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| 8-K - 8-K - STATE BANK FINANCIAL CORP | a8kcoverpage063015.htm |
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | pressrelease063015.htm |
State Bank Financial Corporation 2nd Quarter 2015 Earnings Presentation Joe Evans, Chairman and CEO Tom Wiley, Vice Chairman and President Sheila Ray, EVP and Chief Financial Officer David Black, EVP and Chief Credit Officer July 23, 2015
2 Cautionary Note Regarding Forward-Looking Statements Certain statements contained in this presentation that are not statements of historical fact are forward-looking statements. These forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “will,” “expect,” “anticipate,” and “project,” as well as similar expressions. These forward-looking statements include statements related to the expected benefits of early termination of our loss share agreements with the FDIC (slide 4), the scheduled conversion and integration of First Bank of Georgia (slide 5), our revenue trends (slide 8), and the anticipated results of our focus on efficiency (slide 9). In the course of management’s discussion of this presentation, they may address other forward-looking topics, including expected cost savings related to our recent acquisitions, the sustainability of our core operating franchise, the strength of our credit metrics on our organic loans, the opportunity to use the mortgage and SBA platforms from our recent acquisitions, the growth of our payroll business, our projected growth, continued improvement in our deposit funding mix, our well-positioned franchise, our execution of strategic priorities, our anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, including projections of future accretion on loans, anticipated internal growth, and plans to establish or acquire banks or the assets of failed banks. These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Potential risks and uncertainties include the following: • negative reactions to our recent acquisitions by the customers, employees and counterparties of the acquired banks, or difficulties related to the transition of services; • general economic conditions (both generally and in our markets) may be less favorable than expected, which could result in, among other things, a deterioration in credit quality, a reduction in demand for credit and a decline in real estate values; • a general decline in the real estate and lending markets, particularly in our market areas, could negatively affect our financial results; • costs or difficulties related to the integration of the banks we have acquired or may acquire may be greater than expected; • restrictions or conditions imposed by our regulators on our operations may make it more difficult for us to achieve our goals; • legislative or regulatory changes, including changes in accounting standards and compliance requirements, may adversely affect us; • competitive pressures among depository and other financial institutions may increase significantly; • changes in the interest rate environment may reduce margins or the volumes or values of the loans we make or have acquired; • other financial institutions have greater financial resources and may be able to develop or acquire products that enable them to compete more successfully than we can; • our ability to attract and retain key personnel can be affected by the increased competition for experienced employees in the banking industry; • adverse changes may occur in the bond and equity markets; • war or terrorist activities may cause deterioration in the economy or cause instability in credit markets; • economic, governmental or other factors may prevent the projected population, residential and commercial growth in the markets in which we operate; and • we will or may continue to face the risk factors discussed from time to time in the periodic reports we file with the SEC. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. 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.
3 Notes: Consolidated financial results for 2Q 2015 contained throughout this presentation are unaudited; numbers may not add due to rounding. Includes certain financial information determined by methods other than in accordance with GAAP (for more information, refer to Table 2 on page 7 of the corresponding press release). 2Q15 Results Summary 2Q15 net loss of $2.0 million, due to one-time after-tax charge of $8.9 million related to early termination of loss share agreements 2Q15 operating income of $7.7 million, or $.20 per diluted share Continued growth in key noninterest income initiatives Total loan growth of $42 million during 2Q15, including purchased loan run-off Noninterest-bearing deposits comprise nearly 28% of total deposits Increased 2Q15 dividend to $.06 per common share Income Statement Highlights (dollars in thousands, except per share data) 2Q15 1Q15 2Q14 Interest income on loans $23,174 $21,498 $15,416 Accretion income on loans 8,365 16,069 17,087 Interest income on invested funds 4,037 3,629 2,533 Total interest income 35,576 41,196 35,036 Interest expense 1,972 1,979 1,846 Net interest income 33,604 39,217 33,190 Provision for loan losses 64 3,193 701 Net interest income after provision for loan losses 33,540 36,024 32,489 Noninterest income 9,328 10,257 3,348 Amortization of FDIC receivable (492) (1,448) (1,949) Operating noninterest expense 30,047 29,592 21,794 Operating income before taxes 12,329 15,241 12,094 Operating income tax expense 4,618 5,729 4,415 Operating income 7,711 9,512 7,679 Nonoperating expenses, net of tax benefit (9,732) (308) (172) Net income (loss) available to common shareholders ($2,021) $9,204 $7,507 Diluted net income (loss) per share (.06) .25 .22 Dividends per share .06 .05 .04 Tangible book value per share 13.51 13.70 13.58 Balance Sheet Highlights (period-end) Total Loans $2,042,186 $2,000,189 $1,441,606 Organic 1,524,286 1,433,468 1,230,304 Purchased non-credit impaired 340,539 375,874 - Purchased credit impaired 177,361 190,847 211,302 Total assets 3,300,308 3,351,908 2,585,805 Noninterest-bearing deposits 762,100 691,938 461,434 Total deposits 2,736,285 2,777,935 2,115,213 Shareholders’ equity 522,984 529,246 448,307
4 Early Termination Provides Strategic Benefits Eliminates indemnification asset and clawback payable from balance sheet, including $9.3 million of scheduled future indemnification asset amortization Significantly improves expense run-rate State Bank retains 100% of future recoveries, as opposed to 5% or 20% under loss share agreement Fewer management distractions (less frequent regulatory audits; simplifies reporting complexities) Eliminates tail risk associated with previous claims made to FDIC Expected tangible book value dilution earnback period of less than five quarters Attractive deployment of capital
5 Integration Status Update Bank of Atlanta integration complete First Bank of Georgia conversion scheduled for July 25-26, 2015 Key employee retention from both institutions Well-received in the community with positive feedback from employees and clients Strong operating performance is exceeding internal financial projections
6 Solid Loan Growth ($ i n mi llio n s) ($ i n mi llio n s) 1 Organic loans; excludes purchased loans Note: New loan originations include new loans funded and net loan advances on existing commitments. Paydowns include payoffs, amortization and principal payments. $91mm of organic loan growth in 2Q15 $42mm of net loan growth including purchased loans Total loans impacted by runoff in PNCI and PCI portfolios 1,635 2,000 2,042 113 91 268 (35) (15) (13) 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 4Q14 1Q15 2Q15 Loan Portfolio Roll-forward Total Loans Organic PNCI PCI 0 50 100 150 200 250 300 350 400 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Organic New Loan Fundings vs. Paydowns 1 New Loan Fundings Paydowns Record originations in 2Q15 offset by significantly higher paydowns compared to the first quarter of 2015 Loan portfolio diversification benefited from percentage growth in non-CRE loans outpacing CRE percentage growth over past 12 months
7 Improving Funding Mix Continued focus on increasing transaction deposits, which include NIB demand deposits and IB transaction accounts Noninterest-bearing demand deposits make up nearly 28% of total deposits Total cost of funds of 29 bps, flat versus the prior quarter and down 6 bps from the prior year period ($ i n mi llio n s) 0 200 400 600 800 1,000 1,200 1,400 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 2Q 3Q 4Q 1Q14 2Q 3Q 4Q 1Q15 2Q Transaction Deposit Accounts Noninterest-bearing Interest-bearing NIB 28% IB Transaction 18% Savings & MMA 38% CDs 13% Brokered/ Wholesale 3% 2Q15 Deposit Composition NIB 22% IB Transaction 18% Savings & MMA 42% CDs 13% Brokered/ Wholesale 5% 2Q14
8 1 Excludes accretion income on loans 2 Excludes (amortization)/accretion of FDIC receivable; other noninterest income excludes prepayment fees and gain on securities Total interest income of $27.1mm, excluding accretion, is up $9.2mm, or 52%, from 2Q14 Compounded quarterly growth rate of 8.7% over past five quarters Focus on deploying cash into securities over past 12 months led to $1.5mm increase in investment income since 2Q14 ($ i n t h o u sa n d s) ($ i n t h o u sa n d s) 10,000 15,000 20,000 25,000 30,000 2Q14 3Q14 4Q14 1Q15 2Q15 Interest Income 1 Noninterest income of $9.3mm in 2Q15, excluding indemnification asset (amortization)/accretion Combined mortgage production of over $163mm in the second quarter, leading to $3.5mm in fee income SBA team production of $13.4mm in 2Q15, leading to total SBA income of $1.4mm Payroll fee income increased 16% year-over-year Strong Growth in Noninterest Income Key Initiatives Interest Income Replacing Accretion Strong Revenue Trends 0 2,000 4,000 6,000 8,000 10,000 12,000 2Q14 3Q14 4Q14 1Q15 2Q15 Noninterest Income 2 Other NII Mortgage SBA Payroll
9 Focus on Efficiency Full integration of Bank of Atlanta complete; anticipate First Bank of Georgia integration will be complete in 4Q15 Immediate personnel reduction in special assets with early termination of loss share Annualized salary savings of $2.2mm related to early termination and other efficiency actions from 2Q15 will be recognized in future periods Recorded approximately $876 thousand of merger-related expenses and $443 thousand of severance expenses in the second quarter Further efficiency initiatives under review 2.00% 2.20% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% 3.60% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 (Noninterest Expense – Noninterest Income 1 ) / Average Assets 1 Excludes (amortization)/accretion of FDIC receivable
10 ($ i n t h o u sa n d s) Asset Quality Past due organic loans represent .08% of total organic loans Total NPAs of $4.8mm as of 2Q15, representing .31% of organic loans and OREO OREO balances decreased 11% in 2Q15 Allowance to organic loans is 1.29% at the end of 2Q15 N PA s / Orga n ic L o an s 1 Total past due loans include 30 – 89 day and 90+ day loans past due ($ i n t h o u sa n d s) 0 10,000 20,000 30,000 40,000 2Q14 3Q14 4Q14 1Q15 2Q15 Total OREO Balances 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 0 2,000 4,000 6,000 8,000 10,000 2Q14 3Q14 4Q14 1Q15 2Q15 Organic Nonperforming Assets NPLs OREO NPAs / Organic Loans 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 2Q14 3Q14 4Q14 1Q15 2Q15 Organic Past Due Loan Ratio 1 Past Due Loans / Organic Loans