• Record net income of $17.4 million, or $.44 per diluted share, in the first quarter of 2018
• Return on assets of 1.45% and return on equity of 10.96%?
• Loan growth of $104.4 million, or 12.6% annualized, excluding purchased credit impaired loans
• Successful conversion of AloStar Bank of Commerce's core system?
• Dividend increased 43% to $.20 per common share, a $.06 per share increase

State Bank Financial Corporation (NASDAQ: STBZ) today announced unaudited financial results for the first quarter of 2018. Net income for the first quarter of 2018 was $17.4 million, compared to $5.4 million in the fourth quarter of 2017, which included the impact of a $10.7 million non-cash tax expense related to the revaluation of our net deferred tax assets, and $11.6 million in the first quarter of 2017. Fully diluted earnings per share were $.44 in the first quarter of 2018, compared to $.14 in the fourth quarter of 2017 and $.30 in the first quarter of 2017.

Tom Wiley, Vice Chairman and CEO, commented, “Strong loan growth, disciplined expense management and completion of the AloStar systems conversion led to a fast start to 2018. I am proud of our team as we successfully completed the conversion without losing focus on production. We expect the benefits of our merger with AloStar to grow during the year. Quarterly net income of $17.4 million reflects the benefit of the newly acquired lines of business and the reduction in income taxes.”

Operating Highlights

Interest income on loans improved to $48.4 million in the first quarter of 2018, a $1.5 million increase from the fourth quarter of 2017 and a $14.4 million increase from the first quarter of 2017. Net interest income of $54.9 million in the first quarter of 2018 decreased from $58.0 million in the fourth quarter of 2017 and increased from $44.0 million in the first quarter of 2017. Accretion income on loans was $5.9 million in the first quarter of 2018, down from $10.7 million in the fourth quarter of 2017 and $7.7 million in the first quarter of 2017. The $4.7 million linked-quarter decrease was primarily due to unexpected acceleration of certain purchased credit impaired loan payoffs in the fourth quarter of 2017. As of March 31, 2018, approximately $58 million of accretable discount remains to be recognized as loan accretion income.

Noninterest income was $10.5 million in the first quarter of 2018, compared to $10.1 million in the fourth quarter of 2017 and $9.5 million in the first quarter of 2017. Revenues from mortgage banking and payroll and insurance increased $367,000 and $62,000, respectively, in the first quarter of 2018, compared to the fourth quarter of 2017, while SBA income decreased $674,000.

Total noninterest expense for the first quarter of 2018 was $39.3 million, compared to $40.7 million in the fourth quarter of 2017 and $34.6 million in the first quarter of 2017. The $1.4 million linked-quarter decrease was primarily due to a $1.3 million decrease in merger-related expenses related to the AloStar Bank of Commerce acquisition. Merger-related expenses were $1.3 million for the first quarter of 2018.

Financial Condition

Total assets at March 31, 2018, were $4.9 billion, down from $5.0 billion at December 31, 2017. Total loans were $3.6 billion at March 31, 2018, up $86.3 million from the fourth quarter of 2017. Period-end organic loans increased to $2.5 billion at March 31, 2018, an increase of $149.5 million from the fourth quarter of 2017. Purchased non-credit impaired loans decreased to $945.7 million at March 31, 2018, a $45.1 million linked-quarter decline. Purchased credit impaired loans decreased to $157.5 million at March 31, 2018, an $18.1 million linked-quarter decline.

Past due organic and purchased non-credit impaired loans were .22% and .45% of their respective portfolios at March 31, 2018. The provision for loan losses on organic and purchased non-credit impaired loans was $2.7 million in the first quarter of 2018 and was primarily attributable to organic loan growth, net charge-offs 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 first quarter of 2018.

Total deposits at March 31, 2018, were $4.2 billion, down $58.7 million from December 31, 2017, as the seasonal cash operating cycle of certain State Bank clients led to a decline of $156.1 million in period-end transaction accounts. Noninterest-bearing demand deposits represented 26.0% of total deposits as of March 31, 2018. Average noninterest-bearing demand deposits were $1.1 billion, a $65.3 million decrease from the fourth quarter of 2017 and a $127.0 million increase from the first quarter of 2017.

Joe Evans, Chairman of State Bank Financial, commented, “We began 2018 with a 43% increase in our quarterly dividend and are pleased with the first quarter’s solid growth in earnings and loans. Our focus remains on long term growth, a best in class client experience, operational efficiency and shareholder return. The economic backdrop in our markets remains favorable and creates great opportunity for continued strong performance in 2018.”

Tangible book value per share was $14.15 at the end of the first quarter of 2018. State Bank Financial Corporation continues to be well capitalized, ending the quarter with a leverage ratio of 11.69% and a Tier I risk-based capital ratio of 12.44%.

Detailed Results

Supplemental tables displaying financial results for the first quarter of 2018 and the previous four quarters are included with this press release.

About State Bank Financial Corporation

State Bank Financial Corporation (NASDAQ: STBZ), with approximately $4.9 billion in assets as of March 31, 2018, is an Atlanta-based bank holding company for State Bank and Trust Company. State Bank operates a full service banking business and offers a broad range of commercial and retail banking products to our customers throughout seven of Georgia’s eight largest MSAs.

To learn more about State Bank, visit www.statebt.com