State Bank Financial Corporation announced unaudited financial results for the third quarter ended September 30, 2017.  Net income for the third quarter of 2017 was $14.4 million, compared to $15.2 million in the second quarter of 2017 and $12.4 million in the third quarter of 2016.  The linked-quarter decline was primarily attributable to a reduction in loan recovery income of $2.3 million.  Fully diluted earnings per share were $.37 in the third quarter of 2017, compared to $.39 in the second quarter of 2017 and $.34 in the third quarter of 2016.

Joe Evans, Chairman of State Bank Financial, commented, “I am extremely pleased with our team’s ability to promptly close the meaningfully accretive AloStar transaction in the third quarter. I look forward to closing out 2017 with a full quarter of AloStar's earnings on top of what was already shaping up to be an outstanding year for State Bank. AloStar brings a talented team with deep industry knowledge and a robust pipeline that will help us jumpstart 2018.”

Operating Highlights

Interest income on loans improved to $35.4 million in the third quarter of 2017, a $528,000 increase from the second quarter of 2017 and an $8.8 million increase from the third quarter of 2016.  Net interest income of $44.3 million in the third quarter of 2017 decreased from $46.5 million in the second quarter of 2017 but increased from $38.1 million in the third quarter of 2016.  Accretion income on loans was $6.5 million in the third quarter of 2017, down from $9.2 million in the second quarter of 2017 and $9.3 million in the third quarter of 2016.  As of September 30, 2017, approximately $67 million of accretable discount remains to be recognized as loan accretion income.

Noninterest income was $9.7 million in the third quarter of 2017, compared to $10.5 million in the second quarter of 2017 and $9.8 million in the third quarter of 2016.  Revenues in mortgage and SBA declined $303,000 and $519,000, respectively, in the third quarter of 2017, compared to the second quarter of 2017 while payroll and insurance income increased $69,000.

Total noninterest expense for the third quarter of 2017 was $31.6 million, compared to $32.0 million in the second quarter of 2017 and $28.5 million in the third quarter of 2016.  The $426,000 linked-quarter decrease was primarily due to lower commission, incentive, and employee benefits costs, which were down $421,000 from the previous quarter due to lower production levels in noninterest income lines.

Financial Condition

Comparison of period-end balance sheet metrics for the quarter ended September 30, 2017 to prior periods is materially affected by the acquisition of AloStar Bank of Commerce, which was completed on September 30, 2017.  Average balance sheet metrics for the quarter were not impacted by the acquisition.

Total assets at September 30, 2017, were $5.1 billion, up from $4.2 billion at June 30, 2017.  Total loans were $3.6 billion at September 30, 2017, up $691.8 million from the second quarter of 2017 due to $718.6 million of loans acquired from AloStar Bank of Commerce.  Period-end organic loans increased to $2.3 billion at September 30, 2017, an increase of $29.2 million from the second quarter of 2017.  Purchased non-credit impaired and purchased credit impaired loans, excluding the AloStar acquisition, decreased to $549.6 million at the end of the third quarter of 2017, a $55.9 million linked-quarter decline.

Tom Wiley, Vice Chairman and CEO, commented “Reporting $14.4 million in net income for the quarter reflects the increasingly strong performance of the core bank.  The fundamental trends remain strong, our team is intently focused on delivering an exceptional experience for our clients, and we are very excited about the complementary opportunity AloStar represents for the future of our combined franchise.”

Credit quality metrics remain solid at September 30, 2017.  Past due organic and purchased non-credit impaired loans were .12% and .48% of their respective portfolios. The provision for loan losses on organic and purchased non-credit impaired loans was $1.3 million in the third quarter of 2017 and was primarily attributable to net charge-offs, organic loan growth, and continued seasoning of the purchased non-credit impaired portfolio.  The organic allowance as a percent of organic loans was .99% at the end of the third quarter of 2017.

Total deposits at September 30, 2017, were $4.2 billion, up $788.4 million from $3.5 billion at June 30, 2017, including $705.6 million of deposits acquired from AloStar Bank of Commerce. Period-end transaction accounts, comprised of noninterest-bearing demand deposits and interest-bearing transaction accounts, increased $198.3 million from the second quarter of 2017 inclusive of the acquisition.  Noninterest-bearing demand deposits represented 27.8% of total deposits as of September 30, 2017.  Average noninterest-bearing demand deposits were $1.0 billion, a $32.0 million increase from the second quarter of 2017 and a $181.0 million increase from the third quarter of 2016.

Tangible book value per share was $14.01 at the end of the third quarter of 2017.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 13.37% and a Tier I risk-based capital ratio of 12.21%.