Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - STATE BANK FINANCIAL CORP | pressrelease033118.htm |
| 8-K - 8-K - STATE BANK FINANCIAL CORP | a8kcoverpage033118.htm |
1st Quarter 2018
Earnings Presentation
Tom Wiley, Vice Chairman and CEO
Sheila Ray, EVP and CFO and COO
David Black, EVP and CCO
Joe Evans, Chairman
April 26, 2018
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. These forward-looking statements include, but are not limited to, statements regarding our focus on improving efficiency, including our
expected cost savings target and the timing thereof related to the AloStar Bank of Commerce (“AloStar”) acquisition, our ability to achieve our target burden and target efficiency
ratios, expectations related to our core deposit funding, 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 factors”) 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. Pro forma financial information is not a guarantee of future results and is presented for informational purposes only. 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 include, without limitation, the following:
• negative reactions to our recent or future acquisitions of each bank’s customers, employees, and counterparties or difficulties related to the transition of services;
• the anticipated benefits of the AloStar acquisition, including anticipated cost savings and strategic gains, may be significantly harder or take longer than expected or may not
be achieved in the entirety or at all as a result of unexpected factors or events;
• our ability to achieve anticipated results from the transactions with AloStar will depend on the state of the economic and financial markets going forward;
• 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;
• risk associated with income taxes including the potential for adverse adjustments and the inability to fully realize deferred tax benefits;
• increased cybersecurity risk, including potential network breaches, business disruptions, or financial losses;
• 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
1Q 2018 Results Summary
1 Denotes a non-GAAP financial measure; for more information, refer to Table 7 of the 1Q18 earnings press release
Note: Consolidated financial results contained throughout this presentation are unaudited; numbers may not add due to rounding
Record net income of $17.4mm,
or $.44 per diluted share in
1Q18
ROA of 1.45% and ROE of
10.96% in 1Q18
Organic and PNCI loan growth of
$104mm, or 12.6% annualized
43% quarterly dividend increase
to $0.20 per share; 2.67%
dividend yield at quarter end
Tangible book value per share
increased $0.15 from previous
quarter
Successful integration and
conversion of AloStar Bank of
Commerce completed in March
Income Statement Highlights
($ in 000s , except per share data) 1Q18 4Q17 1Q17
Interest income on loans $48,444 $46,926 $34,060
Accretion income on loans 5,946 10,671 7,677
Interest income on invested funds 6,171 6,034 5,460
Total interest income 60,561 63,631 47,197
Interest expense 5,705 5,614 3,239
Net interest income 54,856 58,017 43,958
Provision for loan and lease losses 3,208 2,848 1,002
Net interest income after provision for loan losses 51,648 55,169 42,956
Total noninterest income 10,461 10,140 9,459
Total noninterest expense 39,268 40,684 34,565
Income before income taxes 22,841 24,625 17,850
Income tax expense 5,476 19,248 6,292
Net income $17,365 $5,377 $11,558
Diluted earnings per share .44 .14 .30
Dividends per share .20 .14 .14
Tangible book value per share 14.15 14.00 13.66
Balance Sheet Highlights (period-end)
Total loans $3,618,521 $3,532,193 $2,854,780
Organic 2,515,318 2,365,843 2,172,555
Purchased non-credit impaired 945,679 990,736 528,065
Purchased credit impaired 157,524 175,614 154,160
Total assets 4,892,297 4,958,582 4,202,681
Noninterest-bearing deposits 1,089,579 1,191,106 944,838
Total deposits 4,184,432 4,243,135 3,409,775
Shareholders’ equity 646,654 641,551 620,283
1
4
Revenue Trends – Interest Income
Interest income (excluding accretion)
of $55mm in 1Q18, a 38% increase
compared to $40mm in 1Q17
Interest income on invested funds
increased 13% to $6.2mm despite a
$60mm decrease in the average
balance year over year
Accretion represented less than 10%
of total interest income in 1Q18
($ i
n
000
s)
Net interest margin of 4.86% in 1Q18 was
impacted by several factors including:
26bps loan yield increase
29bps investment yield increase
2bps interest-bearing deposit cost
increase
$4.7mm accretion income decrease,
primarily in loan recovery income
0
10,000
20,000
30,000
40,000
50,000
60,000
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Interest Income
Interest Income on Loans Interest Income on Invested Funds Accretion
4.86%
5.73%
2.72%
0.75%
0%
1%
2%
3%
4%
5%
6%
7%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Net Interest Margin & Selected Yields
NIM Loans excluding PCI Investment Securities Interest-bearing Liabilities
5
SBA income of $1.2mm, up from 1Q17 as production
increased to $18.2mm in 1Q18
Payroll and insurance income of $1.8mm in 1Q18, an 18%
increase year over year
Revenue Trends – Noninterest Income
Mortgage banking income of $2.9mm in 1Q18, up slightly
compared to 1Q17, with production of $112mm in 1Q18
Total 1Q18 noninterest income of $10.5mm up 3%
linked-quarter, and up 11% from 1Q17
($ i
n
000
s)
1
1 Corporate Analysis represents the portion of payroll income offset by an earnings credit on the payroll customers’ deposit accounts
0
500
1,000
1,500
2,000
1Q17 2Q17 3Q17 4Q17 1Q18N
o
n
in
ter
es
t
In
com
e
($ i
n
000
s)
Income Corporate Analysis
0
50
100
150
200
0
1,000
2,000
3,000
4,000
1Q17 2Q17 3Q17 4Q17 1Q18
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
0
3,000
6,000
9,000
12,000
1Q17 2Q17 3Q17 4Q17 1Q18
Service Charge Other Mortgage Payroll SBA
0.0
5.0
10.0
15.0
20.0
25.0
0
500
1,000
1,500
2,000
2,500
1Q17 2Q17 3Q17 4Q17 1Q18
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
6
Focused on Improving Efficiency
Noninterest expense declined 3% from prior quarter, due primarily to lower merger-related expenses
Noninterest expense is expected to decline as we achieve the projected 25% cost save target related to the AloStar
acquisition during 2Q18
1Q18 Burden Ratio1 of 2.40% and Efficiency Ratio of 60%
Roughly $1.2mm of expense is expected to drop out of the run-rate in 2Q18 in addition to a decline in
merger-related expenses
1 Burden Ratio defined as noninterest expense minus noninterest income, excluding amortization of FDIC receivable, divided by average assets
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2014 2015 2016 2017 1Q18 Target
Burden Ratio
1
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
2014 2015 2016 2017 1Q18 Target
Efficiency Ratio
7
Deposit Funding Mix
($ i
n
m
m
)
Attractive, low-cost core deposit mix focused on transaction-based funding
1
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2014 2015 2016 2017 1Q18
Average Deposit Composition
NIB IB Transaction Savings & MMA CDs
($ in mm) 2014 % 2015 % 2016 % 2017 % 1Q18 %
Nonin erest-bearing 490 23% 758 27% 852 29% 1,020 28% 1,082 26%
Interest-bearing transaction 386 18% 519 19% 541 19% 608 17% 626 15%
Savings & MMA 911 42% 1,060 38% 1,078 37% 1,460 40% 1,594 39%
CDs 380 18% 437 16% 422 15% 544 15% 781 19%
Total Average Deposits $2,166 $2,773 $2,893 $3,633 $4,084
Average Balances
8
Deposit Funding Mix
Average noninterest-bearing
deposits represent 26% of total
deposits
Cost of funds increased 3bps from
the previous quarter to 55bps in
1Q18
8% deposit beta in 1Q18 is
expected to increase throughout
the year as competition for
deposits increases
($ i
n
m
m
)
1 Correspondent/Internet Banking lines of business acquired on September 30, 2017; Year end balance as of December 31, 2017 was $642mm
.00%
.10%
.20%
.30%
.40%
.50%
.60%
0
200
400
600
800
1,000
1,200
1,400
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Average Transaction Deposits
Interest-bearing Noninterest bearing Cost of Funds Cost of IB Transaction Accts
2 Other includes brokered and wholesale time deposits
D posit Region
($ in m)
2014 % 2015 % 2016 % 2017 % 1Q18 %
Atlanta 953 44% 1,152 42% 1,228 42% 1,231 34% 1,222 30%
Middle Georgia 1,116 52% 1,121 40% 1,214 42% 1,305 36% 1,357 33%
Augus - - 422 15% 422 15% 451 12% 446 11%
Athens / Gainesville - - - - - - - - 347 10% 313 8%
Correspondent/Internet1 & Other2 97 4% 78 3% 29 1% 211 6% 649 16%
Greater Savannah - - - - - - - - 88 2% 97 2%
Total Average Deposits $2,166 $2,773 $2,893 $3,633 $4,084
9
Loan Portfolio
To
ta
l L
o
an
s
($
in
m
m
)
1 New loan fundings include new loans funded and net loan advances on existing commitments
1
New loan originations and
fundings in excess of $515mm
in 1Q18
Organic and PNCI loans
increased $104mm in 1Q18
from 4Q17, as organic growth
of $149mm was partially
offset by a $45mm decline in
PNCI loans
Diversity of the loan portfolio
continues to increase
N
ew
Lo
an
Fu
n
d
in
gs ($ i
n
m
m
)
Loan Composition (period-end)
($ in mm)
2014 2015 2016 2017 1Q18
Construction, land & land development $313 $501 $551 $438 $467
Other commercial real estate 636 736 964 1,168 1,168
Total commercial real estate 949 1,236 1,516 1,607 1,636
Residential real estate 135 210 289 293 291
Owner-occupied real estate 212 281 372 379 348
C&I and Leases 123 267 435 1,012 1,122
Consumer 9 21 42 67 64
Total Organic & PNCI Loans 1,428 2,015 2,654 3,357 3,461
PCI Loans 206 146 161 176 158
Total Loans $1,635 $2,160 $2,815 $3,532 $3,619
0
100
200
300
400
500
600
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
Total Loan Portfolio
Organic PNCI PCI New Loan Fundings
10
Loan Portfolio Composition
1 Organic and PNCI loans as of March 31, 2018
Commercial Real Estate Composition
($ in mm) Organic PNCI Total
% of Total
CRE
CRE
Retail $251 $50 $301 19%
Office 172 55 227 14%
Hospitality 159 26 185 12%
Multifamily 126 45 171 10%
Industrial 56 26 82 5%
Sr. Housing 37 10 46 3%
Restaurant 31 3 34 2%
C-Store 24 2 26 2%
Farmland 21 2 24 1%
Mini Storage 22 0 23 1%
Other 42 9 51 3%
Total $942 $227 $1,168 71%
Construction, Land & Land Development
Residential Construction $170 $0 $170 10%
Land & Development 143 16 158 10%
Commercial Construction 130 8 139 8%
Total $443 $24 $467 29%
Total Commercial Real Estate $1,385 $251 $1,636
Other CRE
34%
Construction,
Land & Land
Development
14% OORE
10%
C&I
31%
SFR
8%
Other
3%
Loan Portfolio
1
($ in mm) Organic PNCI Total % of Total
C&I and OORE
Banking Group $523 $89 $611 43%
Lender Finance 92 294 386 27%
Asset Based Lending (ABL) 62 207 269 19%
Equipment Financing 97 - 97 7%
Small Business Administration 24 11 35 2%
Other 17 9 26 2%
Total C&I and OORE $815 $610 $1,425
C&I and Owner-Occupied Real Estate Composition
11
PCI loans decreased 10.3%
quarter over quarter to $158mm
Over 90% of PCI loans are current
as of 1Q18
OREO balances of $4.2mm as of
1Q18
Asset Quality
($ i
n
m
m
)
Total organic NPAs of $13mm at 1Q18
represented .52% of organic loans and
OREO
Past due organic loans at .22% to organic
loans at 1Q18
Annualized net charge-offs of .09% in 1Q18
Allowance for organic loans was .99% at
1Q18
0.00%
0.25%
0.50%
0.75%
1.00%
0
5
10
15
20
1Q17 2Q17 3Q17 4Q17 1Q18
Nonperforming Loans
Organic PNCI NPLs / Organic Loans
0
5
10
15
20
25
0
50
100
150
200
250
1Q17 2Q17 3Q17 4Q17 1Q18
OR
EO
($ i
n
m
m
)
PCI
Lo
an
s ($
in
m
m
)
PCI Loans & OREO
PCI Loans OREO