Attached files
| file | filename |
|---|---|
| EX-99.4 - EXHIBIT 99.4 - STATE BANK FINANCIAL CORP | stbz_ex994x20160930-8k.htm |
| EX-99.3 - EXHIBIT 99.3 - STATE BANK FINANCIAL CORP | stbz_ex993x20160930-8k.htm |
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | pressrelease093016.htm |
| 8-K - 8-K - STATE BANK FINANCIAL CORP | a8kcoverpage093016.htm |
3rd 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
October 27, 2016
State Bank Financial Corporation
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 our focus on improving efficiency, including our target burden ratio and target
efficiency ratio, 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
Income Statement Highlights
(dollars in thousands, except per share data) 3Q16 2Q16 3Q15
Interest income on loans $26,580 $25,406 $24,218
Accretion income on loans 9,335 13,961 11,156
Interest income on invested funds 4,714 4,726 4,050
Total interest income 40,629 44,093 39,424
Interest expense 2,504 2,371 1,977
Net interest income 38,125 41,722 37,447
Provision for loan and lease losses 88 6 (265)
Net interest income after provision for loan losses 38,037 41,716 37,712
Total noninterest income 9,769 10,230 8,894
Total noninterest expense 28,480 30,674 32,416
Income before income taxes 19,326 21,272 14,190
Income tax expense 6,885 7,287 5,071
Net income $12,441 $13,985 $9,119
Diluted earnings per share .34 .38 .25
Dividends per share .14 .14 .07
Tangible book value per share 13.99 13.77 13.78
Balance Sheet Highlights (period-end)
Total loans $2,346,346 $2,345,096 $2,139,691
Organic 2,030,457 2,004,858 1,694,949
Purchased non-credit impaired 189,053 205,705 285,419
Purchased credit impaired 126,836 134,533 159,323
Total assets 3,616,384 3,586,503 3,388,673
Noninterest-bearing deposits 890,588 829,673 823,146
Total deposits 2,959,292 2,885,490 2,795,188
Shareholders’ equity 561,134 553,356 532,161
Results Summary
1 Denotes a non-GAAP financial measure; for more information, refer to Table 8 of the 3Q16 earnings press release
Note: Consolidated financial results contained throughout this presentation are unaudited; numbers may not add due to rounding
3Q16 net income of $12.4
million, or $.34 per diluted
share
Interest income on loans
and invested funds up 11%
from 3Q15
Noninterest income
increased 10% compared
to 3Q15
Noninterest expense down
12% from 3Q15
$.14 quarterly dividend
represents an attractive
2.5% yield at end of 3Q16
and 42% payout ratio in
2016 YTD
1
4
Enhancing Fundamental Performance
Interest
Income
Noninterest
Income
Core Deposit
Funding
Noninterest income contribution of $9.8mm in 3Q16
Mortgage income (+6%), SBA income (+12%), and payroll fee income (+14%)
are all higher YTD 2016 compared to YTD 2015
Average noninterest-bearing deposits represent 29% of average total deposits
Increased deposit market share in Atlanta while strengthening #1 market share
in Middle Georgia
Ongoing focus on expense control led to quarterly decline in noninterest
expense
Burden ratio1 was 2.22% for the first nine months of 2016, down from 2.62%
for the comparable period in 2015
Efficiency
Interest income on loans and invested funds increased $1.2mm (+4%) from
2Q16 and $3.0mm (+11%) from 3Q15
Net interest margin excluding accretion expanded to 3.57% in 3Q16
Average loans increased $80.0mm 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
5
Strong Revenue Trends – Interest Income
Growth in interest income from
organic and PNCI portfolios helped
offset the wind down of PCI loans
Total interest income (excluding
accretion) of $31.3mm in 3Q16
compared to $28.3mm in 3Q15 and
$18.7mm in 3Q14
($ i
n
000
s)
Net interest margin significantly
impacted by quarterly accretion
volatility
Net interest margin excluding
accretion of 3.57% as of 3Q16 has
improved 5 bps from 3Q15 and 57
bps from 3Q14
$17.8
$31.3
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Interest Income and Accretion
Interest Income Accretion
7.38%
4.54%
3.11% 3.57%
2%
3%
4%
5%
6%
7%
8%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Net Interest Margin
NIM NIM excluding Accretion
6
Payroll fee income increased 12% year-over-year,
benefiting from an expanded product offering
Strong Revenue Trends – Noninterest Income
3Q16 mortgage production of $149mm, leading to a 4%
year-over-year increase in fee income
SBA production of $17mm in 3Q16
Servicing portfolio grew to $131mm in 3Q16
Total 3Q16 noninterest income of $9.8mm
($ i
n
000
s)
0
2,000
4,000
6,000
8,000
10,000
12,000
3Q15 4Q15 1Q16 2Q16 3Q16
Service Charge Other Mortgage Payroll SBA
0
50
100
150
200
0
1,000
2,000
3,000
4,000
3Q15 4Q15 1Q16 2Q16 3Q16
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
3Q15 4Q15 1Q16 2Q16 3Q16
# 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
3Q15 4Q15 1Q16 2Q16 3Q16
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
7
Focused on Improving Efficiency
Total noninterest expense decreased $2.2mm from the prior quarter and $3.9mm from the prior year period
reflecting our ongoing focus on expense control
3Q16 salary and benefit expense was down $863 thousand from 2Q16
Remain focused on achieving 2.0% target burden ratio1 and 55% efficiency ratio
Burden ratio declined 15% in 2016 year-to-date compared to the same year-to-date period in 2015
1 Ratio defined as annualized noninterest expense minus annualized noninterest income, excluding (amortization)/accretion of FDIC receivable, divided by average assets
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2013 2014 2015 2016 YTD Target
Burden Ratio
1
30%
40%
50%
60%
70%
80%
90%
2013 2014 2015 2016 YTD Target
Efficiency Ratio
8
Core Deposit Funding
($ i
n
m
m
)
N
IB
/ Tot
al D
ep
o
sit
s
Attractive, low-cost core deposit mix focused on transaction-based funding
Note: Average deposit balances
($ in mm)
Deposit Composition 2012 % 2013 % 2014 % 2015 % 2016 YTD %
Noninterest-bearing 342 16% 413 20% 490 23% 758 27% 844 29%
Interest-bearing transaction 318 15% 336 16% 386 18% 519 19% 529 18%
Savings & MMA 1,030 48% 928 44% 911 42% 1,060 38% 1,065 37%
CDs 476 22% 431 20% 380 18% 437 16% 427 15%
Total Deposits $2,166 $2,107 $2,166 $2,773 $2,865
10%
15%
20%
25%
30%
35%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012 2013 2014 2015 2016 YTD
Deposit Mix
NIB IB Transaction Savings & MMA CDs NIB / Total Deposits
9
Core Deposit Funding
Maintain leading market share in middle Georgia (Macon and Warner Robins), with significant opportunity
for growth in Atlanta and Augusta markets
Continued focus on increasing
transaction deposits, which
include NIB demand deposits
and IB transaction accounts
Average noninterest-bearing
deposits represent 29% of total
deposits
Cost of funds remains low at 34
bps as of 3Q16
($ i
n
m
m
)
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 3Q16
Transaction Deposit Accounts
Interest-bearing Noninterest-bearing Cost of Funds($ in mm)
Deposit Regi 2012 % 2013 % 2014 % 2015 % 2016 YTD %
Atlanta 870 40% 798 38% 869 40% 1,080 39% 1,138 40%
Middle Georgia 1,296 60% 1,309 62% 1,297 60% 1,271 46% 1,311 46%
Augusta - - - - - - 422 15% 415 15%
Total Deposits $2,166 $2,107 $2,166 $2,773 $2,865
10
0
125
250
375
500
500
1,000
1,500
2,000
2,500
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Total Loan Portfolio
Organic PNCI PCI New Loan Fundings
Loan Portfolio
To
ta
l L
o
an
s
($
in
m
m
)
1 New loan fundings include new loans funded and net loan advances on existing commitments
1
New loan originations in
excess of $390mm, offset
by record level of
paydowns
Organic and PNCI loans
increased $8.9mm in the
quarter and $239mm year-
over-year to end 3Q16 at
$2.2B
N
ew
Lo
an
Fu
n
d
in
gs ($ i
n
m
m
)
($ in mm)
Loan Composition 2012 2013 2014 2015 3Q16
Construction, land & land development $230 $251 $313 $501 $496
Other commercial real estate 458 550 636 736 803
Total commercial real estate 688 802 949 1,236 1,299
Residential real estate 43 67 135 210 196
Owner-occupied real estate 172 175 212 281 292
C&I and Leases 74 71 123 267 391
Consumer 8 9 9 21 41
Total Organic & PNCI Loans 986 1,123 1,428 2,015 2,220
PCI Loans 475 257 206 146 127
Total Loans $1,460 $1,381 $1,635 $2,160 $2,346
11
Loan Portfolio and CRE Composition
1 Organic and PNCI loans as of September 30, 2016
Commercial Real Estate Composition
Significant industry, client, source of
repayment, and geographic diversity in
the CRE portfolio
Construction, land & land development
(AD&C) comprises both commercial and
residential construction, which make up
16% and 12%, respectively, of total CRE
CRE
36%
AD&C
22%
SFR
9%
OORE
13%
C&I
14%
Leases
4%
Consumer
2%
Loan Portfolio
1
($ in mm) Organic PNCI Total % of Total CRE
CRE
Retail $181 $22 $203 16%
Office 139 7 146 11%
Multifamily 119 9 128 10%
Hospitality 104 5 108 8%
Industrial 73 7 81 6%
Farmland 27 - 27 2%
Sr. Housing 23 4 26 2%
Mini Storage 21 3 23 2%
Restaurant 21 1 21 2%
C-Store 18 0 18 1%
Other 19 1 20 2%
Total $744 $58 $803 62%
Construction, Land & Land Development
Commercial Construction $201 - $201 16%
Residential Construction 152 0 153 12%
Land & Development 133 $10 142 11%
Total $486 $10 $496 38%
Total Commercial Real Estate $1,231 $68 $1,299
12
Continue to successfully resolve
distressed assets as purchased
credit impaired loans are down
20% year-over-year
OREO balances remain relatively
low at $10.6mm as of 3Q16
Asset Quality Remains Sound
($ i
n
m
m
)
0
10
20
30
40
50
0
100
200
300
400
500
2012 2013 2014 2015 3Q16
OR
EO
($ i
n
m
m
)
PCI
Lo
an
s ($
in
m
m
)
PCI Loans & OREO
PCI Loans OREO
0.00%
0.50%
1.00%
1.50%
2.00%
0
5
10
15
20
2012 2013 2014 2015 3Q16
Nonperforming Loans
Organic PNCI NPLs / Organic Loans
Total organic NPAs of $6.5mm,
representing .32% of organic loans
and OREO
Average net charge-offs were .05% in
3Q16, down from .47% last quarter
Past due organic loans of just .09%,
compared to .18% at 2Q16
Allowance to organic loans is 1.07%,
down from 1.10% last quarter, and
covers NPAs by 3.3 times