LAKE HAVASU CITY, Ariz., May 8, 2008 (PRIME NEWSWIRE) -- State Bank Corp. (OTCBB:SBAZ), the holding company for Mohave State Bank, announced first quarter 2008 net income of $1.06 million, a decline of $252,000, or 19.2 percent, from the $1.32 million reported for first quarter 2007. Earnings per diluted share were $0.28 compared with $0.34 for the prior-year first quarter, down 17.7 percent. Earnings were impacted primarily by net interest margin compression from declining interest rates.
First quarter 2008 highlights include:
* A decline of 14 basis points in the quarterly average net
interest margin year-over-year to 4.42 percent; however, the
net interest margin declined 56 basis points from its third
quarter 2007 peak of 4.98 percent following the series of
interest rate cuts implemented by the Federal Reserve.
* The reclassification of three delinquent loans totaling $3.9
million to nonaccrual status; in the process, $138,000 of
previously accrued interest income was reversed during the first
quarter. Excluding the reversal of this income, first quarter
2008 net interest margin would have been approximately 4.59
percent.
* Twelve-month loan growth of $19.5 million, or 7.8 percent.
Growth primarily reflects a $19.3 million increase in commercial
real estate loans, which comprise 44.6 percent of the Bank's
portfolio as of March 31, 2008. Since year-end, loan growth has
been modest.
* The Company completed its 75,000 share repurchase program in
January.
President and CEO Ralph Tapscott stated, "Our local economy and housing market have not been immune to the series of financial crises that have affected the rest of the country. While our economy is still growing modestly, in the near term, we will have to manage through a softer real estate market. We expect that our margin will remain above our peers and that our nonperforming assets, while increasing, will be controlled.
"Meanwhile, we continue to build our infrastructure in anticipation of future growth. I am pleased to announce that we recently added two seasoned executives to our senior management team. In the first quarter, we appointed Brad Payne to the position of Executive Vice President and Chief Credit Officer, and in early April, we appointed Brian M. Riley to be Executive Vice President and Chief Financial Officer. Both of these bankers have more than twenty years of experience in our industry, and we are delighted to add their strengths to our team," commented Mr. Tapscott.
The Company reported an annualized ROAA of 1.21 percent and an ROAE of 11.91 percent for first quarter 2008, compared with 1.43 percent and 16.43 percent, respectively, for the year-ago quarter.
Income Statement
Total revenue, consisting of net interest income and noninterest income, was $4.11 million for the first quarter 2008, down $194,000, or 4.5 percent, from the first quarter of 2007. Net interest income decreased $315,000, or 8.0 percent, to $3.6 million, reflecting a 5.1 percent decrease in average earning assets as well as a 14 basis point decline in the net interest margin to 4.42 percent. Mr. Tapscott added, "The Bank's funding costs have not adjusted as quickly to declining interest rates as our loan rates have. We anticipate that deposit cost realignment will occur in the next few months. However, competition for funding resources remains strong and will heavily influence the pricing of deposits in our market. To help offset the impact of net interest margin compression, we have been shifting our earning asset mix toward more profitable lending opportunities." During the first quarter of 2008, loans comprised 80 percent of average earnings assets, compared with 71 percent for the year-ago quarter.
Noninterest income for the first quarter of 2008 was $470,000, compared with $349,000 for the year-ago first quarter, an increase of $121,000, or 34.7 percent. Service charges on deposits grew by $42,000 from expansion of product and service offerings and from new customer additions. "Growth of fee income has been a bright spot for us over the past twelve months. We are building a diversified income stream based on a growing mix of banking services, mortgage banking and SBA lending activities," Mr. Tapscott stated.
Noninterest expense for the first quarter of 2008 was $2.3 million compared with $2.1 million for the prior-year first quarter, up $191,000, or 9.0 percent. "We experienced a higher level of expenses during 2007 associated with the opening of a second Kingman branch and costs related to expansion of our technology capabilities," Mr. Tapscott commented. The efficiency ratio for the first quarter of 2008 was 56.34 percent, compared to 53.31 percent for the linked quarter and 49.22 percent for the year-ago quarter.
Balance Sheet
Total assets were $359.9 million at March 31, 2008, up $6.2 million, or 1.8 percent, from the $353.6 million reported at March 31, 2007. Assets in the 2007 period were temporarily inflated by the influx of $15 million of short-term deposits. Loans increased $19.5 million, or 7.8 percent, to $268.1 million. Commercial real estate (CRE) loans, which accounted for 44.6 percent of the March 31, 2008 loan portfolio, were a major growth contributor, up $19.3 million, or 19.2 percent, to $119.9 million. Growth in CRE loans more than offset the $14.3 million, or 15.6 percent, decline in construction (C&D) loans, which ended the quarter at $77.2 million, or 28.7 percent of total loans. Mr. Tapscott noted, "The recent moderation in loan growth reflects a general slowdown in local economic conditions, which has primarily affected construction lending. Residential real estate construction has decreased as the existing inventory of available housing stock has increased. A higher overall foreclosure rate has also added to the level of available housing. Although we have become more selective in adding loans to our portfolio, we remain positive about our expanded SBA and USDA guaranteed lending programs."
Nonperforming assets at March 31, 2008 were $4.5 million, or 1.24 percent of total assets; there were no nonperforming assets at March 31, 2007. Nonperforming assets primarily centered around one residential construction project. Mr. Tapscott commented, "Approximately 83 percent of our non-accruals consist of one C&D loan, which was added early in the first quarter. We are pursuing a number of options regarding the orderly disposition of this asset." Net charge-offs for the first quarter 2008 were $88,000, or 0.13 percent of annualized average loans, compared with net recoveries of $8,000, or (0.01 percent) of annualized average loans for the year-ago quarter. The quarter-end allowance for loan losses was 1.36 percent of total loans, compared with 1.33 percent for prior-year quarter end.
Deposits at March 31, 2008 were $274.3 million, a decrease of $536,000, or 0.2 percent, from the $274.9 million reported at March 31, 2007. The prior-year period was inflated by a temporary influx of $15 million in deposits. "Our deposit mix has been remarkably stable over time. Core deposits continue to dominate our deposit structure and reflect our strong local market franchise," commented Mr. Tapscott.
Shareholder equity increased 12.0 percent to $36.2 million at March 31, 2008 from $32.3 million at March 31, 2007. During the first quarter 2008, the Company completed its 75,000 share repurchase program. Capital ratios remain strong at March 31, 2008; equity to asset ratio of 10.06 percent, and a risk based capital ratio of 12.74 percent in excess of the regulatory standards to qualify as a "well-capitalized" institution.
Mr. Tapscott concluded, "We remain confident in the resilience of our local economy. A forecast of population growth within certain select markets far exceeds the national average. We continue to focus on the elements that have contributed to our success in the past: an experienced management team, local decision-making and outstanding service."
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, with $360 million in assets as of March 31, 2008. 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: 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 Statements Follow
State Bank Corp.
Five-Quarter Performance Summary
For the Quarter Ended
-----------------------------------------------------
Dollars
in thousands 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Performance Highlights
Earnings:
Total revenue
(Net int.
income
+ nonint.
income) $ 4,109 $ 4,382 $ 4,502 $ 4,653 $ 4,303
Net interest
income $ 3,639 $ 3,893 $ 4,049 $ 4,165 $ 3,954
Provision for
loan losses $ 130 $ 65 $ 90 $ 195 $ 170
Noninterest
income $ 470 $ 489 $ 453 $ 488 $ 349
Noninterest
expense $ 2,315 $ 2,336 $ 2,253 $ 2,234 $ 2,118
Net income $ 1,064 $ 1,285 $ 1,463 $ 1,437 $ 1,316
Per Share Data:
Net income,
basic $ 0.28 $ 0.33 $ 0.37 $ 0.39 $ 0.34
Net income
before extra-
ordinary items,
diluted $ 0.28 $ 0.33 $ 0.37 $ 0.39 $ 0.34
Net income,
diluted $ 0.28 $ 0.33 $ 0.37 $ 0.38 $ 0.34
Cash dividends
declared $ 0.10 $ 0.16 $ 0.10 $ 0.10 $ 0.10
Book value $ 9.33 $ 9.03 $ 8.65 $ 8.46 $ 8.36
Tangible book
value $ 9.33 $ 9.03 $ 8.65 $ 8.46 $ 8.36
Performance Ratios:
Return on average
assets 1.21% 1.47% 1.70% 1.63% 1.43%
Return on average
equity 11.91% 14.74% 17.39% 17.68% 16.31%
Net interest
margin, taxable
equivalent 4.42% 4.73% 4.98% 4.98% 4.56%
Average cost of
funds 2.71% 3.01% 3.08% 2.92% 2.99%
Average yield
on loans 7.70% 8.57% 8.91% 8.87% 8.65%
Efficiency
ratio 56.34% 53.31% 50.04% 48.01% 49.22%
Non-interest
income to total
revenue 11.44% 11.16% 10.06% 10.49% 8.11%
Capital & Liquidity:
Total equity to
total assets
(EOP) 10.06% 9.84% 9.69% 9.48% 9.14%
Tangible equity
to tangible
assets 10.06% 9.84% 9.68% 9.48% 9.14%
Total loans to
total deposits 97.74% 101.55% 95.69% 91.56% 90.46%
Mohave State Bank
-----------------
Regulatory
Capital 9.85% 9.73% 9.71% 9.50% 8.87%
Tier 1 Capital 11.51% 11.44% 11.88% 11.80% 12.03%
Risk Based
Capital 12.74% 12.67% 13.13% 13.04% 13.27%
Asset Quality:
Gross
charge-offs $ 88 $ 55 $ -- $ 39 $ --
Net charge-offs
(NCOs) $ 88 $ 46 $ (34) $ 33 $ (8)
NCO to average
loans,
annualized 0.13% 0.07% -0.05% 0.05% -0.01%
Non-accrual
loans $ 4,475 $ 585 $ 252 $ -- $ --
Other real
estate
owned $ -- $ -- $ -- $ -- $ --
Repossessed
assets $ -- $ -- $ -- $ -- $ --
Non-performing
assets (NPAs) $ 4,475 $ 585 $ 252 $ -- $ --
NPAs to total
assets 1.24% 0.16% 0.07% 0.00% 0.00%
Loans more than
90 days past
due $ -- $ -- $ -- $ -- $ 1
NPAs + 90 days
past due $ 4,475 $ 585 $ 252 $ -- $ 1
NPAs + loans
90 days past
due to total
assets 1.24% 0.16% 0.07% 0.00% 0.00%
Allowance for
loan losses to
total loans 1.36% 1.36% 1.42% 1.39% 1.33%
Allowance for
loan losses to
NPAs 81.68% 617.61% 1429.76% -- 331700.00%
Period End Balances:
Assets $ 359,886 $ 352,236 $ 346,586 $ 344,875 $ 353,641
Total Loans
(before
reserves) $ 268,143 $ 265,298 $ 254,386 $ 250,333 $ 248,655
Deposits $ 274,349 $ 261,256 $ 265,841 $ 273,423 $ 274,885
Stockholders'
equity $ 36,202 $ 34,658 $ 33,567 $ 32,698 $ 32,334
Common stock
market capital-
ization $ 69,164 $ 94,758 $ 93,164 $ 99,223 $ 97,187
Full-time
equivalent
employees 91 92 85 83 83
Shares
outstanding 3,831,819 3,836,351 3,881,844 3,891,085 3,887,467
Average Balances:
Assets $ 351,318 $ 349,664 $ 345,045 $ 352,326 $ 368,150
Earning assets $ 329,444 $ 328,981 $ 325,474 $ 334,601 $ 346,987
Total Loans
(before
reserves) $ 264,493 $ 260,492 $ 252,455 $ 249,074 $ 247,680
Deposits $ 266,946 $ 277,858 $ 271,650 $ 278,847 $ 286,045
Other
borrowings $ 46,981 $ 41,270 $ 37,446 $ 39,860 $ 47,965
Stockholders'
equity $ 35,737 $ 34,873 $ 33,649 $ 32,516 $ 32,279
Shares out-
standing,
basic - wtd 3,831,528 3,863,930 3,884,355 3,897,080 3,875,944
Shares out-
standing,
diluted - wtd 3,838,528 3,871,383 3,891,808 3,904,533 3,887,644
State Bank Corp.
Income Statements
For the Quarter Ended
---------------------------------
Dollars in thousands 3/31/2008 12/31/2007 3/31/2007
---------------------------------------------------------------------
Condensed Statements of Income
Interest income
Loans, including fees $ 5,093 $ 5,581 $ 5,357
Securities 664 678 759
Other 11 37 331
--------- --------- ---------
Total interest income 5,768 6,296 6,447
--------- --------- ---------
Interest expense
Deposits 1,802 1,993 2,030
Borrowings 327 410 463
--------- --------- ---------
Total interest expense 2,129 2,403 2,493
--------- --------- ---------
Net interest income 3,639 3,893 3,954
--------- --------- ---------
Provision for loan losses 130 65 170
--------- --------- ---------
Net interest income after
loan loss provision 3,509 3,828 3,784
--------- --------- ---------
Noninterest income
Service charges on deposits 170 183 128
Mortgage loan fees 55 40 37
Gain/losses on sale of loans 141 180 148
Other income 104 86 36
--------- --------- ---------
Total noninterest income 470 489 349
--------- --------- ---------
Noninterest expense
Salaries and employee benefits 1,319 1,322 1,333
Net occupancy expense 95 81 61
Equipment expense 81 73 54
Data processing 326 359 258
Director fees & expenses 128 118 103
Insurance 14 16 12
Marketing & promotion 125 137 109
Professional fees 28 57 41
Office expense 75 75 68
Regulatory assessments 40 30 8
Other expenses 84 68 77
--------- --------- ---------
Total noninterest expense 2,315 2,336 2,124
--------- --------- ---------
Income before income taxes 1,664 1,981 2,009
--------- --------- ---------
Income taxes 600 696 693
--------- --------- ---------
Net Income $ 1,064 $ 1,285 $ 1,316
========= ========= =========
Per Share Data
Basic EPS $ 0.28 $ 0.33 $ 0.34
Diluted EPS $ 0.28 $ 0.33 $ 0.34
Average shares outstanding
Basic 3,831,528 3,863,930 3,875,944
Effect of dilutive stock
options 7,000 7,453 11,700
--------- --------- ---------
Diluted 3,838,528 3,871,383 3,887,644
--------- --------- ---------
State Bank Corp.
Balance Sheets
For the Quarter Ended
-------------------------------- Qrt/Qrt Yr/Yr
Dollars in thousands 3/31/2008 12/31/2007 3/31/2007 Change Change
------------------------------------------------------ -------------
Consolidated
Balance Sheets
Assets
Cash and cash
equivalents $ 7,018 $ 5,458 $ 6,135 28.6% 14.4%
Federal funds sold 8,000 -- 10,910 -26.7%
Held for maturity
securities 8,515 10,033 17,297 -15.1% -50.8%
Available for
sale securities 51,687 54,275 57,953 -4.8% -10.8%
--------- --------- ---------
Total cash and
securities 75,220 69,766 92,295 7.8% -18.5%
Loans held for
sale, before
reserves $ 523 $ 295 $ 1,130 7.8% -53.7%
Gross loans held
for investment 267,620 265,003 247,525 1.0% 8.1%
Loan loss reserve (3,655) (3,613) (3,317) 1.2% 10.2%
--------- --------- ---------
Total net loans 264,488 261,685 245,338 1.1% 7.8%
Premises and
equipment, net $ 10,367 $ 10,125 $ 6,489 2.4% 59.8%
Deferred taxes 1,082 1,595 1,388 -32.2% -22.0%
Federal Home Loan
Bank and other
stock 1,698 1,677 2,055 1.3% -17.4%
Company owned life
insurance 4,821 4,775 4,641 1.0% 3.9%
Other assets 2,210 2,613 1,435 -15.4% 54.0%
--------- --------- ---------
Total Assets $ 359,886 $ 352,236 $ 353,641 2.2% 1.8%
========= ========= =========
Liabilities
Non interest
bearing
demand $ 53,670 $ 48,966 $ 69,209 9.6% -22.5%
Money market, NOW
and savings 138,310 131,830 125,799 4.9% 9.9%
Time deposits
less than $100K 33,330 30,405 33,454 9.6% -0.4%
Time deposits
greater than $100K 49,039 50,055 46,423 -2.0% 5.6%
--------- --------- ---------
Total Deposits 274,349 261,256 274,885 5.0% -0.2%
--------- --------- ---------
Securities sold
under
repurchase
agreements 27,191 23,027 39,156 18.1% -30.6%
Federal Home Loan
Bank advances 20,490 31,185 5,000 -34.3% 309.8%
--------- --------- ---------
Total Debt 47,681 54,212 44,156 -12.0% 8.0%
Other Liabilities 1,654 2,110 2,266 -21.6% -27.0%
--------- --------- ---------
Total
Liabilities 323,684 317,578 321,307 1.9% 0.7%
Shareholders' Equity
Common stock $ 21,589 $ 21,206 $ 20,964 1.8% 3.0%
Accumulated
retained
earnings 13,994 13,477 11,693 3.8% 19.7%
Accumulated
other
comprehensive
loss 619 (25) (323) -2576.0% -291.6%
--------- --------- ---------
Total
shareholders
equity $ 36,202 $ 34,658 $ 32,334 4.5% 12.0%
Total
liabilities
and
shareholders'
equity $ 359,886 $ 352,236 $ 353,641 2.2% 1.8%
========= ========= =========
State Bank Corp.
Deposit and Loan Mix
For the Quarter Ended
-------------------------------------------------
Dollars
in thousands 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------------------------------------------------------------------
Deposit and Loan Mix
Deposit Breakout
Non interest
bearing demand $ 53,670 $ 48,966 $ 56,424 $ 60,929 $ 69,209
Interest
bearing NOW 4,133 4,112 3,608 6,160 4,317
Savings 3,738 3,802 4,041 4,444 4,317
Money market 130,439 123,916 121,411 121,223 117,065
Time deposits
less than $100K 33,330 30,405 32,305 33,809 33,454
Time deposits
greater than $100K 49,039 50,055 48,052 46,858 46,523
--------- --------- --------- --------- ---------
Total deposits $274,349 $261,256 $265,841 $273,423 $274,885
Loan Breakout
Commercial
and industrial $ 33,100 $ 33,912 $ 30,513 $ 30,973 $ 30,038
Real estate -
construction 77,212 74,917 75,816 84,844 91,468
Real estate -
residential 36,891 34,958 30,530 26,415 25,530
Real estate -
commercial 119,872 120,371 116,252 106,694 100,538
Consumer 1,745 1,860 1,976 2,158 1,878
--------- --------- --------- --------- ---------
Total loans $268,820 $266,018 $255,087 $251,084 $249,452
Less unearned fees
and interest 677 720 701 751 797
--------- --------- --------- --------- ---------
Total loans net
of unearned
fees and
interest $268,143 $265,298 $254,386 $250,333 $248,655
Less allowance
for loan losses 3,655 3,613 3,603 3,480 3,317
--------- --------- --------- --------- ---------
Loans, net $264,488 $261,685 $250,783 $246,853 $245,338
Nonperforming Loans
Commercial
and industrial $ -- $ -- $ -- $ -- $ --
Real estate -
construction 4,475 585 252 -- --
Real estate -
residential -- -- -- -- --
Real estate -
commercial -- -- -- -- --
Consumer -- -- -- -- 1
--------- --------- --------- --------- ---------
Total
nonperforming
loans $ 4,475 $ 585 $ 252 $ -- $ 1