State Bank Financial Corporation announced unaudited financial results for the fourth quarter and full year ended December 31, 2016.  Full year net income for 2016 was $47.6 million, or $1.28 per fully diluted share, compared to $28.4 million, or $.77 per fully diluted share, for full year 2015.  Net income for the fourth quarter of 2016 was $10.3 million, compared to $12.4 million in the third quarter of 2016 and $12.1 million in the fourth quarter of 2015.  Fully diluted earnings per share were $.28 in the fourth quarter of 2016 compared to $.34 in the third quarter of 2016 and $.33 in the fourth quarter of 2015.  The fourth quarter of 2016 included $3.5 million of merger-related expenses, which reduced earnings per share by approximately $.06 in the quarter, net of tax. 

Joe Evans, Chairman and CEO of State Bank Financial, commented, "2016 was a great year.  We had record earnings and completed two bank acquisitions that pushed us over $4 billion in assets.  We ended the year with strong momentum, and I am very optimistic about our opportunities in 2017."

Operating Highlights

Interest income on loans improved to $26.7 million in the fourth quarter of 2016, a $116,000 increase from the third quarter of 2016 and a $2.4 million increase from the fourth quarter of 2015.  Net interest income of $39.1 million in the fourth quarter of 2016 increased from $38.1 million in the third quarter of 2016 but declined from $40.6 million in the fourth quarter of 2015.  Accretion income on loans of $10.3 million in the fourth quarter of 2016 was positively impacted by a $2.2 million gain from loan pool closings.  Accretion income was $9.3 million in the third quarter of 2016 and $14.2 million in the fourth quarter of 2015, which included a $4.1 million gain from loan pool closings.  As of December 31, 2016, approximately $69 million of accretable discount, inclusive of $4 million from The National Bank of Georgia and S Bank, remains to be recognized as loan accretion income.

Noninterest income was $9.9 million in the fourth quarter of 2016, compared to $9.8 million in the third quarter of 2016 and $8.1 million in the fourth quarter of 2015.  Payroll fee income increased $235,000 in the fourth quarter of 2016 to $1.4 million, and SBA income was up $165,000 to $1.7 million in the fourth quarter of 2016.  Strong quarters from payroll fee income and SBA income helped offset lower fourth quarter mortgage banking income, which declined compared to the previous quarter as a result of normal seasonality.  For full year 2016, noninterest income, excluding amortization of the FDIC receivable, increased 7.4% compared to 2015, including an increase in mortgage banking income of 9.5%, SBA income of 16.6%, and payroll fee income of 15.1%.

Total noninterest expense for the fourth quarter of 2016 was $32.9 million, a $4.4 million increase from

the third quarter of 2016, and a $3.3 million increase from the fourth quarter of 2015.  The fourth quarter of 2016 included $3.5 million of merger-related expenses and a decrease in net gains on OREO of $714,000 compared to the third quarter of 2016.  Legal and professional fees increased $638,000 in the fourth quarter due to expenses incurred related to a support system project.  Salary and benefit expenses declined $245,000 from the third quarter of 2016 and $360,000 from the fourth quarter of 2015.  For full year 2016, noninterest expense, excluding merger-related expenses and the net benefit of OREO activity, declined $5.7 million, or 4.7%, compared to 2015, primarily due to a $4.5 million decline in salary and benefit expenses.

Financial Condition

Comparison of period-end balance sheet metrics for the year ended December 31, 2016, to prior periods is materially affected by the acquisitions of The National Bank of Georgia and S Bank, which were each completed on December 31, 2016.  Average balance sheet metrics for the quarter and year ended December 31, 2016, are not impacted by these acquisitions.

Total assets at December 31, 2016 were $4.22 billion, up from $3.62 billion at September 30, 2016.  Total loans were $2.8 billion at December 31, 2016, up $468 million from the third quarter of 2016 due to approximately $424 million of loans acquired from The National Bank of Georgia and S Bank as well as organic loan growth during the quarter.

Tom Wiley, Vice Chairman and President, commented, "It was my privilege at year-end to welcome the customers and talented bankers from The National Bank of Georgia and S Bank to State Bank.  These attractive new markets represent tremendous opportunity to build upon the outstanding trajectory of our core franchise.  Results for 2016 clearly demonstrate our commitment to growing low-cost core deposits, emphasizing our fee income lines of business, increasing loans without compromising our credit metrics, prudently deploying capital, and becoming a more efficient company."

Excluding the acquisitions, organic and purchased non-credit impaired loans increased to $2.3 billion at December 31, 2016, a net increase of $49.2 million from the third quarter of 2016 and $254.1 million from the fourth quarter of 2015.  Purchased credit impaired loans, excluding the acquisitions, decreased to $121.8 million at the end of the fourth quarter of 2016, a $5.0 million decrease from the previous quarter and a $23.8 million decrease from the fourth quarter of 2015.

The organic loan portfolio continued to perform well in the fourth quarter of 2016 as past due organic

loans represented .06% of total organic loans.  The allowance as a percent of loans declined six basis points to 1.01% at the end of the fourth quarter of 2016 and covers organic nonperforming assets by more than three times.

Total deposits at December 31, 2016 were $3.43 billion, up $472 million from $2.96 billion at September 30, 2016, including $414 million of deposits acquired from The National Bank of Georgia and S Bank.  Period-end transaction accounts, comprised of noninterest-bearing demand deposits and interest-bearing transaction accounts, increased $211 million from the third quarter of 2016 inclusive of acquisitions.  Noninterest-bearing demand deposits represented 28.7% of total deposits as of December 31, 2016. 

Excluding the acquisitions, period-end total deposits increased $58.8 million in the fourth quarter of 2016, as $95.3 million of growth in transaction accounts was partially offset by declines in CDs and brokered deposits.  Period-end total deposits increased $156.1 million in full year 2016, excluding the acquisitions.  Average total deposits increased $108.7 million from the previous quarter and $132.7 million from the fourth quarter of 2015.

Tangible book value per share was $13.48 at the end of the fourth quarter of 2016.  State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 14.92% and a Tier I risk-based capital ratio of 14.76%.