  6,677  6,171  6,034  5,782  240  1,135 
Total interest income 66,624  63,688  60,561  63,631  47,702  2,936  18,922 
Interest expense 8,039  7,558  5,705  5,614  3,370  481  4,669 
Net interest income 58,585  56,130  54,856  58,017  44,332  2,455  14,253 
Provision for loan and lease losses (organic & PNCI loans) 2,100  2,556  2,650  2,050  1,300  (456) 800 
Provision for loan and lease losses (purchased credit impaired loans) 109  (163) 558  798  (885) 272  994 
Provision for loan and lease losses 2,209  2,393  3,208  2,848  415  (184) 1,794 
Total noninterest income 9,738  10,917  10,461  10,140  9,682  (1,179) 56 
Total noninterest expense 46,318  39,983  39,268  40,684  31,571  6,335  14,747 
Income before income taxes 19,796  24,671  22,841  24,625  22,028  (4,875) (2,232)
Income tax expense 1,841  5,904  5,476  19,248  7,592  (4,063) (5,751)
Net income $17,955  $18,767  $17,365  $5,377  $14,436  $(812) $3,519 
               
Common Share Data              
Basic earnings per share $.46  $.48  $.45  $.14  $.37  $(.02) $.09 
Diluted earnings per share .46  .48  .44  .14  .37  (.02) .09 
Cash dividends declared per share .20  .20  .20  .14  .14    .06 
Book value per share 17.12  16.79  16.58  16.45  16.48  .33  .64 
Tangible book value per share (1) 14.70  14.38  14.15  14.00  14.01  .32  .69 
Market price per share (quarter end) 30.18  33.40  30.01  29.84  28.65  (3.22) 1.53 
               
Common Shares Outstanding              
Common stock 38,800,431  39,121,749  39,003,412  38,992,163  38,991,022  (321,318) (190,591)
Weighted average shares outstanding:              
Basic 38,193,099  38,038,181  38,032,007  38,009,181  37,918,753  154,918  274,346 
Diluted 38,211,476  38,075,106  38,070,554  38,068,619  37,963,141  136,370  248,335 
               
Average Balance Sheet Highlights              
Loans $3,640,532  $3,662,142  $3,598,543  $3,603,482  $2,893,187  $(21,610) $747,345 
Assets 4,984,791  4,950,453  4,860,730  4,982,451  4,178,731  34,338  806,060 
Deposits 4,255,026  4,200,187  4,084,844  4,248,553  3,437,329  54,839  817,697 
Equity 662,112  650,919  642,787  645,409  638,620  11,193  23,492 
Tangible equity (1) 568,242  556,403  547,620  549,564  550,002  11,839  18,240 
               


State Bank Financial Corporation
3Q18 Financial Supplement: Table 1 (continued)
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
            3Q18 change vs
(Dollars in thousands, except per share amounts) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
               
Key Metrics (2)              
Return on average assets 1.43% 1.52% 1.45% .43% 1.37% (.09)% .06%
Return on average equity 10.76  11.56  10.96  3.31  8.97  (.80) 1.79 
Yield on earning assets 5.61  5.47  5.36  5.39  4.85  .14  .76 
Cost of funds .75  .71  .55  .52  .38  .04  .37 
Rate on interest-bearing liabilities 1.03  .98  .75  .71  .54  .05  .49 
Net interest margin 4.93  4.82  4.86  4.91  4.51  .11  .42 
Leverage ratio (3) 11.85  11.75  11.69  11.24  13.37  .10  (1.52)
Tier I risk-based capital ratio (3) 12.89  12.79  12.44  12.61  12.30  .10  .59 
Total risk-based capital ratio (3) 13.66  13.53  13.14  13.28  12.91  .13  .75 
Efficiency ratio (4) 67.79  59.63  60.12  59.69  58.45  8.16  9.34 
Average loans to average deposits 85.56  87.19  88.09  84.82  84.17  (1.63) 1.39 
Noninterest-bearing deposits to total deposits 27.50  27.59  26.04  28.07  27.82  (.09) (.32)
                      
                      

(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
3Q18 Financial Supplement: Table 2
Condensed Consolidated Balance Sheets
Quarterly (Unaudited)
            3Q18 change vs
(Dollars in thousands) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
               
Assets              
Cash and amounts due from depository institutions $16,273  $12,974  $13,113  $17,438  $14,235  $3,299  $2,038 
Interest-bearing deposits in other financial institutions 186,524  215,360  59,620  211,142  251,115  (28,836) (64,591)
Federal funds sold 5,130  9,957  9,000  2,297  16,889  (4,827) (11,759)
Cash and cash equivalents 207,927  238,291  81,733  230,877  282,239  (30,364) (74,312)
Equity securities 1,515  1,515  1,515  1,515  1,515     
Debt securities available-for-sale 772,369  835,670  863,697  872,455  919,248  (63,301) (146,879)
Debt securities held-to-maturity 13,000  16,742  27,558  32,852  57,867  (3,742) (44,867)
Loans 3,637,334  3,605,273  3,618,521  3,532,193  3,572,790  32,061  64,544 
Allowance for loan and lease losses (34,789) (33,335) (31,317) (28,750) (26,842) (1,454) (7,947)
Loans, net 3,602,545  3,571,938  3,587,204  3,503,443  3,545,948  30,607  56,597 
Loans held-for-sale 30,676  55,096  47,482  36,211  47,743  (24,420) (17,067)
Other real estate owned 5,442  5,012  4,207  895  1,271  430  4,171 
Premises and equipment, net 56,007  56,965  52,410  51,794  52,120  (958) 3,887 
Goodwill 84,564  84,564  84,564  84,564  84,564     
Other intangibles, net 9,074  9,729  10,384  11,034  11,755  (655) (2,681)
SBA servicing rights 3,842  3,989  4,003  4,069  3,950  (147) (108)
Bank-owned life insurance 68,772  68,231  67,768  67,313  66,846  541  1,926 
Other assets 68,344  64,587  59,772  61,560  73,417  3,757  (5,073)
Total assets $4,924,077  $5,012,329  $4,892,297  $4,958,582  $5,148,483  $(88,252) $(224,406)
Liabilities and Shareholders’ Equity              
Noninterest-bearing deposits $1,151,511  $1,187,028  $1,089,579  $1,191,106  $1,179,698  $(35,517) $(28,187)
Interest-bearing deposits 3,035,403  3,115,676  3,094,853  3,052,029  3,061,387  (80,273) (25,984)
Total deposits 4,186,914  4,302,704  4,184,432  4,243,135  4,241,085  (115,790) (54,171)
Federal funds purchased and securities sold under agreements to repurchase 33,621  13,525  9,565  25,209  25,499  20,096  8,122 
FHLB borrowings     15,000         
Notes payable   398  398  398  398  (398) (398)
Other liabilities 39,365  38,783  36,248  48,289  238,911  582  (199,546)
Total liabilities 4,259,900  4,355,410  4,245,643  4,317,031  4,505,893  (95,510) (245,993)
Total shareholders’ equity 664,177  656,919  646,654  641,551  642,590  7,258  21,587 
Total liabilities and shareholders’ equity $4,924,077  $5,012,329  $4,892,297  $4,958,582  $5,148,483  $(88,252) $(224,406)
               
Capital Ratios (1)              
Average equity to average assets 13.28% 13.15% 13.22% 12.95% 15.28% .13% (2.00)%
Leverage ratio 11.85  11.75  11.69  11.24  13.37  .10  (1.52)
CET1 risk-based capital ratio 12.89  12.79  12.44  12.61  12.30  .10  .59 
Tier I risk-based capital ratio 12.89  12.79  12.44  12.61  12.30  .10  .59 
Total risk-based capital ratio 13.66  13.53  13.14  13.28  12.91  .13  .75 
                      

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

State Bank Financial Corporation 
3Q18 Financial Supplement: Table 3 
Condensed Consolidated Income Statements 
Quarterly (Unaudited) 
             
            3Q18 change vs
(Dollars in thousands, except per share amounts)  3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
                             
Net Interest Income:                            
Interest income on loans $51,553  $50,416  $48,444  $46,926  $35,400  $1,137  $16,153 
Accretion income on loans 8,154  6,595  5,946  10,671  6,520  1,559  1,634 
Interest income on invested funds 6,917  6,677  6,171  6,034  5,782  240  1,135 
Interest expense 8,039  7,558  5,705  5,614  3,370  481  4,669 
Net interest income 58,585  56,130  54,856  58,017  44,332  2,455  14,253 
Provision for loan and lease losses (organic & PNCI loans) 2,100  2,556  2,650  2,050  1,300  (456) 800 
Provision for loan and lease losses (purchased credit impaired loans) 109  (163) 558  798  (885) 272  994 
Provision for loan and lease losses 2,209  2,393  3,208  2,848  415  (184) 1,794 
Net interest income after provision for loan and lease losses 56,376  53,737  51,648  55,169  43,917  2,639  12,459 
Noninterest Income:              
Service charges on deposits 1,572  1,462  1,625  1,678  1,575  110  (3)
Mortgage banking income 1,818  3,125  2,925  2,558  2,793  (1,307) (975)
Payroll and insurance income 1,667  1,608  1,760  1,698  1,487  59  180 
SBA income 1,401  1,252  1,192  1,866  1,464  149  (63)
ATM income 909  919  870  860  826  (10) 83 
Bank-owned life insurance income 541  463  455  467  526  78  15 
Gain (loss) on sale of investment securities 181  250    (1,481) 3  (69) 178 
Other 1,649  1,838  1,634  2,494  1,008  (189) 641 
Total noninterest income 9,738  10,917  10,461  10,140  9,682  (1,179) 56 
Noninterest Expense:              
Salaries and employee benefits 23,166  24,279  26,042  25,089  20,701  (1,113) 2,465 
Occupancy and equipment 3,240  3,421  3,496  3,576  3,187  (181) 53 
Data processing 2,808  2,696  2,896  2,596  2,587  112  221 
Legal and professional fees 1,187  967  739  973  700  220  487 
Merger-related expenses 10,967  2,601  1,264  2,588  135  8,366  10,832 
Marketing 744  940  425  693  342  (196) 402 
Federal deposit insurance premiums and other regulatory fees 528  589  500  498  407  (61) 121 
Loan collection costs and OREO activity (204) (116) 166  358  181  (88) (385)
Amortization of intangibles 655  654  651  721  701  1  (46)
Other 3,227  3,952  3,089  3,592  2,630  (725) 597 
Total noninterest expense 46,318  39,983  39,268  40,684  31,571  6,335  14,747 
Income Before Income Taxes 19,796  24,671  22,841  24,625  22,028  (4,875) (2,232)
Income tax expense 1,841  5,904  5,476  19,248  7,592  (4,063) (5,751)
Net Income $17,955  $18,767  $17,365  $5,377  $14,436  $(812) $3,519 
               
Net income allocated to participating securities $400  $509  $435  $136  $389  $(109) $11 
Net income allocated to common shareholders 17,555  18,258  16,930  5,241  14,047  (703) 3,508 
               
Effective Tax Rate 9.30% 23.93% 23.97% 78.16% 34.47% (14.63)% (25.17)%
Earnings Per Share              
Basic $.46  $.48  $.45  $.14  $.37  $(.02) $.09 
Diluted .46  .48  .44  .14  .37  (.02) .09 
Weighted Average Shares Outstanding              
Basic 38,193,099  38,038,181  38,032,007  38,009,181  37,918,753  154,918
  274,346 
Diluted 38,211,476  38,075,106  38,070,554  38,068,619  37,963,141  136,370  248,335 


State Bank Financial Corporation       
3Q18 Financial Supplement: Table 4     
Condensed Consolidated Income Statements     
Year to Date (Unaudited)     
     
  Nine Months Ended September 30
  
(Dollars in thousands, except per share amounts)  2018 2017 Change
Net Interest Income:      
Interest income on loans $150,413  $104,332  $46,081 
Accretion income on loans 20,695  23,425  (2,730)
Interest income on invested funds 19,765  16,989  2,776 
Interest expense 21,302  9,978  11,324 
Net interest income 169,571  134,768  34,803 
Provision for loan and lease losses (organic & PNCI loans) 7,306  4,131  3,175 
Provision for loan and lease losses (purchased credit impaired loans) 504  (869) 1,373 
Provision for loan and lease losses 7,810  3,262  4,548 
Net interest income after provision for loan and lease losses 161,761  131,506  30,255 
Noninterest Income:      
Service charges on deposits 4,659  4,513  146 
Mortgage banking income 7,868  8,783  (915)
Payroll and insurance income 5,035  4,400  635 
SBA income 3,845  4,625  (780)
ATM income 2,698  2,522  176 
Bank-owned life insurance income 1,459  1,475  (16)
Gain on sale of investment securities 431  28  403 
Other 5,121  3,271  1,850 
Total noninterest income 31,116  29,617  1,499 
Noninterest Expense:      
Salaries and employee benefits 73,487  63,267  10,220 
Occupancy and equipment 10,157  9,796  361 
Data processing 8,400  7,608  792 
Legal and professional fees 2,893  3,403  (510)
Merger-related expenses 14,832  2,742  12,090 
Marketing 2,109  1,409  700 
Federal deposit insurance premiums and other regulatory fees 1,617  1,202  415 
Loan collection costs and OREO activity (154) (1,074) 920 
Amortization of intangibles 1,960  2,094  (134)
Other 10,268  7,686  2,582 
Total noninterest expense 125,569  98,133  27,436 
Income Before Income Taxes 67,308  62,990  4,318 
Income tax expense 13,221  21,793  (8,572)
Net Income $54,087  $41,197  $12,890 
       
Net income allocated to participating securities $1,342  $1,095  $247 
Net income allocated to common shareholders 52,745  40,102  12,643 
       
Earnings Per Share      
Basic $1.38  $1.06  $.32 
Diluted 1.38  1.06  .32 
Weighted Average Shares Outstanding      
Basic 38,088,378  37,894,385  193,993 
Diluted 38,110,938  37,943,971  166,967 


State Bank Financial Corporation 
3Q18 Financial Supplement: Table 5 
Condensed Consolidated Composition of Loans and Deposits at Period Ends 
Quarterly (Unaudited) 
            3Q18 change vs
(Dollars in thousands)  3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
                             
Composition of Loans                            
Organic loans (1):                            
Construction, land & land development $480,530  $454,625  $442,942  $412,540  $460,368  $25,905  $20,162 
Other commercial real estate 939,258  947,704  941,581  949,594  915,727  (8,446) 23,531 
Total commercial real estate 1,419,788  1,402,329  1,384,523  1,362,134  1,376,095  17,459  43,693 
Residential real estate 238,292  222,886  208,960  196,225  175,258  15,406  63,034 
Owner-occupied real estate 275,095  270,053  253,059  260,273  261,784  5,042  13,311 
Commercial, financial & agricultural 758,897  666,572  562,566  430,205  363,551  92,325  395,346 
Leases 30,410  36,863  43,787  52,396  66,765  (6,453) (36,355)
Consumer 64,361  65,019  62,423  64,610  61,200  (658) 3,161 
Total organic loans 2,786,843  2,663,722  2,515,318  2,365,843  2,304,653  123,121  482,190 
Purchased non-credit impaired loans(2):              
Construction, land & land development 13,284  14,282  24,352  25,908  30,670  (998) (17,386)
Other commercial real estate 186,556  194,995  226,893  218,660  234,486  (8,439) (47,930)
Total commercial real estate 199,840  209,277  251,245  244,568  265,156  (9,437) (65,316)
Residential real estate 61,141  72,817  82,416  96,529  112,244  (11,676) (51,103)
Owner-occupied real estate 73,466  82,500  94,900  118,294  125,438  (9,034) (51,972)
Commercial, financial & agricultural 390,097  426,992  515,327  529,184  558,992  (36,895) (168,895)
Consumer 1,197  1,503  1,791  2,161  2,647  (306) (1,450)
Total purchased non-credit impaired loans 725,741  793,089  945,679  990,736  1,064,477  (67,348) (338,736)
Purchased credit impaired loans (3):              
Construction, land & land development 6,281  13,227  12,802  13,545  16,918  (6,946) (10,637)
Other commercial real estate 60,910  73,607  77,838  86,748  102,934  (12,697) (42,024)
Total commercial real estate 67,191  86,834  90,640  100,293  119,852  (19,643) (52,661)
Residential real estate 30,037  32,087  36,747  40,332  42,190  (2,050) (12,153)
Owner-occupied real estate 17,145  18,019  18,593  20,803  26,210  (874) (9,065)
Commercial, financial & agricultural 10,300  11,440  11,436  14,051  15,139  (1,140) (4,839)
Consumer 77  82  108  135  269  (5) (192)
Total purchased credit impaired loans 124,750  148,462  157,524  175,614  203,660  (23,712) (78,910)
Total loans $3,637,334  $3,605,273  $3,618,521  $3,532,193  $3,572,790  $32,061  $64,544 
Composition of Deposits              
Noninterest-bearing demand deposits $1,151,511  $1,187,028  $1,089,579  $1,191,106  $1,179,698  $(35,517) $(28,187)
Interest-bearing transaction accounts 679,599  674,205  633,542  688,150  619,156  5,394  60,443 
Savings and money market deposits 1,527,399  1,587,204  1,602,908  1,626,238  1,680,922  (59,805) (153,523)
Time deposits 707,950  698,361  713,869  715,133  731,416  9,589  (23,466)
Brokered and wholesale time deposits 120,455  155,906  144,534  22,508  29,893  (35,451) 90,562 
Total deposits $4,186,914  $4,302,704  $4,184,432  $4,243,135  $4,241,085  $(115,790) $(54,171)
                             

(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 
3Q18 Financial Supplement: Table 6 
Condensed Consolidated Asset Quality Data 
Quarterly (Unaudited) 
                      3Q18 change vs 
(Dollars in thousands) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
                             
Allowance for loan and lease losses on organic loans                            
Beginning Balance $26,366  $24,882  $24,039  $22,709  $22,560  $1,484  $3,806 
Charge-offs (326) (171) (664) (474) (912) (155) 586 
Recoveries 87  70  133  77  106  17  (19)
Net (charge-offs) recoveries (239) (101) (531) (397) (806) (138) 567 
Provision for loan and lease losses 1,300  1,585  1,374  1,727  955  (285) 345 
Ending Balance $27,427  $26,366  $24,882  $24,039  $22,709  $1,061  $4,718 
               
Allowance for loan and lease losses on purchased non-credit impaired loans              
Beginning Balance $2,981  $2,249  $995  $900  $667  $732  $2,314 
Charge-offs (451) (285) (40) (273) (152) (166) (299)
Recoveries 59  46  18  45  40  13  19 
Net (charge-offs) recoveries (392) (239) (22) (228) (112) (153) (280)
Provision for loan and lease losses 800  971  1,276  323  345  (171) 455 
Ending Balance $3,389  $2,981  $2,249  $995  $900  $408  $2,489 
               
Allowance for loan and lease losses on purchased credit impaired loans              
Beginning Balance $3,988  $4,186  $3,716  $3,233  $4,761  $(198) $(773)
Charge-offs (124) (35) (88) (315) (643) (89) 519 
Recoveries              
Net (charge-offs) recoveries (124) (35) (88) (315) (643) (89) 519 
Provision for loan and lease losses 109  (163) 558  798  (885) 272  994 
Ending Balance $3,973  $3,988  $4,186  $3,716  $3,233  $(15) $740 
               
Nonperforming organic assets              
Nonaccrual loans $10,648  $8,119  $9,186  $6,656  $5,482  $2,529  $5,166 
Accruing TDRs   490  556  566    (490)  
Total nonperforming organic loans 10,648  8,609  9,742  7,222  5,482  2,039  5,166 
Other real estate owned 3,255  4,135  3,231  153    (880) 3,255 
Total nonperforming organic assets $13,903  $12,744  $12,973  $7,375  $5,482  $1,159  $8,421 
               
Nonperforming purchased non-credit impaired assets              
Nonaccrual loans $22,207  $22,585  $6,356  $5,821  $5,615  $(378) $16,592 
Accruing TDRs 2,756  2,760  2,769      (4) 2,756 
Total nonperforming PNCI loans 24,963  25,345  9,125  5,821  5,615  (382) 19,348 
Other real estate owned 1,261          1,261  1,261 
Total nonperforming PNCI assets $26,224  $25,345  $9,125  $5,821  $5,615  $879  $20,609 
               
Ratios for organic assets              
Annualized QTD charge-offs (recoveries) on organic loans to average organic loans .03% .02% .09% .07% .14% .01% (.11)%
Nonperforming organic loans to organic loans .38  .32  .39  .31  .24  .06  .14 
Nonperforming organic assets to organic loans + OREO .50  .48  .52  .31  .24  .02  .26 
Past due organic loans to organic loans .34  .16  .22  .20  .12  .18  .22 
Allowance for loan and lease losses on organic loans to organic loans .98  .99  .99  1.02  .99  (.01) (.01)
               


State Bank Financial Corporation 
3Q18 Financial Supplement: Table 6 (continued) 
Condensed Consolidated Asset Quality Data 
Quarterly (Unaudited)                  
                 3Q18 change vs 
(Dollars in thousands)  3Q18
 2Q18
 1Q18
 4Q17
 3Q17
 2Q18
 3Q17
Ratios for purchased non-credit impaired loans                     
Annualized QTD charge-offs (recoveries) on PNCI loans to average PNCI loans .20% .11% .01% .09% .10% .09% .10%
Nonperforming PNCI loans to PNCI loans 3.44  3.20  .96  .59  .53  .24  2.91 
Nonperforming PNCI assets to PNCI loans + OREO 3.61  3.20  .96  .59  .53  .41  3.08 
Past due PNCI loans to PNCI loans 2.73  .36  .45  .40  .48  2.37  2.25 
Allowance for loan and lease losses on PNCI loans to PNCI loans .47  .38  .24  .10  .08  .09  .39 
               
Ratios for purchased credit impaired loans (1)              
Annualized QTD charge-offs (recoveries) on PCI loans to average PCI loans .35% .09% .21% .66% 1.95% .26% (1.60)%
Past due PCI loans to PCI loans 6.68  5.95  6.47  5.84  8.12  .73  (1.44)
Allowance for loan and lease losses on PCI loans to PCI loans 3.18  2.69  2.66  2.12  1.59  .49  1.59 
                      

(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 
3Q18 Financial Supplement: Table 7 
Condensed Consolidated Average Balances and Yield Analysis 
Quarterly (Unaudited) 
                      3Q18 change vs 
(Dollars in thousands) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q18 3Q17
Average Balances                            
Interest-bearing deposits in other financial institutions and federal funds sold $244,697  $131,506  $93,692  $168,223  $108,546  $113,191  $136,151 
Investment securities 830,282  880,667  893,685  924,933  913,898  (50,385) (83,616)
Loans, excluding purchased credit impaired (1) 3,499,883  3,507,613  3,430,599  3,413,159  2,762,479  (7,730) 737,404 
Purchased credit impaired loans 140,649  154,529  167,944  190,323  130,708  (13,880) 9,941 
Total earning assets 4,715,511  4,674,315  4,585,920  4,696,638  3,915,631  41,196  799,880 
Total nonearning assets 269,280  276,138  274,810  285,813  263,100  (6,858) 6,180 
Total assets 4,984,791  4,950,453  4,860,730  4,982,451  4,178,731  34,338  806,060 
Interest-bearing transaction accounts 650,995  627,800  626,298  664,938  580,090  23,195  70,905 
Savings & money market deposits 1,570,062  1,568,638  1,594,724  1,685,292  1,383,326  1,424  186,736 
Time deposits 704,879  704,850  715,514  724,578  420,192  29  284,687 
Brokered and wholesale time deposits 139,270  149,956  65,749  25,911  49,675  (10,686) 89,595 
Other borrowings 23,689  55,344  85,788  35,353  57,988  (31,655) (34,299)
Total interest-bearing liabilities 3,088,895  3,106,588  3,088,073  3,136,072  2,491,271  (17,693) 597,624 
Noninterest-bearing deposits 1,189,820  1,148,943  1,082,559  1,147,834  1,004,046  40,877  185,774 
Other liabilities 43,964  44,003  47,311  53,136  44,794  (39) (830)
Shareholders’ equity 662,112  650,919  642,787  645,409  638,620  11,193  23,492 
Total liabilities and shareholders' equity 4,984,791  4,950,453  4,860,730  4,982,451  4,178,731  34,338  806,060 
               
Interest Margins (2)              
Interest-bearing deposits in other financial institutions and federal funds sold 1.76% 1.23% .80% .86% .80% .53% .96%
Investment securities, tax-equivalent basis 2.79  2.86  2.72  2.43  2.42  (.07) .37 
Loans, excluding purchased credit impaired, tax-equivalent basis (3) 5.85  5.77  5.73  5.47  5.11  .08  .74 
Purchased credit impaired loans 23.00  17.12  14.36  22.24  19.79  5.88  3.21 
Total earning assets 5.61% 5.47% 5.36% 5.39% 4.85% .14% .76%
Interest-bearing transaction accounts .23  .16  .14  .13  .13  .07  .10 
Savings & money market deposits 1.13  1.07  .76  .80  .63  .06  .50 
Time deposits 1.41  1.25  1.09  1.04  .72  .16  .69 
Brokered and wholesale time deposits 1.93  1.87  1.91  1.15  1.05  .06  .88 
Other borrowings .12  1.59  1.31  .52  .75  (1.47) (.63)
Total interest-bearing liabilities 1.03% .98% .75% .71% .54% .05% .49%
Net interest spread 4.58% 4.49% 4.61% 4.68% 4.31% .09% .27%
Net interest margin 4.93% 4.82% 4.86% 4.91% 4.51% .11% .42%
Net interest margin contribution from accretion income on loans .69% .57% .53% .90% .66% .12% .03%
                      

(1) Includes average nonaccrual loans of $32.0 million for 3Q18, $18.9 million for 2Q18, $12.9 million for 1Q18, $11.4 million for 4Q17, and $8.0 million for 3Q17.
(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 $28,000 for 3Q18, $6,000 for 2Q18, $57,000 for 1Q18, $128,000 for 4Q17, and $177,000 for 3Q17.

State Bank Financial Corporation 
3Q18 Financial Supplement: Table 8 
Reconciliation of Non-GAAP Measures (1) 
Quarterly (Unaudited) 
          
(dollars in thousands, except per share amounts; taxable equivalent)3Q18 2Q18 1Q18 4Q17 3Q17
          
Book value per common share reconciliation         
Book value per common share (GAAP)$17.12  $16.79  $16.58  $16.45  $16.48 
Effect of goodwill and other intangibles(2.42) (2.41) (2.43) (2.45) (2.47)
Tangible book value per common share$14.70  $14.38  $14.15  $14.00  $14.01 
          
Average tangible equity reconciliation         
Average equity (GAAP)$662,112  $650,919  $642,787  $645,409  $638,620 
Effect of average goodwill and other intangibles(93,870) (94,516) (95,167) (95,845) (88,618)
Average tangible equity$568,242  $556,403  $547,620  $549,564  $550,002 
          

(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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