CenterState Bank (CSFL) 8-K Third Quarter 2014 Operating Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 27, 2014

CenterState Banks, Inc. Announces

Third Quarter 2014 Operating Results

DAVENPORT, FL. – October 27, 2014—CenterState Banks, Inc. (NASDAQ: CSFL) reported earnings per share of $0.08 ($0.13 per share net operating income, a non-gaap measurement described below) on net income of $3,593 for the third quarter of 2014, compared to $0.03 per share ($0.11 per share net operating income) on net income of $1,037 reported during the prior quarter. All amounts are in thousands, except per share information, and all earnings per share amounts are reported on a diluted basis unless otherwise noted.

A comparison of current quarter earnings and prior quarter is presented in the table below:

	3Q14		2Q14
Earnings per share (GAAP)	$	0.08	$	0.03
Net operating income per share (Non-GAAP)	$	0.13	$	0.11

Net operating income is a non-gaap financial measurement used by management to evaluate and monitor financial results of operations excluding certain non-recurring items that include merger and acquisition related expenses, non-recurring charges related to the Company’s efficiency and profitability initiatives announced in January 2014, which included impairment charges on the real estate of several of the branches closed during April 2014 and gains or losses on the sale of securities available for sale. A reconciliation table of this non-gaap measurement is presented on page 19, Explanation of Certain Unaudited Non-GAAP Financial Measures.

Highlights

— Loan production increased 87% compared to the previous quarter. Loans, excluding Purchase Credit Impaired (“PCI”) loans, increased by an annualized rate of 16.5% or $84,340 during the quarter. For the nine month period ending September 30, 2014 the annualized increase was approximately 8.2%.

— First Southern Bank (“FSB”), which was acquired on June 1, 2014, was converted into the Company’s core processing system during the weekend of September 19, 2014.

— The Company closed on its previously announced sale of branch real estate and deposits from 6 of the acquired branch offices from FSB on September 18, 2014. Approximately $170 million of deposits were sold.

— Four additional branch offices acquired from FSB were consolidated and closed on September 19, 2014.

— Merger and acquisition related expenses recognized during the current quarter approximated $3,450 which was higher than the estimate previously communicated. The increase was primarily due to higher than expected data processing charges related to deconversion, as well as expenses related to disposal of fixed assets and certain lease termination arrangements.

— The Company previously announced that the total FSB tangible book value (“TBV”) accretion was estimated to approximate $0.45 per share or 6.3%. The higher than estimated merger expenses discussed above had the effect of decreasing the estimated accretion to $0.43 per share or 6.0%. We expect to recognize additional merger expenses in 4Q14, but do not expect it to be a material amount.

— Net interest margin (“NIM”) decreased to 4.23% in the current quarter compared to 4.37% in the prior quarter primarily due to the integration of FSB for a full quarter versus only one month in 2Q14.

— Stock Repurchase Program announced on October 20, 2014.

1

Quarterly condensed consolidated income statements (unaudited) are shown below for the periods indicated. See notes 1 and 2 below for a discussion related to FDIC revenue and amortization (negative accretion) included in non-interest income.

Quarterly Condensed Consolidated Statements of Operations (unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Interest income	$	37,347		$	33,079		$	29,782		$	25,479		$	26,034
Interest expense		2,097			1,822			1,589			1,398			1,424
Net interest income		35,250			31,257			28,193			24,081			24,610
Provision (recovery) for loan losses		1,108			117			(464	)		746			(1,309	)
(Recovery) provision for loan losses- PCI loans		(153	)		(223	)		423			(563	)		36
Net interest income after loan loss provision		34,295			31,363			28,234			23,898			25,883
Correspondent banking and capital markets division- income		5,142			5,285			3,931			4,025			3,771
Gain on sale of securities available for sale		—			46			—			22			—
FDIC- IA amortization (negative accretion) (1)		(4,953	)		(5,006	)		(5,185	)		(4,500	)		(3,836	)
FDIC- revenue (2)		213			421			1,268			185			3,333
All other non-interest income		6,157			5,626			5,746			5,465			5,339
Total non interest income		6,559			6,372			5,760			5,197			8,607
Credit related expenses		624			1,239			523			510			821
FDIC credit related expenses		(209	)		1,136			1,301			1,310			4,934
Correspondent banking and capital markets division-expense		5,036			5,063			4,378			4,683			4,377
Merger and acquisition related expenses		3,450			4,897			2,347			539			183
Branch closure and efficiency initiatives		(6	)		29			3,158			—			—
All other non-interest expense		26,639			23,789			20,696			19,407			19,535
Total non interest expense		35,534			36,153			32,403			26,449			29,850
Income before income tax		5,320			1,582			1,591			2,646			4,640
Income tax provision		1,727			545			538			846			1,531
NET INCOME	$	3,593		$	1,037		$	1,053		$	1,800		$	3,109
Earnings per share (basic) (GAAP)	$	0.08		$	0.03		$	0.03		$	0.06		$	0.10
Earnings per share (diluted) (GAAP)	$	0.08		$	0.03		$	0.03		$	0.06		$	0.10
Net operating income per share (Non-GAAP) (3)	$	0.13		$	0.11		$	0.13		$	0.07		$	0.11
Average common shares outstanding (basic)		45,061			38,665			34,465			30,112			30,110
Average common shares outstanding (diluted)		45,413			39,051			34,863			30,245			30,244
Common shares outstanding at period end		45,209			45,023			35,536			30,112			30,112

note 1: On the date of an FDIC acquisition (with loss share), the Company estimates expected future losses and the timing of those losses by loan pool. The related reimbursements from the FDIC, pursuant to the specific loss share agreement, of those losses are recorded as a receivable from the FDIC, referred to as indemnification asset or “IA.” The Company updates its estimate of future losses and the timing of the losses each quarter. To the extent management estimates that future losses are less than prior expected future losses, management adjusts its estimates of future expected cash flows and this increase is accreted to interest income over the remaining life of those specific loan pools, increasing the yield on loans. Because management no longer expects these incremental future losses on the loan pool(s), then the expected future reimbursements from the FDIC for the related percentage of loss share are also reduced. Instead of immediately charging down the IA for expected future FDIC reimbursements, the IA is written down over the shorter of the loss share period or the life of the related loan pool(s) by negative accretion (amortization) in this line item.

note 2: Two FDIC related revenue items are included in this line item. The first item is FDIC reimbursement income from the sale of OREO. When OREO (those covered by loss share agreements) is sold for a loss, the FDIC covered portion of the loss is recognized as income and included in this line item per the coverage breakdown in the table on page 13, Selected Credit Quality Ratios. Second, when a loan pool (with loss share) is impaired, the impairment expense is included in provision for loan losses, and the percentage of the loss that is reimbursable from the FDIC is recognized as income from FDIC reimbursement, and included in this line item as well.

note 3: This non-gaap metric represents gaap net income excluding nonrecurring income and expense items net of the effective tax rate for the period presented. Items excluded are gains on sales of securities held for sale, acquisition and merger related expenses and one time charges related to the Company’s efficiency and profitability initiatives announced last quarter, which include impairment charges on the real estate of several of the branches closed during April 2014, divided by the average diluted common shares outstanding. A reconciliation table is presented on page 19, Explanation of Certain Unaudited Non-GAAP Financial Measures.

2

The condensed quarterly results of the Company’s correspondent banking and capital markets segment are presented below.

Quarterly Condensed Segment Information—Correspondent banking and capital markets division (unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Net interest income	$	801		$	740		$	707		$	748		$	725
Total non-interest income (note 1)		5,142			5,285			3,931			4,025			3,771
Total non-interest expense (note 2)		(5,036	)		(5,063	)		(4,378	)		(4,683	)		(4,377	)
Income tax provision		(350	)		(371	)		(100	)		(35	)		(46	)
Net income	$	557		$	591		$	160		$	55		$	73
Contribution to diluted earnings per share	$	0.01		$	0.02		$	—		$	—		$	—
Allocation of indirect expense net of inter-company earnings credit, net of income tax benefit (note 3)	$	(284	)	$	(120	)	$	(150	)	$	(353	)	$	(303	)
Contribution to diluted earnings per share after deduction of allocated indirect expenses	$	0.01		$	0.01		$	—		$	(0.01	)	$	(0.01	)

note 1: The primary component in this line item is gross commissions earned on bond sales, fees from hedging services, loan brokering fees and related consulting fees which were $4,184, $4,192, $3,148, $3,236 and $2,909 for 3Q14, 2Q14, 1Q14, 4Q13 and 3Q13 respectively. The fee income in this category is based on sales volume in any particular period and is therefore volatile between comparable periods. The remaining non interest income items in this category, which are less volatile, 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 2: A significant portion of these expenses are variable in nature and are a derivative of the income from bond sales, hedging services, brokering loans sales and related consulting services identified in note 1 above. The variable expenses related to these fees identified in note 1 above were $2,336, $2,308, $1,713, $1,716 and $1,589 for 3Q14, 2Q14, 1Q14, 4Q13 and 3Q13 respectively. Expenses in this line item do not include any indirect support allocation costs.

note 3: A portion of the cost of the Company’s indirect departments such as human resources, accounting, deposit operations, item processing, information technology, compliance and others have been allocated to the correspondent banking and capital markets division based on management’s estimates. In addition, commencing in 1Q14, an inter-company earnings credit is allocated to the segment for services provided to the commercial bank segment, also based on management’s estimates and judgment.

Loan production

Loans excluding PCI loans increased $84,340 during the current quarter, an annualized growth rate of approximately 16.5%. During the nine month period ending September 30, 2014, non-PCI loans (excluding day 1 acquisition of loans from Gulfstream Business Bank (“GSB”) and FSB) increased by $76,375, an annualized growth rate of approximately 8.2%.

Total new loans originated during the quarter approximated $185.1 million, of which $150.3 million were funded. The weighted average interest rate on funded loans was approximately 3.90%. About 40% of loan production was commercial real estate (“CRE”), 29% commercial and industrial (“C&I”), 19% single family residential and 12% were all other.

3

Approximately 53% of the current quarter production was variable rate and 47% fixed rate. The loan origination pipeline is approximately $282 million at September 30, 2014 compared to $238 million at June 30, 2014. The graph below summarizes total loan production and funded loan production over the past eleven quarters.

Loan portfolio mix, PCI loans, FDIC covered loans and the related Indemnification Asset (“IA”)

Total PCI loans at September 30, 2014 is equal to $309,638 of which $264,689 are covered by FDIC loss sharing agreements. The Company acquired both covered and non-covered PCI loans in its acquisition of FSB. It also acquired FDIC covered loans that are not included in the PCI loan portfolio. In addition, the Company also acquired non-covered PCI loans from the GSB acquisition. The table below compares the Company’s total FDIC covered loans and its PCI loan portfolio at September 30, 2014.

PCI loans			FDIC covered loans
$	264,689	covered by FDIC loss share	$	264,689	PCI loans
	44,949	not covered by FDIC		41,715	non-PCI loans
$	309,638	total PCI loan portfolio	$	306,404	total FDIC covered loans

4

The Company has fourteen loss share agreements with the FDIC. Seven have ten year terms and generally include single family residential loans and the other seven have five year terms and generally include non-single family residential loans. The table below summarizes the covered loans by acquired bank and by term of the related loss share period at September 30, 2014.

													est rem		percentage
	Loss		Unpaid										life of		of losses		end of
	Share		Principal		Carrying		Difference (2)						loans in		reimbursable		loss share
	Term		Balance		Balance		$			%			years(1)		from FDIC		period		IA
Olde Cypress		5 yrs	$	9,974	$	7,099		($2,875	)		29	%		6.8		80%		July 2015	$	254
		10 yrs		36,092		28,971		(7,121	)		20	%		7.6		80%		July 2020		10,051
Comm Bank Bartow		5 yrs		3,687		2,932		(755	)		20	%		2.7		80%		Aug 2015		332
		10 yrs		15,526		11,360		(4,166	)		27	%		7.3		80%		Aug 2020		3,218
Independent Nat’l Bank		5 yrs		20,921		17,725		(3,196	)		15	%		2.0		80%		Aug 2015		982
		10 yrs		20,666		16,101		(4,565	)		22	%		8.0		80%		Aug 2020		4,431
First Guaranty Bank		5 yrs		75,011		51,015		(23,996	)		32	%		3.7		80%		Jan 2017		18,896
		10 yrs		44,852		34,990		(9,862	)		22	%		6.8		80%		Jan 2022		7,578
Central FL State Bank		5 yrs		14,059		8,647		(5,412	)		38	%		1.7		80%		Jan 2017		4,563
		10 yrs		6,337		4,875		(1,462	)		23	%		4.8		80%		Jan 2022		1,199
First Commercial Bank		5 yrs		104,138		88,970		(15,168	)		15	%		2.4		70%/30%/75%		Jan 2016		2,080
		10 yrs		6,875		5,758		(1,117	)		16	%		2.7		70%/30%/75%		Jan 2021		257
Haven Trust Bank		5 yrs		27,714		24,658		(3,056	)		11	%		2.7		70%/0%/70%		Sept 2015		—
		10 yrs		4,246		3,303		(943	)		22	%		3.0		70%/0%/70%		Sept 2020		191
Total			$	390,098	$	306,404		($83,694	)		21	%		4.2					$	54,032

(1) This represents an estimate of the weighted average life or timing of the estimated future cash flows as of September 30, 2014.

(2) Represents the dollar amount difference between the carrying value, or book value, of the loans and the unpaid principal balance (“UPB”), and the dollar amount difference as a percentage of the UPB.

As shown in the table above, the Company’s total IA at September 30, 2014 was $54,032 of which $23,429 represents a receivable from the FDIC for estimated future loss reimbursements, and $30,603 represents previously estimated loss reimbursements that are no longer expected. This amount is now expected to be paid (and/or has been paid) by the borrower (or realized upon the sale of OREO) instead of a reimbursement from the FDIC. At September 30, 2014, the $30,603 previously estimated reimbursements from the FDIC is expected to be written off as amortization expense (negative accretion) in the Company’s non-interest income as summarized below.

Year			Year
2014 (3 months)	$	4,666	2018	$	2,152
2015		10,605	2019		1,817
2016		6,905	2020 thru 2022		1,655
2017		2,803	Total	$	30,603

The table above is based on the Company’s most recent quarterly updated projections of possible future losses, cash flows and timing of cash flows. The above amounts are subject to change, and have changed in past quarters, primarily due to the FDIC covered loan pools performing better than previously estimated. A summary of the activity in the Company’s IA account during the nine month period ending September 30, 2014 is presented in the table below.

Balance at 12/31/13	$	73,877
Effect of FSB acquisition		2,636
Amortization, net		(15,097	)
Indemnification revenue		1,864
Indemnification of foreclosure expenses		307
Proceeds received from FDIC		(9,593	)
Impairment of loan pool(s)		38
Balance 9/30/14	$	54,032

5

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

Loan mix (unaudited)
At quarter ended:	9/30/14		6/30/14		3/31/14		12/31/13		9/30/13
Loans
Real estate loans
Residential	$	572,244	$	563,293	$	495,450	$	458,331	$	449,224
Commercial		1,136,595		1,091,660		736,406		528,710		529,172
Land, development and construction loans		78,514		78,444		60,726		62,503		60,375
Total real estate loans		1,787,353		1,733,397		1,292,582		1,049,544		1,038,771
Commercial loans		282,753		251,741		217,482		143,263		126,451
Consumer and other loans		55,527		56,191		54,205		49,547		49,065
Total loans before unearned fees and costs		2,125,633		2,041,329		1,564,269		1,242,354		1,214,287
Unearned fees and costs		856		820		565		404		135
Total Non-PCI loans (note 1)		2,126,489		2,042,149		1,564,834		1,242,758		1,214,422
PCI loans
Real estate loans
Residential		106,335		119,005		117,879		120,030		124,027
Commercial		165,006		195,157		112,558		100,012		109,285
Land, development and construction loans		26,250		27,885		11,144		6,381		5,673
Total real estate loans		297,591		342,047		241,581		226,423		238,985
Commercial loans		11,226		10,759		8,118		3,850		3,906
Consumer and other loans		821		1,064		1,101		1,148		1,259
Total PCI loans (note 2)		309,638		353,870		250,800		231,421		244,150
Total Loans	$	2,436,127	$	2,396,019	$	1,815,634	$	1,474,179	$	1,458,572

note 1: Included in the $2,126,489 Non-PCI loans at September 30, 2014 are $41,715 that are covered by FDIC loss sharing agreements the Company acquired pursuant to its June 1, 2014 acquisition of FSB.

note 2: Included in the $309,638 PCI loans at September 30, 2014 are $264,689 of loans that are covered by FDIC loss sharing agreements and $44,949 are not covered.

Credit quality and allowance for loan losses

During the quarter, excluding PCI loans, the Company recorded a loan loss provision expense of $1,108 and charge-offs net of recoveries of $313, resulting in an increase in the allowance for loan losses (excluding PCI loans) of $795 as shown in the table below.

With regard to PCI loans, the Company recorded a negative loan loss provision of $153, resulting in a decrease in the allowance for loan losses on PCI loans of $153. See the table “Allowance for loan losses” for additional information.

The allowance for loan losses (“ALLL”) was $19,842 at September 30, 2014 compared to $19,200 at June 30, 2014, an increase of $642. This increase is the result of the aggregate effect of a $675 increase in general loan loss allowance, a $120 increase in the specific loan loss allowance related to impaired loans and a $153 decrease in the loan loss allowance related to PCI loans accounted for pursuant to ASC Topic 310-30. The changes in the Company’s ALLL components between September 30, 2014 and June 30, 2014 are summarized in the table below.

	Sep 30, 2014							June 30, 2014							increase (decrease)
	loan		ALLL					loan		ALLL					loan			ALLL
	balance		balance		%			balance		balance		%			balance			balance
Non impaired loans	$	1,349,696	$	17,058		1.26	%	$	1,240,084	$	16,383		1.32	%	$	109,612		$	675		-6 bps
Gulfstream loans (note 1)		291,140		—		—	%		299,823		—		—	%		(8,683	)
First Southern loans (note 2)		458,958		—		—	%		474,979		—		—	%		(16,021	)
Impaired loans		26,695		1,977		7.41	%		27,263		1,857		6.81	%		(568	)		120		60 bps
Non-PCI loans		2,126,489		19,035		0.90	%		2,042,149		18,240		0.89	%		84,340			795		1 bps
PCI loans (note 3)		309,638		807					353,870		960					(44,232	)		(153	)
Total loans	$	2,436,127	$	19,842		0.81	%	$	2,396,019	$	19,200		0.80	%	$	40,108		$	642		1 bps

6

note 1: Loans acquired in the Company’s January 17, 2014 acquisition of Gulfstream Business Bank that are not PCI loans. These are performing loans recorded at estimated fair value at the acquisition date. The fair value adjustment at the acquisition date was approximately $7,680, or approximately 2.3% of the outstanding aggregate loan balances. This amount is accreted into interest income over the remaining lives of the related loans on a level yield basis, but remains adequate at September 30, 2014, and therefore no provision for loan loss was recorded related to these loans at September 30, 2014.

note 2: Loans acquired in the Company’s June 1, 2014 acquisition of FSB that are not PCI loans. These are performing loans recorded at estimated fair value at the acquisition date. The fair value adjustment at the acquisition date was approximately $9,725, or approximately 2.0% of the outstanding aggregate loan balances. This amount is accreted into interest income over the remaining lives of the related loans on a level yield basis, but remains adequate at September 30, 2014, and therefore no provision for loan loss was recorded related to these loans at September 30, 2014. Included in the $458,958 of FSB non-PCI loans are $41,715 of loans that are covered by FDIC loss sharing agreements.

note 3: Included in the $309,638 PCI loans at September 30, 2014 are $264,689 of loans that are covered by FDIC loss sharing agreements.

The general loan loss allowance (non-impaired loans) increased by a net amount of $675. This increase was primarily due to an increase in loans balances outstanding partially offset by a decrease in the loss factors due to the continued improvement in the local economy and real estate market, and the continued decline in the Company’s two year charge-off history. The Company’s other credit metrics, such as the levels of and trends in the Company’s non-performing loans, past-due loans and impaired loans were also considered when adjusting its qualitative factors, which ultimately increased the current two year historical loss factor ratios.

The specific loan loss allowance (impaired loans) is the aggregate of the results of individual analyses prepared for each one of the impaired loans, excluding PCI loans. 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 $1,567 to $26,695 ($24,718 when the $1,977 specific allowance is considered) from their legal unpaid principal balance outstanding of $28,262. In the aggregate, total impaired loans have been written down to approximately 87% of their legal unpaid principal balance, and non-performing impaired loans have been written down to approximately 79% of their legal unpaid principal balance. The Company’s total non-performing loans (non-accrual loans plus loans past due greater than 90 days and still accruing, $31,067 at September 30, 2014) have been written down to approximately 84% of their legal unpaid principal balance, when the related specific allowance is also considered.

Approximately $14,093 of the Company’s impaired loans (53%) are accruing performing loans. This group of impaired loans is not included in the Company’s non-performing loans or non-performing assets categories.

PCI loans, including those covered by FDIC loss sharing agreements, are accounted for pursuant to ASC Topic 310-30. PCI loan pools are evaluated for impairment each quarter. If a pool is impaired, an allowance for loan loss is recorded.

Management believes the Company’s allowance for loan losses is adequate at September 30, 2014. 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.

Allowance for loan losses (unaudited)
as of or for the quarter ending	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Loans, excluding PCI loans
Allowance at beginning of period	$	18,240		$	18,913		$	19,694		$	19,265		$	21,800
Charge-offs		(869	)		(902	)		(1,160	)		(774	)		(1,570	)
Recoveries		556			112			843			457			344
Net charge-offs		(313	)		(790	)		(317	)		(317	)		(1,226	)
Provision (recovery) for loan losses		1,108			117			(464	)		746			(1,309	)
Allowance at end of period for loans other than PCI loans	$	19,035		$	18,240		$	18,913		$	19,694		$	19,265
PCI loans
Allowance at beginning of period	$	960		$	1,183		$	760		$	2,056		$	2,020
Charge-offs		—			—			—			(733	)		—
Recoveries		—			—			—			—			—
Net charge-offs		—			—			—			(733	)		—
(Recovery) provision for loan losses		(153	)		(223	)		423			(563	)		36
Allowance at end of period for PCI loans	$	807		$	960		$	1,183		$	760		$	2,056
Total allowance at end of period	$	19,842		$	19,200		$	20,096		$	20,454		$	21,321

7

The following table summarizes the Company’s loan portfolio and related allowance for loan losses as a percentage of the loan portfolio segment presented as of the end of the previous five quarters.

(unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Troubled debt restructure (“TDRs”) (note 1)	$	15,006		$	14,940		$	14,986		$	15,447		$	15,811
Impaired loans that were not TDRs		11,689			12,323			11,569			8,663			24,069
Total impaired loans		26,695			27,263			26,555			24,110			39,880
Acquired Gulfstream loans		291,140			299,823			319,665			—			—
Acquired FSB loans		458,958			474,979			—			—			—
All other non-impaired loans		1,349,696			1,240,084			1,218,614			1,218,648			1,174,542
Total Non-PCI loans		2,126,489			2,042,149			1,564,834			1,242,758			1,214,422
Total PCI loans		309,638			353,870			250,800			231,421			244,150
Total loans	$	2,436,127		$	2,396,019		$	1,815,634		$	1,474,179		$	1,458,572
ALLL for Non-PCI loans
Specific loan loss allowance- impaired loans	$	1,977		$	1,857		$	1,919		$	1,811		$	784
General loan loss allowance- Gulfstream loans		—			—			—			n/a			n/a
General loan loss allowance- FSB loans		—			—			n/a			n/a			n/a
General loan loss allowance- non impaired		17,058			16,383			16,994			17,883			18,481
Total allowance for loan losses (note 2)	$	19,035		$	18,240		$	18,913		$	19,694		$	19,265
ALLL as a percentage of period end loans:
Impaired loans		7.41	%		6.81	%		7.23	%		7.51	%		1.97	%
Acquired Gulfstream loans		—	%		—	%		—	%		n/a			n/a
Acquired First Southern loans		—	%		—	%		n/a			n/a			n/a
All other non impaired loans		1.26	%		1.32	%		1.39	%		1.47	%		1.57	%
Total loans (note 2)		0.90	%		0.89	%		1.21	%		1.58	%		1.58	%

note 1: The Company has approximately $15,006 of TDRs. Of this amount $11,951 are performing pursuant to their modified terms, and $3,055 are not performing and have been placed on non-accrual status and included in 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 NPLs.

note 2: Excludes PCI loans.

The Company defines non-performing loans (“NPLs”) as non-accrual loans plus loans past due 90 days or more and still accruing interest. NPLs do not include PCI loans. PCI loans are accounted for pursuant to ASC Topic 310-30. NPLs as a percentage of total Non-PCI loans were 1.46% at September 30, 2014 compared to 1.45% at June 30, 2014.

Non-performing assets (“NPAs”) (which the Company defines as NPLs, 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 agreement; and (b) other repossessed assets that are not real estate, and are not covered by FDIC loss share agreement, were $42,116 at September 30, 2014, compared to $41,923 at June 30, 2014. NPAs as a percentage of total assets was 1.16% at September 30, 2014 compared to 1.07% at June 30, 2014. NPAs as a percentage of loans plus OREO and other repossessed assets, excluding PCI loans and OREO covered by FDIC loss share agreements, was 1.97% at September 30, 2014 compared to 2.04% at June 30, 2014.

8

The table below summarizes selected credit quality data for the periods indicated. The June 30, 2014 quarter end ratios were impacted by the FSB acquisition and the quarter ended March 31, 2014 was impacted by the Gulfstream acquisition.

Selected credit quality ratios (unaudited)
As of or for the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Non-accrual loans (note 1)	$	31,067		$	29,667		$	30,689		$	27,077		$	21,104
Past due loans 90 days or more and still accruing interest (note 1)		—			—			—			—			—
Total non-performing loans (“NPLs”) (note 1)		31,067			29,667			30,689			27,077			21,104
Other real estate owned (“OREO”) (note 2)		10,899			12,123			9,895			6,409			4,804
Repossessed assets other than real estate (note 1)		150			133			135			150			141
Total non-performing assets (“NPAs”) (note 2)	$	42,116		$	41,923		$	40,719		$	33,636		$	26,049
OREO covered by FDIC loss share agreements:
80% covered		9,732			10,423			13,892			19,111			21,633
75% covered		606			1,052			—			—			—
30% covered		12,580			16,349			—			—			—
0% covered		2,534			2,874			—			—			—
Total non-performing assets including
FDIC covered OREO	$	67,568		$	72,621		$	54,611		$	52,747		$	47,682
Non-performing loans as percentage of total loans excluding PCI loans		1.46	%		1.45	%		1.96	%		2.18	%		1.74	%
Non-performing assets as percentage of total assets
Excluding FDIC covered OREO		1.16	%		1.07	%		1.35	%		1.39	%		1.12	%
Including FDIC covered OREO		1.86	%		1.86	%		1.82	%		2.18	%		2.04	%
Non-performing assets as percentage of loans and
OREO plus other repossessed assets (note 1)
Excluding FDIC covered OREO		1.97	%		2.04	%		2.59	%		2.69	%		2.13	%
Including FDIC covered OREO		3.12	%		3.48	%		3.44	%		4.16	%		3.84	%
Loans past due 30 thru 89 days and accruing interest as a percentage of total loans (note 1)		0.55	%		0.64	%		0.77	%		0.85	%		0.75	%
Net charge-offs (note 1)	$	313		$	790		$	317		$	317		$	1,226
Net charge-offs as a percentage of average loans for the period (note 1)		0.01	%		0.05	%		0.02	%		0.03	%		0.10	%
Net charge-offs as a percentage of average loans for the period on an annualized basis (note 1)		0.06	%		0.18	%		0.08	%		0.12	%		0.40	%
Allowance for loan losses as percentage of NPLs (note 1)		61	%		61	%		62	%		73	%		91	%

note 1: Excludes PCI loans.

note 2: Excludes OREO covered by FDIC loss share agreements.

Net Interest Margin (“NIM”)

The Company’s NIM decreased from 4.37% in 2Q14 to 4.23% in 3Q14. As discussed in the Company’s 2Q14 earnings release, a decrease in NIM was expected due to the June 1, 2014 acquisition and integration of FSB. FSB was included in the Company’s balance sheet for the entire period in 3Q14 but only one month in 2Q14.

Average yield on PCI loans decreased from 11.57% in 2Q14 to 10.89% in 3Q14. Again, this was primarily due to the additional PCI loans acquired from FSB. The average day one yield on FSB’s PCI loans was approximately 7.1%, which had a decreasing effect on the combined average yield. The Company did not make any negative adjustments to its estimate of future expected losses in its PCI loan portfolio during the current quarter.

Average yield on non-PCI loans decreased from 4.77% in 2Q14 to 4.67% in 3Q14. The average day one yield on the non-PCI loans acquired from FSB on June 1, 2014 was approximately 5%. This positive effect was offset by the average interest rates of the Company’s new loan production. In 3Q14 the Company experienced its highest loan production quarter in its history. The total production was $185 million which included funded loans of $150 million. The funded loans had an average interest rate of approximately 3.90%. The average rate for new loan production (funded) for the nine month period ending September 30, 2014 was approximately 4.14%. In general, the Company expects the average yield on non-PCI loans to decrease in the future from the current quarter’s 4.67% until average interest rates of new loan production approximates the average yield of the non-PCI loan portfolio, a contracting effect on NIM until this equilibrium occurs.

9

Average yield on securities also decreased in 3Q14 compared to 2Q14 primarily due to the effects of lower overall market interest rates and the Company’s efforts in shortening duration over the past several quarters. The Company’s estimate of its security portfolio duration at September 30, 2014 is approximately 2.87 years.

The mix of interest earning assets also affects the NIM. The Company carried higher overnight cash balances during the current quarter than it normally has in the past. Part of the reason was in preparation of funding the approximately $170 million of deposit liabilities that it sold to Fidelity Southern Bank on September 19, 2014. Federal funds sold yield about 25 basis points. To the extent the Company has larger balances in these lower yield asset classifications results in a lower overall yield on interest earning assets and lower NIM.

Lastly, due to the decrease in deposits between June 30, 2014 and September 30, 2014 (primarily due to the sale of FSB deposits), and partly due to the increase in loan production, the Company’s loan to deposit ratio increased from 72.4% at June 30 to 79.5% at September 30.

The table 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.

Yield and cost table (unaudited)
	3Q14							2Q14							3Q13
	average		interest		avg			average		interest		avg			average		interest		avg
	balance		inc/exp		rate			balance		inc/exp		rate			balance		inc/exp		rate
Loans (TEY)*	$	2,094,522	$	24,649		4.67	%	$	1,723,242	$	20,507		4.77	%	$	1,195,105	$	14,243		4.73	%
PCI loans		331,567		9,099		10.89	%		285,270		8,231		11.57	%		249,154		8,886		14.15	%
Taxable securities		503,176		3,073		2.42	%		571,813		3,809		2.67	%		430,995		2,560		2.36	%
Tax -exempt securities (TEY)		40,059		514		5.09	%		39,112		512		5.25	%		40,119		550		5.44	%
Fed funds sold and other		371,026		417		0.45	%		284,895		424		0.60	%		80,346		149		0.74	%
Tot. interest earning assets(TEY)	$	3,340,350	$	37,752		4.48	%	$	2,904,332	$	33,483		4.62	%	$	1,995,719	$	26,388		5.25	%
Interest bearing deposits	$	2,192,653	$	1,799		0.33	%	$	1,882,384	$	1,523		0.32	%	$	1,402,753	$	1,246		0.35	%
Fed funds purchased		39,419		6		0.06	%		46,426		5		0.04	%		36,823		5		0.05	%
Other borrowings		31,273		52		0.66	%		32,384		56		0.69	%		22,847		21		0.36	%
Corporate debentures		23,844		240		3.99	%		23,861		238		4.00	%		16,987		152		3.55	%
Total interest bearing liabilities	$	2,287,189	$	2,097		0.36	%	$	1,985,055	$	1,822		0.37	%	$	1,479,410	$	1,424		0.38	%
Net Interest Spread (TEY)						4.12	%						4.25	%						4.87	%
Net Interest Margin (TEY)						4.23	%						4.37	%						4.96	%

* TEY = tax equivalent yield

The table below summarizes the Company’s yields on interest earning assets and costs of interest bearing liabilities over the prior five quarters.

Five quarter trend of yields and costs (unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Yield on loans (TEY)*		4.67	%		4.77	%		4.75	%		4.64	%		4.70	%
Yield on PCI loans		10.89	%		11.57	%		13.27	%		13.00	%		14.17	%
Yield on securities (TEY)		2.62	%		2.84	%		3.04	%		2.94	%		2.62	%
Yield on fed funds sold and other		0.45	%		0.60	%		0.49	%		0.52	%		0.74	%
Yield on total interest earning assets		4.44	%		4.57	%		4.84	%		4.85	%		5.18	%
Yield on total interest earning assets (TEY)		4.48	%		4.62	%		4.91	%		4.92	%		5.25	%
Cost of interest bearing deposits		0.33	%		0.32	%		0.33	%		0.35	%		0.35	%
Cost of fed funds purchased		0.06	%		0.04	%		0.06	%		0.06	%		0.05	%
Cost of other borrowings		0.66	%		0.69	%		0.31	%		0.36	%		0.36	%
Cost of corporate debentures		3.99	%		4.00	%		4.01	%		3.50	%		3.55	%
Cost of interest bearing liabilities		0.36	%		0.37	%		0.37	%		0.38	%		0.38	%
Net interest margin (TEY)		4.23	%		4.37	%		4.65	%		4.65	%		4.96	%
Cost of total deposits		0.22	%		0.22	%		0.22	%		0.24	%		0.25	%

* TEY = tax equivalent yield

10

The table below summarizes selected financial ratios over the prior five quarters.

Selected financial ratios (unaudited)
As of or for the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Return on average assets (annualized)		0.37	%		0.13	%		0.15	%		0.30	%		0.53	%
Return on average equity (annualized)		3.24	%		1.18	%		1.32	%		2.60	%		4.56	%
Net operating income return on average assets (annualized)		0.62	%		0.52	%		0.66	%		0.35	%		0.55	%
Loan / deposit ratio		79.5	%		72.4	%		71.0	%		71.7	%		74.3	%
Stockholders’ equity (to total assets)		12.2	%		11.3	%		11.1	%		11.3	%		11.7	%
Common tangible equity (to total tangible assets)		9.8	%		9.1	%		8.5	%		9.4	%		9.7	%
Tier 1 capital (to average assets)		9.4	%		10.8	%		10.0	%		10.4	%		10.6	%
Efficiency ratio, including correspondent banking (note 1)		73.8	%		75.3	%		74.6	%		80.9	%		78.1	%
Efficiency ratio, excluding correspondent banking (note 2)		70.7	%		73.1	%		70.6	%		75.2	%		72.8	%
Common equity per common share	$	9.78		$	9.76		$	9.38		$	9.08		$	9.06
Common tangible equity per common share	$	7.73		$	7.68		$	6.95		$	7.38		$	7.35

note 1: Numerator equals non-interest expense less non-recurring expenses (e.g. merger costs, bank property impairment, etc.) less intangible amortization (both CDI and Trust intangible) less credit related expenses. Denominator equals net interest income on a taxable equivalent yield basis (“TEY”) before the provision for loan losses plus non-interest income less non-recurring income (e.g. gain on sale of securities available for sale, etc.) less FDIC income related to losses on the sales of covered OREO properties and impairment of loan pool(s) covered by FDIC loss share arrangements.

note 2: Numerator starts with the same numerator as in “note 1”, less correspondent bank non-interest expense, including indirect expense allocations. Denominator starts with the same denominator as in “note 1”, less correspondent bank net interest income and less correspondent bank non-interest income.

Deposit activity

On January 17, 2014, the Company assumed $478,999 of deposits in the acquisition of Gulfstream, which included approximately $84,995 of time deposits. On June 1, 2014, the Company assumed $852,633 of additional deposits in the acquisition of FSB, which included approximately $218,057 of time deposits. During the quarter, the Company’s total deposits, excluding deposits held for sale, decreased by $55,113 (time deposits decreased by $38,239 and non-time deposits decreased by $16,874). The cost of interest bearing deposits in the current quarter increased by 1bp to 33bps compared to the prior quarter. The overall cost of total deposits (i.e. includes non-interest bearing checking accounts) was 0.22% for the current quarter and the prior quarter. The table below summarizes the Company’s deposit mix over the periods indicated.

Deposit mix (unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Checking accounts
Non-interest bearing	$	1,043,083		$	1,023,285		$	838,764		$	644,915		$	562,027
Interest bearing		575,020			589,573			558,845			483,842			452,583
Savings deposits		232,255			234,492			234,908			232,942			240,431
Money market accounts		727,798			747,680			482,133			309,657			306,706
Time deposits		488,074			526,313			444,054			384,875			400,208
Total deposits excluding held for sale		3,066,230			3,121,343			2,558,704			2,056,231			1,961,955
Deposits held for sale		—			185,646			—			—			—
Total deposits	$	3,066,230		$	3,306,989		$	2,558,704		$	2,056,231		$	1,961,955
Non time deposits as percentage of total deposits		84	%		83	%		83	%		81	%		80	%
Time deposits as percentage of total deposits		16	%		17	%		17	%		19	%		20	%
Total deposits excluding held for sale		100	%		100	%		100	%		100	%		100	%

On June 4, 2014, the Company entered into an agreement to sell certain assets (excluding loans) in addition to the deposits in 6 of the 17 branches acquired from FSB to another financial institution. The transaction closed in September 2014. The fair value of the actual deposits transferred on the September 18, 2014 sale date was approximately $169,748. The identified deposit account balance decreased from the end of the previous quarter to the September 18, 2014 sale date. Fair value was calculated by using the contractual selling price applied to the deposits transferred.

11

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

Condensed Consolidated Balance Sheets (unaudited)
For the quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Cash and due from banks	$	48,528		$	25,043		$	29,862		$	21,581		$	21,216
Fed funds sold and Fed Res Bank deposits		162,038			490,966			190,399			153,308			85,600
Trading securities		656			89			—			—			398
Investment securities, available for sale		535,767			542,149			617,143			457,086			456,555
Investment securities, held to maturity		5,372			—			—			—			—
Loans held for sale		522			1,596			1,017			1,010			1,317
PCI loans		309,638			353,870			250,800			231,421			244,150
Loans		2,126,489			2,042,149			1,564,834			1,242,758			1,214,422
Allowance for loan losses		(19,842	)		(19,200	)		(20,096	)		(20,454	)		(21,321	)
FDIC indemnification assets		54,032			61,311			65,183			73,877			82,039
Premises and equipment, net		98,972			98,623			95,103			96,619			97,289
Goodwill		76,981			76,981			76,440			44,924			44,924
Core deposit intangible		15,068			15,724			8,800			4,958			5,196
Bank owned life insurance		82,936			57,485			54,574			49,285			48,961
OREO covered by FDIC loss share agreements		25,452			30,698			13,892			19,111			21,633
OREO not covered by FDIC loss share agreements		10,899			12,123			9,895			6,409			4,804
Deferred income tax asset, net		56,640			53,175			7,910			5,296			3,392
Other assets		48,995			58,800			40,405			28,822			25,882
TOTAL ASSETS	$	3,639,143		$	3,901,582		$	3,006,161		$	2,416,011		$	2,336,457
Deposits	$	3,066,230		$	3,306,989		$	2,558,704		$	2,056,231		$	1,961,955
Federal funds purchased		42,070			43,080			45,183			29,909			45,356
Other borrowings		54,329			57,448			49,901			37,453			39,140
Other liabilities		34,152			54,607			19,209			19,039			17,265
Common stockholders’ equity		442,362			439,458			333,164			273,379			272,741
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,639,143		$	3,901,582		$	3,006,161		$	2,416,011		$	2,336,457
Condensed Consolidated Average Balance Sheets (unaudited)
For quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Federal funds sold and other	$	371,026		$	284,895		$	197,915		$	161,270		$	80,346
Security investments		543,235			610,925			532,046			453,658			471,114
PCI loans		331,567			285,270			251,587			240,804			251,626
Loans		2,094,522			1,723,242			1,513,060			1,229,868			1,192,633
Allowance for loan losses		(21,329	)		(20,052	)		(20,970	)		(21,438	)		(23,819	)
All other assets		492,214			386,383			396,123			341,437			377,072
TOTAL ASSETS	$	3,811,235		$	3,270,663		$	2,869,761		$	2,405,599		$	2,348,972
Deposits- interest bearing	$	2,192,653		$	1,882,384		$	1,653,806		$	1,405,244		$	1,402,753
Deposits- non interest bearing		1,043,279			906,746			767,926			635,383			581,827
Federal funds purchased		39,419			46,426			41,999			34,782			36,823
Other borrowings		55,117			56,245			52,341			36,723			39,834
Other liabilities		40,395			25,040			30,389			18,516			17,315
Stockholders’ equity		440,372			353,822			323,300			274,951			270,420
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,811,235		$	3,270,663		$	2,869,761		$	2,405,599		$	2,348,972

12

Condensed Consolidated Earnings Statement (unaudited)
For quarter ended:	9/30/14			6/30/14			3/31/14			12/31/13		9/30/13
Interest income:
Loans	$	33,519		$	28,509		$	25,729		$	22,086	$	22,963
Investments		3,411			4,146			3,814			3,183		2,922
Federal funds sold and other		417			424			239			210		149
Total interest income		37,347			33,079			29,782			25,479		26,034
Interest expense:
Deposits		1,799			1,523			1,337			1,225		1,246
Securities sold under agreement to repurchase		52			56			23			18		21
Federal funds purchased		6			5			6			5		5
Corporate debentures		240			238			223			150		152
Total interest expense		2,097			1,822			1,589			1,398		1,424
Net interest income		35,250			31,257			28,193			24,081		24,610
Provision (recovery) for loan losses		955			(106	)		(41	)		183		(1,273	)
Net interest income after loan loss provision		34,295			31,363			28,234			23,898		25,883
Non interest income (see page 17)		6,559			6,372			5,760			5,197		8,607
Non interest expense:
Salaries, wages and employee benefits		18,799			17,185			15,681			14,550		14,345
Occupancy expense		3,038			2,479			1,960			1,944		1,924
Depreciation of premises and equipment		1,542			1,563			1,478			1,560		1,364
Data processing expense		1,673			1,306			1,039			962		1,026
Legal, audit and other professional fees		1,099			1,376			775			951		1,176
Amortization of intangibles		699			515			376			288		296
Credit related expense (see page 18)		624			1,239			523			510		821
FDIC credit related expenses (see page 18)		(209	)		1,136			1,301			1,310		4,934
Merger and acquisition related expenses		3,450			4,897			2,347			539		183
Branch closure and efficiency initiatives		(6	)		29			3,158			—		—
All other expenses		4,825			4,428			3,765			3,835		3,781
Total non interest expenses		35,534			36,153			32,403			26,449		29,850
Income before provision for income taxes		5,320			1,582			1,591			2,646		4,640
Provision for income taxes		1,727			545			538			846		1,531
Net income	$	3,593		$	1,037		$	1,053		$	1,800	$	3,109
Earnings per share (diluted)	$	0.08		$	0.03		$	0.03		$	0.06	$	0.10

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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:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Correspondent banking and capital markets division (1)	$	4,184		$	4,192		$	3,148		$	3,236		$	2,909
Other correspondent banking related revenue (2)		958			1,093			783			789			862
Wealth management related revenue		993			1,104			1,217			1,172			1,179
Service charges on deposit accounts		2,496			2,333			2,262			2,313			2,244
Debit, prepaid, ATM and merchant card related fees		1,612			1,495			1,506			1,394			1,399
BOLI income		451			356			352			324			327
Other service charges and fees		605			338			409			262			190
Gain on sale of securities available for sale		—			46			—			22			—
Subtotal	$	11,299		$	10,957		$	9,677		$	9,512		$	9,110
FDIC indemnification asset – amortization (see explanation below)		(4,953	)		(5,006	)		(5,185	)		(4,500	)		(3,836	)
FDIC indemnification income		213			421			1,268			185			3,333
Total non-interest income	$	6,559		$	6,372		$	5,760		$	5,197		$	8,607

note 1: Includes gross commissions earned on bond sales, fees from hedging services, loan brokering fees and related consulting fees. The fee income in this category is based on sales volume in any particular period and is therefore volatile between comparable periods.

note 2: Includes fees from safe-keeping activities, bond accounting services, asset/liability consulting services, international wires, clearing and corporate checking account services and other correspondent banking related revenue and fees. The fees included in this category are less volatile than those described above in note 1.

The FDIC indemnification asset (“IA”) is producing amortization (versus accretion) due to reductions in the estimated losses in the FDIC covered PCI loan portfolio. To the extent current projected losses in the covered PCI loan portfolio are less than originally projected losses, the related projected reimbursements from the FDIC contemplated in the IA are less, which produces a negative income accretion in non-interest income. This event generally corresponds to the increase in yields in the FDIC covered PCI loan portfolio, although there is not perfect correlation. Higher expected cash flows (i.e. less expected future losses) on the loan side of the equation is accreted into interest income over the life of the related loan pool. The lower expected reimbursement from the FDIC is amortized over the lesser of the remaining life of the related loan pool(s) or the remaining term of the loss share period.

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 the reimbursement for the respective loss share percentage is recorded as FDIC indemnification income and included in non-interest income. In addition, the FDIC loss share reimbursement percentage of any related loan pool impairments also are reflected in this non-interest income account.

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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:	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Employee salaries and wages	$	14,966		$	13,234		$	11,873		$	11,200		$	11,168
Employee incentive/bonus compensation accrued		1,406			1,276			1,238			1,375			1,325
Employee stock based compensation expense		204			182			187			173			147
Deferred compensation expense		156			160			107			147			147
Health insurance and other employee benefits		1,349			1,180			987			968			842
Payroll taxes		1,005			913			1,120			613			655
401K employer contributions		345			374			360			268			276
Other employee related expenses		160			401			258			381			272
Incremental direct cost of loan origination		(792	)		(535	)		(449	)		(575	)		(487	)
Total salaries, wages and employee benefits		18,799			17,185			15,681			14,550			14,345
Loss (gain) on sale of OREO		31			58			(30	)		(93	)		68
(Gain) loss on sale of FDIC covered OREO		(608	)		321			107			801			1,784
Valuation write down of OREO		157			445			70			110			338
Valuation write down of FDIC covered OREO		172			440			950			51			2,846
Loss (gain) on repossessed assets other than real estate		17			19			(2	)		16			39
Foreclosure and repossession related expenses		419			717			485			477			376
Foreclosure and repo expense, FDIC (note 1)		227			375			244			458			304
Total credit related expenses		415			2,375			1,824			1,820			5,755
Occupancy expense		3,038			2,479			1,960			1,944			1,924
Depreciation of premises and equipment		1,542			1,563			1,478			1,560			1,364
Supplies, stationary and printing		375			334			227			280			268
Marketing expenses		746			619			620			681			722
Data processing expenses		1,673			1,306			1,039			962			1,026
Legal, auditing and other professional fees		1,099			1,376			775			951			1,176
Bank regulatory related expenses		916			753			631			565			588
Postage and delivery		386			365			268			266			266
ATM and debit card related expenses		466			468			474			414			435
Amortization of intangibles		699			515			376			288			296
Internet and telephone banking		412			415			378			334			286
Correspondent account and Federal Reserve charges		191			152			135			116			114
Conferences, seminars, education and training		79			98			100			155			138
Director fees		147			95			115			102			99
Travel expenses		126			106			65			102			119
Other expenses		981			1,023			752			820			746
Subtotal		32,090			31,227			26,898			25,910			29,667
Merger and acquisition related expenses		3,450			4,897			2,347			539			183
Branch closure and efficiency initiatives		(6	)		29			3,158			—			—
\Total non- interest expense	$	35,534		$	36,153		$	32,403		$	26,449		$	29,850

note 1: These are foreclosure and repossession related expenses related to FDIC covered assets, and are shown net of FDIC reimbursable amounts pursuant to FDIC loss share agreements.

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 financial highlights provide reconciliations 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. It also reconciles net income and net operating income. 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

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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. All amounts are in thousands except per share data (unaudited):

	3Q14			2Q14			3Q13
Interest income, as reported (GAAP)	$	37,347		$	33,079		$	26,034
tax equivalent adjustments		405			404			354
Interest income (tax equivalent)	$	37,752		$	33,483		$	26,388
Net interest income, as reported (GAAP)	$	35,250		$	31,257		$	24,610
tax equivalent adjustments		405			404			354
Net interest income (tax equivalent)	$	35,655		$	31,661		$	24,964
	9/30/14			6/30/14			3/31/14			12/31/13			9/30/13
Total stockholders’ equity (GAAP)	$	442,362		$	439,458		$	333,164		$	273,379		$	272,741
Goodwill		(76,981	)		(76,981	)		(76,440	)		(44,924	)		(44,924	)
Core deposit intangible		(15,068	)		(15,724	)		(8,800	)		(4,958	)		(5,196	)
Trust intangible		(1,027	)		(1,070	)		(1,113	)		(1,158	)		(1,209	)
Tangible common equity	$	349,286		$	345,683		$	246,811		$	222,339		$	221,412
	3Q14			2Q14			1Q14			4Q13			3Q13
Net income (GAAP)	$	3,593		$	1,037		$	1,053		$	1,800		$	3,109
exclude gain on sale of AFS securities		—			(46	)		—			(22	)		—
add back merger and acquisition related expenses		3,450			4,897			2,347			539			183
add back branch closure and efficiency initiatives		(6	)		29			3,158			—			—
tax effected using the effective tax rate for the period presented		(1,118	)		(1,680	)		(1,862	)		(165	)		(60	)
Net operating income	$	5,919		$	4,237		$	4,696		$	2,152		$	3,232
Average diluted shares outstanding during the period presented		45,413			39,051			34,863			30,245			30,244
Net operating income per share	$	0.13		$	0.11		$	0.13		$	0.07		$	0.11

About CenterState Banks, Inc.

The Company, headquartered in Davenport, Florida, between Orlando and Tampa, is a bank holding company whose single subsidiary bank operates 58 full service branch banking locations in 20 counties throughout Florida. Its subsidiary bank 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, the Company also operates a correspondent banking and bond sales division. The division is integrated with and part of the Company’s 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 southeastern United States.

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

“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.

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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, 2013, and otherwise in our SEC reports and filings.

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