State Bank Reports Second Quarter Financial Results; Organic Loans Now Represent More Than Half of Total Loans
ATLANTA, July 30, 2012 /PRNewswire/ -- State Bank Financial Corporation (NASDAQ: STBZ) today announced unaudited financial results for the quarter ended June 30, 2012. Net income for the second quarter was $11.0 million, up from $5.1 million in the first quarter. Fully diluted earnings per share were $.34 for the second quarter compared to $.16 in the first quarter of 2012.
Commenting on these results, Joe Evans, Chairman and CEO, said, "This quarter's results reflect both the fundamental strength of our franchise and the inherent volatility of loss share accounting. Core operating highlights on a linked quarter basis include: lower expenses, lower funding costs and strong organic loan growth, which are all the direct result of solid execution by our State Bank team members. Net income for the quarter also benefited from higher accretion income due to faster than anticipated pay offs and lower than predicted losses on covered loans."
Total assets at quarter-end were $2.67 billion, relatively flat compared to $2.68 billion at the end of the first quarter. Total net loans were $1.49 billion, up $9.0 million from the first quarter. Loans not covered by loss share agreements with the FDIC grew $78.2 million in the second quarter of 2012 to $881.1 million. Noncovered loans now comprise 56.2% of State Bank's total gross loans. A reclassification of March 31, 2012 loan balances now reflects $101.9 million of organic loan growth in the first quarter, versus the $53.6 million previously reported.
Total deposits at quarter-end were $2.17 billion, down from $2.19 billion at the end of the first quarter. This decrease was the result of continued active management of higher cost interest-bearing deposits with outflows centered in money market balances. Noninterest-bearing deposits grew by $30.2 million, or 9.7%, in the second quarter. Cost of funds for the quarter was 47 basis points, a five basis point improvement from the first quarter of 2012.
Tangible book value per share increased to $12.99 in the first quarter, up $.37, or 2.9%, from the first quarter. State Bank Financial Corporation continues to be well capitalized, finishing the quarter with a leverage ratio of 15.24% and a Tier I risk-based capital ratio of 31.45%.
Net interest income was $46.4 million in the second quarter of 2012, up from $35.5 million in the first quarter of 2012. The $10.9 million linked quarter increase was primarily driven by accretion on covered loans rising $8.7 million. The higher accretion was driven by covered loans that paid off earlier and with lower losses than expected based on previous cash flow assumptions. Net interest income also benefited from income on noncovered loans being up $1.9 million and interest expense being down $286 thousand.
Provision for loan losses on noncovered loans was $2.1 million in the second quarter, up from $1.5 million in the first quarter, the result of loan growth and continued stable credit quality metrics in that portfolio. Provision for loan losses on covered loans was $2.9 million in the second quarter, up from negative $1.3 million in the first quarter.
Total noninterest income was negative $1.2 million in the second quarter compared to negative $3.8 million in the first quarter of 2012. Amortization of the indemnification asset was negative $4.0 million for the second quarter. Though down from the first quarter amount of negative $7.0 million, the amortization of the indemnification asset continued to negatively impact noninterest income. While detrimental to near-term earnings, this change reflects a more positive view of covered loan asset quality, and therefore fewer reimbursement claims planned to be made to the FDIC. The amortization of the indemnification asset is linked with increased accretion income on covered loans that are experiencing improving credit quality trends, and amortization is expected to decline over time unless asset quality trends further improve.
Noninterest expense for the second quarter was $22.4 million, down from $23.2 million in the first quarter of 2012 primarily due to lower net other real estate owned costs, which were $458 thousand in the second quarter compared to $2.1 million in the first quarter. Data processing expense was $529 thousand lower in the second quarter due to conversion costs incurred in the first quarter related to the two FDIC assisted transactions announced in the fourth quarter of 2011. These linked quarter positive expense trends were partially offset by higher legal and professional fees, up primarily from consulting costs and investments in customer relationship management technology.
Supplemental tables displaying financial results for second quarter 2012 and the previous four quarters are included with this press release.
State Bank Vice Chairman and Chief Operating Officer Dan Speight, Vice Chairman, President and Chief Credit Officer Kim Childers, and Executive Vice President and Chief Financial Officer Tom Callicutt will discuss financial and business results for the quarter on a conference call today at 11:00 a.m. EDT. The dial in number is 1.888.612.1053. Please dial in 10 minutes prior to the start of the call to register. You will be asked to provide your name and affiliation/company to join 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 available in the investors section on the company's website at www.statebt.com.
About State Bank Financial Corporation and State Bank and Trust Company
State Bank Financial Corporation (NASDAQ: STBZ) is the holding company for State Bank and Trust Company, one of Georgia's best-capitalized banks, with approximately $2.67 billion in assets as of June 30, 2012. State Bank has locations in Metro Atlanta and Middle Georgia. State Bank Financial Corporation is headquartered in Atlanta, Georgia and State Bank and Trust Company is headquartered in Macon, Georgia.
State Bank was named the best performing community bank in the United States for 2011 by SNL Financial LC for banks between $500 million and $5 billion in assets.
Since 2009 State Bank has been an active acquirer of the assets and deposits of failed banks in Metro Atlanta and Middle Georgia. To date, State Bank has completed 12 transactions facilitated by the Federal Deposit Insurance Corporation.
To learn more about State Bank, visit www.statebt.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans, expectations and benefits of our strategic plan, and are thus prospective. 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 FDIC-assisted transactions, 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.