10-Q 1 csfl-10q_20150331.htm 10-Q

 

 

 

U.S. SECURTIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

Form 10-Q

 

(Mark One)

x

Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2015

¨

Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from              to             

Commission file number 000-32017

 

CENTERSTATE BANKS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Florida

 

59-3606741

(State or Other Jurisdiction
of Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

42745 U.S. Highway 27

Davenport, Florida 33837

(Address of Principal Executive Offices)

(863) 419-7750

(Issuer’s Telephone Number, Including Area Code)

 

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

YES  x    NO  ¨

Check whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company.

 

Large accelerated filer

¨

Accelerated filer

x

Non-accelerated filer

¨

Smaller reporting company

¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES  x    NO  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

YES  ¨    NO  x

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

Common stock, par value $.01 per share

 

 

 

45,442,124 shares

 

(class)

 

Outstanding at April 30, 2015

 

 

 

 

 

 


 

CENTERSTATE BANKS, INC. AND SUBSIDIARIES

INDEX

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

 

 

Condensed consolidated balance sheets at March 31, 2015 (unaudited) and December 31, 2014

 

3

 

Condensed consolidated statements of earnings and comprehensive income for the three months ended March 31, 2015 and 2014 (unaudited)

 

4

 

Condensed consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2015 and 2014 (unaudited)

 

6

 

Condensed consolidated statements of cash flows for the three months ended March 31, 2015 and 2014 (unaudited)

 

7

 

Notes to condensed consolidated financial statements (unaudited)

 

9

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

33

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

49

 

Item 4. Controls and Procedures

 

49

 

PART II. OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

 

50

 

Item 1A. Risk Factors

 

50

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

50

 

Item 3. Defaults Upon Senior Securities

 

50

 

Item 4. [Removed and Reserved]

 

50

 

Item 5. Other Information

 

50

 

Item 6. Exhibits

 

50

 

SIGNATURES

 

51

 

CERTIFICATIONS

 

 

 

 

 

 

2


 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands of dollars, except per share data)

 

ASSETS

 

March 31, 2015

 

 

December 31, 2014

 

Cash and due from banks

 

$

59,295

 

 

$

52,067

 

Federal funds sold and Federal Reserve Bank deposits

 

 

197,046

 

 

 

106,346

 

    Cash and cash equivalents

 

 

256,341

 

 

 

158,413

 

Trading securities, at fair value

 

 

1,017

 

 

 

3,420

 

Investment securities available for sale, at fair value

 

 

520,247

 

 

 

517,457

 

Investment securities held to maturity (fair value of $230,439 and $238,431

 

 

 

 

 

 

 

 

    at March 31, 2015 and December 31, 2014, respectively)

 

 

228,870

 

 

 

237,362

 

Loans held for sale, at lower of cost or fair value

 

 

522

 

 

 

1,251

 

 

 

 

 

 

 

 

 

 

Loans, excluding purchased credit impaired

 

 

2,201,395

 

 

 

2,152,759

 

Purchased credit impaired loans

 

 

263,268

 

 

 

276,766

 

Allowance for loan losses

 

 

(20,980

)

 

 

(19,898

)

     Net Loans

 

 

2,443,683

 

 

 

2,409,627

 

 

 

 

 

 

 

 

 

 

Bank premises and equipment, net

 

 

100,526

 

 

 

98,848

 

Accrued interest receivable

 

 

9,275

 

 

 

8,999

 

Federal Home Loan Bank and Federal Reserve Bank stock, at cost

 

 

14,011

 

 

 

14,219

 

Goodwill

 

 

76,739

 

 

 

76,739

 

Core deposit intangible

 

 

13,789

 

 

 

14,417

 

Trust intangible

 

 

946

 

 

 

984

 

Bank owned life insurance

 

 

84,137

 

 

 

83,544

 

Other repossessed real estate owned covered by FDIC loss share agreements

 

 

13,528

 

 

 

19,404

 

Other repossessed real estate owned

 

 

7,586

 

 

 

8,896

 

FDIC indemnification asset

 

 

41,594

 

 

 

49,054

 

Deferred income tax asset, net

 

 

48,502

 

 

 

49,587

 

Bank property held for sale

 

 

2,449

 

 

 

2,675

 

Prepaid expense and other assets

 

 

24,810

 

 

 

21,973

 

TOTAL ASSETS

 

$

3,888,572

 

 

$

3,776,869

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

     Demand - non-interest bearing

 

$

1,112,282

 

 

$

1,048,874

 

     Demand - interest bearing

 

 

623,370

 

 

 

607,359

 

     Savings and money market accounts

 

 

954,685

 

 

 

947,995

 

     Time deposits

 

 

459,035

 

 

 

487,812

 

Total deposits

 

 

3,149,372

 

 

 

3,092,040

 

 

 

 

 

 

 

 

 

 

Securities sold under agreement to repurchase

 

 

31,071

 

 

 

27,022

 

Federal funds purchased

 

 

187,443

 

 

 

151,992

 

Corporate debentures

 

 

23,961

 

 

 

23,917

 

Accrued interest payable

 

 

293

 

 

 

336

 

Payables and accrued expenses

 

 

33,367

 

 

 

29,085

 

     Total liabilities

 

 

3,425,507

 

 

 

3,324,392

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock, $.01 par value: 100,000,000 shares

 

 

 

 

 

 

 

 

     authorized; 45,408,924 and 45,323,553  shares issued and outstanding

 

 

 

 

 

 

 

 

     at March 31, 2015 and December 31, 2014, respectively

 

 

454

 

 

 

453

 

Additional paid-in capital

 

 

389,578

 

 

 

388,698

 

Retained earnings

 

 

67,966

 

 

 

59,273

 

Accumulated other comprehensive income

 

 

5,067

 

 

 

4,053

 

Total stockholders' equity

 

 

463,065

 

 

 

452,477

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

3,888,572

 

 

$

3,776,869

 

See notes to the accompanying condensed consolidated financial statements

 

 

 

 

3


 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three months ended

 

Interest income:

 

March 31, 2015

 

 

March 31, 2014

 

Loans

 

$

34,268

 

 

$

25,729

 

Investment securities available for sale:

 

 

 

 

 

 

 

 

Taxable

 

 

4,282

 

 

 

3,478

 

Tax-exempt

 

 

539

 

 

 

336

 

Federal funds sold and other

 

 

396

 

 

 

239

 

 

 

 

39,485

 

 

 

29,782

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

 

1,447

 

 

 

1,337

 

Securities sold under agreement to repurchase

 

 

49

 

 

 

23

 

Federal funds purchased

 

 

132

 

 

 

6

 

Corporate debentures

 

 

237

 

 

 

223

 

 

 

 

1,865

 

 

 

1,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

37,620

 

 

 

28,193

 

Provision for loan losses

 

 

1,642

 

 

 

(41

)

Net interest income after loan loss provision

 

 

35,978

 

 

 

28,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non interest income:

 

 

 

 

 

 

 

 

Correspondent banking capital markets revenue

 

 

5,694

 

 

 

3,136

 

Other correspondent banking related  revenue

 

 

1,106

 

 

 

795

 

Service charges on deposit accounts

 

 

2,261

 

 

 

2,262

 

Debit, prepaid, ATM and merchant card related fees

 

 

1,701

 

 

 

1,506

 

Wealth management related revenue

 

 

970

 

 

 

1,217

 

FDIC indemnification income

 

 

667

 

 

 

1,268

 

FDIC indemnification asset amortization

 

 

(4,350

)

 

 

(5,185

)

Bank owned life insurance income

 

 

593

 

 

 

352

 

Other service charges and fees

 

 

439

 

 

 

409

 

Total other income

 

 

9,081

 

 

 

5,760

 

See notes to the accompanying condensed consolidated financial statements.

 

 

 

 

4


 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three months ended

 

 

 

March 31, 2015

 

 

March 31, 2014

 

Non interest expense:

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

 

19,580

 

 

 

15,681

 

Occupancy expense

 

 

2,445

 

 

 

1,960

 

Depreciation of premises and equipment

 

 

1,433

 

 

 

1,478

 

Supplies, stationary and printing

 

 

365

 

 

 

227

 

Marketing expenses

 

 

538

 

 

 

620

 

Data processing expense

 

 

1,330

 

 

 

1,039

 

Legal, audit and other professional fees

 

 

735

 

 

 

775

 

Core deposit intangible ("CDI") amortization

 

 

628

 

 

 

331

 

Postage and delivery

 

 

368

 

 

 

268

 

ATM and debit card related expenses

 

 

433

 

 

 

474

 

Bank regulatory expenses

 

 

910

 

 

 

631

 

(Gain) loss on sale of repossessed real estate (“OREO”)

 

 

(1,528

)

 

 

77

 

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

 

 

389

 

 

 

1,020

 

Gain on repossessed assets other than real estate

 

 

(1

)

 

 

(2

)

Foreclosure related expenses

 

 

623

 

 

 

729

 

Merger and acquisition related expenses

 

 

-

 

 

 

2,347

 

Branch closure and efficiency initiatives

 

 

-

 

 

 

3,158

 

Other expenses

 

 

2,355

 

 

 

1,590

 

Total other expenses

 

 

30,603

 

 

 

32,403

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

14,456

 

 

 

1,591

 

Provision for income taxes

 

 

5,308

 

 

 

538

 

Net income

 

$

9,148

 

 

$

1,053

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

Unrealized securities holding gain, net of income taxes

 

$

1,014

 

 

$

1,128

 

Less: reclassified adjustments for gain included in net income, net of

    income taxes, of $0 and $0 ,respectively

 

 

-

 

 

 

-

 

Net unrealized gain on available for sale securities,

    net of income taxes

 

$

1,014

 

 

$

1,128

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

$

10,162

 

 

$

2,181

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

 

$

0.03

 

Diluted

 

$

0.20

 

 

$

0.03

 

Common shares used in the calculation of earnings per share:

 

 

 

 

 

 

 

 

Basic (1)

 

 

45,127,940

 

 

 

34,465,022

 

Diluted (1)

 

 

45,657,624

 

 

 

34,862,703

 

 

(1)

Excludes participating shares.

See notes to the accompanying condensed consolidated financial statements

 

 

 

 

5


 

 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2015 and 2014 (unaudited)

(in thousands of dollars, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

common

 

 

Common

 

 

paid in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

 

shares

 

 

stock

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balances at January 1, 2014

 

 

30,112,475

 

 

$

301

 

 

$

229,544

 

 

$

48,018

 

 

$

(4,484

)

 

$

273,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,053

 

 

 

 

 

 

 

1,053

 

Unrealized holding loss on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   available for sale securities, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

deferred income tax of $708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,128

 

 

 

1,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid - common ($0.01 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(355

)

 

 

 

 

 

 

(355

)

Stock grants issued

 

 

19,856

 

 

 

 

 

 

 

216

 

 

 

 

 

 

 

 

 

 

 

216

 

Stock based compensation expense

 

 

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

67

 

Stock options exercised, including tax benefit

 

 

207,658

 

 

 

2

 

 

 

907

 

 

 

 

 

 

 

 

 

 

 

909

 

Stock issued pursuant to Gulfstream acquisition

 

 

5,195,541

 

 

 

52

 

 

 

53,098

 

 

 

 

 

 

 

 

 

 

 

53,150

 

Stock options acquired and converted pursuant

   to Gulfstream acquisition

 

 

 

 

 

 

 

 

 

 

3,617

 

 

 

 

 

 

 

 

 

 

 

3,617

 

Balances at March 31, 2014

 

 

35,535,530

 

 

$

355

 

 

$

287,449

 

 

$

48,716

 

 

$

(3,356

)

 

$

333,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2015

 

 

45,323,553

 

 

$

453

 

 

$

388,698

 

 

$

59,273

 

 

$

4,053

 

 

$

452,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,148

 

 

 

 

 

 

 

9,148

 

Unrealized holding gain on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   available for sale securities, net of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

deferred income tax of $637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,014

 

 

 

1,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid - common ($0.01 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(455

)

 

 

 

 

 

 

(455

)

Stock grants issued

 

 

45,053

 

 

 

1

 

 

 

607

 

 

 

 

 

 

 

 

 

 

 

608

 

Stock based compensation expense

 

 

 

 

 

 

 

 

 

 

56

 

 

 

 

 

 

 

 

 

 

 

56

 

Stock options exercised, including tax benefit

 

 

40,318

 

 

 

-

 

 

 

217

 

 

 

 

 

 

 

 

 

 

 

217

 

Balances at March 31, 2015

 

 

45,408,924

 

 

$

454

 

 

$

389,578

 

 

$

67,966

 

 

$

5,067

 

 

$

463,065

 

See notes to the accompanying condensed consolidated financial statements

 

 

 

 

6


 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three months ended March 31,

 

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

   Net income

 

$

9,148

 

 

$

1,053

 

   Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

      Provision for loan losses

 

 

1,642

 

 

 

(41

)

      Depreciation of premises and equipment

 

 

1,433

 

 

 

1,478

 

      Accretion of purchase accounting adjustments

 

 

(10,523

)

 

 

(8,092

)

      Net amortization of investment securities

 

 

2,013

 

 

 

1,175

 

      Net deferred loan origination fees

 

 

139

 

 

 

(162

)

      Trading securities revenue

 

 

(174

)

 

 

(27

)

      Purchases of trading securities

 

 

(38,082

)

 

 

(28,809

)

      Proceeds from sale of trading securities

 

 

40,659

 

 

 

28,836

 

      Repossessed real estate owned valuation write down

 

 

389

 

 

 

1,020

 

      (Gain) loss on sale of repossessed real estate owned

 

 

(1,528

)

 

 

77

 

      Loss on sale of repossessed assets other than real estate

 

 

(1

)

 

 

(2

)

      Gain on sale of loans held for sale

 

 

(164

)

 

 

(76

)

      Loans originated and held for sale

 

 

(7,431

)

 

 

(4,610

)

      Proceeds from sale of loans held for sale

 

 

8,324

 

 

 

4,926

 

      Gain on disposal of and or sale of fixed assets

 

 

-

 

 

 

(7

)

      Gain on disposal of bank property held for sale

 

 

(41

)

 

-

 

      Impairment on bank property held for sale

 

 

682

 

 

 

2,506

 

      Deferred income taxes

 

 

452

 

 

 

3,724

 

      Stock based compensation expense

 

 

830

 

 

 

187

 

      Bank owned life insurance income

 

 

(593

)

 

 

(352

)

      Net cash from changes in:

 

 

 

 

 

 

 

 

         Net changes in accrued interest receivable, prepaid expenses, and other assets

 

 

173

 

 

 

(3,234

)

         Net change in accrued interest payable, accrued expense, and other liabilities

 

 

3,804

 

 

 

(3,946

)

            Net cash provided by (used by) operating activities

 

 

11,151

 

 

 

(4,376

)

See notes to the accompanying condensed consolidated financial statements.

 

 

 

 

7


 

CenterState Banks, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars, except per share data)

(continued)

 

 

 

Three months ended March 31,

 

 

 

2015

 

 

2014

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Available for sale securities:

 

 

 

 

 

 

 

 

   Purchases of investment securities

 

 

(1,004

)

 

 

-

 

   Purchases of mortgage backed securities

 

 

(22,306

)

 

 

(176,583

)

   Proceeds from pay-downs of mortgage backed securities

 

 

20,554

 

 

 

17,187

 

   Proceeds from sales of investment securities

 

 

-

 

 

 

19,583

 

   Proceeds from sales of mortgage backed securities

 

 

-

 

 

 

41,233

 

Held to maturity securities:

 

 

 

 

 

 

 

 

   Purchases of investment securities

 

 

(37,882

)

 

 

-

 

   Proceeds from called investment securities

 

 

37,110

 

 

 

-

 

   Proceeds from pay-downs of mortgage backed securities

 

 

8,868

 

 

 

-

 

   Proceeds from sales of FHLB and FRB stock

 

 

208

 

 

 

1,055

 

   Net (increase) decrease in loans

 

 

(28,103

)

 

 

22,898

 

   Cash received from FDIC loss sharing agreements

 

 

3,654

 

 

 

5,299

 

   Purchases of premises and equipment, net

 

 

(3,111

)

 

 

3,470

 

   Proceeds from sale of repossessed real estate

 

 

11,589

 

 

 

6,762

 

   Proceeds from sale of fixed assets

 

 

-

 

 

 

7

 

   Proceeds from sale of bank property held for sale

 

 

555

 

 

 

-

 

   Net cash from bank acquisitions

 

 

-

 

 

 

77,005

 

            Net cash (used in) provided by investing activities

 

 

(9,868

)

 

 

17,916

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

   Net increase in deposits

 

 

57,567

 

 

 

23,629

 

   Net increase (decrease) in securities sold under agreement to repurchase

 

 

4,049

 

 

 

(1,917

)

   Net increase in federal funds purchased

 

 

35,451

 

 

 

15,274

 

   Net decrease in other borrowings

 

 

-

 

 

 

(5,708

)

   Net decrease in payable to shareholders for acquisitions

 

 

(184

)

 

 

-

 

   Stock options exercised, including tax benefit

 

 

217

 

 

 

909

 

   Dividends paid

 

 

(455

)

 

 

(355

)

            Net cash used in financing activities

 

 

96,645

 

 

 

31,832

 

 

 

 

 

 

 

 

 

 

            Net increase in cash and cash equivalents

 

 

97,928

 

 

 

45,372

 

Cash and cash equivalents, beginning of period

 

 

158,413

 

 

 

174,889

 

Cash and cash equivalents, end of period

 

$

256,341

 

 

$

220,261

 

 

 

 

 

 

 

 

 

 

Transfer of loans to other real estate owned

 

$

3,264

 

 

$

3,432

 

Transfers of bank property to held for sale

 

$

970

 

 

$

4,647

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

    Interest

 

$

2,187

 

 

$

1,727

 

    Income taxes

 

$

170

 

 

$

1,520

 

See notes to the accompanying condensed consolidated financial statements.

 

 

 

 

8


 

CenterState Banks, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

 

 

NOTE 1: Nature of Operations and basis of presentation

The consolidated financial statements include the accounts of CenterState Banks, Inc. (the “Parent Company,” “Company” or “CSFL”), and its wholly owned subsidiary bank, CenterState Bank of Florida, N.A. (“CenterState”), and non bank subsidiary, R4ALL, Inc. The subsidiary bank operates through 58 full service banking locations in 20 counties throughout Florida, providing traditional deposit and lending products and services to its commercial and retail customers.  R4ALL, Inc. is a separate non bank subsidiary of CSFL. Its purpose is to purchase troubled loans from the subsidiary bank and manage their eventual disposition.

In addition, the Company also operates a correspondent banking and capital markets division. The division is integrated with and part of the subsidiary bank located in Winter Haven, Florida, although the majority of its bond salesmen, traders and operational personnel are physically housed in leased facilities located in Birmingham, Alabama, Atlanta, Georgia and Winston Salem, North Carolina. The business lines of this division are primarily divided into three inter-related revenue generating activities. The first, and largest, revenue generator is commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities. The second category includes correspondent bank deposits (i.e. federal funds purchased) and correspondent bank checking account deposits. The third revenue generating category includes fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services. The customer base includes small to medium size financial institutions primarily located in the Southeastern United States.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2014. In the Company’s opinion, all adjustments, consisting primarily of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods have been made. The results of operations of the three month  period ended March 31, 2015 are not necessarily indicative of the results expected for the full year.

Some items in the prior period financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or shareholders’ equity.

 

 

9


CenterState Banks, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

 

NOTE 2: Common stock outstanding and earnings per share data

Basic earnings per share is based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the periods and the further dilution from stock options using the treasury method. Average stock options outstanding that were anti dilutive during the three month periods ending March 31, 2015 and 2014 were 586,620 and 1,016,949,  respectively. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods presented.

 

 

Three months ended March 31,

 

 

2015

 

 

2014

 

Basic