State Bank Financial Corporation Reports Operating Income of $11.4 Million for Third Quarter 2015


  • Operating Earnings Per Diluted Share of $.31
  • $98 Million of Net Loan Growth, or 19% Annualized
  • Announced Organizational Realignment as Part of Broader Efficiency Initiative in September
  • Acquisition of Equipment Finance Group Subsequent to Quarter-End

ATLANTA, Oct. 22, 2015 (GLOBE NEWSWIRE) -- State Bank Financial Corporation (NASDAQ:STBZ) today announced operating income of $11.4 million, or $.31 per fully diluted share for the quarter ended September 30, 2015, compared to $7.7 million, or $.21 per fully diluted share for the second quarter of 2015.  Interest income on loans improved to $24.2 million, a $1.1 million increase from the second quarter of 2015, and was driven by continued strong loan growth.  Additionally, recovery activity, much of which would have previously been shared with the FDIC under the bank’s now terminated loss share agreements, contributed significantly to the improvement in operating income.

Operating income excludes severance and merger-related expenses that are not considered part of ongoing operations.  Including those items, net income for the third quarter of 2015 was $9.1 million, compared to a net loss of $2.0 million for the second quarter of 2015.  Fully diluted earnings per share were $.25 in the third quarter of 2015 compared to a fully diluted loss per share of $.06 in the second quarter of 2015.

Joe Evans, Chairman and CEO of State Bank Financial, commented, "This was another quarter of solid fundamentals as loans, core deposits, and fee income businesses continue to grow at an impressive pace.  Also, recovery income related to previously charged-off loans exceeded expectations.  I am pleased with the results of the third quarter, but even more pleased with the outlook."

Acquisition of Patriot Capital

In a separate release today, State Bank and Trust Company announced that it purchased the equipment finance origination platform of Patriot Capital Corporation, a leading provider of equipment financing to the retail petroleum industry.  Patriot Capital is a privately owned company with 17 employees that finances equipment throughout the continental United States.  Patriot Capital was founded in 2000 and is based in Atlanta, Georgia.

Tom Wiley, President of State Bank Financial, added, "I am very pleased with our strong loan growth this quarter and am excited about the addition of Patriot Capital's production in future periods.  We expect our acquisition of Patriot Capital will further diversify and broaden our asset generating capabilities."

Operating Highlights

Net interest income of $37.4 million in the third quarter of 2015 increased from $33.5 million in the second quarter of 2015 due to higher interest and accretion income on loans.  Interest income on loans, excluding purchased credit impaired loans, for the third quarter of 2015 was $24.2 million, up $1.1 million from $23.1 million in the prior quarter.  Accretion income on loans was $11.2 million in the third quarter of 2015, up from $8.4 million in the second quarter of 2015 due primarily to larger gains from early loan payoffs compared to the previous quarter.  Base accretion declined $764,000 in the third quarter of 2015 compared to the prior quarter.  As of September 30, 2015, approximately $97 million of accretable discount remains to be recognized as loan accretion income, compared to $104 million of accretable discount remaining at the end of the second quarter of 2015.  Interest expense of $2.0 million in the third quarter of 2015 was essentially flat compared to the prior quarter.  Cost of funds for the third quarter of 2015 was 28 basis points, down one basis point from the second quarter of 2015.

The organic loan portfolio continued to perform well in the third quarter of 2015 as past due organic loans represented only eight basis points of total organic loans.  A net provision benefit of $265,000 was recognized in the third quarter of 2015, consisting of an $873,000 benefit to the provision on purchased credit impaired loans due to improving cash flow expectations.  This was partially offset by a $614,000 provision expense on organic loans due to loan growth in the quarter.

Noninterest income, excluding amortization of the FDIC receivable for loss share agreements in the second quarter of 2015, was $8.9 million for the third quarter of 2015, down from $9.3 million in the second quarter of 2015.  Noninterest income was negatively affected by the hedges on underlying fixed-rate loans, which contributed to a $636,000 linked-quarter decline.  In addition, a decline in mortgage banking income was largely offset by increases in SBA and payroll fee income.

Total noninterest expense for the third quarter of 2015 was $32.4 million, a $1.1 million increase from the second quarter of 2015, due almost entirely to higher salary and benefit costs as a result of severance related to the organizational realignment announced in September 2015.  Severance expenses totaled $3.0 million in the third quarter of 2015 compared to $443,000 in the second quarter of 2015.  Merger-related expenses totaled $717,000 in the third quarter of 2015, down from $876,000 in the second quarter of 2015.

Financial Condition

Total assets at September 30, 2015 were $3.4 billion, up from $3.3 billion at June 30, 2015.  Period-end organic and purchased non-credit impaired loans increased to $2.0 billion at September 30, 2015, a net increase of $115.5 million from the second quarter of 2015.  Purchased credit impaired loans decreased to $159.3 million at the end of the third quarter of 2015, an $18.0 million linked-quarter decline.  Total net loans, excluding loans held for sale, were $2.1 billion at September 30, 2015, up $98.1 million from the second quarter of 2015.

Total deposits at September 30, 2015 were $2.8 billion, up from $2.7 billion at the end of the second quarter of 2015.  Period-end noninterest-bearing demand deposits increased $61.0 million from the second quarter of 2015 and represented 29.4% of total deposits as of September 30, 2015.  Average noninterest-bearing demand deposits increased $75.0 million from the second quarter of 2015, the 14th consecutive quarterly increase.  Period-end and average transaction accounts, comprised of noninterest-bearing demand deposits and interest-bearing transaction accounts, increased $62.8 million and $39.4 million, respectively, from the second quarter of 2015.

Tangible book value per share was $13.78 at the end of the third quarter of 2015.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 15.04% and a Tier I risk-based capital ratio of 18.64%.

Comparison to the Third Quarter of 2014

Net operating income for the quarter ended September 30, 2015 decreased $284,000 compared to the same period in 2014.  The decrease in operating income was primarily due to the $10.0 million decrease in accretion income as the third quarter of 2014 benefited from $9.2 million in gains from loan pool closeouts.  Net income decreased $2.4 million from the third quarter of 2014 primarily as a result of severance and merger-related charges recognized in the third quarter of 2015.  Net interest income declined $513,000 as an $8.1 million increase in interest income on loans was more than offset by the previously mentioned decline in accretion income.  Cost of funds for the third quarter of 2015 of 28 basis points was down seven basis points from the third quarter of 2014.

Comparisons to the third quarter of 2014 are materially affected by State Bank's acquisitions of Atlanta Bancorporation, Inc. on October 1, 2014 and Georgia-Carolina Bancshares, Inc. on January 1, 2015.

Noninterest income, excluding amortization of the FDIC receivable, increased $5.3 million in the third quarter of 2015 compared to the third quarter of 2014, primarily as a result of the mortgage banking and SBA lending units acquired in our two acquisitions.  Operating expenses were also impacted by the acquisitions and increased $6.5 million during the third quarter of 2015 compared to the third quarter of 2014.

Total loans increased $635.0 million during the year-over-year period as growth in organic loans of $403.0 million and purchased non-credit impaired loans of $285.4 million was partially offset by a $53.5 million decline in purchased credit impaired loans.  Total deposits increased $639.2 million for the quarter ended September 30, 2015, compared to the third quarter of 2014, including growth in noninterest-bearing deposits of $298.5 million and interest-bearing transaction accounts of $122.2 million.

Detailed Results

Supplemental tables displaying financial results for the third quarter of 2015, the previous four quarters and year-to-date 2015 are included with this press release.

Non-GAAP Financial Measures

This press release contains certain performance 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 3Q15 Financial Supplement: Table 8, Condensed Operating Results to GAAP Earnings Reconciliation.

Conference Call

Chief Executive Officer Joe Evans, President Tom Wiley, Chief Financial Officer Sheila Ray and Chief Credit Officer David Black will discuss financial and business results for the quarter on a conference call today at 11:00 a.m. ET.

Dial in number:  1.800.708.4508

Please allow time to register your name and affiliation/company prior to the start of the call.  A replay of the conference call will be available shortly after the call's completion in the Investors section on the company's website at www.statebt.com.  A slide presentation for today's call is also available in the Investors section on the company's website.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ:STBZ), with approximately $3.4 billion in assets as of September 30, 2015, is an Atlanta-based bank holding company for State Bank and Trust Company.  State Bank operates 26 banking offices in Metro Atlanta, Middle Georgia and Augusta, Georgia, and seven mortgage origination offices.

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

Cautionary Note Regarding Forward-Looking Statements

Certain statements on our conference call may be "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,” “plan,” “seek,” “believe,” “expect,” “strategy,” “future,” “likely,” “project,” “may,” “should,” “will” and similar references to future periods.  Examples of forward-looking statements include, among others, our outlook for future periods and our expectation that our acquisition of Patriot Capital will further diversify and broaden our asset-generating capabilities.  Such forward-looking statements are subject to risks, uncertainties, and other factors, such as a downturn in the economy, unanticipated losses related to the integration of, and accounting for, acquired assets and assumed liabilities in our acquisitions, access to funding sources, greater than expected noninterest expenses, volatile credit and financial markets both domestic and foreign, potential deterioration in real estate values, regulatory changes and excessive loan losses, 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. See Item 1A, Risk Factors, in our Annual Report on Form 10-K for the most recently ended fiscal year, for a description of some of the important factors that may affect actual outcomes.


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 1
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
 
            3Q15 change vs
(Dollars in thousands, except per share  amounts; taxable equivalent) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Income Statement Highlights              
Interest income on loans $24,397  $23,174  $21,498  $17,496  $16,237  $1,223  $8,160 
Accretion income on loans 11,156  8,365  16,069  14,124  21,110  2,791  (9,954)
Interest income on invested funds 4,054  4,037  3,629  2,932  2,552  17  1,502 
Total interest income (1) 39,607  35,576  41,196  34,552  39,899  4,031  (292)
Interest expense 1,977  1,972  1,979  1,923  1,857  5  120 
Net interest income (1) 37,630  33,604  39,217  32,629  38,042  4,026  (412)
Provision for loan and lease losses (265) 64  3,193  1,189  416  (329) (681)
Adjusted (amortization) accretion of FDIC receivable for loss share agreements (1) (3)   (492) (1,448) 1,652  (196) 492  196 
Other noninterest income (1) (4) 8,894  9,319  10,250  5,285  3,624  (425) 5,270 
Total operating noninterest income (1) (3) 8,894  8,827  8,802  6,937  3,428  67  5,466 
Operating noninterest expense (1) (5) 28,687  30,038  29,585  23,999  22,207  (1,351) 6,480 
Operating income before taxes (1) (3)(5) 18,102  12,329  15,241  14,378  18,847  5,773  (745)
Operating income tax expense (1) (6) 6,696  4,620  5,729  5,689  7,157  2,076  (461)
Operating income (1) (7) 11,406  7,709  9,512  8,689  11,690  3,697  (284)
Loss share termination, net of tax benefit   (8,921)       8,921   
Severance costs, net of tax benefit (1,847) (272) (224) (916) (49) (1,575) (1,798)
Merger-related expenses, net of tax benefit (440) (537) (84) (188) (137) 97  (303)
Net income (loss) available to common shareholders $9,119  $(2,021) $9,204  $7,585  $11,504  $11,140  $(2,385)
               
Common Share Data              
Basic net income (loss) per share $.26  $(.06) $.27  $.24  $.36  $.32  $(.10)
Diluted net income (loss) per share .25  (.06) .26  .23  .35  .31  (.10)
Cash dividends declared per share .07  .06  .05  .04  .04  .01  .03 
Book value per share 14.88  14.62  14.81  14.38  14.20  .26  .68 
Tangible book value per share (1) 13.78  13.51  13.70  13.97  13.83  .27  (.05)
Market price per share (quarter end) 20.68  21.70  21.00  19.98  16.24  (1.02) 4.44 
               
Common Shares Outstanding              
Common stock 35,753,855  35,763,791  35,738,850  32,269,604  32,271,466  (9,936) 3,482,389 
Weighted average shares outstanding:              
Basic 34,687,354  34,654,689  33,593,687  31,794,828  31,723,875  32,665  2,963,479 
Diluted (8) 37,068,387  34,654,689  35,642,302  33,462,979  33,253,907  2,413,698  3,814,480 
               
Average Balance Sheet Highlights              
Loans $2,136,746  $2,099,798  $1,986,008  $1,645,013  $1,461,326  $36,948  $675,420 
Assets 3,344,023  3,316,424  3,323,713  2,858,209  2,609,776  27,599  734,247 
Deposits 2,766,314  2,746,818  2,716,084  2,339,566  2,125,659  19,496  640,655 
Liabilities 48,211  44,347  82,361  57,506  35,135  3,864  13,076 
Equity 529,498  525,259  525,268  461,137  448,982  4,239  80,516 
Tangible common equity 489,757  485,337  485,087  447,641  437,038  4,420  52,719 
               


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 1 (continued)
Condensed Consolidated Financial Summary Results
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands, except per share  amounts; taxable equivalent) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Key Metrics (2)              
Operating return on average assets (7) 1.35% .93% 1.16% 1.21% 1.78% .42% (.43)%
Operating return on average equity (7) 8.55  5.89  7.34  7.48  10.33  2.66  (1.78)
Return on average assets 1.08  (.24) 1.12  1.05  1.75  1.32  (.67)
Return on average equity 6.83  (1.54) 7.11  6.53  10.17  8.37  (3.34)
Yield on earning assets 4.98  4.58  5.37  5.08  6.44  .40  (1.46)
Cost of funds .28  .29  .29  .33  .35  (.01) (.07)
Rate on interest-bearing liabilities .40  .39  .38  .43  .45  .01  (.05)
Net interest margin 4.73  4.33  5.11  4.80  6.13  .40  (1.40)
Net interest margin excluding accretion income (9) 3.52  3.45  3.22  2.96  2.99  .07  .53 
Average equity to average assets (1) 15.83  15.84  15.80  16.13  17.20  (.01) (1.37)
Leverage ratio 15.04  14.92  15.00  15.90  17.16  .12  (2.12)
Tier I risk-based capital ratio 18.64  19.12  19.51  23.12  25.17  (.48) (6.53)
Total risk-based capital ratio 19.73  20.28  20.70  24.37  26.42  (.55) (6.69)
Operating efficiency ratio (1) (3) (5) 61.66  70.79  61.61  60.66  53.55     
Average loans to average deposits 77.24  76.44  73.12  70.31  68.75  .80  8.49 
Noninterest-bearing deposits to total deposits 29.45  27.85  24.91  24.14  24.33  1.60  5.12 


 (1)Non-GAAP financial measure. See Condensed Operating Results to GAAP Earnings Reconciliation (Table 8) for further information.
 (2)Income statement ratios and yield/rate information are annualized for the applicable period.
 (3)Excludes the one-time loss share expense termination charge of $14.6 million in the second quarter of 2015.
 (4)Includes all line items of noninterest income other than (amortization) accretion of FDIC receivable for loss share agreements.
 (5)Excludes severance costs and merger-related expenses.
 (6)Excludes the taxable equivalent adjustments on interest income and the income tax benefit relating to the one-time loss share expense termination charge, severance costs and merger-related expense.
 (7)Excludes the one-time loss share expense termination charge, severance costs and merger-related expense, net of the income tax benefit.
 (8)Since the Company had a net loss for the three month period ended June 30, 2015, all potential common shares were excluded from the calculation of diluted earnings per share as they would have had an anti-dilutive effect for the period.
 (9)Excludes accretion income on loans and average purchased credit impaired loans.
  


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 2
Condensed Consolidated Balance Sheets
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Assets              
Cash and amounts due from depository institutions $15,734  $21,903  $20,426  $10,550  $17,209  $(6,169) $(1,475)
Interest-bearing deposits in other financial institutions 153,937  179,831  285,971  470,608  459,271  (25,894) (305,334)
Cash and cash equivalents 169,671  201,734  306,397  481,158  476,480  (32,063) (306,809)
Investment securities available-for-sale 831,548  815,277  819,609  640,086  532,447  16,271  299,101 
Loans 2,139,691  2,042,186  2,000,189  1,634,529  1,504,725  97,505  634,966 
Allowance for loan and lease losses (1) (28,930) (29,569) (29,982) (28,638) (27,231) 639  (1,699)
Loans, net 2,110,761  2,012,617  1,970,207  1,605,891  1,477,494  98,144  633,267 
Loans held-for-sale 59,563  64,047  45,211  3,174  1,283  (4,484) 58,280 
Other real estate owned 11,363  15,055  16,848  8,568  15,169  (3,692) (3,806)
Premises and equipment, net 43,982  45,608  46,370  35,286  34,696  (1,626) 9,286 
Goodwill 31,049  31,049  30,510  10,606  10,381    20,668 
Other intangibles, net 8,486  8,922  9,045  2,752  1,511  (436) 6,975 
SBA servicing rights 2,463  2,185  1,902  1,516    278  2,463 
FDIC receivable for loss share agreements     17,098  22,320  26,221    (26,221)
Bank-owned life insurance 58,347  57,810  57,348  41,479  41,136  537  17,211 
Other assets 61,440  46,004  31,363  29,374  30,779  15,436  30,661 
Total assets $3,388,673  $3,300,308  $3,351,908  $2,882,210  $2,647,597  $88,365  $741,076 
Liabilities and Shareholders’ Equity              
Noninterest-bearing deposits $823,146  $762,100  $691,938  $577,295  $524,634  $61,046  $298,512 
Interest-bearing deposits 1,972,042  1,974,185  2,085,997  1,814,387  1,631,340  (2,143) 340,702 
Total deposits 2,795,188  2,736,285  2,777,935  2,391,682  2,155,974  58,903  639,214 
Securities sold under agreements to repurchase 4,872  11,747  8,250      (6,875) 4,872 
Notes payable 2,761  2,765  2,769  2,771  2,776  (4) (15)
Other liabilities 53,691  26,527  33,708  23,662  30,570  27,164  23,121 
Total liabilities 2,856,512  2,777,324  2,822,662  2,418,115  2,189,320  79,188  667,192 
Total shareholders’ equity 532,161  522,984  529,246  464,095  458,277  9,177  73,884 
Total liabilities and shareholders’ equity $3,388,673  $3,300,308  $3,351,908  $2,882,210  $2,647,597  $88,365  $741,076 
               
Capital Ratios (2)              
Average equity to average assets 15.83% 15.84% 15.80% 16.13% 17.20% (.01)% (1.37)%
Leverage ratio 15.04  14.92  15.00  15.90  17.16  .12  (2.12)
CET1 risk-based capital ratio 18.64  19.12  19.51  N/A N/A (.48) N/A
Tier I risk-based capital ratio 18.64  19.12  19.51  23.12  25.17  (.48) (6.53)
Total risk-based capital ratio 19.73  20.28  20.70  24.37  26.42  (.55) (6.69)


 (1)Allowance for loan losses on purchased credit impaired loans was approximately $8.8 million at 3Q15, $10.0 million at 2Q15, $10.6 million at 1Q15, $10.2 million at 4Q14 and $8.4 million at 3Q14.
 (2)Beginning January 1, 2015, the Company's ratios are calculated using the Basel III framework. Capital ratios for prior periods were calculated using the Basel I framework. The Common Equity Tier 1 (CET1) capital ratio is a new ratio introduced under the Basel III framework.
  


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 3
Condensed Consolidated Income Statements
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands, except per share  amounts) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Net Interest Income:              
Interest income on loans $24,218  $23,070  $21,400  $17,416  $16,162  $1,148  $8,056 
Accretion income on loans 11,156  8,365  16,069  14,124  21,110  2,791  (9,954)
Interest income on invested funds 4,050  4,032  3,602  2,928  2,545  18  1,505 
Interest expense 1,977  1,972  1,979  1,923  1,857  5  120 
Net interest income 37,447  33,495  39,092  32,545  37,960  3,952  (513)
Provision for loan and lease losses (265) 64  3,193  1,189  416  (329) (681)
Net interest income after provision for loan and lease losses 37,712  33,431  35,899  31,356  37,544  4,281  168 
Noninterest Income:              
(Amortization) accretion of FDIC receivable for loss share agreements   (15,040) (1,448) 1,652  (196) 15,040  196 
Service charges on deposits 1,491  1,501  1,489  1,274  1,206  (10) 285 
Mortgage banking income 3,079  3,480  2,680  322  191  (401) 2,888 
Payroll fee income 1,004  956  1,158  1,050  875  48  129 
SBA income 1,720  1,380  1,123  477    340  1,720 
ATM income 742  773  725  624  621  (31) 121 
Bank-owned life insurance income 537  462  455  343  333  75  204 
Gain (loss) on sale of investment securities 17  (59) 380  223    76  17 
Other 304  826  2,240  972  398  (522) (94)
Total noninterest income 8,894  (5,721) 8,802  6,937  3,428  14,615  5,466 
Noninterest Expense:              
Salaries and employee benefits 23,293  20,506  19,582  17,797  14,644  2,787  8,649 
Occupancy and equipment 3,113  3,219  3,105  2,615  2,440  (106) 673 
Data processing 2,097  2,435  2,280  1,909  1,758  (338) 339 
Legal and professional fees 1,144  1,284  1,484  844  851  (140) 293 
Merger-related expenses 717  876  137  306  223  (159) 494 
Marketing 491  599  436  491  453  (108) 38 
Federal deposit insurance premiums and other regulatory fees 621  455  506  393  356  166  265 
Loan collection and OREO costs (1,198) (114) 405  (112)   (1,084) (1,198)
Amortization of intangibles 436  442  417  257  152  (6) 284 
Other 1,702  1,655  1,735  1,299  1,633  47  69 
Total noninterest expense 32,416  31,357  30,087  25,799  22,510  1,059  9,906 
Income (Loss) Before Income Taxes 14,190  (3,647) 14,614  12,494  18,462  17,837  (4,272)
Income tax expense (benefit) 5,071  (1,626) 5,410  4,909  6,958  6,697  (1,887)
Net Income (Loss) $9,119  $(2,021) $9,204  $7,585  $11,504  $11,140  $(2,385)
               
Net Income (Loss) Per Share              
Basic $.26  $(.06) $.27  $.24  $.36  $.32  $(.10)
Diluted .25  (.06) .26  .23  .35  .31  (.10)
Weighted Average Shares Outstanding              
Basic 34,687,354  34,654,689  33,593,687  31,794,828  31,723,875  32,665  2,963,479 
Diluted 37,068,387  34,654,689  35,642,302  33,462,979  33,253,907  2,413,698  3,814,480 
                      


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 4
Condensed Consolidated Income Statements
Year to Date (Unaudited)
  Nine Months Ended September 30 YTD Change
(Dollars in thousands, except per share amounts) 2015 2014 
       
Net Interest Income:      
Interest income on loans $68,688  $46,760  $21,928 
Accretion income on loans 35,590  64,733  (29,143)
Interest income on invested funds 11,684  7,560  4,124 
Interest expense 5,928  5,597  331 
Net interest income 110,034  113,456  (3,422)
Provision for loan and lease losses 2,992  1,707  1,285 
Net interest income after provision for loan and lease losses 107,042  111,749  (4,707)
Noninterest Income:      
Amortization of FDIC receivable for loss share agreements (16,488) (17,437) 949 
Service charges on deposits 4,481  3,560  921 
Mortgage banking income 9,239  513  8,726 
Payroll fee income 3,118  2,650  468 
SBA income 4,223    4,223 
ATM income 2,240  1,847  393 
Bank-owned life insurance income 1,454  991  463 
Gain on sale of investment securities 338  23  315 
Other 3,370  518  2,852 
Total noninterest income 11,975  (7,335) 19,310 
Noninterest Expense:      
Salaries and employee benefits 63,381  44,296  19,085 
Occupancy and equipment 9,437  7,283  2,154 
Data processing 6,812  5,144  1,668 
Legal and professional fees 3,912  2,596  1,316 
Merger-related expenses 1,730  488  1,242 
Marketing 1,526  1,333  193 
Federal deposit insurance premiums and other regulatory fees 1,582  1,027  555 
Loan collection and OREO costs (907) 592  (1,499)
Amortization of intangibles 1,295  475  820 
Other 5,092  4,435  657 
Total noninterest expense 93,860  67,669  26,191 
Income Before Income Taxes 25,157  36,745  (11,588)
Income tax expense 8,855  13,412  (4,557)
Net Income $16,302  $23,333  $(7,031)
       
Net Income Per Share      
Basic $.48  $.74  $(.26)
Diluted .45  .70  (.25)
Weighted Average Shares Outstanding      
Basic 34,315,916  31,700,092  2,615,824 
Diluted 36,594,476  33,214,953  3,379,523 
          


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 5
Condensed Consolidated Composition of Loans and Deposits at Period Ends
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Composition of Loans              
Organic loans (1):              
Construction, land & land development $412,788  $399,982  $388,148  $310,987  $324,008  $12,806  $88,780 
Other commercial real estate 705,616  634,943  606,347  609,478  591,672  70,673  113,944 
Total commercial real estate 1,118,404  1,034,925  994,495  920,465  915,680  83,479  202,724 
Residential real estate 127,823  118,612  107,554  91,448  80,231  9,211  47,592 
Owner-occupied real estate 212,171  205,805  191,557  188,933  164,514  6,366  47,657 
Commercial, financial & agricultural 165,305  126,157  108,929  90,930  102,417  39,148  62,888 
Leases 54,814  26,709  21,491  19,959  19,636  28,105  35,178 
Consumer 16,432  12,078  9,442  8,658  9,445  4,354  6,987 
Total organic loans 1,694,949  1,524,286  1,433,468  1,320,393  1,291,923  170,663  403,026 
Purchased non-credit impaired loans(2):              
Construction, land & land development 37,326  61,089  67,129  2,166    (23,763) 37,326 
Other commercial real estate 79,878  91,212  94,917  26,793    (11,334) 79,878 
Total commercial real estate 117,204  152,301  162,046  28,959    (35,097) 117,204 
Residential real estate 75,987  82,668  88,871  43,669    (6,681) 75,987 
Owner-occupied real estate 69,619  73,409  77,946  22,743    (3,790) 69,619 
Commercial, financial & agricultural 19,529  28,656  42,494  11,635    (9,127) 19,529 
Consumer 3,080  3,505  4,517  791    (425) 3,080 
Total purchased non-credit impaired loans 285,419  340,539  375,874  107,797    (55,120) 285,419 
Purchased credit impaired loans (3):              
Construction, land & land development 16,473  20,002  18,791  24,544  25,463  (3,529) (8,990)
Other commercial real estate 42,637  48,187  54,211  58,680  54,573  (5,550) (11,936)
Total commercial real estate 59,110  68,189  73,002  83,224  80,036  (9,079) (20,926)
Residential real estate 67,218  70,537  74,876  78,793  80,859  (3,319) (13,641)
Owner-occupied real estate 30,655  35,036  39,210  42,168  48,834  (4,381) (18,179)
Commercial, financial & agricultural 2,132  3,234  3,427  1,953  2,790  (1,102) (658)
Consumer 208  365  332  201  283  (157) (75)
Total purchased credit impaired loans 159,323  177,361  190,847  206,339  212,802  (18,038) (53,479)
Total loans $2,139,691  $2,042,186  $2,000,189  $1,634,529  $1,504,725  $97,505  $634,966 
Composition of Deposits              
Noninterest-bearing demand deposits $823,146  $762,100  $691,938  $577,295  $524,634  $61,046  $298,512 
Interest-bearing transaction accounts 499,434  497,715  562,378  495,966  377,220  1,719  122,214 
Savings and money market deposits 1,059,770  1,038,292  1,052,677  954,626  910,488  21,478  149,282 
Time deposits less than $250,000 289,815  301,431  319,118  247,757  234,145  (11,616) 55,670 
Time deposits $250,000 or greater 56,750  59,105  58,076  18,946  20,418  (2,355) 36,332 
Brokered and wholesale time deposits 66,273  77,642  93,748  97,092  89,069  (11,369) (22,796)
Total deposits $2,795,188  $2,736,285  $2,777,935  $2,391,682  $2,155,974  $58,903  $639,214 


 (1)Loans originated by State Bank and Trust Company ("State Bank").
 (2)Consists of loans purchased through the Bank of Atlanta and First Bank acquisitions.
 (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
3Q15 Financial Supplement: Table 6
Condensed Consolidated Asset Quality Data
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
               
Allowance for loan and lease losses on organic loans              
Beginning Balance $19,594  $19,424  $18,392  $18,828  $17,885  $170  $1,709 
Charge-offs (63) (64) (76) (1,250) (87) 1  24 
Recoveries 31  12  38  39  30  19  1 
Net (charge-offs) recoveries (32) (52) (38) (1,211) (57) 20  25 
Provision for loan and lease losses 614  222  1,070  775  1,000  392  (386)
Ending Balance $20,176  $19,594  $19,424  $18,392  $18,828  $582  $1,348 
               
Allowance for loan and lease losses on purchased loans (1) (2)              
Beginning Balance $9,975  $10,558  $10,246  $8,403  $17,722  $(583) $(7,747)
Charge-offs (3,282) (2,201) (3,231) (898) (5,329) (1,081) 2,047 
Recoveries 2,940  1,227  924  2,410  2,417  1,713  523 
Net (charge-offs) recoveries (342) (974) (2,307) 1,512  (2,912) 632  2,570 
Provision for loan and lease losses (879) 391  2,619  331  (6,407) (1,270) 5,528 
Ending Balance $8,754  $9,975  $10,558  $10,246  $8,403  $(1,221) $351 
               
Nonperforming organic assets              
Nonaccrual loans $1,848  $1,649  $1,428  $1,245  $740  $199  $1,108 
Troubled debt restructurings 3,269  3,322  3,374  4,301  875  (53) 2,394 
Total nonperforming organic loans 5,117  4,971  4,802  5,546  1,615  146  3,502 
Other real estate owned 500  160    74  410  340  90 
Total nonperforming organic assets $5,617  $5,131  $4,802  $5,620  $2,025  $486  $3,592 
               
Ratios for organic assets              
Annualized QTD charge-offs (recoveries) to average organic loans .01% .01% .01% .36% .02% % (.01)%
Nonperforming loans to organic loans .30  .33  .33  .42  .13  (.03) .17 
Nonperforming assets to organic loans + OREO .33  .34  .33  .43  .16  (.01) .17 
Past due loans to organic loans .08  .08  .11  .17  .10    (.02)
Allowance for loan and lease losses to organic loans 1.19  1.29  1.36  1.39  1.46  (.10) (.27)
               
Ratios for purchased non-credit impaired loans              
Annualized QTD charge-offs (recoveries) to average PNCI loans (.01)% .04% % % N/A (.05)% N/A
Nonperforming loans to PNCI loans .57  .07  .04  .10  N/A .50  N/A
Past due loans to PNCI loans .64  .49  .36  .46  N/A .15  N/A
               
Ratios for purchased credit impaired loans (3)              
Annualized QTD charge-offs (recoveries) to average PCI loans .83% 2.07% 4.81% (2.80)% 5.37% (1.24)% (4.54)%
Past due loans to PCI loans 14.15  13.30  18.48  15.62  15.14  .85  (.99)
Allowance for loan and lease losses to PCI loans 5.49  5.62  5.53  4.97  3.95  (.13) 1.54 


 (1)Includes purchased non-credit impaired and purchased credit impaired activity. Net recoveries (charge-offs) for purchased non-credit impaired loans were $6,000 for 3Q15, $(46,000) for 2Q15 and $(2,000) for 2Q15 with a corresponding provision for loan and lease losses for each of the periods, resulting in no ending allowance for purchased non-credit impaired loans at each period end.
 (2)Allowance for loan and lease losses amount attributable to FDIC loss share agreements for purchased credit impaired loans was $0 for 3Q15, $(549,000) for 2Q15, $(496,000) for 1Q15, $83,000 for 4Q14, and $5.8 million for 3Q14.
 (3)For each period presented, a portion of the Company's purchased credit impaired loans were contractually past due; however, such delinquencies were included in the Company's 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, purchased credit impaired loans are not considered to be nonperforming assets.


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 7
Condensed Consolidated Average Balances and Yield Analysis
Quarterly (Unaudited)
            3Q15 change vs
(Dollars in thousands) 3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
Average Balances              
Interest-bearing deposits in other financial institutions $179,526  $191,653  $320,248  $450,362  $476,190  (12,127) (296,664)
Investment securities 837,786  821,998  807,002  603,101  523,488  15,788  314,298 
Loans, excluding purchased credit  impaired (1) 1,969,651  1,920,219  1,791,537  1,430,495  1,246,008  49,432  723,643 
Purchased credit impaired loans 167,095  179,579  194,471  214,518  215,318  (12,484) (48,223)
Total earning assets 3,154,058  3,113,449  3,113,258  2,698,476  2,461,004  40,609  693,054 
Total nonearning assets 189,965  202,975  210,455  159,733  148,772  (13,010) 41,193 
Total assets 3,344,023  3,316,424  3,323,713  2,858,209  2,609,776  27,599  734,247 
Interest-bearing transaction accounts 486,514  522,147  507,087  433,545  376,052  (35,633) 110,462 
Savings & money market deposits 1,042,941  1,035,706  1,072,818  958,782  896,503  7,235  146,438 
Time deposits less than $250,000 295,304  309,725  327,807  240,509  239,924  (14,421) 55,380 
Time deposits $250,000 or greater 57,511  57,375  56,529  66,009  20,906  136  36,605 
Brokered and wholesale time deposits 70,004  82,840  103,464  86,371  96,743  (12,836) (26,739)
Other borrowings 15,507  11,667  27,742  7,385  2,778  3,840  12,729 
Total interest-bearing liabilities 1,967,781  2,019,460  2,095,447  1,792,601  1,632,906  (51,679) 334,875 
Noninterest-bearing deposits 814,040  739,025  648,379  554,350  495,531  75,015  318,509 
Other liabilities 32,704  32,680  54,619  50,121  32,357  24  347 
Shareholders’ equity 529,498  525,259  525,268  461,137  448,982  4,239  80,516 
Total liabilities and shareholders' equity 3,344,023  3,316,424  3,323,713  2,858,209  2,609,776  27,599  734,247 
               
Interest Margins (2)              
Interest-bearing deposits in other financial institutions .27% .29% .27% .26% .26% (.02)% .01%
Investment securities, tax-equivalent basis (3) 1.86  1.90  1.72  1.73  1.70  (.04) .16 
Loans, excluding purchased credit impaired, tax-equivalent basis (4) 4.91  4.84  4.87  4.85  5.17  .07  (.26)
Purchased credit impaired loans 26.49  18.68  33.51  26.12  38.90  7.81  (12.41)
Total earning assets 4.98% 4.58% 5.37% 5.08% 6.44% .40% (1.46)%
Interest-bearing transaction accounts .13  .14  .14  .13  .13  (.01)  
Savings & money market deposits .47  .46  .45  .46  .46  .01  .01 
Time deposits less than $250,000 .38  .24  .21  .43  .54  .14  (.16)
Time deposits $250,000 or greater .36  .99  1.03  .75  .78  (.63) (.42)
Brokered and wholesale time deposits .97  .97  .94  1.02  1.08    (.11)
Other borrowings 1.69  2.23  .98  3.55  9.00  (.54) (7.31)
Total interest-bearing liabilities .40% .39% .38% .43% .45% .01% (.05)%
Net interest spread 4.58% 4.19% 4.99% 4.65% 5.99% .39% (1.41)%
Net interest margin 4.73% 4.33% 5.11% 4.80% 6.13% .40% (1.40)%
Net interest margin excluding accretion income 3.52% 3.45% 3.22% 2.96% 2.99% .07% .53%


 (1)Includes average nonaccrual loans of $5.9 million for 3Q15, $4.9 million for 2Q15, $5.1 million for 1Q15, $5.6 million for 4Q14, and $1.7 million for 3Q14.
 (2)Interest income or expense annualized for the applicable period.
 (3)Reflects taxable equivalent adjustments using the federal statutory tax rate of 35% in adjusting interest on tax-exempt securities to a fully taxable basis. The taxable equivalent adjustments included above amount to $4,000 for 3Q15, $5,000 for 2Q15, $27,000 for 1Q15, $4,000 for 4Q14, and $7,000 for 3Q14.
 (4)Reflects taxable equivalent adjustments using the federal statutory tax rate of 35% in adjusting tax-exempt loan interest income to a fully taxable basis. The taxable equivalent adjustments included above amount to $179,000 for 3Q15, $104,000 for 2Q15, $98,000 for 1Q15, $80,000 for 4Q14, and $75,000 for 3Q14.


 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 8
Condensed Operating Results to GAAP Earnings Reconciliation (1)
Quarterly (Unaudited)
           3Q15 change vs
(dollars in thousands, except per share amounts; taxable equivalent)3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
              
Interest income reconciliation             
Interest income - taxable equivalent$39,607  $35,576  $41,196  $34,552  $39,899  $4,031  $(292)
Taxable equivalent adjustment(183) (109) (125) (84) (82) (74) (101)
Interest income (GAAP)$39,424  $35,467  $41,071  $34,468  $39,817  $3,957  $(393)
              
Net interest income reconciliation             
Net interest income - taxable equivalent$37,630  $33,604  $39,217  $32,629  $38,042  $4,026  $(412)
Taxable equivalent adjustment(183) (109) (125) (84) (82) (74) (101)
Net interest income (GAAP)$37,447  $33,495  $39,092  $32,545  $37,960  $3,952  $(513)
              
Adjusted (amortization) accretion of FDIC receivable for loss share agreements             
Adjusted (amortization) accretion of FDIC receivable for loss share agreements$  $(492) $(1,448) $1,652  $(196) $492  $196 
Loss share termination  (14,548)       14,548   
(Amortization) accretion of FDIC receivable for loss share agreements (GAAP)$  $(15,040) $(1,448) $1,652  $(196) $15,040  $196 
              
Operating noninterest income reconciliation             
Operating noninterest income$8,894  $8,827  $8,802  $6,937  $3,428  $67  $5,466 
Loss share termination  (14,548)       14,548   
Total noninterest income (GAAP)$8,894  $(5,721) $8,802  $6,937  $3,428  $14,615  $5,466 
              
Operating noninterest expense reconciliation             
Operating noninterest expense$28,687  $30,038  $29,585  $23,999  $22,207  $(1,351) $6,480 
Merger-related expenses717  876  137  306  223  (159) 494 
Severance costs3,012  443  365  1,494  80  2,569  2,932 
Total noninterest expense (GAAP)$32,416  $31,357  $30,087  $25,799  $22,510  $1,059  $9,906 
              
Operating income before taxes reconciliation             
Operating income before taxes$18,102  $12,329  $15,241  $14,378  $18,847  $5,773  $(745)
Loss share termination  (14,548)       14,548   
Merger-related expenses(717) (876) (137) (306) (223) 159  (494)
Severance costs(3,012) (443) (365) (1,494) (80) (2,569) (2,932)
Taxable equivalent adjustment to interest income(183) (109) (125) (84) (82) (74) (101)
Income (loss) before taxes (GAAP)$14,190  $(3,647) 14,614  12,494  $18,462  $17,837  $(4,272)
              
 
 
State Bank Financial Corporation
3Q15 Financial Supplement: Table 8 (continued)
Condensed Operating Results to GAAP Earnings Reconciliation (1)
Quarterly (Unaudited)
           3Q15 change vs
(dollars in thousands, except per share amounts; taxable equivalent)3Q15 2Q15 1Q15 4Q14 3Q14 2Q15 3Q14
Operating income tax reconciliation             
Operating income tax expense$6,696  $4,620  $5,729  $5,689  $7,157  $2,076  $(461)
Loss share termination tax benefit  (5,627)       5,627   
Merger-related expenses tax benefit(277) (339) (53) (118) (86) 62  (191)
Severance costs tax benefit(1,165) (171) (141) (578) (31) (994) (1,134)
Taxable equivalent adjustment to interest income(183) (109) (125) (84) (82) (74) (101)
Income tax expense (GAAP)$5,071  $(1,626) $5,410  $4,909  $6,958  $6,697  $(1,887)
              
Operating income reconciliation             
Operating income$11,406  $7,709  $9,512  $8,689  $11,690  $3,697  $(284)
Loss share termination, net of tax benefit  (8,921)       8,921   
Merger-related expenses, net of tax benefit(440) (537) (84) (188) (137) 97  (303)
Severance costs, net of tax benefit(1,847) (272) (224) (916) (49) (1,575) (1,798)
Net income (GAAP)$9,119  $(2,021) $9,204  $7,585  $11,504  $11,140  (2,385)
              
Book value per common share reconciliation             
Tangible book value per common share$13.78  $13.51  $13.70  $13.97  $13.83  $0.27  $(.05)
Effect of goodwill and other intangibles1.10  1.11  1.11  .41  .37  (.01) .73 
Book value per common share (GAAP)$14.88  $14.62  $14.81  $14.38  $14.20  $0.26  $.68 
              
Average equity to average assets reconciliation             
Average tangible common equity to average assets14.63% 14.63% 14.59% 15.66% 16.75% % (2.12)%
Effect of average goodwill and other intangibles1.20  1.21  1.21  .47  .45  (.01) .75 
Average equity to average assets (GAAP)15.83% 15.84% 15.80% 16.13% 17.20% (.01)% (1.37)%
              
Efficiency ratio reconciliation             
Operating efficiency ratio61.66% 70.79% 61.61% 60.66% 53.55% (9.13)% 8.11%
Effect of tax equivalent adjustment to interest income, loss share termination, merger-related expenses, and severance costs8.29% 42.11  1.21  4.68  .84  (33.82)% 7.45%
Efficiency ratio (GAAP)69.95% 112.90% 62.82% 65.34% 54.39% (42.95)% 15.56%


 (1)Management evaluates the capital position and operating performance of State Bank Financial Corporation (the “Company”) by using certain financial measures not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), including:  interest income - taxable equivalent, net interest income - taxable equivalent, adjusted (amortization) accretion of FDIC receivable for loss share agreements, operating noninterest income, operating noninterest expense, operating income before taxes - taxable equivalent, operating income tax expense, tangible book value per common share and operating efficiency ratio. The Company has included these non-GAAP financial measures in this press release for the applicable periods presented. Management believes that the presentation of these non-GAAP financial measures (a) provides important supplemental information that contributes to a proper understanding of the Company’s operating performance, (b) enables a more complete understanding of factors and trends affecting the Company’s business, and (c) allows investors to evaluate the Company’s performance in a manner similar to management, the financial services industry, bank stock analysts, and bank regulators. Management uses non-GAAP measures as follows: preparation of the Company’s operating budgets, monthly financial performance reporting, and presentation to investors of Company performance.
    
 Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the accompanying table. 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 substitutes for GAAP financial measures, and the Company strongly encourages 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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