EX-99.1 2 d288194dex991.htm PRESS RELEASE Press release

Exhibit 99.1

FOR IMMEDIATE RELEASE

January 30, 2012

CenterState Banks, Inc. Announces

Fourth Quarter 2011 Operating Results

(All dollar amounts are in thousands, except per share information)

DAVENPORT, FL. – January 30, 2012 - CenterState Banks, Inc. (NASDAQ: CSFL) reported net income of $14,082 or $0.47 per share for the fourth quarter and $7,909 or $0.26 per share for the full year 2011. Two previously reported events which materially affected the results of the Company’s fourth quarter were a bargain purchase gain relating to the Federal Trust Bank (“FTB”) acquisition and sale of loans in the wholesale market. The pre-tax bargain purchase gain relating to the FTB acquisition was approximately $45,891 before direct merger related expenses of approximately $5,591. The Company also recognized a pre-tax loss on loan sales of approximately $12,356, of which $11,971 (excludes selling expenses) was included in the loan loss provision expense.

The Company’s credit metrics improved during the current quarter due primarily to the previous announced loan sale discussed above. The table below summarizes certain credit metrics at the periods presented. Assets covered by FDIC loss share agreements are excluded from the table below.

 

     actual
9/30/11
    note 1
as  previously
estimated
12/31/11
    actual
12/31/11
 

Non-accrual loans

   $ 61,990      $ 35,280      $ 38,858   

Accruing loans past due >90days

     207        200        120   
  

 

 

   

 

 

   

 

 

 

Total Non- Performing Loans (“NPL”)

     62,197        35,480        38,978   

Repossessed real estate (“OREO”)

     12,061        8,712        8,712   

Other repossessed assets (“ORA”)

     1,727        1,585        1,619   
  

 

 

   

 

 

   

 

 

 

Total Non- Performing Assets (“NPA”)

   $ 75,985      $ 45,777      $ 49,309   
  

 

 

   

 

 

   

 

 

 

Total non- covered loans

   $ 991,725      $ 1,118,000      $ 1,119,715   

NPL as percentage of total non covered loans

     6.27     3.17     3.48

NPA as percentage of Loans + OREO + ORA

     7.56     4.06     4.36

NPA as percentage of total assets

     3.53     1.96     2.16

 

note 1: Represents the Company’s preliminary estimates as furnished in a Form 8-K dated January 5, 2012.

The primary reason actual year end non-accrual loans differ from the previously estimated year end non-accrual loans is because of one residential land development loan for $3,855. Subsequent to the Company’s January 5, 2012 Form 8-K release, this loan was downgraded because of a weakness in the documentation of sufficient cash flows and diminished collateral value. As such, the credit was written down through a specific reserve effective December 31, 2011. Once this occurs, the Company is required to transfer the loan to non-accrual status, even though payments are and have been current. If this event had not occurred, the Company’s actual year end credit metrics presented above would have been substantially the same as the Company’s preliminary estimates.

NPA inflows for the quarter were approximately $11,584 including the quarter end downgrade described above. Excluding that downgrade, inflows would have been approximately $7,729. Outflows were approximately $38,260. Outflows consist primarily of net charge offs, loan sales, OREO (“repossessed real estate”) sales, and OREO valuation write downs. Inflows consist primarily of additions of new nonaccrual loans net of any prior nonaccrual loans returning to accrual status and also net of any principal pay-downs or pay-offs. The table below summarizes the approximate NPA inflows and outflows during the quarters presented.

 

4


     4Q11     3Q11     2Q11     1Q11     4Q10     3Q10     2Q10     1Q10  

Inflows

   $ 11,584      $ 7,220      $ 14,828      $ 16,927      $ 20,560      $ 28,871      $ 9,945      $ 11,254   

Outflows

     (38,260     (9,264     (19,133     (13,117     (10,863     (23,887     (5,642     (5,166
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

net change (decr)/incr

   ($ 26,676   ($ 2,044   ($ 4,305   $ 3,810      $ 9,697      $ 4,984      $ 4,303      $ 6,088   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NPA balance qrt end

   $ 49,309      $ 75,985      $ 78,029      $ 82,334      $ 78,524      $ 68,827      $ 63,843      $ 59,540   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As previously announced, the Company acquired Central Florida State Bank in Belleview, Florida near Ocala, pursuant to an FDIC assisted transaction, on January 20, 2012. Approximately $48 million of loans were acquired pursuant to an 80% loss share agreement with the FDIC and approximately $65 million of deposits were assumed. The bank had four branches each of which are within two miles of an existing CenterState branch. The Company expects significant branch overlap efficiencies. The transaction is expected to be between $0.025 and $0.03 per share accretive to earnings and neutral to tangible book value, with an IRR of approximately 25%.

On January 30, 2012, the Company announced its acquisition of First Guaranty Bank and Trust Company of Jacksonville (“FGB”), pursuant to an FDIC assisted transaction effective January 27, 2012. Approximately $275 million of loans were acquired pursuant to an 80% loss share agreement with the FDIC and approximately $330 million of deposits were assumed. This transaction will expedite entrance into the Jacksonville market, consistent with the Company’s strategic plan. It will immediately provide a platform for Gil Pomar, former President and CEO of The Jacksonville Bank, who joined our Company last summer. We expect to recognize goodwill of approximately $11 million, and therefore we will have some dilution to our tangible book value which we expect to recover in approximately three years. The transaction is expected to be between $0.09 and $0.11 per share accretive to earnings, and an IRR in excess of 20%.

Quarterly condensed consolidated income statements (unaudited) are shown below for the periods indicated.

 

Quarterly Condensed Consolidated Statements of Operations (unaudited)  

For the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Interest income

   $ 21,324      $ 19,837      $ 20,705      $ 20,377      $ 19,473   

Interest expense

     2,757        2,881        3,166        3,403        3,866   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     18,567        16,956        17,539        16,974        15,607   

Provision for loan losses

     (18,065     (5,005     (11,645     (11,276     (5,056
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after loan loss provision

     502        11,951        5,894        5,698        10,551   

Income from correspondent banking and bond sales division

     6,661        7,999        5,759        4,470        7,140   

Gain on sale of securities available for sale

     130        205        3,120        9        3,808   

Bargain purchase gains on bank acquisitions

     45,891        —          —          11,129        —     

All other non-interest income

     2,921        4,041        4,339        5,298        4,231   

Credit related expenses

     (3,306     (2,966     (2,862     (3,561     (1,617

Acquisition related expenses

     (6,246     (579     (469     (401     —     

Correspondent banking division expenses

     (6,373     (6,806     (5,732     (4,978     (6,689

All other non-interest expense

     (18,799     (16,436     (17,466     (17,709     (17,166
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     21,381        (2,591     (7,417     (45     258   

Income tax (provision) benefit

     (7,299     599        3,071        210        178   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

   $ 14,082      $ (1,992   $ (4,346   $ 165      $ 436   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) available to common shareholders

   $ 14,082      $ (1,992   $ (4,346   $ 165      $ 436   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share (basic)

   $ 0.47      $ (0.07   $ (0.14   $ 0.01      $ 0.01   

Earnings (loss) per share (diluted)

   $ 0.47      $ (0.07   $ (0.14   $ 0.01      $ 0.01   

Average common shares outstanding (basic)

     30,041,089        30,039,329        30,037,556        30,020,035        30,004,761   

Average common shares outstanding (diluted)

     30,041,089        30,039,329        30,037,556        30,047,618        30,067,639   

Common shares outstanding at period end

     30,055,499        30,039,332        30,039,092        30,035,292        30,004,761   

PTPP earnings (note 2)

   $ 2,977      $ 5,754      $ 4,439      $ 4,055      $ 3,123   

PTPP earnings per share (diluted) (note 1)

   $ 0.10      $ 0.19      $ 0.15      $ 0.13      $ 0.10   

 

5


Note 1: PTPP earnings per share means, PTPP as defined in note 2 below divided by the average number of diluted common shares outstanding.
Note 2: Pre-tax pre-provision earnings (“PTPP”) is a non-GAAP measure that means income (loss) before income tax excluding the provision for loan losses and gain on sale of available for sale (“AFS”) securities. In addition the Company also excluded other credit related costs including losses on repossessed real estate and other assets, and other foreclosure related expenses. It also excludes non-recurring items as listed in the table below.

 

Quarterly condensed PTPP reconciliation (unaudited)

 

For the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Income (loss) before income tax

   $ 21,381      $ (2,591   $ (7,417   $ (45   $ 258   

exclude provision for loan losses

     18,065        5,005        11,645        11,276        5,056   

exclude other credit related costs

     3,306        2,966        2,862        3,561        1,617   

exclude gain on sale of AFS securities

     (130     (205     (3,120     (9     (3,808

exclude non-recurring items:

          

bargain purchase gain

     (45,891     —          —          (11,129     —     

acquisition related expenses

     6,246        579        469        401        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PTPP earnings

   $ 2,977      $ 5,754      $ 4,439      $ 4,055      $ 3,123   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Company’s condensed quarterly correspondent banking and bond sales segment is presented below.

 

Quarterly Condensed Segment Information - Correspondent banking and bond sales division (unaudited)

 

For the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Net interest income

   $ 965      $ 1,082      $ 1,113      $ 662      $ 974   

Total non-interest income (note 3)

     7,203        8,574        6,305        4,984        7,576   

Total non-interest expense (note 4)

     (6,373     (6,806     (5,732     (4,978     (6,689

Income tax provision

     (675     (1,073     (634     (251     (700
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1,120      $ 1,777      $ 1,052      $ 417      $ 1,161   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contribution to diluted earnings per share

   $ 0.04      $ 0.06      $ 0.04      $ 0.01      $ 0.04   

 

Note 3: The primary component in this line item is gross commissions earned on bond sales (“income from correspondent banking and bond sales division”) which was $6,661, 7,999, $5,759, $4,470 and $7,140 for 4Q11, 3Q11, 2Q11, 1Q11 and 4Q10, respectively. The remaining non interest income items in this category include fees from safe-keeping activities, bond accounting services, asset/liability consulting related activities, international wires, clearing and corporate checking account services, and other correspondent banking related revenue and fees.
Note 4: The majority of these expenses are variable in nature and are a derivative of the income from correspondent banking and bond sales division.

Net Interest Margin (“NIM”)

The NIM increased by 9 bps between sequential quarters, primarily due to a lower cost of interest bearing liabilities driven by lower cost of interest bearing deposits. Overall yield on interest earning assets increased 3 bps between sequential quarters. Yield on loans, excluding covered loans, decreased from 5.42% to 5.21% between quarters primarily due to the loans purchased pursuant to the FTB acquisition. Approximately 95% of the loans purchased are single family residential, and of that amount approximately 93% are variable rate. As such that portfolio is currently yielding approximately 4% on average, which was a decreasing effect on the Company’s existing portfolio which was yielding approximately 5.42%. In addition, the FTB loans were outstanding only two months during the current quarter, whereby next period they will be outstanding an entire quarter.

 

6


Yields on loans covered by FDIC loss share agreements and accounted for pursuant to ASC Topic 310-30 increased between sequential quarters from 6.21% to 6.80%. Management estimated that future expected losses appear to be less than originally estimated and as such future expected cash flows are now estimated to be higher than previously estimated. Higher future expected cash flows are accreted into interest income over the remaining expected lives of the loans increasing their yields. Management reviews actual and expected cash flows in this portfolio on a quarterly basis and makes judgments with regard to actual versus expected losses, actual versus expected cash flows, potential impairments and potential adjustments to future accretable yields.

The tables below summarizes yields and costs by various interest earning asset and interest bearing liability account types for the current quarter, the previous calendar quarter and the same quarter last year. The second table below also lists selected financial ratios for the last five quarters.

 

Yield and Cost table (unaudited)

                                                            
     4Q11     3Q11     4Q10  
     average
balance
     interest
inc/exp
     avg
rate
    average
Balance
     interest
inc/exp
     avg
rate
    average
balance
     interest
inc/exp
     avg
rate
 

Loans (TEY)* (note 1)

   $ 1,099,754       $ 14,434         5.21   $ 991,217       $ 13,549         5.42   $ 946,747       $ 12,546         5.26

Covered loans (note 2)

     167,512         2,873         6.80     176,275         2,759         6.21     203,234         2,514         4.91

Taxable securities

     528,673         3,650         2.74     422,641         3,132         2.94     524,137         3,893         2.95

Tax -exempt securities (TEY)

     37,644         562         5.92     36,229         521         5.71     31,939         487         6.05

Fed funds sold and other

     152,550         146         0.38     230,716         188         0.32     159,957         226         0.56
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Tot. interest earning assets (TEY)

   $ 1,986,133       $ 21,665         4.33   $ 1,857,078       $ 20,149         4.30   $ 1,866,014       $ 19,666         4.18
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Interest bearing deposits

   $ 1,456,253       $ 2,576         0.70   $ 1,353,164       $ 2,731         0.80   $ 1,365,362       $ 3,633         1.06

Fed funds purchased

     57,049         8         0.06     67,540         9         0.05     74,981         19         0.10

Other borrowings

     17,145         34         0.79     18,527         37         0.79     27,492         109         1.57

Corporate debentures

     14,704         139         3.75     12,500         104         3.30     12,500         105         3.33
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total interest bearing liabilities

   $ 1,545,151       $ 2,757         0.71   $ 1,451,731       $ 2,881         0.79   $ 1,480,335       $ 3,866         1.04
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net Interest Spread (TEY)

           3.62           3.52           3.15
        

 

 

         

 

 

         

 

 

 

Net Interest Margin (TEY)

           3.78           3.69           3.36
        

 

 

         

 

 

         

 

 

 

 

* TEY = tax equivalent yield
Note 1: loans not covered by FDIC loss share agreements
Note 2: loans covered by FDIC loss share agreements, and accounted for pursuant to ASC Topic 310-30.

 

Selected financial ratios (unaudited)

                              

As of or for the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Return on average assets (annualized)

     2.49     (0.37 )%      (0.80 )%      0.03     0.08

Return on average equity (annualized)

     21.57     (3.17 )%      (6.87 )%      0.27     0.68

Yield on average loans (note 1)

     5.42     5.54     5.41     5.48     5.20

Yield on average investments (note 1)

     2.41     2.21     2.63     2.50     2.55

Yield on average interest earning assets

     4.26     4.24     4.33     4.36     4.14

Yield on average interest earning assets (note 1)

     4.33     4.30     4.39     4.41     4.18

Cost of average interest bearing deposits

     0.70     0.80     0.85     0.91     1.06

Cost of average borrowings

     0.81     0.60     0.62     0.69     0.80

Cost of average interest bearing liabilities (note 2)

     0.71     0.79     0.84     0.90     1.04

Net interest margin (note 1)

     3.78     3.69     3.73     3.68     3.36

Loan / deposit ratio

     66.9     64.9     67.6     67.2     67.0

Stockholders’ equity (to total assets)

     11.5     11.6     11.6     11.4     12.3

Common tangible equity (to total tangible assets)

     9.8     9.8     9.8     9.6     10.4

Tier 1 capital (to average assets)

     10.5     10.3     10.1     10.0     10.3

Efficiency ratio (note 3)

     101     90     94     98     94

Common equity per common share

   $ 8.74      $ 8.32      $ 8.33      $ 8.42      $ 8.41   

Common tangible equity per common share

   $ 7.30      $ 6.92      $ 6.92      $ 7.00      $ 7.01   

 

7


note 1: Tax equivalent basis.
note 2: Does not include non-interest bearing checking accounts.
note 3: Efficiency ratio is equal to (non-interest expense less nonrecurring items) divided by (net interest income plus non-interest income less nonrecurring items). Gain on the sale of available for sale securities is considered a nonrecurring item for the purposes of this ratio in the above table.

Loan portfolio mix and covered loans

Approximately 12.8% of the Company’s loans, or $164,051, are covered by FDIC loss sharing agreements related to the acquisition of three failed financial institutions during the third quarter of 2010. Pursuant to the terms of the loss sharing agreements, the FDIC is obligated to reimburse the Company for 80% of losses with respect to the covered loans beginning with the first dollar of loss incurred, subject to the terms of the agreements. The Company will reimburse the FDIC for its share of recoveries with respect to the covered loans. The loss sharing agreements applicable to single family residential mortgage loans provide for FDIC loss sharing and the Company reimbursement to the FDIC for recoveries for ten years. The loss sharing agreements applicable to commercial loans provides for FDIC loss sharing for five years and Company reimbursement to the FDIC for a total of eight years for recoveries. All of the covered loans acquired are accounted for pursuant to ASC Topic 310-30.

Approximately 7.1% of the Company’s loans, or $90,457, are subject to a two year put back option, commencing January 20, 2011, with TD Bank, N.A., so that if any of these loans become 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loan to TD Bank.

Approximately 12.1% of the Company’s loans, or $155,823, are subject to a one year put back option, commencing November 1, 2011, with Hartford Insurance Group (“Hartford”), so that if any of these loans become 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loan to Hartford.

Approximately 68% of the Company’s loans, or $873,435, are not covered by FDIC loss sharing agreements or subject to a put back option with TD Bank, N.A. or Hartford.

 

8


The table below summarizes the Company’s loan mix over the most recent five quarter ends.

 

Loan mix (unaudited)

                              

At quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Loans not covered by FDIC loss share agreements

          

Real estate loans

          

Residential

   $ 405,923      $ 259,829      $ 261,773      $ 259,327      $ 255,571   

Commercial

     447,459        466,860        484,897        500,512        410,162   

Land, development and construction loans

     89,517        95,894        101,606        107,179        109,380   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate loans

     942,899        822,583        848,276        867,018        775,113   

Commercial loans

     126,064        117,900        113,030        116,424        100,906   

Consumer and other loans, (note 1)

     1,392        1,633        2,287        2,599        3,264   

Consumer and other loans

     49,999        50,283        51,287        53,990        52,115   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans before unearned fees and costs

     1,120,354        992,399        1,014,880        1,040,031        931,398   

Unearned fees and costs

     (639     (674     (665     (720     (728
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans not covered by FDIC loss share agreements

     1,119,715        991,725        1,014,215        1,039,311        930,670   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans covered by FDIC loss share agreements

          

Real estate loans

          

Residential

     99,270        102,852        105,249        106,655        110,586   

Commercial

     54,184        56,839        58,867        65,975        68,286   

Land, development and construction loans

     8,231        8,686        11,771        12,217        13,653   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate loans

     161,685        168,377        175,887        184,847        192,525   

Commercial loans

     2,366        2,816        4,095        4,861        5,760   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans covered by FDIC loss share agreements

     164,051        171,193        179,982        189,708        198,285   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Loans

   $ 1,283,766      $ 1,162,918      $ 1,194,197      $ 1,229,019      $ 1,128,955   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Note 1: Consumer loans acquired pursuant to three FDIC assisted transactions of failed financial institutions during the third quarter of 2010. These loans are not covered by an FDIC loss share agreement and are being accounted for pursuant to ASC Topic 310-30.

Credit quality and allowance for loan losses

During the current quarter, excluding loans covered by FDIC loss share agreements, the Company recorded a charge of $18,019 to loan loss provision (expense), of which $11,971 related to loans sold in the wholesale debt market. Charge-offs (net of recoveries) was $16,313, of which, as indicated above, $11,971 related to loans sold in the wholesale debt market. The quarterly provision expense and net charge-offs excluding the amount related to the loan sale is $6,048 and $4,342, respectively.

With regard to loans covered by FDIC loss share agreements, the Company recorded a charge of $46 to loan loss provision (expense). See the table “Allowance for loan losses” on the following page for additional information.

The allowance for loan losses (“ALLL”) was $27,944 at December 31, 2011 compared to $26,192 at September 30, 2011, an increase of $1,752. This increase is the result of the aggregate effect of a $451 increase in general loan loss allowance, a $1,255 increase in specific loan loss allowance related to impaired loans and a $46 increase in loan loss allowance related to certain loan pools of FDIC covered loans accounted for pursuant to ASC Topic 310-30. The changes in the Company’s ALLL components between December 31, 2011 and September 30, 2011 are summarized in the table below.

 

9


     Dec 31, 2011     Sept 30, 2011     increase (decrease)  
     loan
balance
     ALLL
Balance
     %     loan
balance
     ALLL
balance
     %     loan
balance
    ALLL
balance
    

 

 

Impaired loans

   $ 53,668       $ 3,304         6.16   $ 74,680       $ 2,049         2.74   ($ 21,013   $ 1,255         342bps   

Non impaired loans

     819,767         24,281         2.96     819,997         23,830         2.91     (229     451         5 bps   

TD loans (note 1)

     90,457         —             97,048         —             (6,591     —        

FTB loans (note 2)

     155,823         —             —           —             155,823        —        
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Loans (note 3)

     1,119,715         27,585         2.46     991,725         25,879         2.61     127,990        1,706         -15 bps   

Covered loans (note 4)

     164,051         359           171,193         313           (7,142     46      
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total loans

   $ 1,283,766       $ 27,944         2.18   $ 1,162,918       $ 26,192         2.25   $ 120,848      $ 1,752         -7 bps   

 

Note 1: Performing loans purchased from TD Bank subject to a two year put back option commencing on January 20, 2011, such that if any of these loans become 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loans to TD Bank.
Note 2: Performing loans purchased from Hartford Insurance Group’s (“Hartford”) wholly owned bank, FTB subject to a one year put back option commencing on November 1, 2011, such that if any of these loans become 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loans to Hartford.
Note 3: Total loans not covered by FDIC loss share agreements.
Note 4: Loans covered by FDIC loss share agreements. Eighty percent of any losses in this portfolio will be reimbursed by the FDIC and recognized as FDIC Indemnification income and included in non-interest income within the Company’s condensed consolidated statement of operations.

The general loan loss allowance (non impaired loans) increased by $451, or 5 bps to 2.96% of non-impaired loan balance outstanding as of the end of the current period as compared to 2.91% at the end of the previous period. This is a result of changes in historical charge off rates, changes in current environmental factors and changes in the loan portfolio mix. Currently, there is no general loan loss allowance associated with the performing loans purchased from TD Bank and for the FTB performing loans purchased from Hartford for the reasons described in notes 1 and 2 above.

The specific loan loss allowance (impaired loans) is the aggregate of the results of individual analyses prepared for each one of the impaired loans not covered by an FDIC loss sharing agreement on a loan by loan basis. The primary reason for the increase in specific allowance was due to one performing loan that was downgraded subsequent to January 5, 2012 effective as of December 31, 2011. Due to the downgrade event, a specific reserve was placed against this loan, and the loan was transferred to non accrual status and included in the Company’s NPLs at year end.

The Company recorded partial charge offs in lieu of specific allowance for a number of the impaired loans. The Company’s impaired loans have been written down by $10,093 to $53,668 ($50,364 when the $3,304 specific allowance is considered) from their legal unpaid principal balance outstanding of $63,761. As such, in the aggregate, our total impaired loans have been written down to approximately 79% of their legal unpaid principal balance.

Any losses in loans covered by FDIC loss share agreements, as described in note 3 above, are reimbursable from the FDIC to the extent of 80% of any losses. These loans are being accounted for pursuant to ASC Topic 310-30. Loan pools in this portfolio are evaluated for impairment each quarter. If a pool is impaired, an allowance for potential loan loss is recorded.

Management believes the Company’s allowance for loan losses is adequate at December 31, 2011. However, management recognizes that many factors can adversely impact various segments of the Company’s market and customers, and therefore there is no assurance as to the amount of losses or probable losses which may develop in the future. The table below summarizes the changes in allowance for loan losses during the previous five quarters.

 

10


Allowance for loan losses (unaudited)

                              

as of or for the quarter ending

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Loans not covered by FDIC loss share agreements

          

Allowance at beginning of period

   $ 25,879      $ 27,418      $ 28,245      $ 26,267      $ 28,012   

Charge-offs

     (5,487     (7,186     (9,811     (9,458     (6,912

Charge-offs related to loan sales

     (11,971     —          (2,492     —          —     

Recoveries

     1,145        662        124        160        111   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

     (16,313     (6,524     (12,179     (9,298     (6,801

Provision for loan losses

     18,019        4,985        11,352        11,276        5,056   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance at end of period for loans not covered by FDIC loss share agreements

   $ 27,585      $ 25,879      $ 27,418      $ 28,245      $ 26,267   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans covered by FDIC loss share agreements

          

Allowance at beginning of period

   $ 313      $ —        $ —        $ —        $ —     

Charge-offs

     —          —          (293     —          —     

Recoveries

     —          293        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

     —          293        (293     —          —     

Provision for loan losses

     46        20        293        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance at end of period for loans covered by FDIC loss share agreements

   $ 359      $ 313      $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allowance at end of period

   $ 27,944      $ 26,192      $ 27,418      $ 28,245      $ 26,267   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Company defines non performing loans as non-accrual loans plus loans past due 90 days or more and still accruing interest. Non-performing loans do not include loans covered by FDIC loss share agreements, which are accounted for pursuant to ASC Topic 310-30. Non-performing loans as a percentage of total loans not covered by FDIC loss share agreements were 3.48% at December 31, 2011 compared to 6.27% at September 30, 2011.

Non-performing assets (which the Company defines as non performing loans, as defined above, plus (a) OREO (i.e. real estate acquired through foreclosure, in-substance foreclosure, or deed in lieu of foreclosure), excluding OREO covered by FDIC loss share agreements; and (b) other repossessed assets that are not real estate, and are not covered by FDIC loss share agreements), were $49,309 at December 31, 2011, compared to $75,985 at September 30, 2011. Non-performing assets as a percentage of total assets was 2.16% at December 31, 2011 compared to 3.53% at September 30, 2011. Non-performing assets as a percentage of loans plus OREO and other repossessed assets, excluding loans and OREO covered by FDIC loss share agreements, was 4.36% at December 31, 2011 compared to 7.56% at September 30, 2011.

 

11


The table below summarizes selected credit quality data for the periods indicated.

 

Selected credit quality ratios (unaudited)

                         

As of or for the quarter ended:

  12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Non-accrual loans (note 1)

  $ 38,858      $ 61,990      $ 65,658      $ 71,631      $ 62,553   

Past due loans 90 days or more and still accruing interest (note 1)

    120        207        301        —          3,200   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-performing loans (“NPLs”) (note 1)

    38,978        62,197        65,959        71,631        65,753   

Other real estate owned (OREO) (note 1)

    8,712        12,061        11,284        10,222        12,239   

Repossessed assets other than real estate (note 1)

    1,619        1,727        786        481        532   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-performing assets (“NPAs”) (note 1)

  $ 49,309      $ 75,985      $ 78,029      $ 82,334      $ 78,524   

Non-performing loans as percentage of total loans not covered by FDIC loss share agreements

    3.48     6.27     6.50     6.89     7.07

Non-performing assets as percentage of total assets

    2.16     3.53     3.62     3.70     3.81

Non-performing assets as percentage of loans and OREO plus other repossessed assets (note 1)

    4.36     7.56     7.60     7.84     8.32

Net charge-offs (recoveries)

  $ 16,313      $ 6,231      $ 12,472      $ 9,298      $ 6,801   

Net charge-offs (recoveries) (note 1)

  $ 16,313      $ 6,524      $ 12,179      $ 9,298      $ 6,801   

Net charge-offs as a percentage of average loans for the period (note 1)

    1.48     0.66     1.18     0.91     0.72

Net charge-offs as a percentage of average loans for the period on an annualized basis (note 1)

    5.92     2.64     4.72     3.64     2.85

Loans past due 30 thru 89 days and accruing interest as a percentage of total loans (note 1)

    1.45     0.83     0.99     1.66     1.96

Allowance for loan losses as percentage of NPLs (note 1)

    71     42     42     39     40

Trouble debt restructure (“TDRs”) (note 2)

  $ 12,361      $ 16,243      $ 18,603      $ 21,176      $ 22,322   

Impaired loans that were not TDRs

    41,307        58,437        54,704        62,626        64,655   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total impaired loans

    53,668        74,680        73,307        83,802        86,977   

Loans acquired pursuant to TD transaction (note 3)

    90,457        97,048        104,772        114,737        —     

Loans acquired pursuant to FTB transaction (note 4)

    155,823        —          —          —          —     

All other non impaired loans

    819,767        819,997        836,136        840,772        843,693   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans not covered by FDIC loss share agreements

    1,119,715        991,725        1,014,215        1,039,311        930,670   

Total loans covered by FDIC loss share agreements

    164,051        171,193        179,982        189,708        198,285   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 1,283,766      $ 1,162,918      $ 1,194,197      $ 1,229,019      $ 1,128,955   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses for loans not covered by FDIC loss share agreements

         

Specific loan loss allowance- impaired loans

  $ 3,304      $ 2,049      $ 3,519      $ 5,738      $ 4,584   

General loan loss allowance- TD transaction

    —          —          —          —          —     

General loan loss allowance- FTB transaction

    —          —          —          —          —     

General loan loss allowance- all other non impaired

    24,281        23,830        23,899        22,507        21,683   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allowance for loan losses

  $ 27,585      $ 25,879      $ 27,418      $ 28,245      $ 26,267   

Allowance for loan loss percentage of period end loans:

         

Impaired loans (note 1)

    6.16     2.74     4.80     6.85     5.27

Loans acquired pursuant to TD transaction (note 3)

    —          —          —          —          —     

Loans acquired pursuant to FTB transaction (note 4)

    —          —          —          —          —     

All other non impaired loans (note 1)

    2.96     2.91     2.86     2.68     2.57
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans (note 1)

    2.46     2.61     2.70     2.72     2.82

 

12


Note 1: Excludes loans, OREO and other repossessed assets covered by FDIC loss share agreements.
Note 2: We have approximately $12,361 of TDRs. Of this amount $6,554 are performing pursuant to their modified terms, and $5,807 are not performing and have been placed on non-accrual status and included in our non performing loans (“NPLs”). Current accounting standards require TDRs to be included in our impaired loans, whether they are performing or not performing. Only non performing TDRs are included in our NPLs.
Note 3: Performing loans purchased from TD Bank, N.A. during the first quarter of 2011. The performing loans were selected by CenterState and are subject to a two year put back option. If any loan in this category becomes past due 30 days or is adversely classified pursuant to bank regulatory guidelines, CenterState has the option to put it back to TD Bank, N.A. anytime during a two year period beginning as of the January 20, 2011 purchase date. The Company has not allocated any loan loss allowance to this group of loans.
Note 4: Performing loans purchased from Hartford’s wholly owned bank FTB during the fourth quarter of 2011. The performing loans were selected by CenterState and are subject to a one year put back option. If any loan in this category becomes past due 30 days or is adversely classified pursuant to bank regulatory guidelines, CenterState has the option to put it back to Hartford anytime during a one year period beginning as of the November 1, 2011 purchase date. The Company has not allocated any loan loss allowance to this group of loans.

As shown in the table on the previous page, the largest component of non-performing assets is non-accrual loans. Due primarily as a result of the non performing loan sale during the current quarter, the Company’s non-accrual decreased from 302 loans with an aggregated balance of $61,990 at September 30, 2011 to 221 loans with an aggregate balance of $38,858 at December 31, 2011. Non accrual loans at December 31, 2011 are further delineated by collateral category and number of loans in the table below.

 

collateral category (unaudited)

   total amount      percentage
of total
non-accrual
loans
    number of
non-accrual
loans in
category
 

Residential real estate loans

   $ 14,810         38     99   

Commercial real estate loans

     11,637         30     31   

Land, development, construction loans

     10,482         27     35   

Non real estate commercial loans

     1,464         4     28   

Non real estate consumer and other loans

     465         1     28   
  

 

 

    

 

 

   

 

 

 

Total non-accrual loans at December 31, 2011

   $ 38,858         100     221   
  

 

 

    

 

 

   

 

 

 

The second largest component of non-performing assets after non-accrual loans is OREO, excluding OREO covered by FDIC loss share agreements. At December 31, 2011, total OREO was $18,181. Of this amount, $9,469 was acquired pursuant to the acquisition of three failed financial institutions during the third quarter of 2010. The acquired OREO is covered by FDIC loss sharing agreements. Pursuant to the terms of the loss sharing agreements, the FDIC is obligated to reimburse the Company for 80% of losses with respect to the covered OREO beginning with the first dollar of loss incurred, subject to the terms of the agreements. The Company will reimburse the FDIC for its share of recoveries with respect to the covered OREO. The loss sharing agreements applicable to single family residential mortgage loans provide for FDIC loss sharing and the Company reimbursement to the FDIC for recoveries for ten years. The loss sharing agreements applicable to commercial loans provide for FDIC loss sharing for five years and Company reimbursement to the FDIC for a total of eight years for recoveries.

OREO not covered by FDIC loss share agreements is $8,712 at December 31, 2011. OREO is carried at the lower of cost or market less the estimated cost to sell. Further declines in real estate values can affect the market value of these assets. Any further decline in market value beyond its cost basis is

 

13


recorded as a current expense in the Company’s Statement of Operations. The current carrying value represents approximately 42% of the unpaid legal balance of the related loan when the asset was repossessed. OREO is further delineated in the table below.

 

(unaudited)    carrying amount  

Description of repossessed real estate

   at Dec 31, 2011  

22 single family homes

   $ 1,704   

1 mobile home with land

     126   

43 residential building lots

     1,664   

15 commercial buildings

     3,167   

Land / various acreages

     2,051   
  

 

 

 

Total, excluding OREO covered by FDIC loss share agreements

   $ 8,712   

Deposit activity

During the current quarter, total deposits increased by $127,851 (time deposits increased by $23,331 and non time deposits increased by $104,520) primarily due to the $197,841 of deposits acquired pursuant to the Federal Trust Bank acquisition on November 1, 2011. The cost of deposits decreased in every deposit category, including time deposits which decreased from an average cost of 1.51% in the third quarter to 1.41% in the fourth quarter of 2011. The overall cost of total deposits (i.e. includes non interest bearing checking accounts) decreased by 7 bps from 0.62% during the third quarter to 0.55% during the fourth quarter of 2011. Cost of total interest bearing deposits also decreased 10 bps to 0.70%. A summary of the deposit mix over the previous five quarters is presented in the table below.

 

Deposit mix (unaudited)

                              

At quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Checking accounts

          

Non-interest bearing

   $ 423,128      $ 402,683      $ 395,775      $ 378,395      $ 323,224   

Interest bearing

     344,303        310,723        310,533        310,660        282,405   

Savings deposits

     205,387        206,053        209,966        209,690        198,428   

Money market accounts

     340,053        288,892        238,381        275,729        223,724   

Time deposits

     606,918        583,587        611,280        653,428        657,813   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

   $ 1,919,789      $ 1,791,938      $ 1,765,935      $ 1,827,902      $ 1,685,594   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non time deposits as percentage of total deposits

     68     67     65     64     61

Time deposits as percentage of total deposits

     32     33     35     36     39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     100     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

14


Presented below are condensed consolidated balance sheets and average balance sheets for the periods indicated.

 

Condensed Consolidated Balance Sheets (unaudited)

                   

At quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Cash and due from banks

   $ 17,893      $ 19,119      $ 19,176      $ 19,542      $ 23,251   

Fed funds sold and Fed Res Bank deposits

     133,202        163,745        230,322        146,275        154,264   

Trading securities

     —          —          1,249        2,192        2,225   

Investments securities, available for sale

     591,164        557,129        455,131        575,098        500,927   

Loans held for sale

     3,741        664        899        168        673   

Loans covered by FDIC loss share agreements

     164,051        171,193        179,982        189,708        198,285   

Loans not covered by FDIC loss share agreements

     1,119,715        991,725        1,014,215        1,039,311        930,670   

Allowance for loan losses

     (27,944     (26,192     (27,418     (28,245     (26,267

FDIC indemnification assets

     50,642        53,820        58,544        60,122        59,456   

Premises and equipment, net

     94,358        88,995        88,015        86,652        84,982   

Goodwill

     38,035        38,035        38,035        38,035        38,035   

Core deposit intangible

     5,203        4,187        4,382        4,582        3,921   

Bank owned life insurance

     36,520        28,141        27,914        27,678        27,440   

OREO covered by FDIC loss share agreements

     9,469        9,634        9,696        11,332        11,104   

OREO not covered by FDIC loss share agreements

     8,712        12,061        11,284        10,222        12,239   

Other assets

     39,698        41,549        45,100        42,839        41,719   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 2,284,459      $ 2,153,805      $ 2,156,526      $ 2,225,511      $ 2,062,924   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

   $ 1,919,789      $ 1,791,938      $ 1,765,935      $ 1,827,902      $ 1,685,594   

Federal funds purchased

     54,624        61,343        87,435        92,111        68,495   

Other borrowings

     31,597        29,982        34,152        34,022        41,289   

Other liabilities

     15,816        20,506        18,718        18,489        15,297   

Common stockholders’ equity

     262,633        250,036        250,286        252,987        252,249   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,284,459      $ 2,153,805      $ 2,156,526      $ 2,225,511      $ 2,062,924   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Condensed Consolidated Average Balance Sheets (unaudited)

                              

For quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Federal funds sold and other

   $ 152,550      $ 230,716      $ 153,840      $ 143,464      $ 159,957   

Security investments

     566,317        458,870        548,264        540,601        556,076   

Loans covered by FDIC loss share agreements

     167,512        176,275        184,413        194,503        203,234   

Loans not covered by FDIC loss share agreements

     1,099,754        991,217        1,032,592        1,018,009        946,747   

Allowance for loan losses

     (26,866     (29,009     (26,549     (26,614     (28,700

All other assets

     286,824        287,483        286,908        294,991        272,980   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   $ 2,246,091      $ 2,115,552      $ 2,179,468      $ 2,164,954      $ 2,110,294   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits- interest bearing

   $ 1,456,253      $ 1,353,164      $ 1,399,653      $ 1,422,934      $ 1,365,362   

Deposits- non interest bearing

     418,373        406,455        392,504        354,036        347,046   

Federal funds purchased

     57,049        67,540        82,118        77,311        74,981   

Other borrowings

     31,849        31,027        36,113        37,171        39,992   

Other liabilities

     23,592        8,374        15,172        21,814        27,308   

Stockholders’ equity

     258,975        248,992        253,908        251,688        255,605   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,246,091      $ 2,115,552      $ 2,179,468      $ 2,164,954      $ 2,110,294   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Non interest income and non interest expense

The table below summarizes the Company’s non-interest income for the periods indicated.

 

Quarterly Condensed Consolidated Non Interest Income (unaudited)

                    

For the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11      12/31/10  

Service charges on deposit accounts

   $ 1,713      $ 1,629      $ 1,417      $ 1,556       $ 1,909   

Income from correspondent banking and bond sales division

     6,661        7,999        5,759        4,470         7,140   

Commissions from sale of mutual funds and annuities

     487        557        322        439         335   

Debit card and ATM fees

     769        713        714        656         565   

Loan related fees

     77        199        306        165         159   

BOLI income

     266        227        235        239         250   

Trading securities revenue

     88        130        106        161         174   

Gain on sale of securities available for sale

     130        205        3,120        9         3,808   

FDIC indemnification asset – amortization of discount rate

     (699     (225     (47     468         373   

FDIC indemnification income

     (845     256        585        1,136         —     

Other correspondent banking related fees

     489        434        430        339         251   

Other service charges and fees

     579        121        271        139         215   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Subtotal

   $ 9,712      $ 12,245      $ 13,218      $ 9,777       $ 15,179   

Bargain purchase gains related to acquisitions

     45,891        —          —          11,129         —     
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total non-interest income

   $ 55,603      $ 12,245      $ 13,218      $ 20,906       $ 15,179   

The FDIC indemnification asset (“IA”) discount amortization is producing negative amortization due to adjustments in the FDIC covered loan portfolio. That is, to the extent current adjusted projected losses in the covered loan portfolio are less than originally projected losses, and therefore future loan accretion yields increase, the related projected reimbursements from the FDIC contemplated in the IA is less, which produces a negative income accretion in non-interest income. This event corresponds to the increase in yields in the FDIC covered loan portfolio.

When a FDIC covered OREO property is sold at a loss, the loss is included in non-interest expense as loss on sale of OREO, and eighty percent of the loss is recorded as FDIC indemnification income and included in non-interest income. Eighty percent of any related loan pool impairments also are reflected in this account. The current quarter’s negative non interest income in this category includes adjustments related to the first three quarters of 2011.

The Company’s operating expenses increased during the current quarter primarily due to the November 1, 2011 acquisition of FTB. In addition, there was additional cost of operating FTB as a separate entity for forty days until its conversion to the Company’s core system on December 9, 2011.

Incentive compensation expense increased during the current quarter due to year end accrual adjustments. Employee health insurance expense increased quarter to quarter partly due to an increase in employees from FTB, but also from adjustments reflective of self-insured plans such as the one the Company has. That is, higher medical payments than projected at the end of the year.

Gross commissions from bond sales were lower by $1,338 quarter to quarter, which would have also reflected lower compensation related expenses by about a half of that amount.

 

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Merger, acquisition and conversion related expense for the current quarter was $6,246. Included in this amount was a third party data processing termination fee of $2,909 and severance payments of $2,052. Both relate to the FTB transaction and both were paid by the seller. The remaining amount included attorney fees, accountant fees, valuation firm fees, investment banker fees and various data processing conversion related costs other than the termination fee identified above.

The table below summarizes the Company’s non-interest expense for the periods indicated.

 

Quarterly Condensed Consolidated Non Interest Expense (unaudited)

                   

For the quarter ended:

   12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Employee salaries and wages

   $ 12,711      $ 12,621      $ 11,246      $ 10,572      $ 11,947   

Employee incentive/bonus compensation accrued

     1,024        600        594        612        938   

Employee stock based compensation expense

     170        158        182        195        181   

Deferred compensation expense

     115        114        115        116        120   

Health insurance and other employee benefits

     1,068        483        831        833        659   

Payroll taxes

     644        618        649        933        578   

401K employer contributions

     243        231        230        279        191   

Other employee related expenses

     158        231        104        92        162   

Incremental direct cost of loan origination

     (158     (112     (131     (126     (144
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total salaries, wages and employee benefits

   $ 15,975      $ 14,944      $ 13,820      $ 13,506      $ 14,632   

Occupancy expense

     2,027        2,036        2,114        2,094        2,084   

Depreciation of premises and equipment

     1,196        1,016        996        999        918   

Supplies, stationary and printing

     301        314        366        304        345   

Marketing expenses

     692        611        760        728        732   

Data processing expenses

     915        848        1,625        1,292        865   

Legal, auditing and other professional fees

     853        559        623        694        828   

Bank regulatory related expenses

     559        617        645        800        868   

Postage and delivery

     206        293        200        231        302   

ATM and debit card related expenses

     556        335        424        316        334   

Amortization of CDI

     219        194        201        190        172   

Loss (gain) on sale of repossessed real estate (“OREO”)

     183        307        (463     518        579   

Valuation write down of repossessed real estate (“OREO”)

     2,092        1,389        1,235        2,035        368   

Loss on repossessed assets other than real estate

     56        218        82        21        54   

Foreclosure and repossession related expenses

     975        1,052        2,008        987        616   

Internet and telephone banking

     243        324        282        156        236   

Visa/Mastercard processing expenses

     35        35        35        35        145   

Put back option amortization expense

     158        109        110        73        —     

Operational write-offs and losses

     146        166        120        121        265   

Correspondent account and Federal Reserve charges

     115        118        120        118        114   

Conferences, seminars, education and training

     168        134        122        74        252   

Director fees

     89        71        66        68        83   

Travel expenses

     27        30        40        37        91   

Other expenses

     692        488        529        851        589   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

   $ 28,478      $ 26,208      $ 26,060      $ 26,248      $ 25,472   

Merger, acquisition and conversion related expenses

     6,246        579        469        401        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non- interest expense

   $ 34,724      $ 26,787      $ 26,529      $ 26,649      $ 25,472   

Explanation of Certain Unaudited Non-GAAP Financial Measures

This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The attached financial highlights provide reconciliations

 

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between GAAP interest income, net interest income and tax equivalent basis interest income and net interest income, as well as total stockholders’ equity and tangible common equity. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.

Reconciliation of GAAP to non-GAAP Measures (unaudited):

 

     4Q11      3Q11      4Q10  

Interest income, as reported (GAAP)

   $ 21,324       $ 19,837       $ 19,473   

tax equivalent adjustments

     341         312         193   
  

 

 

    

 

 

    

 

 

 

Interest income (tax equivalent)

   $ 21,665       $ 20,149       $ 19,666   
  

 

 

    

 

 

    

 

 

 

Net interest income, as reported (GAAP)

   $ 18,567       $ 16,956       $ 15,607   

tax equivalent adjustments

     341         312         193   
  

 

 

    

 

 

    

 

 

 

Net interest income (tax equivalent)

   $ 18,908       $ 17,268       $ 15,800   
  

 

 

    

 

 

    

 

 

 

 

     12/31/11     9/30/11     6/30/11     3/31/11     12/31/10  

Total stockholders’ equity (GAAP)

   $ 262,633      $ 250,036      $ 250,286      $ 252,987      $ 252,249   

Goodwill

     (38,035     (38,035     (38,035     (38,035     (38,035

Core deposit intangible

     (5,203     (4,187     (4,382     (4,582     (3,921
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

   $ 219,395      $ 207,814      $ 207,869      $ 210,370      $ 210,293   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

About CenterState Banks, Inc.

The Company, headquartered in Davenport, Florida, between Orlando and Tampa, is a multi bank holding company that was formed in June 2000 as part of a merger of three independent commercial banks. Currently, the Company operates through its two subsidiary banks with 58 full service branch banking locations in 17 counties throughout central Florida. Through its subsidiary banks, the Company provides a range of consumer and commercial banking services to individuals, businesses and industries.

In addition to providing traditional deposit and lending products and services to its commercial and retail customers in central Florida, the Company also operates a correspondent banking and bond sales division. The division is integrated with and part of the lead subsidiary bank located in Winter Haven, Florida, although the majority of the bond salesmen, traders and operations personnel are physically housed in leased facilities located in Birmingham, Alabama, Atlanta, Georgia and Winston-Salem, North Carolina. The customer base includes small to medium size financial institutions primarily located in Florida, Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

For additional information contact Ernest S. Pinner, CEO, John C. Corbett, EVP, or James J. Antal, CFO, at 863-419-7750.

 

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Some of the statements in this report constitute forward-looking statements, within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements related to future events, other future financial and operating performance, costs, revenues, economic conditions in our markets, loan performance, credit risks, collateral values and credit conditions, or business strategies, including expansion and acquisition activities and may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. We cannot assure you that future results, levels of activity, performance or goals will be achieved, and actual results may differ from those set forth in the forward looking statements.

Forward-looking statements, with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of the Company or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2010, and otherwise in our SEC reports and filings.

 

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