LAKE HAVASU CITY, Ariz., Feb. 06, 2018 (GLOBE NEWSWIRE) -- State Bank Corp. (OTCPink:SBAZ) (“Company”), the holding company for Mohave State Bank (“Bank”), today reported that net income increased by 69.0% to $1.54 million, or $0.19 per diluted share, for the fourth quarter ended December 31, 2017, as compared to $911,000, or $0.11 per diluted share, for the fourth quarter of 2016. In the preceding quarter, the Company reported record earnings of $1.84 million, or $0.23 per diluted share.
For the year ended December 31, 2017, net income grew by 66.8% to $6.29 million, or $0.78 per diluted share, compared to $3.78 million, or $0.56 per diluted share, for 2016.
“We produced excellent financial results in 2017, which was truly a transformational year for our organization,” stated Brian M. Riley, President and Chief Executive Officer. “The goal in 2017 was to optimize the post-merger performance of our Company. The exceptional results speak to the efforts of our leadership team in building Arizona’s premier community bank.”
As a result of the Tax Cuts and Job Act enacted December 22, 2017, the company revalued its deferred tax assets and liabilities to account for the future impact of lower corporate tax rates and other provisions of the legislation. Based on its preliminary analysis, State Bank Corp. recorded a one-time net tax charge of $133,242, primarily related to the revaluation of these deferred tax items. This increase in income tax expense was reflected in State Bank Corp.’s operating results for the fourth quarter of 2017 and was in addition to the normal provision for income tax related to pre-tax net operating income.
“We recorded an additional tax expense of $133,242, or $.02 per share, due to the downward revision to our DTA value in the fourth quarter of 2017 because of the recently enacted tax legislation,” said Riley. “The effective tax rate for the current quarter was 35.1% (excluding the 4Q17 DTA charge). We believe our effective tax rate will decline to approximately 24.0% in 2018 and that the expected tax savings will be approximately $1.2 million on an annual basis. We plan to invest a portion of our 2018 tax savings into infrastructure, technology improvements and other strategic objectives.”
Fourth Quarter 2017 Financial Highlights:
- Fourth quarter net income increased 69.0% to $1.54 million, or $0.19 per diluted share.
- The net interest margin remained healthy compared to peer banks at 3.86%.
- Net loan loss recovery of $173,000.
- Core deposits comprised 88.6% of total deposits.
- Tangible book value increased 11.4% to $6.37 per share from $5.72 per share a year earlier.
Net interest margin was 3.86% in the fourth quarter 2017 compared to 3.99% in the preceding quarter and 3.85% in the fourth quarter a year ago. Yield on loans decreased in the fourth quarter due to a one time interest reversal on a large non-accrual credit. Average cost of funds remained steady at 20 basis points, even as the Company increased overall deposit rates to remain competitive in the marketplace.
The provision for loan losses was $100,000 during the fourth quarter of 2017, with net recoveries of $173,000. The allowance for loan losses totaled $3.3 million at December 31, 2017, or 0.94% of total loans. Excluding acquired loans, the reserve ratio was 1.12%, which is in line with industry peers. On the acquired portfolio, the credit component of the loan purchase discount remains greater than an imputed reserve.
Total assets were $620.6 million at December 31, 2017, an increase of $37.5 million, or 6.4%, from $583.1 million at December 31, 2016. Total loans held for investment were $347.9 million as compared to $323.2 million at December 31, 2016, reflecting an increase of 7.6%.
Total deposits were $549.4 million at year-end, an increase of $33.1 million, or 6.4%, from $516.3 million at December 31, 2016. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased to $486.8 million at December 31, 2017, or 9.8%, from $442.9 million at December 31, 2016. Core deposits now comprise 88.6% of total deposits.
Nonperforming assets were $6.9 million at December 31, 2017, a slight increase from $6.1 million at December 31, 2016. This amount primarily consists of two loan relationships that the Company is attempting to resolve in a favorable manner. Nonperforming assets represented 1.11% of total assets at December 31, 2017.
Shareholder equity increased to $58.7 million at December 31, 2017, from $53.8 million at December 31, 2016. At December 31, 2017, tangible book value per share was $6.37 per share compared to $5.72 per share at December 31, 2016.