Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | pressrelease063016.htm |
| 8-K - 8-K - STATE BANK FINANCIAL CORP | a8kcoverpage063016.htm |
State Bank Financial Corporation
2nd Quarter 2016
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 28, 2016
2
Cautionary Note Regarding Forward-Looking
Statements
This presentation contains forward-looking statements within the meaning of the federal securities laws. 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,” “should,” “anticipate,” “may,” and
“project,” as well as similar expressions. Pro forma financial information is not a guarantee of future results and is presented for informational purposes only. These forward-
looking statements include, but are not limited to, statements regarding our proposed acquisitions of NBG Bancorp (“NBG”) and its subsidiary and S Bankshares and its
subsidiary, including our belief that these acquisitions will provide entry into attractive new markets and other key transaction assumptions, statements regarding our significant
opportunity for deposit growth in the Atlanta and Augusta markets, statements regarding remaining accretable discount and its future benefits, including statements related to
base accretion, and other statements about expected developments or events, our future financial performance, and the execution of our strategic goals. Forward-looking
statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions (“risk factor”) that are difficult to predict with regard to timing,
extent, likelihood and degree. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. We
undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Risk factors including,
without limitation, the following:
• completion of the transactions with NBG and S Bankshares is dependent on, among other things, receipt of regulatory approvals and S Bankshares shareholder approval, the
timing of which cannot be predicted and which may not be received at all;
• the impact of the completion of the transactions with NBG and S Bankshares on our financial statements will be affected by the timing of the transactions;
• the transactions may be more expensive to complete and the anticipated benefits, including anticipated cost savings and strategic gains, may be significantly harder or take
longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events;
• the integration of NBG’s and S Bankshares’ business and operations into ours may be more costly than anticipated or have unanticipated adverse results related to NBG’s,
S Bankshares’ or our existing businesses;
• our ability to achieve anticipated results from the transactions with NBG and S Bankshares will depend on the state of the economic and financial markets going forward;
• 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;
• 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; and
• economic, governmental or other factors may prevent the projected population, residential and commercial growth in the markets in which we operate.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the most recently ended fiscal
year. These and other risk factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome and a forward-
looking statement.
3
Additional Information About the Mergers
and Where to Find It
Proposed Merger with NBG Bancorp, Inc.
In connection with the proposed merger transaction with NBG Bancorp, Inc., State Bank Financial has filed a registration statement on Form S-4 (Registration Statement No. 333-
211445) that includes a joint proxy statement/prospectus. The SEC declared the registration statement effective on June 15, 2016. A definitive proxy statement/prospectus dated
June 15, 2016 was mailed on or about June 20, 2016 to the shareholders of NBG Bancorp, Inc. The registration statement and the proxy statement/prospectus filed with the SEC
related to the proposed transaction contains important information about State Bank Financial, NBG Bancorp, Inc. and the proposed transaction and related matters. WE URGE
SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH OR THAT MAY BE FILED WITH THE SEC IN
CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS BECAUSE THOSE DOCUMENTS
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Security holders may obtain free copies of these documents and other documents filed with the SEC on the SEC’s website at
http://www.sec.gov. Security holders may also obtain free copies of the documents filed with the SEC by State Bank Financial at its website at https://www.statebt.com (which
website is not incorporated herein by reference) or by contacting Jeremy Lucas by telephone at 404.239.8626.
State Bank Financial and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of NBG Bancorp, Inc. in connection
with the proposed merger. Information regarding these persons who may, under the rules of the SEC, be considered participants in the solicitation of shareholders in connection with
the proposed merger are provided in the proxy statement/prospectus described above. Additional information regarding State Bank Financial’s directors and executive officers is
included in State Bank Financial’s definitive proxy statement for 2016, which was filed with the SEC on April 15, 2016. You can obtain free copies of this document from State Bank
Financial using the contact information above.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
Proposed Merger with S Bankshares, Inc.
In connection with the proposed merger transaction with S Bankshares, Inc., State Bank Financial will file a registration statement on Form S-4 with the SEC to register State Bank
Financial’s shares that will be issued to S Bankshares, Inc. shareholders in connection with the transaction. The registration statement will include a proxy statement of S Bankshares,
Inc. and a prospectus of State Bank Financial, as well as other relevant documents concerning the proposed transaction. The registration statement and the proxy
statement/prospectus to be filed with the SEC related to the proposed transaction will contain important information about State Bank Financial, S Bankshares, Inc. and the proposed
transaction and related matters. WE URGE SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND
ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION. Security holders may obtain free copies of these documents and other
documents filed with the SEC on the SEC’s website at http://www.sec.gov. Security holders may also obtain free copies of the documents filed with the SEC by State Bank Financial at
its website at https://www.statebt.com (which website is not incorporated herein by reference) or by contacting Jeremy Lucas by telephone at 404.239.8626.
State Bank Financial and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of S Bankshares, Inc. in connection
with the proposed merger. Information regarding these persons who may, under the rules of the SEC, be considered participants in the solicitation of shareholders in connection with
the proposed merger will be provided in the proxy statement/prospectus described above when it is filed with the SEC. Additional information regarding State Bank Financial’s
directors and executive officers is included in State Bank Financial’s definitive proxy statement for 2016, which was filed with the SEC on April 15, 2016. You can obtain free copies of
this document from State Bank Financial using the contact information above.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
4
Income Statement Highlights
(dollars in thousands, except per share data) 2Q16 1Q16 2Q15
Interest income on loans $25,406 $24,342 $23,070
Accretion income on loans 13,961 9,743 8,365
Interest income on invested funds 4,726 4,673 4,032
Total interest income 44,093 38,758 35,467
Interest expense 2,371 2,113 1,972
Net interest income 41,722 36,645 33,495
Provision for loan and lease losses 6 (134) 64
Net interest income after provision for loan losses 41,716 36,779 33,431
Noninterest income 10,230 9,391 9,319
Amortization of FDIC receivable - - (15,040)
Total noninterest expense 30,674 28,898 31,357
Income before income taxes 21,272 17,272 (3,647)
Income tax expense 7,433 6,434 (1,626)
Net income (loss) available to common shareholders $13,839 $10,838 ($2,021)
Diluted net income (loss) per share .37 .29 (.06)
Dividends per share .14 .14 .06
Tangible book value per share 13.77 13.49 13.51
Balance Sheet Highlights (period-end)
Total loans $2,345,096 $2,258,533 $2,042,186
Organic 2,004,858 1,895,340 1,524,286
Purchased non-credit impaired 205,705 223,398 340,539
Purchased credit impaired 134,533 139,795 177,361
Total assets 3,586,503 3,532,971 3,300,308
Noninterest-bearing deposits 829,673 891,511 762,100
Total deposits 2,885,490 2,905,598 2,736,285
Shareholders’ equity 553,356 545,855 522,984
Results Summary
1 Denotes a non-GAAP financial measure; for more information, refer to Table 8 of the 2Q16 earnings press release
Note: Consolidated financial results contained throughout this presentation are unaudited; numbers may not add due to rounding
2Q16 net income of $13.8
million, or $.37 per diluted
share
Interest income on loans and
invested funds up 4% in the
quarter and 11% from 2Q15
Noninterest income increased
9% versus the prior quarter
and 10% compared to the
prior year period
Announced two bank
acquisitions that will add
three attractive MSAs to
our footprint
$.14 quarterly dividend
represents an attractive 2.8%
yield at end of 2Q16 and 42%
payout ratio in the first half of
2016
1
5
Enhancing Fundamental Performance
Interest
Income
Noninterest
Income
Core Deposit
Funding
Noninterest income of $10.2mm was up 10% compared to 2Q15
Record quarter for mortgage and 2nd highest quarter for SBA
Payroll income increased 16% year-over-year
Average noninterest-bearing deposits represent 30% of average total deposits
Cost of funds remains low at 33 bps
Noninterest expense increased due to new hires in revenue-producing lines of
business and higher production commissions in 2Q16
Burden ratio1 was 2.30% in the first half of 2016, down from 2.54% in the first
half of 2015
Efficiency
Interest income on loans and invested funds increased $1.1mm (+4%) from
1Q16 and $3.0mm (+11%) from 2Q15
Total loans were up $87mm from the previous quarter
1 Ratio defined as annualized noninterest expense minus annualized noninterest income, excluding (amortization)/accretion of FDIC receivable, divided by average assets
6
Recent Acquisition Announcements
Source: SNL Financial; company documents
Note: Key metrics as of June 30, 2016
Founded in 2000
Headquartered in Athens, Georgia
Branch office in Gainesville, Georgia
Athens mortgage office
Total Assets: $417 million
Total Loans: $342 million
Total Deposits: $322 million
Total Equity: $44 million
Key Metrics
Headquartered in Glennville, Georgia
3 additional offices in southeast
Georgia, including Savannah
Total Assets: $109 million
Total Loans: $82 million
Total Deposits: $91 million
Total Equity: $11 million
Key Metrics
Announced April 5, 2016
Announced May 19, 2016
Long-term relationship with quality leadership team in familiar
Georgia markets
Will provide entry into attractive Athens and Gainesville markets
Will provide an established banking platform in Savannah, the third
largest MSA in Georgia and a market well-known to the company’s
management team
Locally-owned bank with quality, community-focused board
7
Atlanta
Macon
Warner
Robins
Augusta
Savannah
Athens
Gainesville
STBZ Proforma Highlights
1
Key Metrics and Capital Ratios
2
Concentrated footprint in 7 of the 8 largest
MSAs in Georgia
$4.1 billion of total assets
31 full-service banking offices
8 mortgage origination offices
1 Proforma for pending acquisitions of NBG Bancorp, Inc. and S Bankshares, Inc.
2 Assets, loans, and deposits as of June 30, 2016; capital ratios as of March 31, 2016
l STBZ
l NBG
l S Bank
($ in mm)
STBZ Proforma
Well
Capitalized
TCE / TA 14.3% 12.6% N/A
Tier 1 Leverage 14.6% 12.6% 5.0%
Tier 1 RBC 17.1% 15.0% 8.0%
Total RBC 18.1% 15.9% 10.0%
STBZ
NBG +
S Bank Proforma
Assets $3,587 $526 $4,113
Loans $2,345 $424 $2,769
Deposits $2,885 $413 $3,298
8
Strong Revenue Trends – Interest Income
Continue to replace accretion income
with interest income from organic
and purchased non-credit impaired
portfolios
Total interest income (excluding
accretion) of $30.1mm in 2Q16
compared to $27.1mm in 2Q15 and
$17.9mm in 2Q14
($ i
n
000
s)
Net interest margin significantly
impacted by quarterly accretion
volatility
Net interest margin excluding
accretion has improved year-over-
year to 3.53% at 2Q16
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Interest Income and Accretion
Interest Income Accretion
7.38%
5.08%
3.11% 3.53%
2%
3%
4%
5%
6%
7%
8%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Net Interest Margin
NIM NIM excluding Accretion
9
Payroll fee income increased 16% year-over-year as
number of clients increased 9% year-over-year
Strong Revenue Trends – Noninterest Income
2Q16 mortgage production of $143mm, leading to a 17%
quarterly increase in fee income
SBA production increased to $28.6mm in 2Q16, a 39%
increase from 1Q16 and 113% increase from 2Q15
Total 2Q16 noninterest income of $10.2mm is
second highest quarterly level
0
2,000
4,000
6,000
8,000
10,000
12,000
2Q15 3Q15 4Q15 1Q16 2Q16
Service Charge Other Mortgage Payroll SBA
($ i
n
000
s)
0
50
100
150
200
0
1,000
2,000
3,000
4,000
2Q15 3Q15 4Q15 1Q16 2Q16
Pr
o
d
u
cti
o
n
($
in
m
m
)
N
o
n
in
ter
es
t
In
com
e
($ i
n
000
s)
Income Production
1,000
1,050
1,100
1,150
1,200
0
250
500
750
1,000
1,250
1,500
2Q15 3Q15 4Q15 1Q16 2Q16
# o
f C
lien
ts
N
o
n
in
ter
es
t
In
com
e
($ i
n
000
s)
Income Number of Clients
0
5
10
15
20
25
30
35
0
500
1,000
1,500
2,000
2Q15 3Q15 4Q15 1Q16 2Q16
Pr
o
d
u
cti
o
n
($
in
m
m
)
N
o
n
in
ter
es
t
In
com
e
($ i
n
000
s)
Income Production
10
Focused on Improving Efficiency
Total expense increased from the prior quarter but was down compared to the prior year period
Reinvestments in revenue-producing opportunities, including SBA team addition and recent hires in
mortgage and Patriot Capital divisions, combined with higher production commissions led to higher
expense in the quarter
Remain focused on achieving 2.0% target burden ratio1 and 55% efficiency ratio
Burden ratio declined 9% in the first half of 2016 compared to the first half of 2015
1 Ratio defined as annualized noninterest expense minus annualized noninterest income, excluding (amortization)/accretion of FDIC receivable, divided by average assets
30%
40%
50%
60%
70%
80%
90%
2013 2014 2015 1H 2016 Target
Efficiency Ratio
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2013 2014 2015 1H 2016 Target
Burden Ratio
1
11
Core Deposit Funding
($ i
n
m
m
)
N
IB
/ Tot
al D
ep
o
sit
s
Attractive, low-cost core deposit mix focused on transaction-based funding
($ in mm)
Deposit Composition 2012 % 2013 % 2014 % 2015 % 2Q16 %
Noninterest-bearing 342 16% 413 20% 490 23% 758 27% 848 30%
Interest-bearing transaction 318 15% 336 16% 386 18% 519 19% 531 18%
Savings & MMA 1,030 48% 928 44% 911 42% 1,060 38% 1,052 37%
CDs 476 22% 431 20% 380 18% 437 16% 441 15%
Total Deposits $2,166 $2,107 $2,166 $2,773 $2,873
10%
15%
20%
25%
30%
35%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012 2013 2014 2015 2Q16
Deposit Mix
NIB IB Transaction Savings & MMA CDs NIB / Total Deposits
Note: Average deposit balances
12
Core Deposit Funding
Maintain leading market share in middle Georgia (Macon and Warner Robins), with significant opportunity
for growth in Atlanta and Augusta markets
Continued focus on increasing
transaction deposits
Noninterest-bearing deposits
represent 30% of total deposits
Cost of funds increased slightly
to 33 bps due to growth in
retail money market and time
deposits
($ i
n
m
m
)
($ in mm)
Deposit Regi 2012 % 2013 % 2014 % 2015 % 2Q16 %
Atlanta 870 40% 798 38% 869 40% 1,080 39% 1,152 40%
Middle Georgia 1,296 60% 1,309 62% 1,297 60% 1,271 46% 1,306 45%
Augusta - - - - - - 422 15% 415 14%
Total Deposits $2,166 $2,107 $2,166 $2,773 $2,873
Note: Average deposit balances
.00%
.10%
.20%
.30%
.40%
.50%
0
200
400
600
800
1,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Transaction Deposit Accounts
Interest-bearing Noninterest-bearing Cost of Funds
13
($ in mm)
Loan Composition 2012 2013 2014 2015 2Q16
Construction, land & land development $230 $251 $313 $501 $482
Other commercial real estate 458 550 636 736 814
Residential real estate 43 67 135 210 200
Owner-occupied real estate 172 175 212 281 294
C&I and Leases 74 71 123 267 384
Consumer 8 9 9 21 36
Total Organic & PNCI Loans 986 1,123 1,428 2,015 2,211
PCI Loans 475 257 206 146 135
Total Loans $1,460 $1,381 $1,635 $2,160 $2,345
Solid Loan Growth
To
ta
l L
o
an
s
($
in
m
m
)
1 New loan fundings include new loans funded and net loan advances on existing commitments
0
125
250
375
500
500
1,000
1,500
2,000
2,500
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Total Loan Portfolio
Organic PNCI PCI New Loan Fundings Organic Net Loan Growth
1
Organic and PNCI loans
increased $92mm in the
quarter and $346mm year-
over-year to end 2Q16 at
$2.2B
Strong quarter of new loan
originations with diverse
growth across the portfolio
Fu
n
d
in
gs /
G
ro
w
th
($
in
m
m
)
14
Loan Portfolio and CRE Composition
1 Organic and PNCI loans
Commercial Real Estate Composition
Significant industry, client, source of
repayment, and geographic diversity in
the CRE portfolio
Construction, land & land development
(AD&C) comprises both commercial and
residential construction, which make up
15% and 12%, respectively, of total CRE
CRE
37%
AD&C
22%
SFR
9%
OORE
13%
C&I
13%
Leases
4%
Consumer
2%
Loan Portfolio
1
($ in mm) Organic PNCI Total % of Total CRE
CRE
Retail $188 $22 $210 16%
Office 141 7 148 11%
Multifamily 125 9 134 10%
Hospitality 117 6 122 9%
Industrial 66 8 74 6%
Sr. Housing 23 4 26 2%
Farmland 24 - 24 2%
Mini Storage 15 7 22 2%
Restaurant 20 1 20 2%
C-Store 18 0 19 1%
Other 12 1 14 1%
Total $749 $65 $814 63%
Construction, Land & Land Development
Commercial Construction $191 - $191 15%
Residential Construction 156 - 156 12%
Land & Development 124 $11 135 10%
Total $471 $11 $482 37%
Total Commercial Real Estate $1,220 $76 $1,296
15
Organic PNCI
Past due loans: .18% .40%
NPAs: .35% .86%
Average NCOs: .46% (.05)%
Allowance: 1.10% .08%
(covers organic NPAs by 3.2x)
Successful resolution of distressed
assets as purchased credit
impaired loans are down 24%
year-over-year
OREO balances remain relatively
low at $11.6mm as of 2Q16
Asset Quality Remains Sound
($ i
n
m
m
)
0.00%
0.50%
1.00%
1.50%
2.00%
0
5
10
15
20
2012 2013 2014 2015 2Q16
Nonperforming Loans
Organic PNCI NPLs / Organic Loans
0
10
20
30
40
50
0
100
200
300
400
500
2012 2013 2014 2015 2Q16
OR
EO
($ i
n
m
m
)
PCI
Lo
an
s ($
in
m
m
)
PCI Loans & OREO
PCI Loans OREO
16
Earnback of pre-tax expense of $14.5mm at early termination announcement surpassed our initial five quarter
expectation on a cumulative basis in 2Q16
Significant strategic benefits to early loss share termination:
Eliminated negative earnings impact of quarterly amortization expense and clawback payable
Allowed State Bank to retain in excess of $9.0mm in net recoveries since 2Q15
Reduced cash expenses directly related to special assets
Led to fewer management distractions
Recap of Loss Share Termination
$75mm of accretable
discount remaining will
continue to provide
significant future benefits
Potential quarterly upside
in accretion from
recoveries and pool
closeouts
Base accretion is
predictable and in line
with historical trends
0
5
10
15
20
25
30
0
50
100
150
200
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Ac
creti
o
n
($ i
n
m
m
)
Ac
cr
et
ab
le
Di
sco
u
n
t
($ i
n
m
m
)
Accretable Discount Remaining
Accretable Discount Accretion Income Base Accretion