Cadence Bancorporation 8-K Other Events

Exhibit 99.1

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Financial Condition

(Dollars in thousands, except per share amounts)

	June 30, 2018			December 31, 2017
	(unaudited)			(1)
Assets
Cash and amounts due from depository institutions	$	12,974		$	17,438
Interest-bearing deposits in other financial institutions		215,360			211,142
Federal funds sold		9,957			2,297
Cash and cash equivalents		238,291			230,877
Equity securities		1,515			1,515
Debt securitiesavailable-for-sale		835,670			872,455
Debt securitiesheld-to-maturity (fair value of $16,817 and $33,351, respectively)		16,742			32,852
Loans		3,605,273			3,532,193
Allowance for loan and lease losses		(33,335	)		(28,750	)
Loans, net		3,571,938			3,503,443
Loansheld-for-sale (includes loans at fair value of $39,222 and $25,791, respectively)		55,096			36,211
Other real estate owned		5,012			895
Premises and equipment, net		56,965			51,794
Goodwill		84,564			84,564
Other intangibles, net		9,729			11,034
SBA servicing rights		3,989			4,069
Bank-owned life insurance		68,231			67,313
Other assets		64,587			61,560
Total assets	$	5,012,329		$	4,958,582
Liabilities and Shareholders’ Equity
Liabilities:
Noninterest-bearing deposits	$	1,187,028		$	1,191,106
Interest-bearing deposits		3,115,676			3,052,029
Total deposits		4,302,704			4,243,135
Federal funds purchased and securities sold under agreements to repurchase		13,525			25,209
Notes payable		398			398
Other liabilities		38,783			48,289
Total liabilities		4,355,410			4,317,031
Shareholders’ equity:
Preferred stock, $1 par value; 2,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $.01 par value; 100,000,000 shares authorized; 39,121,749 and 38,992,163 shares issued and outstanding, respectively		391			390
Additionalpaid-in capital		415,698			413,583
Retained earnings		250,628			230,145
Accumulated other comprehensive loss, net of tax		(9,798	)		(2,567	)
Total shareholders’ equity		656,919			641,551
Total liabilities and shareholders’ equity	$	5,012,329		$	4,958,582

(1) Derived from audited financial statements

See accompanying notes to consolidated financial statements.

1

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2018			2017			2018		2017
Interest income:
Loans	$	50,416		$	34,872		$	98,860	$	68,932
Loan accretion		6,595			9,228			12,541		16,905
Investment securities		6,275			5,655			12,261		11,023
Deposits with other financial institutions		402			92			587		184
Total interest income		63,688			49,847			124,249		97,044
Interest expense:
Deposits		7,338			3,123			12,766		6,231
FHLB borrowings		206			229			463		341
Notes payable		11			9			24		20
Federal funds purchased and repurchase agreements		3			8			10		16
Total interest expense		7,558			3,369			13,263		6,608
Net interest income		56,130			46,478			110,986		90,436
Provision for loan and lease losses		2,393			1,845			5,601		2,847
Net interest income after provision for loan and lease losses		53,737			44,633			105,385		87,589
Noninterest income:
Service charges on deposits		1,462			1,471			3,087		2,938
Mortgage banking income		3,125			3,096			6,050		5,990
SBA income		1,252			1,983			2,444		3,161
Payroll and insurance income		1,608			1,418			3,368		2,913
ATM income		919			864			1,789		1,696
Bank-owned life insurance income		463			465			918		949
Gain on sale of investment securities		250			13			250		25
Other		1,838			1,166			3,472		2,263
Total noninterest income		10,917			10,476			21,378		19,935
Noninterest expense:
Salaries and employee benefits		24,279			21,178			50,321		42,566
Occupancy and equipment		3,421			3,329			6,917		6,609
Data processing		2,696			2,382			5,592		5,021
Legal and professional fees		967			898			1,706		2,703
Merger-related expenses		2,601			372			3,865		2,607
Marketing		940			403			1,365		1,067
Federal deposit insurance premiums and other regulatory fees		589			398			1,089		795
Loan collection costs and OREO activity		(116	)		(213	)		50		(1,255	)
Amortization of intangibles		654			697			1,305		1,393
Other		3,952			2,553			7,041		5,056
Total noninterest expense		39,983			31,997			79,251		66,562
Income before income taxes		24,671			23,112			47,512		40,962
Income tax expense		5,904			7,909			11,380		14,201
Net income	$	18,767		$	15,203		$	36,132	$	26,761
Basic earnings per share	$	.48		$	.39		$	.93	$	.69
Diluted earnings per share	$	.48		$	.39		$	.92	$	.69
Cash dividends declared per common share	$	.20		$	.14		$	.40	$	.28
Weighted Average Shares Outstanding:
Basic		38,038,181			37,896,125			38,035,111		37,881,999
Diluted		38,075,106			37,942,483			38,072,919		37,934,187

See accompanying notes to consolidated financial statements.

2

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in thousands)

	Three Months Ended					Six Months Ended
	June 30					June 30
	2018			2017		2018			2017
Net income	$	18,767		$	15,203	$	36,132		$	26,761
Other comprehensive income (loss), net of tax:
Net change in unrealized (losses) gains		(2,184	)		1,110		(9,064	)		594
Amortization of net unrealized (gains) losses on securities transferred toheld-to-maturity		(3	)		46		23			44
Transfer of unrealized gain fromheld-to-maturity toavailable-for-sale		(51	)		—		(51	)		—
Amounts reclassified for (gains) losses realized and included in earnings		(250	)		417		(159	)		809
Other comprehensive (loss) income, before income taxes		(2,488	)		1,573		(9,251	)		1,447
Income tax expense		(616	)		585		(1,997	)		549
Other comprehensive income (loss), net of income taxes		(1,872	)		988		(7,254	)		898
Comprehensive income		$16,895		$	16,191	$	28,878		$	27,659

See accompanying notes to consolidated financial statements.

3

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(Dollars in thousands)

	Warrants			Common				Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
				Shares		Stock
Balance, December 31, 2016		133,912			38,845,573	$	388	$	409,736		$	205,966		$	(2,457	)	$	613,633
Exercise of stock warrants		(46,000	)		31,939		1		—			—			—			1
Share-based compensation		—			—		—		1,817			—			—			1,817
Restricted stock activity		—			77,974		1		(128	)		(83	)		—			(210	)
Issuance of common stock		—			12,486		—		335			—			—			335
Other comprehensive income		—			—		—		—			—			898			898
Common stock dividends, $.28 per share		—			—		—		—			(10,898	)		—			(10,898	)
Net income		—			—		—		—			26,761			—			26,761
Balance, June 30, 2017		87,912			38,967,972	$	390	$	411,760		$	221,746		$	(1,559	)	$	632,337
Balance, December 31, 2017		82,904			38,992,163	$	390	$	413,583		$	230,145		$	(2,567	)	$	641,551
Exercise of stock warrants		(30,000	)		20,215		—		—			—			—			—
Share-based compensation		—			—		—		2,116			—			—			2,116
Restricted stock activity		—			109,371		1		(1	)		—			—			—
Adoption of ASU2016-01		—			—		—		—			(23	)		23			—
Other comprehensive (loss)		—			—		—		—			—			(7,254	)		(7,254	)
Common stock dividends, $.40 per share		—			—		—		—			(15,626	)		—			(15,626	)
Net income		—			—		—		—			36,132			—			36,132
Balance, June 30, 2018		52,904			39,121,749	$	391	$	415,698		$	250,628		$	(9,798	)	$	656,919

See accompanying notes to consolidated financial statements.

4

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

	Six Months Ended
	June 30
	2018			2017
Cash Flows from Operating Activities
Net income	$	36,132		$	26,761
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		4,721			5,838
Provision for loan and lease losses		5,601			2,847
Accretion on acquisitions, net		(12,541	)		(16,905	)
Gains on sales of other real estate owned		(604	)		(1,693	)
Writedowns of other real estate owned		128			121
Proceeds from sales of mortgage loansheld-for-sale		234,304			248,964
Proceeds from sales of SBA loansheld-for-sale		20,261			27,463
Originations of mortgage loansheld-for-sale		(242,295	)		(237,579	)
Originations of SBA loansheld-for-sale		(23,834	)		(26,097	)
Mortgage banking activities		(6,050	)		(5,990	)
Gains on sales of SBA loans		(1,882	)		(2,483	)
Net gains on sales ofavailable-for-sale securities		(250	)		(25	)
Share-based compensation expense		2,116			1,817
Changes in fair value of SBA servicing rights		493			246
Changes in other assets and other liabilities, net		(9,354	)		(593	)
Net cash provided by operating activities		6,946			22,692
Cash flows from Investing Activities
Purchase of investment securitiesavailable-for-sale		(57,201	)		(161,915	)
Proceeds from sales and calls of investment securitiesavailable-for-sale		4,275			64,778
Proceeds from maturities and paydowns of investment securitiesavailable-for-sale		88,805			95,192
Proceeds from maturities and paydowns of investment securitiesheld-to-maturity		6,010			9,000
Purchase of investment securitiesheld-to-maturity		—			(5,000	)
Loan originations, repayments and resolutions, net		(66,319	)		(51,705	)
Net purchases of premises and equipment		(7,043	)		(926	)
Proceeds from sales of other real estate owned		1,123			10,787
Net cash paid in excess of assets and liabilities acquired in purchase business combinations		—			(34,316	)
Net cash used in investing activities		(30,350	)		(74,105	)
Cash Flows from Financing Activities
Net (decrease) increase in noninterest-bearing customer deposits		(4,078	)		25,090
Net increase (decrease) in interest-bearing customer deposits		63,647			(3,563	)
Proceeds from FHLB advances		694,500			840,000
Repayments of FHLB advances		(694,500	)		(807,014	)
Net decrease in federal funds purchased and securities sold under repurchase agreements		(11,684	)		(2,417	)
Payment of contingent consideration		(1,441	)		(1,495	)
Exercise of stock warrants		—			1
Restricted stock activity		—			(210	)
Dividends paid to shareholders		(15,626	)		(10,898	)
Net cash provided by financing activities		30,818			39,494
Net increase (decrease) in cash and cash equivalents		7,414			(11,919	)
Cash and cash equivalents, beginning		230,877			149,593
Cash and cash equivalents, ending		$238,291		$	137,674

5

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

	Six Months Ended
	June 30
	2018			2017
Supplemental Disclosure of Noncash Investing and Financing Activities
Unrealized (losses) gains on securities and cash flow hedges, net of tax	$	(7,254	)	$	898
Transfer of debt securitiesheld-to-maturity toavailable-for-sale		10,066			—
Transfers of loans to other real estate owned		4,764			725

See accompanying notes to consolidated financial statements.

6

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

Overview

State Bank Financial Corporation (the “Company” or “we”) is a bank holding company whose business is primarily conducted through its wholly-owned banking subsidiary, State Bank and Trust Company (the “Bank” or “State Bank”). We operate a full service banking business and offer a broad range of commercial and retail banking products to our customers throughout seven of Georgia’s eight largest metropolitan statistical areas, or MSAs.

The accompanying unaudited consolidated financial statements for the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited, but reflect all adjustments, consisting of normal and recurring items, which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim period presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto and the report of our independent registered public accounting firm included in the Company’s Annual Report on Form10-K for the year ended December 31, 2017.

Certain amounts have been reclassified to conform to the current period presentation. The reclassifications had no effect on net income or shareholders’ equity as previously reported.

Proposed Merger with Cadence Bancorporation

On May 11, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cadence Bancorporation, a Delaware corporation (“Cadence”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into Cadence, with Cadence continuing as the surviving corporation. Immediately following the completion of the merger, the Bank will merge with and into Cadence’s wholly owned bank subsidiary, Cadence Bank, N.A. (“Cadence Bank”), with Cadence Bank continuing as the surviving bank. Subject to the terms and conditions of the Merger Agreement, if the merger is completed, Company shareholders will receive 1.160 shares of Cadence Class A common stock, par value $0.01 per share, for each share of Company common stock, par value $0.01 per share, they hold immediately prior to the merger, plus cash in lieu of fractional shares.

The transaction is expected to close in the fourth quarter of 2018, subject to Company shareholder and regulatory approvals in addition to satisfaction of certain other closing conditions.

NOTE 2: ADOPTION OF NEW ACCOUNTING STANDARDS AND RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

ASU2018-05— In March 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2018-05,Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The purpose of this ASU is to codify the SEC’s guidance issued in Staff Accounting Bulletin 118. The amendments in this update were effective upon issuance. The adoption did not have a material impact on our consolidated financial statements.

ASU2018-04— In March 2018, FASB issued ASU2018-04,Investment—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273. The purpose of this ASU is to codify the SEC’s guidance issued in Staff Accounting Bulletin 117. The amendments in this update were effective upon issuance. The adoption did not have a material impact on our consolidated financial statements.

7

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASU2017-12— On August 28, 2017, FASB issued ASU2017-12,Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.The purpose of this ASU is to better align a company’s risk management activities and financial reporting for hedging relationships with the economic objectives of those activities, simplify the hedge accounting requirements, and improve the disclosures of hedging arrangements. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period. ASU2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company adopted the amendments in this ASU effective January 1, 2018. The adoption changed the location of changes in fair value of the hedging instrument and hedged item to interest income for periods subsequent to adoption and enhanced disclosures of derivatives and hedging activities. The Company did not elect to modify the measurement methodology for any fair value hedges existing as of the adoption date and there was no cumulative effect adjustment required upon adoption. See Note 8 for enhanced disclosures.

ASU2018-03— In February 2018, FASB issued ASU2018-03,Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic825-10).This Update clarifies certain aspects of the guidance issued in ASU2016-01 including (i) that an entity measuring an equity security using the measurement alternative may make an irrevocable election to change its measurement approach to a fair value method under Topic 820 for that security and any identical or similar investments of the same issuer, (ii) that fair value adjustments under the measurement alternative should be as of the date the observable transaction for a similar security occurred, (iii) requiring the remeasurement of the entire value of forward contracts and purchased options when observable transactions occur on the underlying equity securities, (iv) that financial liabilities for which the fair value option is elected should follow the guidance in paragraph825-10-45-5, (v) that changes in the fair value of financial liabilities for which the fair value option is elected relating to the instrument-specific credit risk should first be measured in the currency of denomination and then both components of the change in fair value should be remeasured into the reporting entity’s functional currency usingend-of-period spot rates, and (vi) that the prospective transition approach should only be applied for instances in which the measurement alternative is applied. The guidance was effective for interim periods beginning after June 15, 2018 and may be early adopted provided ASU2016-01 was adopted. The Company adopted the amendments in this ASU effective January 1, 2018. The adoption did not have a material impact on our consolidated financial statements.

ASU2016-01 — In January 2016, FASB issued ASUNo. 2016-01,Financial Instruments—Overall (Subtopic825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this ASU (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related toavailable-for-sale securities in combination with the entity’s other deferred tax assets. The accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted the amendments in this ASU effective January 1, 2018. The adoption of2016-01 resulted in a reclassification of unrealized loss of $23,000 from accumulated other comprehensive loss to retained earnings.

ASU2014-09,Revenue from Contracts with Customers (Topic 606), ASU2015-14Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU2016-08Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU2016-10Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU2016-11Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates2014-09 and2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, ASU2016-12Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, ASU2016-20Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,and ASU2017-05Other Income—Gains and losses from the Derecognition of Nonfinancial Assets (Subtopic610-20)—Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets— In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The new guidance, which does not apply to financial instruments, provides that revenue should be recognized for the transfer of goods or services to customers in an amount equal to the consideration the entity receives or expects to receive in exchange for those goods or services. The guidance also includes expanded disclosure requirements that provide comprehensive information about the nature, amount, timing, and uncertainty of

8

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

revenue and cash flows arising from contracts with customers. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted the amendments in this ASU effective January 1, 2018 using the modified retrospective method. Since there was no change to net income impact upon adoption of the new guidance, a cumulative effect adjustment to opening retained earnings was not necessary. See below for additional information related to revenue generated from contracts with customers.

Revenue Recognition

On January 1, 2018 the Company adopted ASC Topic 606, using the modified retrospective method. Disclosures of revenue from contracts with customers for periods beginning after January 1, 2018 are presented under ASC Topic 606 and have not materially changed from the prior year amounts. Consistent with this guidance, noninterest income within the scope of this guidance is recognized as services are transferred to our customers in an amount that reflects the considerations we expect to be entitled to in exchange for those services. The Company’s revenue streams that were in scope include service charges on deposits, payroll and insurance income, ATM income and other noninterest income.

Services Charges on Deposits — Service charges on deposits primarily consist of monthly maintenance charges, correspondent bank service charges, analysis charges and NSF charges. The fee for NSF charges and certain service charges are fixed and the performance obligation is typically satisfied at the time of the related transaction. The consideration for analysis charges and monthly maintenance charges are variable as the fee can be reduced if the customer meets certain qualifying metrics. The Company’s performance obligations are satisfied either at the time of the transaction or over the course of a month.

Payroll and insurance income — Payroll and insurance income consists principally of payroll processing fees, property and casualty brokerage and employee benefits brokerage. Payroll processing fees are charged as the services are provided and the Company satisfied its performance obligation simultaneously. Property and casualty includes the brokerage of both personal and commercial coverages. The placement of the policy is completion of the Company’s performance obligation and revenue is recognized at that time. The Company’s commission is a percentage of the premium. Employee benefits brokerage consists of assisting companies in designing and managing comprehensive employee benefit programs. The services provided by the Company are collectively benefit management services which are considered a bundle of services that are highly interrelated. Each of the underlying services are activities to fulfill the benefit management service and are not distinct and separate performance obligations. Revenue is recognized over the contract term as services are rendered on a monthly basis. Customer payments are usually received on a monthly basis.

ATM Income — ATM income represents revenues earned from interchange fees and merchant processing fees. Interchange revenues are earned on debit card transactions conducted with payment networks. ATM fees primarily consist of surcharges assessed to our customers for using anon-Bank ATM or anon-Bank customer using our ATM. Such fees generally are recognized concurrently with the delivery of services on a daily basis.

Other — Other noninterest income primarily consists of certain transaction based fees where the performance obligation is satisfied simultaneously with the revenue recognition.

Contract Costs— Costs associated with revenue from contracts with customers related primarily to contracts that have a period of one year or less. The Company has elected to expense the associated costs as incurred.

Contract Balances — The Company records contract assets when revenue is recognized prior to receipt of consideration from the customer. The Company does not have material contract assets atperiod-end. The Company records contract liabilities when the consideration is received or due in advance of providing services to customers. The Company typically receives payments for its services during the period or at the time services are provided and does not have material contract liabilities atperiod-end.

Recent Accounting Pronouncements

ASU2017-09— On May 10, 2017, FASB issued ASU2017-09,Scope of Modification Accounting.This Update amends the scope of modification accounting for share-based payment arrangements. It provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation—Stock Compensation. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The guidance is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures.

9

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASU2017-08 — In March 2017, FASB issued ASUNo. 2017-08,Receivables—Nonrefundable Fees and Other Costs (Topic310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium. The premium on individual callable debt securities shall be amortized to the earliest call date. This guidance does not apply to securities for which prepayments are estimated on a large number of similar loans where prepayments are probable and reasonably estimable. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. This update should be adopted on a modified retrospective basis with a cumulative-effect adjustment to retained earnings on the date of adoption. The guidance is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures.

ASU2017-04 — In January 2017, FASB issued ASUNo. 2017-04,Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The guidance is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures.

ASU2017-01 — In January 2017, FASB issued ASUNo. 2017-01,Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU clarifies the definition of a business to assist with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The guidance is not expected to have a significant impact on the Company’s financial position, results of operations or disclosures.

ASU2016-13 — In June 2016, FASB issued ASUNo. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU changed the credit loss model on financial instruments measured at amortized cost, available for sale securities and certain purchased financial instruments. Credit losses on financial instruments measured at amortized cost will be determined using a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to someoff-balance sheet credit exposures. Purchased financial assets with more-than-insignificant credit deterioration since origination (“PCD assets”) measured at amortized cost will have an allowance for credit losses established at acquisition as part of the purchase price. Subsequent increases or decreases to the allowance for credit losses on PCD assets will be recognized in the income statement. Interest income should be recognized on PCD assets based on the effective interest rate, determined excluding the discount attributed to credit losses at acquisition. Credit losses relating toavailable-for-sale debt securities will be recognized through an allowance for credit losses. The amount of the credit loss is limited to the amount by which fair value is below amortized cost of theavailable-for-sale debt security. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and if early adopted, all provisions must be adopted in the same period. The amendments should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period adopted. A prospective approach is required for securities with other-than-temporary impairment recognized prior to adoption. The Company is still reviewing the impact of the adoption of this guidance and has established a cross-functional implementation team. The Company expects the allowance for credit losses to increase upon adoption with a corresponding adjustment to retained earnings. The ultimate amount of the increase will depend on the portfolio composition, credit quality, economic conditions and reasonable and supportable forecasts at that time.

10

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASU2016-02— In February 2016, FASB issued ASUNo. 2016-02,Leases (Topic 842). The new standard requires the recognition of assets and liabilities arising from the lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Initial costs directly attributable to negotiating and arranging the lease will be included in the asset. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. Lessees will also be required to provide additional qualitative and quantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. These disclosures are intended to supplement the amounts recorded in the financial statements and provide additional information about the nature of an organization’s leasing activities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize aright-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company expects to elect the package of practical expedients that allows it to not reassess whether any expired or existing contracts represent leases, the lease classification of any expired or existing lease and initial direct costs for any existing or expired leases. The Company expects this standard will have a material impact on its financial statements throughgross-up of the balance sheet for lease assets and liabilities. However, no material change to lease expense recognition is expected.

NOTE 3: ACQUISITIONS

Acquisition of AloStar Bank of Commerce

On September 30, 2017, State Bank completed its acquisition of AloStar Bank of Commerce (“AloStar”). State Bank Interim Corp., a wholly-owned subsidiary of State Bank, merged with and into AloStar, immediately followed by the merger of AloStar with and into State Bank. Under the terms of the merger agreement, each share of AloStar common stock was converted into the right to receive $24.26 in cash. Total consideration paid was approximately $195.0 million and the final merger consideration was distributed in October 2017.

The merger of AloStar was accounted for under the acquisition method of accounting. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. Goodwill of $7.1 million was generated from the acquisition, all of which is expected to be deductible for income tax purposes.

11

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the assets acquired and liabilities assumed and the consideration payable by the Company at the acquisition date(dollars in thousands):

	As Recorded by AloStar Bank of Commerce		Fair Value Adjustments			As Recorded by the Company
Assets
Cash and cash equivalents	$	91,571	$	—		$	91,571
Investment securitiesavailable-for-sale		76,436		(195	)(a)		76,241
Loans, net		728,319		(9,763	)(b)		718,556
Core deposit intangible		—		856	(c)		856
Premises and equipment, net		507		—			507
Other assets		11,430		2,233	(d)		13,663
Total assets acquired	$	908,263	$	(6,869	)	$	901,394
Liabilities
Deposits:
Noninterest-bearing	$	102,653	$	—		$	102,653
Interest-bearing		603,069		(121	)(e)		602,948
Total deposits		705,722		(121	)		705,601
Other liabilities		7,912		—			7,912
Total liabilities assumed		713,634		(121	)		713,513
Net identifiable assets acquired over liabilities assumed	$	194,629	$	(6,748	)	$	187,881
Goodwill	$	—	$	7,088		$	7,088
Net assets acquired over liabilities assumed	$	194,629	$	340		$	194,969
Consideration:
Cash consideration payable		194,969
Fair value of total consideration transferred	$	194,969

Explanation of fair value adjustments

(a) Adjustment reflects the loss on certain securities that were sold immediately following the closing that was deemed to be a more accurate representation of fair value.

(b) Adjustment reflects the fair value adjustment based on the State Bank’s evaluation of the acquired loan portfolio and includes the adjustment to eliminate the recorded allowance for loan and lease losses.

(c) Adjustment reflects the fair value adjustment to record the estimated core deposit intangible.

(d) Adjustment reflects the fair value adjustment based on State Bank’s evaluation of acquired other assets.

(e) Adjustment reflects the fair value adjustment based on State Bank’s evaluation of acquired deposits.

12

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents certain pro forma information as if AloStar had been acquired on January 1, 2017(dollars in thousands, except per share amounts). These results combine the historical results of AloStar in the Company’s consolidated statements of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2017. Merger-related costs are not included in the pro forma statements below.

	Six Months Ended June 30
	2018		2017
	Pro Forma		Pro Forma
Net interest income	$	110,986	$	111,572
Net income		37,670		33,851
Earnings per share:
Basic	$	.96	$	.87
Diluted		.96		.87

The following is a summary of the purchased credit impaired loans acquired in the AloStar transaction on September 30, 2017(dollars in thousands):

	Purchased Credit Impaired Loans
Contractually required principal and interest at acquisition	$	108,308
Contractual cash flows not expected to be collected (nonaccretable difference)		(19,093	)
Expected cash flows at acquisition		89,215
Accretable difference		(11,664	)
Basis in acquired loans at acquisition—estimated fair value	$	77,551

On September 30, 2017, the fair value of the purchasednon-credit impaired loans acquired in the AloStar transaction was $641.0 million. The gross contractual amounts receivable of the purchasednon-credit impaired loans at acquisition was $707.0 million, of which $9.3 million was the amount of contractual cash flows not expected to be collected.

NOTE 4: INVESTMENT SECURITIES

The amortized cost and fair value of debt securities classified asavailable-for-sale are as follows(dollars in thousands):

	June 30, 2018								December 31, 2017
Debt SecuritiesAvailable-for-Sale	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Government securities	$	67,702	$	—	$	1,023	$	66,679	$	70,203	$	—	$	644	$	69,559
Residential mortgage-backed securities — nonagency		96,933		2,397		98		99,232		115,639		3,183		112		118,710
Residential mortgage-backed securities — agency		557,940		111		15,081		542,970		582,845		319		7,315		575,849
Corporate securities		126,203		1,284		698		126,789		107,115		1,299		77		108,337
Total debt securitiesavailable-for-sale	$	848,778	$	3,792	$	16,900	$	835,670	$	875,802	$	4,801	$	8,148	$	872,455

13

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost and fair value of debt securities classified asheld-to-maturity are as follows(dollars in thousands):

	June 30, 2018								December 31, 2017
Debt SecuritiesHeld-to-Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Asset-backed securities	$	16,742	$	75	$	—	$	16,817	$	22,692	$	259	$	—	$	22,951
Corporate securities		—		—		—		—		10,160		240		—		10,400
Total debt securitiesheld-to-maturity	$	16,742	$	75	$	—	$	16,817	$	32,852	$	499	$	—	$	33,351

The amortized cost and estimated fair value of debt securities by contractual maturities are summarized in the tables below (dollars in thousands):

Debt SecuritiesAvailable-for-Sale	Distribution of Maturities (1)
June 30, 2018	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
U.S. Government securities	$	18,022	$	49,680	$	—	$	—	$	67,702
Residential mortgage-backed securities — nonagency		—		—		306		96,627		96,933
Residential mortgage-backed securities — agency		4,806		58,866		125,239		369,029		557,940
Corporate securities		38,884		55,944		31,037		338		126,203
Total debt securitiesavailable-for-sale	$	61,712	$	164,490	$	156,582	$	465,994	$	848,778
Fair Value:
U.S. Government securities	$	17,867	$	48,812	$	—	$	—	$	66,679
Residential mortgage-backed securities — nonagency		—		—		316		98,916		99,232
Residential mortgage-backed securities — agency		4,781		57,518		121,667		359,004		542,970
Corporate securities		38,934		55,339		31,804		712		126,789
Total debt securitiesavailable-for-sale	$	61,582	$	161,669	$	153,787	$	458,632	$	835,670

Debt SecuritiesHeld-to-Maturity	Distribution of Maturities (1)
June 30, 2018	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Asset-backed securities	$	—	$	—	$	7,742	$	9,000	$	16,742
Corporate securities		—		—		—		—		—
Total debt securitiesheld-to-maturity	$	—	$	—	$	7,742	$	9,000	$	16,742
Fair Value:
Asset-backed securities	$	—	$	—	$	7,773	$	9,044	$	16,817
Corporate securities		—		—		—		—		—
Total debt securitiesheld-to-maturity	$	—	$	—	$	7,773	$	9,044	$	16,817

(1) Actual cash flows may differ from contractual maturities as borrowers may prepay obligations without prepayment penalties.

14

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables provide information regarding debt securities with unrealized losses(dollars in thousands):

	Less than 12 Months				12 Months or More				Total
Debt SecuritiesAvailable-for-Sale	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2018
U.S. Government securities	$	41,350	$	634	$	25,329	$	389	$	66,679	$	1,023
Residential mortgage-backed securities — nonagency		1,924		10		4,474		88		6,398		98
Residential mortgage-backed securities — agency		322,707		7,573		215,575		7,508		538,282		15,081
Corporate securities		85,683		698		—		—		85,683		698
Total temporarily impaired securities	$	451,664	$	8,915	$	245,378	$	7,985	$	697,042	$	16,900
December 31, 2017
U.S. Government securities	$	46,625	$	364	$	20,436	$	280	$	67,061	$	644
Residential mortgage-backed securities — nonagency		1,403		3		6,269		109		7,672		112
Residential mortgage-backed securities — agency		312,617		2,548		210,862		4,767		523,479		7,315
Corporate securities		32,495		77		—		—		32,495		77
Total temporarily impaired securities	$	393,140	$	2,992	$	237,567	$	5,156	$	630,707	$	8,148

Less than 12 Months

12 Months or More

Total

Debt SecuritiesHeld-to-Maturity

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

June 30, 2018

Asset-backed securities

$

—

$

—

$

—

$

—

$

—

$

—

Total temporarily impaired securities

$

—

$

—

$

—

$

—

$

—

$

—

At June 30, 2018, the Company held 155 debt securities that were in an unrealized loss position. Market changes in interest rates and credit spreads may result in temporary unrealized losses as market prices of securities fluctuate. The Company reviews its investment portfolio on a quarterly basis for indications of other than temporary impairment (“OTTI”). The severity and duration of impairment and the likelihood of potential recovery of impairment is considered along with the intent and ability to hold any impaired security to maturity or recovery of carrying value. More specifically, when analyzing the nonagency portfolio, the Company uses cash flow models that estimate cash flows on security-specific collateral and the transaction structure. Future expected credit losses are determined by using various assumptions, the most significant of which include current default rates, prepayment rates and loss severities. Credit information is available and modeled at the loan level underlying each security during the OTTI analysis; the Company also considers information such as loan to collateral values, FICO scores and geographic considerations, such as home price appreciation or depreciation. These inputs are updated quarterly or as changes occur to ensure that the most current credit and other assumptions are utilized in the analysis. If, based on the analysis, the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are discounted at the security’s initial effective interest rate to arrive at a present value amount. OTTI credit losses reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of these securities. At June 30, 2018, there was no intent to sell any of the securities in an unrealized loss position, and it is more likely than not the Company will not be required to sell these securities. Furthermore, the present value of cash flows expected to be collected exceeded the Company’s amortized cost basis of the debt securities; therefore, these securities are not deemed to be other than temporarily impaired.

During the second quarter of 2018, the Company transferred a $10.1 million corporate security fromheld-to-maturity toavailable-for-sale. The issuing corporation is the target of a merger which caused the Company to change its assessment of the issuing corporation’s creditworthiness. Subsequently, the Company sold a $4.0 million portion of this debt security’s par value.

15

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sales and calls of securities are summarized in the following table for the periods presented(dollars in thousands):

	Three Months Ended					Six Months Ended
	June 30					June 30
Debt SecuritiesAvailable-For-Sale	2018		2017			2018		2017
Proceeds from sales and calls	$	4,275	$	21,942		$	4,275	$	64,778
Gross gains on sales and calls	$	250	$	89		$	250	$	118
Gross losses on sales and calls		—		(76	)		—		(93	)
Net realized gains on sales and calls	$	250	$	13		$	250	$	25

The composition of debt securities reflects the strategy of management to maintain an appropriate level of liquidity while providing a relatively stable source of revenue. The securities portfolio may at times be used to mitigate interest rate risk associated with other areas of the balance sheet while also providing a means for the investment of available funds, providing liquidity and supplying investment securities that are required to be pledged as collateral against specific deposits and for other purposes. Debt securities with an aggregate fair value of $103.9 million and $116.1 million at June 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and repurchase agreements.

NOTE 5: LOANS

Loans, in total, are summarized as follows(dollars in thousands):

Total Loans	June 30, 2018			December 31, 2017
Construction, land & land development	$	482,134		$	451,993
Other commercial real estate		1,216,306			1,255,002
Total commercial real estate		1,698,440			1,706,995
Residential real estate		327,790			333,086
Owner-occupied real estate		370,572			399,370
Commercial, financial & agricultural		1,105,004			973,440
Leases		36,863			52,396
Consumer		66,604			66,906
Total loans		3,605,273			3,532,193
Allowance for loan and lease losses		(33,335	)		(28,750	)
Total loans, net	$	3,571,938		$	3,503,443

16

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organic loans, net of related discounts, are summarized as follows(dollars in thousands):

Organic Loans	June 30, 2018			December 31, 2017
Construction, land & land development	$	454,625		$	412,540
Other commercial real estate		947,704			949,594
Total commercial real estate		1,402,329			1,362,134
Residential real estate		222,886			196,225
Owner-occupied real estate		270,053			260,273
Commercial, financial & agricultural		666,572			430,205
Leases		36,863			52,396
Consumer		65,019			64,610
Total organic loans (1)		2,663,722			2,365,843
Allowance for loan and lease losses		(26,366	)		(24,039	)
Total organic loans, net	$	2,637,356		$	2,341,804

(1) Includes net deferred loan fees that totaled approximately $10.3 million and $9.3 million at June 30, 2018 and December 31, 2017, respectively.

Purchasednon-credit impaired loans (“PNCI loans”), net of related discounts, are summarized as follows(dollars in thousands):

PurchasedNon-Credit Impaired Loans	June 30, 2018			December 31, 2017
Construction, land & land development	$	14,282		$	25,908
Other commercial real estate		194,995			218,660
Total commercial real estate		209,277			244,568
Residential real estate		72,817			96,529
Owner-occupied real estate		82,500			118,294
Commercial, financial & agricultural		426,992			529,184
Consumer		1,503			2,161
Total purchasednon-credit impaired loans (1)		793,089			990,736
Allowance for loan and lease losses		(2,981	)		(995	)
Total purchasednon-credit impaired loans, net	$	790,108		$	989,741

(1) Includes net discounts that totaled approximately $7.3 million and $12.7 million at June 30, 2018 and December 31, 2017, respectively.

Purchased credit impaired loans (“PCI loans”), net of related discounts, are summarized as follows (dollars in thousands):

Purchased Credit Impaired Loans	June 30, 2018			December 31, 2017
Construction, land & land development	$	13,227		$	13,545
Other commercial real estate		73,607			86,748
Total commercial real estate		86,834			100,293
Residential real estate		32,087			40,332
Owner-occupied real estate		18,019			20,803
Commercial, financial & agricultural		11,440			14,051
Consumer		82			135
Total purchased credit impaired loans		148,462			175,614
Allowance for loan and lease losses		(3,988	)		(3,716	)
Total purchased credit impaired loans, net	$	144,474		$	171,898

17

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the carrying value of purchased credit impaired loans are presented in the following table for the periods presented(dollars in thousands):

	Three Months Ended June 30						Six Months Ended June 30
Purchased Credit Impaired Loans	2018			2017			2018			2017
Balance, beginning of period	$	153,338		$	149,560		$	171,898		$	155,573
Accretion of fair value discounts		6,595			9,228			12,541			16,905
Reductions in principal balances resulting from repayments, write-offs and foreclosures		(15,657	)		(27,790	)		(39,693	)		(41,953	)
Change in the allowance for loan and lease losses on purchased credit impaired loans		198			(161	)		(272	)		312
Balance, end of period	$	144,474		$	130,837		$	144,474		$	130,837

Purchased credit impaired loans are initially recorded at fair value at the acquisition date. The Companyre-estimates expected cash flows on purchased credit impaired loans on a quarterly basis. Subsequent decreases in the amount of cash expected to be collected from the borrower results in a provision for loan and lease losses and an increase in the allowance for loan and lease losses. Subsequent increases in the amount of cash expected to be collected from the borrower results first in the reversal of any previously-recorded provision for loan and lease losses and related allowance for loan and lease losses, and then as a prospective increase in the accretable discount on the purchased credit impaired loans. The accretable discount is accreted into interest income over the estimated life of the related loan on a level yield basis.

Changes in the value of the accretable discount on purchased credit impaired loans are presented in the following table for the periods presented(dollars in thousands):

	Three Months Ended June 30						Six Months Ended June 30
Changes in Accretable Discount	2018			2017			2018			2017
Balance, beginning of period	$	57,854		$	63,066		$	57,927		$	69,301
Accretion		(6,595	)		(9,228	)		(12,541	)		(16,905	)
Transfers to accretable discounts and exit events, net		2,279			5,970			8,152			7,412
Balance, end of period	$	53,538		$	59,808		$	53,538		$	59,808

The change in the accretable discount is a result of the Company’s review andre-estimation of loss assumptions and expected cash flows on purchased credit impaired loans.

At June 30, 2018 and December 31, 2017, loans with a carrying value of $3.1 billion were pledged for lines of credit. At June 30, 2018, consumer mortgage loans secured by residential real estate properties totaling $104,000 were in formal foreclosure proceedings.

18

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6: ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)

The following tables summarize the Company’s allowance for loan and lease losses for the periods indicated(dollars in thousands):

	Three Months Ended June 30
	2018												2017
	Organic Loans			Purchased Non-Credit Impaired Loans			Purchased Credit Impaired Loans			Total			Organic Loans			Purchased Non-Credit Impaired Loans			Purchased Credit Impaired Loans			Total
Balance, beginning of period	$	24,882		$	2,249		$	4,186		$	31,317		$	21,885		$	491		$	4,600		$	26,976
Charge-offs		(171	)		(285	)		(35	)		(491	)		(536	)		(197	)		(214	)		(947	)
Recoveries		70			46			—			116			113			1			—			114
Net (charge-offs) recoveries		(101	)		(239	)		(35	)		(375	)		(423	)		(196	)		(214	)		(833	)
Provision for loan and lease losses		1,585			971			(163	)		2,393			1,098			372			375			1,845
Balance, end of period	$	26,366		$	2,981		$	3,988		$	33,335		$	22,560		$	667		$	4,761		$	27,988
	Six Months Ended June 30
	2018												2017
	Organic Loans			Purchased Non-Credit Impaired Loans			Purchased Credit Impaired Loans			Total			Organic Loans			Purchased Non-Credit Impaired Loans			Purchased Credit Impaired Loans			Total
Balance, beginning of period	$	24,039		$	995		$	3,716		$	28,750		$	21,086		$	439		$	5,073		$	26,598
Charge-offs		(835	)		(325	)		(123	)		(1,283	)		(1,076	)		(245	)		(328	)		(1,649	)
Recoveries		203			64			—			267			190			2			—			192
Net (charge-offs) recoveries		(632	)		(261	)		(123	)		(1,016	)		(886	)		(243	)		(328	)		(1,457	)
Provision for loan and lease losses		2,959			2,247			395			5,601			2,360			471			16			2,847
Balance, end of period	$	26,366		$	2,981		$	3,988		$	33,335		$	22,560		$	667		$	4,761		$	27,988

19

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity in the allowance for loan and lease losses on organic loans is detailed as follows by portfolio segment for the periods indicated(dollars in thousands):

Organic Loans	Commercial Real Estate			Residential Real Estate			Owner- Occupied Real Estate			Commercial, Financial & Agricultural			Leases			Consumer			Total
Three Months Ended June 30, 2018
Beginning balance	$	11,932		$	2,894		$	2,281		$	6,230		$	494		$	1,051		$	24,882
Charge-offs		(9	)		(64	)		—			(46	)		(17	)		(35	)		(171	)
Recoveries		20			7			—			25			4			14			70
Provision		211			(425	)		673			1,229			(70	)		(33	)		1,585
Ending balance	$	12,154		$	2,412		$	2,954		$	7,438		$	411		$	997		$	26,366
Six Months Ended June 30, 2018
Beginning balance	$	13,037		$	2,809		$	2,075		$	4,535		$	629		$	954		$	24,039
Charge-offs		(277	)		(212	)		—			(159	)		(80	)		(107	)		(835	)
Recoveries		20			10			—			106			33			34			203
Provision		(626	)		(195	)		879			2,956			(171	)		116			2,959
Ending balance	$	12,154		$	2,412		$	2,954		$	7,438		$	411		$	997		$	26,366
Three Months Ended June 30, 2017
Beginning balance	$	12,112		$	1,666		$	2,108		$	4,514		$	710		$	775		$	21,885
Charge-offs		(187	)		(25	)		—			(82	)		(135	)		(107	)		(536	)
Recoveries		—			3			—			22			68			20			113
Provision		1,412			197			(72	)		(791	)		182			170			1,098
Ending balance	$	13,337		$	1,841		$	2,036		$	3,663		$	825		$	858		$	22,560
Six Months Ended June 30, 2017
Beginning balance	$	11,767		$	1,786		$	2,239		$	4,093		$	655		$	546		$	21,086
Charge-offs		(187	)		(48	)		—			(142	)		(499	)		(200	)		(1,076	)
Recoveries		—			6			—			51			109			24			190
Provision		1,757			97			(203	)		(339	)		560			488			2,360
Ending balance	$	13,337		$	1,841		$	2,036		$	3,663		$	825		$	858		$	22,560

20

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the balance of organic loans and the allowance for loan and lease losses based on the method of determining the allowance at the dates indicated(dollars in thousands):

	Allowance for Loan and Lease Losses						Loans
Organic Loans	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Allowance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Loans
June 30, 2018
Commercial real estate	$	—	$	12,154	$	12,154	$	3,334	$	1,398,995	$	1,402,329
Residential real estate		—		2,412		2,412		1,350		221,536		222,886
Owner-occupied real estate		—		2,954		2,954		1,456		268,597		270,053
Commercial, financial & agricultural		—		7,438		7,438		5,039		661,533		666,572
Leases		—		411		411		—		36,863		36,863
Consumer		—		997		997		—		65,019		65,019
Total organic loans	$	—	$	26,366	$	26,366	$	11,179	$	2,652,543	$	2,663,722
December 31, 2017
Commercial real estate	$	—	$	13,037	$	13,037	$	3,822	$	1,358,312	$	1,362,134
Residential real estate		—		2,809		2,809		49		196,176		196,225
Owner-occupied real estate		65		2,010		2,075		808		259,465		260,273
Commercial, financial & agricultural		34		4,501		4,535		280		429,925		430,205
Leases		—		629		629		—		52,396		52,396
Consumer		—		954		954		—		64,610		64,610
Total organic loans	$	99	$	23,940	$	24,039	$	4,959	$	2,360,884	$	2,365,843

21

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity in the allowance for loan and lease losses on purchasednon-credit impaired loans is detailed as follows by portfolio segment for the periods indicated(dollars in thousands):

PurchasedNon-Credit Impaired Loans	Commercial Real Estate			Residential Real Estate			Owner- Occupied Real Estate			Commercial, Financial & Agricultural			Consumer			Total
Three Months Ended June 30, 2018
Beginning balance	$	336		$	524		$	316		$	1,067		$	6		$	2,249
Charge-offs		—			(36	)		(249	)		—			—			(285	)
Recoveries		2			2			21			20			1			46
Provision		(46	)		(156	)		353			823			(3	)		971
Ending balance	$	292		$	334		$	441		$	1,910		$	4		$	2,981
Six Months Ended June 30, 2018
Beginning balance	$	230		$	664		$	88		$	8		$	5		$	995
Charge-offs		—			(36	)		(249	)		(37	)		(3	)		(325	)
Recoveries		7			10			21			24			2			64
Provision		55			(304	)		581			1,915			—			2,247
Ending balance	$	292		$	334		$	441		$	1,910		$	4		$	2,981
Three Months Ended June 30, 2017
Beginning balance	$	239		$	175		$	76		$	—		$	1		$	491
Charge-offs		—			—			(80	)		(115	)		(2	)		(197	)
Recoveries		—			—			—			—			1			1
Provision		(94	)		167			156			141			2			372
Ending balance	$	145		$	342		$	152		$	26		$	2		$	667
Six Months Ended June 30, 2017
Beginning balance	$	88		$	72		$	44		$	235		$	—		$	439
Charge-offs		—			—			(80	)		(160	)		(5	)		(245	)
Recoveries		—			—			—			—			2			2
Provision		57			270			188			(49	)		5			471
Ending balance	$	145		$	342		$	152		$	26		$	2		$	667

22

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the balance of purchasednon-credit impaired loans and the allowance for loan and lease losses based on the method of determining the allowance at the dates indicated(dollars in thousands):

	Allowance for Loan and Lease Losses						Loans
PurchasedNon-Credit Impaired Loans	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Allowance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Loans
June 30, 2018
Commercial real estate	$	—	$	292	$	292	$	—	$	209,277	$	209,277
Residential real estate		—		334		334		15		72,802		72,817
Owner-occupied real estate		28		413		441		848		81,652		82,500
Commercial, financial & agricultural		782		1,128		1,910		55,166		371,826		426,992
Consumer		—		4		4		—		1,503		1,503
Total purchasednon-credit impaired loans	$	810	$	2,171	$	2,981	$	56,029	$	737,060	$	793,089
December 31, 2017
Commercial real estate	$	—	$	230	$	230	$	—	$	244,568	$	244,568
Residential real estate		—		664		664		19		96,510		96,529
Owner-occupied real estate		—		88		88		3,264		115,030		118,294
Commercial, financial & agricultural		8		—		8		1,491		527,693		529,184
Consumer		—		5		5		—		2,161		2,161
Total purchasednon-credit impaired loans	$	8	$	987	$	995	$	4,774	$	985,962	$	990,736

23

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity in the allowance for loan and lease losses on purchased credit impaired loans is detailed as follows by portfolio segment for the periods indicated(dollars in thousands):

Purchased Credit Impaired Loans	Commercial Real Estate			Residential Real Estate			Owner- Occupied Real Estate			Commercial, Financial & Agricultural			Consumer			Total
Three Months Ended June 30, 2018
Beginning balance	$	2,304		$	830		$	825		$	217		$	10		$	4,186
Charge-offs		(1	)		(28	)		—			—			(6	)		(35	)
Recoveries		—			—			—			—			—			—
Provision		(131	)		(16	)		(9	)		(3	)		(4	)		(163	)
Ending balance	$	2,172		$	786		$	816		$	214		$	—		$	3,988
Six Months Ended June 30, 2018
Beginning balance	$	1,706		$	1,242		$	718		$	42		$	8		$	3,716
Charge-offs		(34	)		(73	)		(10	)		—			(6	)		(123	)
Recoveries		—			—			—			—			—			—
Provision		500			(383	)		108			172			(2	)		395
Ending balance	$	2,172		$	786		$	816		$	214		$	—		$	3,988
Three Months Ended June 30, 2017
Beginning balance	$	2,073		$	959		$	1,531		$	37		$	—		$	4,600
Charge-offs		(160	)		(38	)		—			(15	)		(1	)		(214	)
Recoveries		—			—			—			—			—			—
Provision		218			47			80			15			15			375
Ending balance	$	2,131		$	968		$	1,611		$	37		$	14		$	4,761
Six Months Ended June 30, 2017
Beginning balance	$	2,183		$	1,196		$	1,655		$	38		$	1		$	5,073
Charge-offs		(233	)		(42	)		(36	)		(16	)		(1	)		(328	)
Recoveries		—			—			—			—			—			—
Provision		181			(186	)		(8	)		15			14			16
Ending balance	$	2,131		$	968		$	1,611		$	37		$	14		$	4,761

24

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the balance of purchased credit impaired loans and the allowance for loan and lease losses based on the method of determining the allowance at the dates indicated(dollars in thousands):

	Allowance for Loan and Lease Losses						Loans
Purchased Credit Impaired Loans	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Allowance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Loans
June 30, 2018
Commercial real estate	$	996	$	1,176	$	2,172	$	74,876	$	11,958	$	86,834
Residential real estate		68		718		786		2,262		29,825		32,087
Owner-occupied real estate		695		121		816		7,646		10,373		18,019
Commercial, financial & agricultural		8		206		214		548		10,892		11,440
Consumer		—		—		—		—		82		82
Total purchased credit impaired loans	$	1,767	$	2,221	$	3,988	$	85,332	$	63,130	$	148,462
December 31, 2017
Commercial real estate	$	1,052	$	654	$	1,706	$	79,085	$	21,208	$	100,293
Residential real estate		128		1,114		1,242		3,029		37,303		40,332
Owner-occupied real estate		586		132		718		9,483		11,320		20,803
Commercial, financial & agricultural		32		10		42		2,318		11,733		14,051
Consumer		—		8		8		—		135		135
Total purchased credit impaired loans	$	1,798	$	1,918	$	3,716	$	93,915	$	81,699	$	175,614

25

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impaired loans, segregated by class of loans, are presented in the following table(dollars in thousands):

	June 30, 2018						December 31, 2017
Impaired Loans (1)	Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Construction, land & land development	$	75	$	71	$	—	$	82	$	79	$	—
Other commercial real estate		3,291		3,289		—		4,617		3,822		—
Total commercial real estate		3,366		3,360		—		4,699		3,901		—
Residential real estate		2,491		2,340		—		453		456		—
Owner-occupied real estate		1,640		1,600		—		4,172		4,015		—
Commercial, financial & agricultural		61,145		58,974		—		2,739		1,882		—
Consumer		39		33		—		51		40		—
Subtotal		68,681		66,307		—		12,114		10,294		—
With related allowance recorded:
Construction, land & land development		—		—		—		113		112		56
Other commercial real estate		—		—		—		—		—		—
Total commercial real estate		—		—		—		113		112		56
Residential real estate		789		741		371		1,452		1,399		699
Owner-occupied real estate		966		930		69		350		335		125
Commercial, financial & agricultural		2,949		2,858		1,465		872		821		318
Consumer		80		76		38		83		81		40
Subtotal		4,784		4,605		1,943		2,870		2,748		1,238
Total impaired loans	$	73,465	$	70,912	$	1,943	$	14,984	$	13,042	$	1,238

(1) Includes loans with SBA guaranteed balances of $3.6 million and $5.7 million at June 30, 2018 and December 31, 2017, respectively.

26

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information related to the average recorded investment and interest income recognized on impaired loans, for the periods presented(dollars in thousands):

	June 30, 2018				June 30, 2017
	Average Recorded Investment (1)		Interest Income Recognized (2)		Average Recorded Investment (1)		Interest Income Recognized (2)
Impaired Loans
Three Months Ended
Construction, land & land development	$	75	$	—	$	3,458	$	—
Other commercial real estate		3,312		8		51		—
Total commercial real estate		3,387		8		3,509		—
Residential real estate		3,873		—		1,018		—
Owner-occupied real estate		2,525		—		2,788		—
Commercial, financial & agricultural		57,434		661		2,682		1
Consumer		117		—		72		—
Total impaired loans	$	67,336	$	669	$	10,069	$	1
Six Months Ended
Construction, land & land development	$	132	$	—	$	4,297	$	—
Other commercial real estate		3,359		16		53		—
Total commercial real estate		3,491		16		4,350		—
Residential real estate		4,099		—		1,031		—
Owner-occupied real estate		4,099		—		2,824		—
Commercial, financial & agricultural		41,624		1,027		2,736		1
Consumer		131		—		77		—
Total impaired loans	$	53,444	$	1,043	$	11,018	$	1

(1) The average recorded investment for troubled debt restructurings was $6.9 million and $7.0 million for the three and six months ended June 30, 2018, respectively, and was $3.2 million and $4.1 million for the three and six months ended June 30, 2017, respectively.

(2) The interest income recognized on troubled debt restructurings was $67,000 and $131,000 for the three and six months ended June 30, 2018, respectively, and was $0 for both the three and six months ended June 30, 2017.

The following table presents the recorded investment in nonaccrual loans by loan class at the dates indicated(dollars in thousands):

Nonaccrual Loans	June 30, 2018		December 31, 2017
Construction, land & land development	$	71	$	191
Other commercial real estate		2,799		3,257
Total commercial real estate		2,870		3,448
Residential real estate		3,081		1,855
Owner-occupied real estate		2,530		4,350
Commercial, financial & agricultural		22,114		2,703
Consumer		109		121
Total nonaccrual loans	$	30,704	$	12,477

27

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents an analysis of past due organic loans, by class of loans, at the dates indicated(dollars in thousands):

Organic Loans	30 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
June 30, 2018
Construction, land & land development	$	138	$	45	$	183	$	454,442	$	454,625	$	—
Other commercial real estate		12		—		12		947,692		947,704		—
Total commercial real estate		150		45		195		1,402,134		1,402,329		—
Residential real estate		1,114		269		1,383		221,503		222,886		—
Owner-occupied real estate		1,591		242		1,833		268,220		270,053		—
Commercial, financial & agricultural		193		471		664		665,908		666,572		—
Leases		—		—		—		36,863		36,863		—
Consumer		117		9		126		64,893		65,019		—
Total organic loans	$	3,165	$	1,036	$	4,201	$	2,659,521	$	2,663,722	$	—
December 31, 2017
Construction, land & land development	$	487	$	45	$	532	$	412,008	$	412,540	$	—
Other commercial real estate		—		—		—		949,594		949,594		—
Total commercial real estate		487		45		532		1,361,602		1,362,134		—
Residential real estate		1,868		92		1,960		194,265		196,225		—
Owner-occupied real estate		474		713		1,187		259,086		260,273		—
Commercial, financial & agricultural		865		122		987		429,218		430,205		—
Leases		—		—		—		52,396		52,396		—
Consumer		67		28		95		64,515		64,610		—
Total organic loans	$	3,761	$	1,000	$	4,761	$	2,361,082	$	2,365,843	$	—

28

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents an analysis of past due purchasednon-credit impaired loans, by class of loans, at the dates indicated(dollars in thousands):

PurchasedNon-Credit Impaired Loans	30 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
June 30, 2018
Construction, land & land development	$	—	$	—	$	—	$	14,282	$	14,282	$	—
Other commercial real estate		—		—		—		194,995		194,995		—
Total commercial real estate		—		—		—		209,277		209,277		—
Residential real estate		1,449		195		1,644		71,173		72,817		—
Owner-occupied real estate		46		144		190		82,310		82,500		—
Commercial, financial & agricultural		71		930		1,001		425,991		426,992		—
Consumer		29		8		37		1,466		1,503		—
Total purchasednon-credit impaired loans	$	1,595	$	1,277	$	2,872	$	790,217	$	793,089	$	—
December 31, 2017
Construction, land & land development	$	35	$	—	$	35	$	25,873	$	25,908	$	—
Other commercial real estate		—		45		45		218,615		218,660		—
Total commercial real estate		35		45		80		244,488		244,568		—
Residential real estate		537		126		663		95,866		96,529		—
Owner-occupied real estate		283		1,590		1,873		116,421		118,294		—
Commercial, financial & agricultural		640		628		1,268		527,916		529,184		—
Consumer		28		13		41		2,120		2,161		—
Total purchasednon-credit impaired loans	$	1,523	$	2,402	$	3,925	$	986,811	$	990,736	$	—

29

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents an analysis of past due purchased credit impaired loans, by class of loans, at the dates indicated(dollars in thousands):

Purchased Credit Impaired Loans	30 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans
June 30, 2018
Construction, land & land development	$	8	$	1,798	$	1,806	$	11,421	$	13,227
Other commercial real estate		298		2,364		2,662		70,945		73,607
Total commercial real estate		306		4,162		4,468		82,366		86,834
Residential real estate		962		1,206		2,168		29,919		32,087
Owner-occupied real estate		187		598		785		17,234		18,019
Commercial, financial & agricultural		—		1,414		1,414		10,026		11,440
Consumer		—		—		—		82		82
Total purchased credit impaired loans	$	1,455	$	7,380	$	8,835	$	139,627	$	148,462
December 31, 2017
Construction, land & land development	$	1	$	1,881	$	1,882	$	11,663	$	13,545
Other commercial real estate		363		3,303		3,666		83,082		86,748
Total commercial real estate		364		5,184		5,548		94,745		100,293
Residential real estate		1,519		1,876		3,395		36,937		40,332
Owner-occupied real estate		85		786		871		19,932		20,803
Commercial, financial & agricultural		201		224		425		13,626		14,051
Consumer		—		15		15		120		135
Total purchased credit impaired loans	$	2,169	$	8,085	$	10,254	$	165,360	$	175,614

For each period indicated, a portion of the Company’s purchased credit impaired loans were past due, including many that were 90 days or more past due; however, such delinquencies were included in the Company’s performance expectations in determining the fair values of purchased credit impaired loans at each acquisition and at subsequent valuation dates. All purchased credit impaired loan cash flows and the timing of such cash flows continue to be estimable and probable of collection and thus accretion income continues to be recognized on these assets. As such, the referenced purchased credit impaired loans are not considered nonperforming assets.

Asset Quality Grades:

The Company assigns loans into risk categories based on relevant information about the ability of borrowers to pay their debts, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. A loan’s risk grade is assigned at inception based upon the strength of the repayment sources and reassessed periodically throughout the year. Loans over certain dollar thresholds identified as having weaknesses are subject to more frequent review. In addition, the Company’s internal loan review department provides an ongoing, comprehensive and independent assessment of credit risk within the Company.

Loans are graded on a scale of 1 to 9. Pass grades are from 1 to 4. Descriptions of the general characteristics of grades 5 and above are as follows:

Watch (Grade 5) — Loans graded Watch are pass credits that have not met performance expectations or that have higher inherent risk characteristics warranting continued supervision and attention.

OAEM (Grade 6) — Loans graded OAEM (other assets especially mentioned) have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. OAEM loans are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification.

Substandard (Grade 7) — Loans classified as substandard are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Doubtful (Grade 8) — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss (Grade 9) — Loans classified as loss are considered uncollectible and have little value to the Company and their continuance as an active relationship is not warranted.

The following table presents the risk grades of the organic loan portfolio, by class of loans, at the dates indicated(dollars in thousands):

Organic Loans	Pass		Watch		OAEM		Substandard		Doubtful		Total
June 30, 2018
Construction, land & land development	$	418,587	$	30,238	$	5,755	$	45	$	—	$	454,625
Other commercial real estate		904,916		37,816		2,161		2,811		—		947,704
Total commercial real estate		1,323,503		68,054		7,916		2,856		—		1,402,329
Residential real estate		215,547		4,180		311		2,848		—		222,886
Owner-occupied real estate		238,941		23,746		2,214		5,152		—		270,053
Commercial, financial & agricultural		617,246		42,647		262		6,417		—		666,572
Leases		34,481		2,382		—		—		—		36,863
Consumer		64,828		49		61		78		3		65,019
Total organic loans	$	2,494,546	$	141,058	$	10,764	$	17,351	$	3	$	2,663,722
December 31, 2017
Construction, land & land development	$	371,358	$	38,939	$	2,086	$	157	$	—	$	412,540
Other commercial real estate		920,168		22,229		3,365		3,832		—		949,594
Total commercial real estate		1,291,526		61,168		5,451		3,989		—		1,362,134
Residential real estate		188,918		3,668		1,488		2,151		—		196,225
Owner-occupied real estate		240,987		16,891		1,067		1,328		—		260,273
Commercial, financial & agricultural		421,114		7,870		123		1,098		—		430,205
Leases		47,908		4,488		—		—		—		52,396
Consumer		64,361		58		81		110		—		64,610
Total organic loans	$	2,254,814	$	94,143	$	8,210	$	8,676	$	—	$	2,365,843

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STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the risk grades of the purchasednon-credit impaired loan portfolio, by class of loans, at the dates indicated(dollars in thousands):

PurchasedNon-Credit Impaired Loans	Pass		Watch		OAEM		Substandard		Doubtful		Total
June 30, 2018
Construction, land & land development	$	14,210	$	44	$	—	$	28	$	—	$	14,282
Other commercial real estate		155,344		35,540		3,584		527		—		194,995
Total commercial real estate		169,554		35,584		3,584		555		—		209,277
Residential real estate		69,339		1,308		294		1,802		74		72,817
Owner-occupied real estate		72,994		6,148		—		3,358		—		82,500
Commercial, financial & agricultural		321,831		49,628		15,760		39,773		—		426,992
Consumer		1,432		12		—		39		20		1,503
Total purchasednon-credit impaired loans	$	635,150	$	92,680	$	19,638	$	45,527	$	94	$	793,089
December 31, 2017
Construction, land & land development	$	25,486	$	385	$	—	$	37	$	—	$	25,908
Other commercial real estate		214,916		1,341		1,825		578		—		218,660
Total commercial real estate		240,402		1,726		1,825		615		—		244,568
Residential real estate		92,119		2,216		791		1,369		34		96,529
Owner-occupied real estate		110,034		3,227		1,280		3,753		—		118,294
Commercial, financial & agricultural		452,822		59,306		5,223		11,833		—		529,184
Consumer		2,091		3		—		37		30		2,161
Total purchasednon-credit impaired loans	$	897,468	$	66,478	$	9,119	$	17,607	$	64	$	990,736

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STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Classifications on purchased credit impaired loans are based upon the borrower’s ability to pay the current unpaid principal balance without regard to the net carrying value of the loan on the Company’s balance sheet. Because the values shown in the table below are based on each loan’s estimated cash flows, any expected losses should be covered by a combination of the specific reserves established in the allowance for loan and lease losses on purchased credit impaired loans plus the discounts to the unpaid principal balances reflected in the recorded investment of each loan.

The following table presents the risk grades of the purchased credit impaired loan portfolio, by class of loans(dollars in thousands):

Purchased Credit Impaired Loans	Pass		Watch		OAEM		Substandard		Doubtful		Total
June 30, 2018
Construction, land & land development	$	6,466	$	609	$	915	$	5,237	$	—	$	13,227
Other commercial real estate		46,059		15,756		1,273		10,519		—		73,607
Total commercial real estate		52,525		16,365		2,188		15,756		—		86,834
Residential real estate		17,187		4,522		1,274		9,036		68		32,087
Owner-occupied real estate		6,356		3,759		791		7,113		—		18,019
Commercial, financial & agricultural		513		121		—		10,806		—		11,440
Consumer		31		24		19		8		—		82
Total purchased credit impaired loans	$	76,612	$	24,791	$	4,272	$	42,719	$	68	$	148,462
December 31, 2017
Construction, land & land development	$	6,677	$	809	$	973	$	5,086	$	—	$	13,545
Other commercial real estate		63,210		11,998		2,361		9,179		—		86,748
Total commercial real estate		69,887		12,807		3,334		14,265		—		100,293
Residential real estate		21,706		6,419		1,590		10,504		113		40,332
Owner-occupied real estate		7,181		4,896		818		7,908		—		20,803
Commercial, financial & agricultural		2,094		211		323		11,423		—		14,051
Consumer		60		28		21		26		—		135
Total purchased credit impaired loans	$	100,928	$	24,361	$	6,086	$	44,126	$	113	$	175,614

Troubled Debt Restructurings (TDRs)

Total troubled debt restructurings (TDRs) were $6.9 million at June 30, 2018, with $28,000 in related allowance. At December 31, 2017, TDRs totaled $1.5 million with no related allowance. At June 30, 2018, there was one commitment to extend credit to a borrower with an existing troubled debt restructuring totaling $599,000. At December 31, 2017, there were no commitments to extend credit to borrowers with an existing troubled debt restructuring. Purchased credit impaired loans modified post-acquisition are not removed from their accounting pools and accounted for as TDRs, even if those loans would otherwise be deemed TDRs.

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STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides information on loans that were modified as TDRs during the periods presented(dollars in thousands):

	June 30, 2018						June 30, 2017
TDR Additions (1)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Six Months Ended
Construction, land & land development		—	$	—	$	—		—	$	—	$	—
Other commercial real estate		2		2,801		2,801		—		—		—
Total commercial real estate		2		2,801		2,801		—		—		—
Commercial & industrial		—		—		—		—		—		—
Owner-occupied real estate		—		—		—		—		—		—
Residential real estate		1		2,769		2,769		—		—		—
Consumer & Other		—		—		—		—		—		—
Total modifications		3	$	5,570	$	5,570		—	$	—	$	—

(1) Thepre-modification and post-modification recorded investment amount represents the recorded investment on the date of the loan modification. Since the modifications on these loans were either an interest rate concession or payment term extension, not principal reductions, thepre-modification and post-modification recorded investment amount is the same.

There were no loans modified as a TDR during the three months ended June 30, 2018 or 2017. During the six months ended June 30, 2018, there was one loan modified as a TDR which subsequently defaulted within twelve months of its modification date with a recorded investment of $848,000. During the six months ended June 30, 2017, there were no TDRs that subsequently defaulted within twelve months of their modification dates.

NOTE 7: SBA SERVICING RIGHTS

All sales of SBA loans, consisting of the guaranteed portion, are executed on a servicing retained basis. These loans, which are partially guaranteed by the SBA, are generally secured by business property such as real estate, inventory, equipment and accounts receivable. During the three and six months ended June 30, 2018, the Company sold SBA loans with unpaid principal balances totaling $9.8 million and $18.4 million, respectively, and recognized $1.0 million and $1.9 million in gains on the loan sales, respectively. During the three and six months ended June 30, 2017, the Company sold SBA loans with unpaid principal balances totaling $16.5 million and $25.0 million, respectively, and recognized $1.6 million and $2.5 million in gains on the loan sales, respectively. The Company retains the related loan servicing rights and receives servicing fees on the sold loans. Both the servicing fees and the gains on sales of loans are recorded in SBA income on the consolidated statements of income. SBA servicing fees totaled $462,000 and $938,000 for the three and six months ended June 30, 2018, respectively. SBA servicing fees totaled $407,000 and $840,000 for the three and six months ended June 30, 2017, respectively. At June 30, 2018 and December 31, 2017, the Company serviced SBA loans for others with unpaid principal balances totaling $184.8 million and $185.6 million, respectively.

The table below summarizes the activity in the SBA servicing rights asset for the periods presented(dollars in thousands):

	Three Months Ended June 30						Six Months Ended June 30
SBA Servicing Rights	2018			2017			2018			2017
Balance, beginning of period	$	4,003		$	3,547		$	4,069		$	3,477
Additions		213			391			413			597
Fair value adjustments		(227	)		(110	)		(493	)		(246	)
Balance, end of period	$	3,989		$	3,828		$	3,989		$	3,828

34

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the SBA servicing rights asset, key metrics, and the sensitivity of the fair value due to adverse changes in key economic assumptions at the periods presented are as follows(dollars in thousands):

SBA Servicing Rights	June 30, 2018			December 31, 2017
Fair value	$	3,989		$	4,069
Weighted average discount rate		12.7	%		12.9	%
Decline in fair value due to a 100 basis point adverse change	$	(130	)	$	(140	)
Decline in fair value due to a 200 basis point adverse change		(253	)		(272	)
Prepayment speed		11.0	%		9.1	%
Decline in fair value due to a 10% adverse change	$	(160	)	$	(141	)
Decline in fair value due to a 20% adverse change		(310	)		(275	)
Weighted average remaining life (years)		5.9			6.7

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in model inputs and/or assumptions generally cannot be extrapolated because the relationship of the change in input or assumption to the change in fair value may not be linear. In addition, the effect of an adverse variation in a particular input or assumption on the value of the SBA servicing rights is calculated without changing any other input or assumption. In reality, changes in one factor may magnify or counteract the effect of the change.

The risk inherent in the SBA servicing rights asset includes prepayments at different rates than anticipated or resolution of loans at dates not consistent with the estimated expected lives. These events would cause the value of the servicing asset to decline at a faster or slower rate than originally anticipated.

Information about the SBA loans serviced by the Company at and for the periods presented are as follows(dollars in thousands):

	June 30, 2018
SBA Loans Serviced	Unpaid Principal Balance		30 - 89 Days Past Due		90 Days or Greater Past Due		Net Charge-offs for the Six Months Ended June 30, 2018
Serviced for others	$	184,803	$	557	$	—	$	—
Held-for-sale		15,874		—		—		—
Held-for-investment		151,343		1,677		5,714		52
Total SBA loans serviced	$	352,020	$	2,234	$	5,714	$	52

	December 31, 2017
SBA Loans Serviced	Unpaid Principal Balance		30 - 89 Days Past Due		90 Days or Greater Past Due		Net Charge-offs for the Six Months Ended June 30, 2017
Serviced for others	$	185,557	$	1,555	$	—	$	—
Held-for-sale		10,420		—		—		—
Held-for-investment		153,810		2,508		6,627		—
Total SBA loans serviced	$	349,787	$	4,063	$	6,627	$	—

35

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8: DERIVATIVE INSTRUMENTS & HEDGING ACTIVITIES

Interest Rate Swaps and Caps

Risk Management Objective of Interest Rate Swaps and Caps

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedging relationship. The Company’s hedging strategies involving interest rate derivatives are classified as either Fair Value Hedges or Cash Flow Hedges, depending upon the rate characteristic of the hedged item.

Fair Value Hedge:As a result of interest rate fluctuations, fixed-rate assets and liabilities will appreciate or depreciate in fair value. When effectively hedged, this appreciation or depreciation will generally be offset by fluctuations in the fair value of the derivative instruments that are linked to the hedged assets and liabilities. This strategy is referred to as a fair value hedge.

Cash Flow Hedge: Cash flows related to floating-rate assets and liabilities will fluctuate with changes in an underlying rate index. When effectively hedged, the increases or decreases in cash flows related to the floating rate asset or liability will generally be offset by changes in cash flows of the derivative instrument designated as a hedge. This strategy is referred to as a cash flow hedge.

Credit and Collateral Risks for Interest Rate Swaps and Caps

The Company manages credit exposure on interest rate swap and cap transactions by entering into a bilateral credit support agreement with each counterparty. The credit support agreements require collateralization of exposures beyond specified minimum threshold amounts. The details of these agreements, including the minimum thresholds, vary by counterparty. Refer to Note 9, Balance Sheet Offsetting, for more information on collateral pledged and received under these agreements.

The Company’s agreements with its interest rate swap and cap counterparties contain a provision where if either party defaults on any of its indebtedness, then it could also be declared in default on its derivative obligations. The agreements with derivative counterparties also include provisions that if not met, could result in the Company being declared in default. If the Company were to be declared in default, the counterparty could terminate the derivative positions and the Company and the counterparty would be required to settle their obligations under the agreements. At June 30, 2018, the Company had no derivatives in a net liability position under these agreements.

Mortgage Derivatives

Risk Management Objective of Mortgage Lending Activities

The Company also maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. The risk management program includes the use of forward contracts and other derivatives that are recorded in the financial statements at fair value and are used to offset changes in value of the mortgage inventory due to changes in market interest rates. As a normal part of our operations, we enter into derivative contracts to economically hedge risks associated with overall price risk related to interest rate lock commitments (“IRLCs”) and mortgage loansheld-for-sale for which the fair value option has been elected. Fair value changes occur as a result of interest rate movements as well as changes in the value of the associated servicing. Derivative instruments used include forward sale commitments and IRLCs.

Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of mortgage loans in order to economically hedge the effect of changes in interest rates resulting from interest rate lock commitments.

36

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit and Collateral Risks for Mortgage Lending Activities

The Company’s underlying risks are primarily related to interest rates and forward sales commitments entered into as part of its mortgage banking activities. Forward sales commitments are contracts for the delayed delivery or net settlement of an underlying instrument, such as a mortgage loan, in which the seller agrees to deliver on a specified future date, either a specified instrument at a specified price or yield or the net cash equivalent of an underlying instrument. These hedges are used to preserve the Company’s position relative to future sales of mortgage loans to third parties in an effort to minimize the volatility of the expected gain on sale from changes in interest rate and the associated pricing changes.

Derivative Fair Values

The table below presents the fair values of the Company’s derivatives at the dates presented(dollars in thousands):

	Derivative Assets (1)				Derivative Liabilities (1)
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Derivatives Designated as Hedging Instruments
Interest rate swaps and caps	$	4,230	$	2,011	$	—	$	116
Total	$	4,230	$	2,011	$	—	$	116
Derivatives Not Designated as Hedging Instruments
Mortgage derivatives	$	1,013	$	616	$	699	$	238
Total	$	1,013	$	616	$	699	$	238

(1) All derivative assets are located in “Other Assets” on the consolidated statements of financial condition and all derivative liabilities are located in “Other Liabilities” on the consolidated statements of financial condition.

The tables below presents the effect of fair value and cash flow hedge accounting on the consolidated statements of income for the periods presented(dollars in thousands):

	Three Months Ended June 30
	2018							2017
	Interest Income			Interest Expense		Noninterest Income		Interest Income		Interest Expense		Noninterest Income
Total amounts of income and expense line items presented in the consolidated statements of income	$	63,688		$	7,558	$	10,917	$	49,847	$	3,369	$	10,476
Gain (loss) on fair value hedging relationships in Subtopic815-20
Interest rate swaps:
Hedged items		(588	)		—		—		—		—		425
Derivatives designated as hedging instruments		668			—		—		—		—		(464	)
Gain (loss) on cash flow hedging relationships in Subtopic815-20
Interest rate caps:
Amount of loss reclassified from accumulated other comprehensive loss into income		—			—		—		—		430		—

37

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended
	June 30
	2018							2017
	Interest Income			Interest Expense		Noninterest Income		Interest Income		Interest Expense		Noninterest Income
Total amounts of income and expense line items presented in the consolidated statements of income	$	124,249		$	13,263	$	21,378	$	97,044	$	6,608	$	19,935
Gain (loss) on fair value hedging relationships in Subtopic815-20
Interest rate swaps:
Hedged items		(2,316	)		—		—		—		—		(83	)
Derivatives designated as hedging instruments		2,527			—		—		—		—		32
Gain (loss) on cash flow hedging relationships in Subtopic815-20
Interest rate caps:
Amount of loss reclassified from accumulated other comprehensive loss into income		—			91		—		—		834		—

Derivatives Designated as Hedging Instruments

Fair Value Hedges

The Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps, designated as fair value hedges, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments over the life of the agreements without the exchange of the underlying notional amount. The gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings. At June 30, 2018 and December 31, 2017, the Company had 72 and 84 interest rate swaps with an aggregate notional amount of $123.0 million and $141.9 million, designated as fair value hedges associated with the Company’s fixed rate loan program.

The tables below presents the effect of fair value hedges on the consolidated statements of financial condition for the periods presented(dollars in thousands):

Line Item in the Statement of Financial Condition in	Carrying Amount of the Hedged Asset				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset
Which the Hedged Item Is Included	June 30, 2018		December 31, 2017		June 30, 2018			December 31, 2017
Loans	$	119,559	$	139,391	$	(4,145	)	$	(1,892	)
Total	$	119,559	$	139,391	$	(4,145	)	$	(1,892	)

Cash Flow Hedges

The Company used interest rate caps as part of its interest rate risk management strategy. Interest rate caps, designated as cash flow hedges, involve the payment of a premium to a counterparty based on the notional size and cap strike rate. The Company’s former cash flow hedges were for the purpose of capping interest rates paid on deposits, which protected the Company in a rising rate environment. The caps were purchased during the first quarter of 2013 to hedge the variable cash outflows associated with these liabilities; they originally had a five-year life and notional value of $200.0 million. These caps expired in the first quarter of 2018. Amounts reported in AOCI related to derivatives were reclassified to interest expense as the interest rate cap premium was amortized over the life of the cap.

38

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the effect of the Company’s derivatives in cash flow hedging relationships for the periods presented(dollars in thousands):

			Three Months Ended					Six Months Ended
			June 30					June 30
Interest Rate Products	Location		2018		2017			2018			2017
Amount of (loss) gain recognized in AOCI on derivatives		OCI	$	—	$	21		$	(4	)	$	80
Amount of loss reclassified from AOCI into income		Interest expense		—		430			91			834
Amount of loss recognized in consolidated statements of comprehensive income			$	—	$	(409	)	$	(95	)	$	(754	)

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps

At June 30, 2018, the Company had no interest rate swaps that were not designated as fair value hedges associated with the Company’s fixed rate loan program and recognized no related income statement impact during the three and six months ended June 30, 2018. For the three and six months ended June 30, 2017, there were net losses of $40,000 and $56,000, respectively, recorded in the income statement for the interest rate swaps not designated as hedging instruments.

Mortgage Derivatives

Mortgage derivative fair value assets and liabilities are recorded in “Other Assets” and “Other Liabilities,” respectively, on the consolidated statements of financial condition. At June 30, 2018 and December 31, 2017, the fair value of mortgage derivative assets was $1.0 million and $616,000, respectively, and the fair value of mortgage derivative liabilities was $699,000 and $238,000, respectively. At June 30, 2018 and December 31, 2017, the Company had approximately $52.7 million and $36.3 million, respectively, of interest rate lock commitments, and $82.6 million and $55.8 million, respectively, of forward commitments for the future delivery of residential mortgage loans. The net gain related to interest rate lock commitments for the three months ended June 30, 2018 was $204,000, compared to a loss of $284,000 for the same period in 2017. The net gains related to interest rate lock commitments were $542,000 and $329,000 for the six months ended June 30, 2018 and 2017, respectively. The net loss for forward commitments related to these mortgage loans was $534,000 for the three months ended June 30, 2018, compared to a net gain of $303,000 for the same period in 2017. The net losses for forward commitments were $606,000 and $682,000 for the six months ended June 30, 2018 and 2017, respectively.

The table below presents the effect of the Company’s derivatives not designated as hedging instruments for the periods presented(dollars in thousands):

			Three Months Ended						Six Months Ended
			June 30						June 30
Interest Rate Products	Location		2018			2017			2018			2017
Amount of loss recognized in income on interest rate swaps		Noninterest income	$	—		$	(40	)	$	—		$	(56	)
Amount of gain (loss) recognized in income on interest rate lock commitments		Noninterest income		204			(284	)		542			329
Amount of (loss) gain recognized in income on forward commitments		Noninterest income		(534	)		303			(606	)		(682	)
Total (loss) gain recognized in income on derivatives not designated as hedging instruments			$	(330	)	$	(21	)	$	(64	)	$	(409	)

39

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9: BALANCE SHEET OFFSETTING AND REPURCHASE AGREEMENTS

Balance Sheet Offsetting

Certain financial instruments, including repurchase agreements and derivatives (interest rate swaps and caps), may be eligible for offset in the consolidated statements of financial condition and/or subject to master netting arrangements or similar agreements; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes.

The table below presents information about the Company’s financial instruments that are eligible for offset in the consolidated statements of financial condition at the dates presented(dollars in thousands):

	Gross Amounts Recognized		Gross Amounts Offset on the Statement of Financial Condition		Net Amounts Presented on the Statement of Financial Condition		Gross Amounts Not Offset on the Statement of Financial Condition						Net Amount
							Financial Instruments			Collateral Received/Posted (1)
June 30, 2018
Offsetting Assets
Interest rate swaps and caps	$	4,230	$	—	$	4,230	$	—		$	(4,230	)	$	—
Offsetting Liabilities
Interest rate swaps and caps	$	—	$	—	$	—	$	—		$	—		$	—
Repurchase agreements		13,525		—		13,525		—			(13,525	)		—
Total liabilities	$	13,525	$	—	$	13,525	$	—		$	(13,525	)	$	—
December 31, 2017
Offsetting Assets
Interest rate swaps and caps	$	2,011	$	—	$	2,011	$	(116	)	$	(1,895	)	$	—
Offsetting Liabilities
Interest rate swaps and caps	$	116	$	—	$	116	$	(116	)	$	—		$	—
Repurchase agreements		25,209		—		25,209		—			(25,209	)		—
Total liabilities	$	25,325	$	—	$	25,325	$	(116	)	$	(25,209	)	$	—

(1) The application of collateral cannot reduce the net amount below zero; therefore, excess collateral received/posted is not reflected in this table. All positions are fully collateralized.

Repurchase Agreements

The Company utilizes securities sold under repurchase agreements to facilitate the needs of its customers. Securities sold under repurchase agreements consist of balances in the transaction accounts of commercial customers swept nightly to an overnight investment account and are collateralized with investment securities having a market value no less than the balance borrowed. The investment securities pledged are subject to market fluctuations as well as prepayments of principal. The Company monitors the risk of the fair value of its pledged collateral falling below the balance of the repurchase agreements on a daily basis and may be required to provide additional collateral. Securities pledged as collateral are maintained with a safekeeping agent.

At June 30, 2018 and December 31, 2017, securities sold under repurchase agreements were $13.5 million and $25.2 million, respectively, all of which mature on an overnight and continuous basis. At both June 30, 2018 and December 31, 2017, investment securities pledged for the outstanding repurchase agreements consisted of U.S. government sponsored agency mortgage-backed securities.

40

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10: REGULATORY MATTERS

Regulatory Capital Requirements

Beginning on January 1, 2015, the Company and State Bank became subject to the provisions of the Basel III final rule that governs the regulatory capital calculation, including transitional, orphase-in, provisions. The methods for calculating the risk-based capital ratios will change as the provisions of the Basel III final rule related to the numerator (capital) and denominator (risk-weighted assets) are fully phased in on January 1, 2019. The ongoing methodological changes will result in differences in the reported capital ratios from one reporting period to the next that are independent of applicable changes in the capital base, asset composition,off-balance sheet exposures or risk profile.

Beginning on January 1, 2016, the Company and State Bank must maintain a capital conservation buffer to avoid restrictions on capital distributions or discretionary bonus payments. This buffer must consist solely of Common Equity Tier 1 Capital, but the buffer applies to all three measurements (Common Equity Tier 1, Tier 1 capital and total capital) in addition to the minimum risk-based capital requirements. The capital conservation buffer required for 2018 is common equity equal to 1.875% of risk-weighted assets and will increase by .625% per year until reaching 2.5% beginning January 1, 2019.

The minimum regulatory capital ratios and ratios to be considered well-capitalized under prompt corrective action provisions at both June 30, 2018 and December 31, 2017 are presented in the table below:

Capital Ratio Requirements	Minimum Requirement			Well-capitalized (1)
Common Equity Tier 1 (CET1) capital ratio		4.50	%		6.50	%
Tier 1 risk-based capital ratio		6.00	%		8.00	%
Total risk-based capital ratio		8.00	%		10.00	%
Tier 1 leverage ratio		4.00	%		5.00	%

(1) The prompt corrective action provisions are only applicable at the bank level.

At June 30, 2018 and December 31, 2017, the Company and State Bank exceeded all regulatory capital adequacy requirements to which they were subject.

The Company’s regulatory ratios at the dates indicated are presented in the table below(dollars in thousands):

	June 30, 2018							December 31, 2017
	Actual					Required		Actual					Required
Company	Amount		Ratio			Minimum Amount		Amount		Ratio			Minimum Amount
Common Equity Tier 1 (CET1) capital ratio	$	569,237		12.79	%	$	200,354	$	547,822		12.61	%	$	195,433
Tier 1 risk-based capital ratio		569,237		12.79	%		267,139		547,822		12.61	%		260,578
Total risk-based capital ratio		602,572		13.53	%		356,186		576,572		13.28	%		347,437
Tier 1 leverage ratio		569,237		11.75	%		193,773		547,822		11.24	%		194,924

41

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

State Bank’s regulatory ratios at the dates indicated are presented in the table below(dollars in thousands):

	June 30, 2018									December 31, 2017
	Actual					Required				Actual					Required
State Bank	Amount		Ratio			Minimum Amount		Well Capitalized Amount		Amount		Ratio			Minimum Amount		Well Capitalized Amount
Common Equity Tier 1 (CET1) capital ratio	$	494,402		11.13	%	$	199,943	$	288,807	$	481,135		11.10	%	$	194,972	$	281,626
Tier 1 risk-based capital ratio		494,402		11.13	%		266,591		355,455		481,135		11.10	%		259,962		346,617
Total risk-based capital ratio		527,737		11.88	%		355,455		444,318		509,885		11.77	%		346,617		433,271
Tier 1 leverage ratio		494,402		10.21	%		193,611		242,014		481,135		9.90	%		194,429		243,037

Regulatory Restrictions on Dividends

Regulatory policy statements provide that generally bank holding companies should pay dividends only out of current operating earnings and that the level of dividends must be consistent with current and expected capital requirements. Dividends received from State Bank have been the primary source of funds available for the declaration and payment of dividends to the Company’s common shareholders.

Federal and state banking laws and regulations restrict the amount of dividends banks may distribute without prior regulatory approval. At June 30, 2018, State Bank had no capacity to pay dividends to the Company without prior regulatory approval.

At June 30, 2018, the Company had $66.5 million in cash and due from bank accounts, which can be used for additional capital as needed by State Bank, payment of holding company expenses, payment of dividends to shareholders, or for other corporate purposes.

NOTE 11: COMMITMENTS AND CONTINGENT LIABILITIES

Commitments

In order to meet the financing needs of its customers, the Company maintains financial instruments withoff-balance-sheet risk in the normal course of business. These financial instruments include commitments to extend credit and standby letters of credit and involve, to varying degrees, elements of credit, interest rate and/or liquidity risk. Such financial instruments are recorded when they are funded and the related fees are generally recognized when collected.

Commitments to extend credit are legally binding agreements to lend to customers. Commitments generally have fixed maturity dates or other termination clauses with required fee payments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements. The amount of collateral required, if deemed necessary upon extension of credit, is determined on a case by case basis by management through credit evaluation of the customer.

Standby letters of credit are commitments guaranteeing performance of a customer to a third party. Those guarantees are issued primarily to support public and private borrowing arrangements. In order to minimize its exposure, the Company’s credit policies govern the issuance of standby letters of credit.

The Company’s exposure to credit loss is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as we do foron-balance-sheet instruments.

42

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s commitments is as follows(dollars in thousands):

	June 30, 2018		December 31, 2017
Commitments to extend credit:
Fixed	$	91,509	$	65,117
Variable		944,668		914,524
Letters of credit:
Fixed		5,759		5,978
Variable		6,895		11,428
Total commitments	$	1,048,831	$	997,047

The fixed rate loan commitments have maturities ranging from one month to thirteen years. Management takes appropriate actions to mitigate interest rate risk associated with these fixed rate commitments through various measures including, but not limited to, the use of derivative financial instruments.

Contingent Liabilities

Mortgage loan sales agreements contain covenants that may, in limited circumstances, require the Company to repurchase or indemnify the investors for losses or costs related to the loans the Company has sold. As a result of the potential recourse provisions, the Company maintains a recourse liability for mortgage loans sold to investors. At June 30, 2018, the recourse liability was $296,000.

Furthermore, in the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company’s financial statements.

NOTE 12: FAIR VALUE

Overview

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Financial Accounting Standards Board’s Accounting Standards Codification Topic 820 (“ASC 820”)Fair Value Measurements and Disclosures establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs classified within Level 3 of the hierarchy).

Fair Value Hierarchy

Level 1

Valuation is based on inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2

Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as interest rates, yield curves observable at commonly quoted intervals, and other market-corroborated inputs.

Level 3

Valuation is generated from techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques.

43

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company evaluates fair value measurement inputs on an ongoing basis in order to determine if there is a change of sufficient significance to warrant a transfer between levels. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s valuation process. For the six months ended June 30, 2018 and the year ended December 31, 2017, there were no transfers between levels.

Fair Value Option

ASC 820 allows companies to report selected financial assets and liabilities at fair value using the fair value option. The changes in fair value are recognized in earnings and the assets and liabilities measured under this methodology are required to be displayed separately on the balance sheet. The Company made the election to record mortgage loansheld-for-sale at fair value under the fair value option, which allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to hedge them without the burden of complying with the requirements for hedge accounting.

Financial Assets and Financial Liabilities Measured on a Recurring Basis

The Company uses the following methods and assumptions in estimating the fair value of its financial assets and financial liabilities on a recurring basis:

Investment SecuritiesAvailable-for-Sale

At June 30, 2018, the Company’s investment portfolio primarily consisted of U.S. government agency mortgage-backed securities, nonagency mortgage-backed securities, U.S. government securities, municipal securities, asset-backed securities, and corporate securities. Fair Values for U.S. Treasury and equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges utilizing Level 1 inputs. Other securities classified asavailable-for-sale are reported at fair value utilizing Level 2 inputs. The fair value of other securities classified asavailable-for-sale are determined using widely accepted valuation techniques including matrix pricing and broker-quote-based applications. Inputs may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other relevant items. The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. From time to time, the Company validates the appropriateness of the valuations provided by the independent pricing service to prices obtained from an additional third party or prices derived using internal models.

Hedged Loans

Loans involved in fair value hedges are recorded at fair value on a recurring basis. The estimated fair value is determined using Level 2 inputs consistent with the valuation methodology for interest rate swaps discussed below. The Company does not record other loans held for investment at fair value on a recurring basis.

Mortgage LoansHeld-for-Sale

Mortgage loansheld-for-sale are recorded at fair value on a recurring basis. The estimated fair value is determined using Level 2 inputs based on observable data such as the existing forward commitment terms or the current market value of similar loans. Interest income is recorded in interest income on the consolidated statements of income and is based on the contractual terms of the loan. None of these loans were 90 days or more past due or on nonaccrual at June 30, 2018.

44

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 2018, the aggregate fair value of the Company’s mortgage loansheld-for-sale was $39.2 million and the contractual balance including accrued interest was $38.1 million, with a fair value mark totaling $1.2 million. The Company recognized a gain of $251,000 and a gain of $617,000 for the three and six months ended June 30, 2018, respectively, related to the change in fair value of the mortgage loansheld-for-sale, included in “mortgage banking income” on the consolidated statements of income. For the three and six months ended June 30, 2017, the amount recognized related to the change in fair value of the mortgage loansheld-for-sale was a loss of $243,000 and a gain of $482,000, respectively.

Derivative Financial Instruments

Interest Rate Swaps and Caps

The Company uses interest rate swaps to provide longer-term fixed rate funding to its customers and interest rate caps to mitigate the interest rate risk on its variable rate liabilities. The majority of these derivatives are traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract. Therefore, these derivative contracts are classified as Level 2. The Company utilizes an independent third party valuation company to validate the dealer prices. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are considered to have been derived utilizing Level 3 inputs.

The Company evaluates the credit risk of its counterparties as well as that of the Company. The Company has considered factors such as the likelihood of default by the Company and its counterparties, its net exposures, and remaining contractual life, among other things, in determining if any fair value adjustments related to credit risk are required. Counterparty exposure is evaluated by netting positions that are subject to master netting arrangements, as well as considering the amount of collateral securing the position. The Company reviews its counterparty exposure on a regular basis, and, when necessary, appropriate business actions are taken to adjust the exposure. The Company also utilizes this approach to estimate its own credit risk on derivative liability positions. To date, the Company has not realized any losses due to a counterparty’s inability to pay any net uncollateralized position.

Mortgage Derivatives

Mortgage derivatives include interest rate lock commitments to originate residential mortgage loansheld-for-sale. The Company relies on an internal valuation model to estimate the fair value of its interest rate lock commitments to originate residential mortgage loansheld-for-sale. The model groups the interest rate lock commitments by interest rate and term, applies an estimated pull-through rate based on historical experience, and then multiplies by quoted investor prices which were determined to be reasonably applicable to the loan commitment group based on interest rate, term, and rate lock expiration date of the loan commitment group. While there are Level 2 and 3 inputs used in the valuation model, the Company has determined that the majority of the inputs significant in the valuation of the interest rate lock commitments fall within Level 3 of the fair value hierarchy. Changes in the fair values of these derivatives are included in “mortgage banking income” on the consolidated statements of income.

Mortgage derivatives also include forward commitments to sell residential mortgage loans to various investors when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitment to fund loans. The Company also relies on an internal valuation model to estimate the fair value of its forward commitments to sell residential mortgage loans (i.e., an estimate of what the Company would receive or pay to terminate the forward delivery contract based on market prices for similar financial instruments), which includes matching specific terms and maturities of the forward commitments against applicable investor pricing available (Level 2). Changes in the fair values of these derivatives are included in “mortgage banking income” on the consolidated statements of income.

45

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SBA Servicing Rights

The Company has the rights to service a portfolio of SBA loans. The SBA servicing rights are measured at fair value when loans are sold on a servicing retained basis. The servicing rights are subsequently measured at fair value on a recurring basis utilizing Level 3 inputs. Management uses a model operated and maintained by a third party to calculate the present value of future cash flows using the third party’s market-based assumptions. The future cash flows for each asset are based on the asset’s unique characteristics and the third party’s market-based assumptions for prepayment speeds, default and voluntary prepayments. Fornon-guaranteed portions of servicing assets, future cash flows are estimated using loan specific assumptions for losses and recoveries. Adjustments to fair value are recorded as a component of “SBA income” on the consolidated statements of income. Please reference Note 7 for the roll-forward of the SBA servicing rights asset at fair value utilizing level 3 inputs.

The following tables present financial assets and financial liabilities measured at fair value on a recurring basis at the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value(dollars in thousands):

June 30, 2018		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Equity securities - financial services industry		$	—	$	1,515	$	—	$	1,515
U.S. Government securities	��		—		66,679		—		66,679
Residential mortgage-backed securities — nonagency			—		99,232		—		99,232
Residential mortgage-backed securities — agency			—		542,970		—		542,970
Corporate securities			—		126,789		—		126,789
Hedged loans			—		119,559		—		119,559
Mortgage loansheld-for-sale			—		39,222		—		39,222
Mortgage derivatives			—		52		961		1,013
Interest rate swaps and caps			—		4,230		—		4,230
SBA servicing rights			—		—		3,989		3,989
Total recurring assets at fair value		$	—	$	998,733	$	4,950	$	1,003,683
Liabilities:
Interest rate swaps and caps		$	—	$	—	$	—	$	—
Mortgage derivatives			—		264		435		699
Total recurring liabilities at fair value		$	—	$	264	$	435	$	699

46

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017	Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Equity securities - financial services industry	$	—	$	1,515	$	—	$	1,515
U.S. Government securities		—		69,559		—		69,559
Residential mortgage-backed securities — nonagency		—		118,710		—		118,710
Residential mortgage-backed securities — agency		—		575,849		—		575,849
Corporate securities		—		108,337		—		108,337
Hedged loans		—		139,391		—		139,391
Mortgage loans held for sale		—		25,791		—		25,791
Mortgage derivatives		—		101		515		616
Interest rate swaps and caps		—		2,011		—		2,011
SBA servicing rights		—		—		4,069		4,069
Total recurring assets at fair value	$	—	$	1,039,749	$	4,584	$	1,044,333
Liabilities:
Interest rate swaps and caps	$	—	$	116	$	—	$	116
Mortgage derivatives		—		38		200		238
Total recurring liabilities at fair value	$	—	$	154	$	200	$	354

Changes in the carrying value of mortgage derivatives utilizing Level 3 inputs are presented in the following tables for the periods presented(dollars in thousands):

	Three Months Ended June 30						Six Months Ended June 30
	2018						2018
Mortgage Derivatives	Other Assets			Other Liabilities			Other Assets			Other Liabilities
Balance, beginning of period	$	916		$	310		$	515		$	200
Issuances (1)		430			430			1,031			740
Settlements and closed loans (1)		(385	)		(305	)		(585	)		(505	)
Balance, end of period	$	961		$	435		$	961		$	435
	Three Months Ended June 30						Six Months Ended June 30
	2017						2017
Mortgage Derivatives	Other Assets			Other Liabilities			Other Assets			Other Liabilities
Balance, beginning of period	$	1,096		$	465		$	699		$	445
Issuances (1)		362			363			1,204			828
Settlements and closed loans (1)		(568	)		(443	)		(1,013	)		(888	)
Balance, end of period	$	890		$	385		$	890		$	385

(1) The change in fair value, recorded as a component of “mortgage banking income” on the consolidated statements of income, was a loss of $80,000 and a gain of $211,000 for the three and six months ended June 30, 2018, respectively. The change in fair value resulted in a loss of $126,000 and a gain of $251,000 for the three and six months ended June 30, 2017, respectively.

47

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Assets Measured on a Nonrecurring Basis

The Company uses the following methods and assumptions in estimating the fair value of its financial assets on a nonrecurring basis:

Impaired Loans

Loans, excluding purchased credit impaired loans, are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The fair values of impaired loans are measured on a nonrecurring basis and are based on the underlying collateral value of each loan if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 inputs that are based on observable market data such as an appraisal. Updated appraisals are obtained on at least an annual basis. Level 3 inputs are based on the Company’s customized discounting criteria when management determines the fair value of the collateral is further impaired.

The following table presents financial assets measured at fair value on a nonrecurring basis at the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value(dollars in thousands):

	Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2018
Impaired loans	$	—	$	—	$	68,969	$	68,969
Total nonrecurring assets at fair value	$	—	$	—	$	68,969	$	68,969
December 31, 2017
Impaired loans	$	—	$	—	$	11,804	$	11,804
Total nonrecurring assets at fair value	$	—	$	—	$	11,804	$	11,804

Impaired loans, excluding purchased credit impaired loans, that are measured for impairment using the fair value of collateral for collateral dependent loans had recorded investments of $70.9 million and $13.0 million with respective valuation allowances of $1.9 million and $1.2 million at June 30, 2018 and December 31, 2017, respectively.

Nonfinancial Assets Measured on a Nonrecurring Basis

The Company uses the following methods and assumptions in estimating the fair values of its nonfinancial assets on a nonrecurring basis:

Other Real Estate Owned

Other real estate owned (“OREO”) consists of real estate acquired through foreclosure or a deed in lieu of foreclosure in satisfaction of a loan, OREO acquired in a business acquisition, and banking premises no longer used for a specific business purpose. Real estate obtained in satisfaction of a loan is initially recorded at the lower of the principal investment in the loan or the fair value of the collateral less estimated costs to sell at the time of foreclosure with any excess in loan balance charged against the allowance for loan and lease losses. OREO acquired in a business acquisition is recorded at fair value on Day 1 of the acquisition. Banking premises no longer used for a specific business purpose is transferred into OREO at the lower of its carrying value or fair value less estimated costs to sell with any excess in the carrying value charged to noninterest expense. For all fair value estimates of the real estate properties, management considers a number of factors such as appraised values, estimated selling prices, and current market conditions, resulting in a Level 3 classification. Management periodically reviews the carrying value of OREO for impairment and adjusts the values as appropriate through noninterest expense.

48

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents nonfinancial assets measured at fair value on a nonrecurring basis at the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

	Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2018
Other real estate owned	$	—	$	—	$	5,563	$	5,563
December 31, 2017
Other real estate owned	$	—	$	—	$	1,204	$	1,204

The following table is a reconciliation of the fair value measurement of other real estate owned disclosed in accordance with ASC 820 to the amount recorded on the consolidated statement of financial condition at the dates indicated(dollars in thousands):

	June 30, 2018			December 31, 2017
Other real estate owned:
Other real estate owned at fair value	$	5,563		$	1,204
Estimated selling costs and other adjustments		(551	)		(309	)
Other real estate owned	$	5,012		$	895

Unobservable Inputs for Level 3 Fair Value Measurements

The following tables provide information describing the unobservable inputs used in Level 3 fair value measurements at the dates indicated(dollars in thousands):

June 30, 2018	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
SBA servicing rights	$	3,989	Discounted cash flows	Discount rate	9% - 23% (13%)
				Prepayment speed	5% - 13% (11%)
Mortgage derivatives - asset	$	961	Pricing model	Pull-through rate	85%
Mortgage derivatives - liability	$	435	Pricing model	Pull-through rate	85%
Impaired loans - collateral dependent	$	68,969	Third party appraisal	Management discount for   property type and recent   market volatility	0% - 100% (3%)
Other real estate owned	$	5,563	Third party appraisal	Management discount for   property type and recent   market volatility	0% - 50% (5%)
December 31, 2017	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
SBA servicing rights	$	4,069	Discounted cash flows	Discount rate	10% - 22% (13%)
				Prepayment speed	4% - 13% (9%)
Mortgage derivatives - asset	$	515	Pricing model	Pull-through rate	84%
Mortgage derivatives - liability	$	200	Pricing model	Pull-through rate	84%
Impaired loans - collateral dependent	$	11,804	Third party appraisal	Management discount for   property type and recent   market volatility	0% - 50% (9%)
Other real estate owned	$	1,204	Third party appraisal	Management discount for   property type and recent   market volatility	0% - 33% (12%)

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STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Assets and Financial Liabilities

The following table includes the estimated fair value of the Company’s financial assets and financial liabilities at the dates indicated(dollars in thousands).

			June 30, 2018				December 31, 2017
	Fair Value Hierarchy Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents		Level 1	$	238,291	$	238,291	$	230,877	$	230,877
Equity securities		Level 2		1,515		1,515		1,515		1,515
Investment securitiesavailable-for-sale		Level 2		835,670		835,670		872,455		872,455
Investment securitiesheld-to-maturity		Level 2 & 3		16,742		16,817		32,852		33,351
Loansheld-for-sale		Level 2		55,096		56,641		36,211		37,580
Loans, net		Level 2 & 3		3,571,938		3,612,910		3,503,443		3,513,057
Other real estate owned		Level 3		5,012		5,563		895		1,204
Interest rate swaps and caps		Level 2		4,230		4,230		2,011		2,011
Mortgage derivatives		Levels 2 & 3		1,013		1,013		616		616
SBA servicing rights		Level 3		3,989		3,989		4,069		4,069
Accrued interest receivable		Level 2		15,577		15,577		14,906		14,906
Federal Home Loan Bank stock		Level 3		4,452		4,452		4,651		4,651
Liabilities:
Deposits		Level 2	$	4,302,704	$	4,301,233	$	4,243,135	$	4,237,883
Federal funds purchased and securities sold under agreements to repurchase		Level 2		13,525		13,525		25,209		25,209
Notes payable		Level 2		398		398		398		398
Interest rate swaps and caps		Level 2		—		—		116		116
Mortgage derivatives		Levels 2 & 3		699		699		238		238
Accrued interest payable		Level 2		3,623		3,623		3,750		3,750

The fair value of financial instruments not measured at fair value on a recurring or nonrecurring basis are measured using an exit price notion for periods beginning after January 1, 2018. Prior to January 1, 2018, fair value for such instruments was estimated primarily based on the net present value of future cash flows.

50

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13: EARNINGS PER SHARE

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As such, earnings per share is calculated using thetwo-class method. Basic earnings per share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period which excludes the participating securities. Diluted earnings per share includes the dilutive effect of additional potential common shares from stock compensation awards and warrants. There were no anti-dilutive securities excluded from the computation of earnings per share in the periods presented.

Earnings per share have been computed based on the following weighted average number of common shares outstanding(dollars in thousands, except per share data):

	Three Months Ended June 30						Six Months Ended June 30
	2018			2017			2018			2017
Numerator:
Net income per consolidated statements of income	$	18,767		$	15,203		$	36,132		$	26,761
Net income allocated to participating securities		(509	)		(413	)		(943	)		(706	)
Net income allocated to common stock	$	18,258		$	14,790		$	35,189		$	26,055
Basic earnings per share computation:
Net income allocated to common stock	$	18,258		$	14,790		$	35,189		$	26,055
Weighted average common shares outstanding, including shares considered participating securities		39,098,445			38,955,513			39,053,840			38,908,102
Less: Average participating securities		(1,060,264	)		(1,059,388	)		(1,018,729	)		(1,026,103	)
Weighted average shares		38,038,181			37,896,125			38,035,111			37,881,999
Basic earnings per share	$	.48		$	.39		$	.93		$	.69
Diluted earnings per share computation:
Net income allocated to common stock	$	18,258		$	14,790		$	35,189		$	26,055
Weighted average common shares outstanding for basic earnings per share		38,038,181			37,896,125			38,035,111			37,881,999
Weighted average dilutive grants		36,925			46,358			37,808			52,188
Weighted average shares and dilutive potential common shares		38,075,106			37,942,483			38,072,919			37,934,187
Diluted earnings per share	$	.48		$	.39		$	.92		$	.69

NOTE 14: ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income, or AOCI, is reported as a component of shareholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on investment securitiesavailable-for-sale, unrealized gains and losses on investment securitiesavailable-for-sale transferred toheld-to-maturity, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Unrealized holding gains and losses on securities transferred toheld-to-maturity are amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization/accretion of the net premium/discount created in the transfer. The components of AOCI are reported net of related tax effects.

51

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of AOCI and changes in those components for the periods presented are as follows(dollars in thousands):

	Investment Securities Available-for-Sale			Held-to-Maturity Securities Transferred from Available-For-Sale			Cash Flow Hedges (Effective Portion)			Total
Three Months Ended
June 30, 2018
Balance, beginning of period	$	(7,973	)	$	47		$	—		$	(7,926	)
Other comprehensive loss before income taxes:
Net change in unrealized losses		(2,184	)		—			—			(2,184	)
Amounts reclassified for net gains realized and included in earnings		(250	)		—			—			(250	)
Transfer of unrealized gain fromheld-to-maturity toavailable-for-sale		—			(51	)		—			(51	)
Amortization of net unrealized losses on securities transferred toheld-to-maturity		—			(3	)		—			(3	)
Income tax benefit		(616	)		—			—			(616	)
Balance, end of period	$	(9,791	)	$	(7	)	$	—		$	(9,798	)
June 30, 2017
Balance, beginning of period	$	(1,568	)	$	(177	)	$	(802	)	$	(2,547	)
Other comprehensive income before income taxes:
Net change in unrealized gains		1,089			—			21			1,110
Amounts reclassified for net (gains) losses realized and included in earnings		(13	)		—			430			417
Amortization of net unrealized losses on securities transferredto-held-to-maturity		—			46			—			46
Income tax expense		413			—			172			585
Balance, end of period	$	(905	)	$	(131	)	$	(523	)	$	(1,559	)
Six Months Ended
June 30, 2018
Balance, beginning of period	$	(2,523	)	$	21		$	(65	)	$	(2,567	)
Other comprehensive loss before income taxes:
Net change in unrealized losses		(9,060	)		—			(4	)		(9,064	)
Amounts reclassified for net (gains) losses realized and included in earnings		(250	)		—			91			(159	)
Transfer of unrealized gain fromheld-to-maturity toavailable-for-sale		—			(51	)		—			(51	)
Amortization of net unrealized losses on securities transferredto-held-to-maturity		—			23			—			23
Adoption of ASU2016-01		23			—			—			23
Income tax (benefit) expense		(2,019	)		—			22			(1,997	)
Balance, end of period	$	(9,791	)	$	(7	)	$	—		$	(9,798	)

52

STATE BANK FINANCIAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Investment Securities Available-for- Sale			Held-to- Maturity Securities Transferred from Available- For-Sale			Cash Flow Hedges (Effective Portion)			Total
June 30, 2017
Balance, beginning of period	$	(1,200	)	$	(175	)	$	(1,082	)	$	(2,457	)
Other comprehensive income before income taxes:
Net change in unrealized gains		514			—			80			594
Amounts reclassified for net (gains) losses realized and included in earnings		(25	)		—			834			809
Amortization of net unrealized losses on securities transferredto-held-to-maturity		—			44			—			44
Income tax expense		194			—			355			549
Balance, end of period	$	(905	)	$	(131	)	$	(523	)	$	(1,559	)

Reclassifications from AOCI into income for the periods presented are as follows(dollars in thousands):

Reclassifications from AOCI into income and affected line items on Consolidated	Three Months Ended June 30						Six Months Ended June 30
Statements of Income	2018			2017			2018			2017
Investment securitiesavailable-for-sale
Gain on sale of investment securities	$	250		$	13		$	250		$	25
Income tax expense		(63	)		(5	)		(63	)		(10	)
Net income	$	187		$	8		$	187		$	15
Cash flow hedges (effective portion)
Interest expense on deposits	$	—		$	(430	)	$	(91	)	$	(834	)
Income tax benefit		—			165			23			320
Net income	$	—		$	(265	)	$	(68	)	$	(514	)

53