Exhibit 99.5
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma combined consolidated financial information and accompanying notes show the impact on the historical financial conditions and results of operations of CenterState, Platinum Bank Holding Company (“Platinum”) and Gateway Financial Holdings of Florida, Inc. (“Gateway”) have been prepared to illustrate the effects of the merger under the acquisition method of accounting. See “The Merger — Accounting Treatment.”
The unaudited pro forma combined consolidated balance sheet as of September 30, 2016 is presented as if the Platinum and the Gateway mergers had occurred on September 30, 2016. The unaudited pro forma combined consolidated income statements for the year ended December 31, 2015 and the nine months period ended September 30, 2016 are presented as if both mergers had occurred on January 1, 2015. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the income statement only, expected to have a continuing impact on consolidated results of operations, as such, CenterState’s one-time merger costs for either merger are not included.
The unaudited pro forma combined consolidated financial statements are provided for informational purposes only. The unaudited pro forma combined consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the merger been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma combined consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined consolidated financial statements should be read together with:
| • | the accompanying notes to the unaudited pro forma combined consolidated financial statements; |
| • | CenterState’s audited consolidated financial statements and accompanying notes as of and for the twelve months ended December 31, 2015, included in CenterState’s Annual Report on Form 10-K for the year ended December 31, 2015 filed on March 3, 2016; |
| • | CenterState’s unaudited condensed consolidated financial statements and accompanying notes as of and for the nine months ended September 30, 2016, included in CenterState’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2016 filed on November 3, 2016; |
| • | Platinum’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2015 included as Exhibit 99.1 to this Form 8-K; |
| • | Platinum’s unaudited condensed consolidated financial statements and accompanying notes as of and for the nine months ended September 30, 2016 included as Exhibit 99.2 in this Form 8-K; |
| • | Gateway’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2015 included as Exhibit 99.3 to this Form 8-K; |
| • | Gateway’s unaudited condensed consolidated financial statements and accompanying notes as of and for the nine months ended September 30, 2016 included as Exhibit 99.4 in this Form 8-K. |
1
Unaudited Pro Forma Combined Consolidated Balance Sheet
At September 30, 2016
(in thousands, except per share data)
|
| CenterState Sept. 30, 2016 as reported |
|
| Platinum Sept. 30, 2016 as reported |
|
| Pro Forma adjustments |
|
| Platinum Pro Forma Sept. 30, 2016 |
|
| Gateway Sept. 30, 2016 as reported |
|
| Pro Forma adjustments |
|
| Pro Forma Sept. 30, 2016 combined |
| ||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 198,866 |
|
|
| 48,836 |
|
|
| (14,692 | )a,c |
| $ | 233,010 |
|
| $ | 46,088 |
|
| $ | (42,191 | )a,c,o |
| $ | 236,907 |
| |||
Interest-bearing time deposits |
| - |
|
|
| 40,518 |
|
|
|
|
|
| $ | 40,518 |
|
| $ | 24,538 |
|
|
|
|
|
| $ | 65,056 |
| ||||
Investment securities |
|
| 1,027,506 |
|
|
| 33,500 |
|
|
|
|
|
|
| 1,061,006 |
|
|
| 220,030 |
|
|
| (1,212 | )d |
|
| 1,279,824 |
| |||
Loans held for sale |
|
| 2,333 |
|
|
| - |
|
|
|
|
|
|
| 2,333 |
|
|
| - |
|
|
|
|
|
|
| 2,333 |
| |||
Loans |
|
| 3,294,482 |
|
|
| 452,421 |
|
|
| (14,376 | )e,n |
|
| 3,732,527 |
|
|
| 542,552 |
|
|
| (8,550 | )e |
|
| 4,266,529 |
| |||
Allowance for loan losses |
|
| (25,499 | ) |
|
| (5,084 | ) |
|
| 5,084 | f |
|
| (25,499 | ) |
|
| (7,227 | ) |
|
| 7,227 | f |
|
| (25,499 | ) | |||
Net loans |
|
| 3,268,983 |
|
|
| 447,337 |
|
|
|
|
|
|
| 3,707,028 |
|
|
| 535,325 |
|
|
|
|
|
|
| 4,241,030 |
| |||
Other Real Estate Owned ("OREO") |
|
| 9,005 |
|
|
| 1,636 |
|
|
| (450 | )g |
|
| 10,191 |
|
|
| 1,781 |
|
|
| (178 | )g |
|
| 11,794 |
| |||
Bank premises and equipment, net |
|
| 114,567 |
|
|
| 8,947 |
|
|
| 5,500 | h |
|
| 129,014 |
|
|
| 23,875 |
|
|
| (4,575 | )h |
|
| 148,314 |
| |||
Goodwill |
|
| 105,492 |
|
|
| - |
|
|
| 36,744 | k |
|
| 142,236 |
|
|
| - |
|
|
| 38,364 | k |
|
| 180,600 |
| |||
Other intangibles |
|
| 17,000 |
|
|
| - |
|
|
| 3,570 | i |
|
| 20,570 |
|
|
| - |
|
|
| 8,482 | i |
|
| 29,052 |
| |||
Bank owned life insurance |
|
| 97,767 |
|
|
| - |
|
|
|
|
|
|
| 97,767 |
|
|
| 15,262 |
|
|
|
|
|
|
| 113,029 |
| |||
Deferred income tax asset, net |
|
| 58,614 |
|
|
| - |
|
|
| (299 | )j |
|
| 58,315 |
|
|
| 5,061 |
|
|
| 1,803 | c,j |
|
| 65,179 |
| |||
Prepaid and other assets |
|
| 114,379 |
|
|
| 3,276 |
|
|
| (60 | )n |
|
| 117,595 |
|
|
| 7,742 |
|
|
|
|
|
|
| 125,337 |
| |||
Total Assets |
| $ | 5,014,512 |
|
| $ | 584,050 |
|
|
|
|
|
| $ | 5,619,583 |
|
| $ | 879,702 |
|
|
|
|
|
| $ | 6,498,455 |
| |||
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Deposits |
| $ | 4,055,934 |
|
| $ | 493,062 |
|
|
| 1,128 | l |
| $ | 4,550,124 |
|
| $ | 721,265 |
|
|
| 1,400 | l |
| $ | 5,272,789 |
| |||
Other borrowings |
|
| 285,218 |
|
|
| 40,717 |
|
|
| (7,165 | )m,n |
|
| 318,770 |
|
|
| 67,750 |
|
|
| 226 | m |
|
| 386,746 |
| |||
Corporate debentures |
|
| 25,899 |
|
|
| - |
|
|
|
|
|
|
| 25,899 |
|
|
| - |
|
|
|
|
|
|
| 25,899 |
| |||
Payables and other liabilities |
|
| 94,690 |
|
|
| 2,858 |
|
|
| (60 | )n |
|
| 97,488 |
|
|
| 5,662 |
|
|
|
|
|
|
| 103,150 |
| |||
Total liabilities |
|
| 4,461,741 |
|
|
| 536,637 |
|
|
|
|
|
|
| 4,992,281 |
|
|
| 794,677 |
|
|
|
|
|
|
| 5,788,584 |
| |||
Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,608 |
|
|
| (4,608 | )o,p |
| - |
| ||||
Common Stock |
|
| 480 |
|
|
| 5,556 |
|
|
| (5,514 | )b,p |
|
| 522 |
|
|
| 27,219 |
|
|
| (27,177 | )b,p |
|
| 564 |
| |||
Additional paid in capital |
|
| 428,798 |
|
|
| 10,649 |
|
|
| 63,840 | b,p |
|
| 503,287 |
|
|
| 40,474 |
|
|
| 42,053 | b,o,p |
|
| 585,814 |
| |||
Retained earnings |
|
| 115,985 |
|
|
| 30,715 |
|
|
| (30,715 | )c,p |
|
| 115,985 |
|
|
| 10,986 |
|
|
| (10,986 | )c,p |
|
| 115,985 |
| |||
Accumulated other comprehensive loss |
|
| 7,508 |
|
|
| 493 |
|
|
| (493 | )p |
|
| 7,508 |
|
|
| 1,738 |
|
|
| (1,738 | )p |
|
| 7,508 |
| |||
Total stockholders' equity |
|
| 552,771 |
|
|
| 47,413 |
|
|
|
|
|
|
| 627,302 |
|
|
| 85,025 |
|
|
|
|
|
|
| 709,871 |
| |||
Total Liabilities and Stockholders' Equity |
| $ | 5,014,512 |
|
| $ | 584,050 |
|
|
|
|
|
| $ | 5,619,583 |
|
| $ | 879,702 |
|
|
|
|
|
| $ | 6,498,455 |
| |||
See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information
2
Unaudited Pro Forma Combined Consolidated Statement of Income
For the year ended December 31, 2015
(in thousands, except per share data)
|
| CenterState Dec. 31, 2015 as reported |
|
| Platinum Dec. 31, 2015 as reported |
|
| Pro Forma adjustments |
|
| CenterState 'Platinum Pro Forma Dec. 31, 2015 |
|
| Gateway Dec. 31, 2015 as reported |
|
| Gateway reclass |
|
| Pro Forma adjustments |
|
| Pro Forma Dec. 31, 2015 combined |
| ||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
| $ | 141,696 |
|
| $ | 21,725 |
|
| $ | 708 | u |
| $ | 164,129 |
|
| $ | 19,909 |
|
|
|
|
|
| $ | 352 | u |
| $ | 184,390 |
|
Investment securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 16,460 |
|
|
| 671 |
|
|
|
|
|
|
| 17,131 |
|
|
| 4,859 |
|
|
|
|
|
|
|
|
|
|
| 21,990 |
|
Tax-exempt |
|
| 2,641 |
|
|
|
|
|
|
|
|
|
|
| 2,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,641 |
|
Federal funds sold and other |
|
| 1,523 |
|
|
| 347 |
|
|
|
|
|
|
| 1,870 |
|
|
| 794 |
|
|
|
|
|
|
|
|
|
|
| 2,664 |
|
Total interest income |
|
| 162,320 |
|
|
| 22,743 |
|
|
|
|
|
|
| 185,771 |
|
|
| 25,562 |
|
|
|
|
|
|
|
|
|
|
| 211,685 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 5,506 |
|
|
| 2,794 |
|
|
| (514 | )t |
|
| 7,786 |
|
|
| 3,031 |
|
|
|
|
|
|
| (691 | )t |
|
| 10,126 |
|
Other borrowings |
|
| 1,780 |
|
|
| 718 |
|
|
|
|
|
|
| 2,498 |
|
|
| 336 |
|
|
|
|
|
|
|
|
|
|
| 2,834 |
|
Total interest expense |
|
| 7,286 |
|
|
| 3,512 |
|
|
|
|
|
|
| 10,284 |
|
|
| 3,367 |
|
|
|
|
|
|
|
|
|
|
| 12,960 |
|
Net interest income |
|
| 155,034 |
|
|
| 19,231 |
|
|
|
|
|
|
| 175,487 |
|
|
| 22,195 |
|
|
|
|
|
|
|
|
|
|
| 198,725 |
|
Provision for loan losses |
|
| 4,493 |
|
|
| 37 |
|
|
|
|
|
|
| 4,530 |
|
|
| (24 | ) |
|
|
|
|
|
|
|
|
|
| 4,506 |
|
Net interest income after loan loss provision |
|
| 150,541 |
|
|
| 19,194 |
|
|
|
|
|
|
| 170,957 |
|
|
| 22,219 |
|
|
|
|
|
|
|
|
|
|
| 194,219 |
|
Non interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from correspondent banking and bond sales division |
|
| 23,225 |
|
|
|
|
|
|
|
|
|
|
| 23,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23,225 |
|
Other correspondent banking revenue |
|
| 4,338 |
|
|
|
|
|
|
|
|
|
|
| 4,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,338 |
|
Service charges on deposit accounts |
|
| 9,745 |
|
|
| 298 |
|
|
|
|
|
|
| 10,043 |
|
|
| 912 |
|
|
|
|
|
|
|
|
|
|
| 10,955 |
|
Debit, prepaid, ATM and merchant card related fees |
|
| 6,913 |
|
|
|
|
|
|
|
|
|
|
| 6,913 |
|
|
|
|
|
|
| 495 | r |
|
|
|
|
|
| 7,408 |
|
Wealth management related revenue |
|
| 3,813 |
|
|
|
|
|
|
|
|
|
|
| 3,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,813 |
|
FDIC indemnification income |
|
| 1,686 |
|
|
|
|
|
|
|
|
|
|
| 1,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,686 |
|
FDIC indemnification asset amortization |
|
| (16,563 | ) |
|
|
|
|
|
|
|
|
|
| (16,563 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16,563 | ) |
Bank owned life insurance income |
|
| 2,346 |
|
|
|
|
|
|
|
|
|
|
| 2,346 |
|
|
|
|
|
|
| 490 | q |
|
|
|
|
|
| 2,836 |
|
Net gain on sale of securities available for sale |
|
| 4 |
|
|
| (1 | ) |
|
|
|
|
|
| 3 |
|
|
| 2,204 |
|
|
|
|
|
|
|
|
|
|
| 2,207 |
|
Other service charges and fees |
|
| 1,943 |
|
|
| 251 |
|
|
|
|
|
|
| 2,194 |
|
|
| (1,168 | ) |
|
| (985 | )q,r |
|
|
|
|
|
| 41 |
|
Total non interest income |
|
| 37,450 |
|
|
| 548 |
|
|
|
|
|
|
| 37,998 |
|
|
| 1,948 |
|
|
|
|
|
|
|
|
|
|
| 39,946 |
|
3
Unaudited Pro Forma Combined Consolidated Statement of Income (continued)
For the year ended December 31, 2015
(in thousands, except per share data)
| CenterState Dec. 31, 2015 as reported |
|
| Platinum Dec. 31, 2015 as reported |
|
| Pro Forma adjustments |
|
| CenterState 'Platinum Pro Forma Dec. 31, 2015 |
|
| Gateway Dec. 31, 2015 as reported |
|
| Gateway reclass |
| Pro Forma adjustments |
|
| Pro Forma Dec. 31, 2015 combined |
| ||||||||
Non interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary, wages and employee benefits |
|
| 77,398 |
|
|
| 9,201 |
|
|
|
|
|
|
| 86,599 |
|
|
| 10,335 |
|
|
|
|
|
|
|
|
| 96,934 |
|
Occupancy expense |
|
| 15,673 |
|
|
| 1,129 |
|
|
|
|
|
|
| 16,802 |
|
|
| 2,383 |
|
|
|
|
|
|
|
|
| 19,185 |
|
Data processing expense |
|
| 4,679 |
|
|
| 913 |
|
|
|
|
|
|
| 5,592 |
|
|
| 1,404 |
|
|
|
|
|
|
|
|
| 6,996 |
|
Professional fees |
|
| 2,954 |
|
|
| 211 |
|
|
|
|
|
|
| 3,165 |
|
|
| 341 |
|
|
|
|
|
|
|
|
| 3,506 |
|
Bank regulatory expenses |
|
| 3,173 |
|
|
| 439 |
|
|
|
|
|
|
| 3,612 |
|
|
| 434 |
|
|
|
|
|
|
|
|
| 4,046 |
|
Credit related expenses |
|
| 2,295 |
|
|
| 611 |
|
|
|
|
|
|
| 2,906 |
|
|
| 164 |
|
|
|
|
|
|
|
|
| 3,070 |
|
Marketing expenses |
|
| 2,317 |
|
|
| 278 |
|
|
|
|
|
|
| 2,595 |
|
|
| 278 |
|
|
|
|
|
|
|
|
| 2,873 |
|
Merger and acquisition related expenses |
|
| 693 |
|
|
|
|
|
|
|
|
|
|
| 693 |
|
|
|
|
|
|
|
|
|
|
|
|
| 693 |
|
All other expenses |
|
| 16,900 |
|
|
| 1,249 |
|
|
| 536 | s |
|
| 18,685 |
|
|
| 3,093 |
|
|
|
|
| 1,272 | s |
|
| 23,050 |
|
|
|
| 126,082 |
|
|
| 14,031 |
|
|
|
|
|
|
| 140,649 |
|
|
| 18,432 |
|
|
|
|
|
|
|
|
| 160,353 |
|
Income before provision for income taxes |
|
| 61,909 |
|
|
| 5,711 |
|
|
|
|
|
|
| 68,306 |
|
|
| 5,735 |
|
|
|
|
|
|
|
|
| 73,812 |
|
Provision for income taxes |
|
| 22,571 |
|
|
|
|
|
|
| 2,347 | v,w |
|
| 24,918 |
|
|
| 1,120 |
|
|
|
|
| (88 | )v |
|
| 25,950 |
|
Net income |
|
| 39,338 |
|
|
| 5,711 |
|
|
|
|
|
|
| 43,388 |
|
|
| 4,615 |
|
|
|
|
|
|
|
|
| 47,862 |
|
Less: earnings allocated to participating securities |
|
| 212 |
|
|
|
|
|
|
|
|
|
|
| 212 |
|
|
|
|
|
|
|
|
|
|
|
|
| 212 |
|
Less: preferred stock dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| 195 |
|
|
|
|
| (195 | )x |
|
| - |
|
Net income available to common shareholders |
| $ | 39,126 |
|
| $ | 5,711 |
|
|
|
|
|
| $ | 43,176 |
|
| $ | 4,420 |
|
|
|
|
|
|
|
| $ | 47,650 |
|
Basic earnings (loss) per common share |
| $ | 0.87 |
|
| $ | 5.21 |
|
|
|
|
|
| $ | 0.86 |
|
| $ | 0.69 |
|
|
|
|
|
|
|
| $ | 0.89 |
|
Diluted earnings (loss) per common share |
| $ | 0.85 |
|
| $ | 5.19 |
|
|
|
|
|
| $ | 0.84 |
|
| $ | 0.68 |
|
|
|
|
|
|
|
| $ | 0.88 |
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 45,182 |
|
|
| 1,096 |
|
|
|
|
|
|
| 50,377 |
|
|
| 6,363 |
|
|
|
|
|
|
|
|
| 53,617 |
|
Diluted |
|
| 45,789 |
|
|
| 1,100 |
|
|
|
|
|
|
| 51,175 |
|
|
| 6,506 |
|
|
|
|
|
|
|
|
| 54,407 |
|
See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information
4
Unaudited Pro Forma Combined Consolidated Statement of Income
For the nine months ended September 30, 2016
(in thousands, except per share data)
|
| CenterState Sept 30, 2016 as reported |
|
| Platinum Sept 30, 2016 as reported |
|
| Pro Forma adjustments |
|
| CenterState Platinum Pro Forma Sept 30, 2016 |
|
| Gateway Sept 30, 2016 as reported |
|
| Gateway reclass |
|
| Pro Forma adjustments |
|
| Pro Forma Sept 30, 2016 combined |
| ||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
| $ | 119,540 |
|
| $ | 16,745 |
|
| $ | 323 | u |
| $ | 136,608 |
|
| $ | 17,650 |
|
|
|
|
|
| $ | 198 | u |
| $ | 154,456 |
|
Investment securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 14,523 |
|
|
| 575 |
|
|
|
|
|
|
| 15,098 |
|
|
| 3,549 |
|
|
|
|
|
|
|
|
|
|
| 18,647 |
|
Tax-exempt |
|
| 2,775 |
|
|
|
|
|
|
|
|
|
|
| 2,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,775 |
|
Federal funds sold and other |
|
| 1,672 |
|
|
| 395 |
|
|
|
|
|
|
| 2,067 |
|
|
| 884 |
|
|
|
|
|
|
|
|
|
|
| 2,951 |
|
Total interest income |
|
| 138,510 |
|
|
| 17,715 |
|
|
|
|
|
|
| 156,548 |
|
|
| 22,083 |
|
|
|
|
|
|
|
|
|
|
| 178,829 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 5,042 |
|
|
| 2,072 |
|
|
| (214 | )t |
|
| 6,900 |
|
|
| 2,469 |
|
|
|
|
|
|
| (291 | )t |
|
| 9,078 |
|
Other borrowings |
|
| 1,677 |
|
|
| 572 |
|
|
| (222 | )y |
|
| 2,027 |
|
|
| 604 |
|
|
|
|
|
|
|
|
|
|
| 2,631 |
|
Total interest expense |
|
| 6,719 |
|
|
| 2,644 |
|
|
|
|
|
|
| 8,927 |
|
|
| 3,073 |
|
|
|
|
|
|
|
|
|
|
| 11,709 |
|
Net interest income |
|
| 131,791 |
|
|
| 15,071 |
|
|
|
|
|
|
| 147,621 |
|
|
| 19,010 |
|
|
|
|
|
|
|
|
|
|
| 167,120 |
|
Provision for loan losses |
|
| 2,696 |
|
|
| 362 |
|
|
|
|
|
|
| 3,058 |
|
|
| 434 |
|
|
|
|
|
|
|
|
|
|
| 3,492 |
|
Net interest income after loan loss provision |
|
| 129,095 |
|
|
| 14,709 |
|
|
|
|
|
|
| 144,563 |
|
|
| 18,576 |
|
|
|
|
|
|
|
|
|
|
| 163,628 |
|
Non interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from correspondent banking and bond sales division |
|
| 21,801 |
|
|
|
|
|
|
|
|
|
|
| 21,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 21,801 |
|
Other correspondent banking revenue |
|
| 3,793 |
|
|
|
|
|
|
|
|
|
|
| 3,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,793 |
|
Service charges on deposit accounts |
|
| 9,835 |
|
|
| 310 |
|
|
|
|
|
|
| 10,145 |
|
|
| 736 |
|
|
|
|
|
|
|
|
|
|
| 10,881 |
|
Debit, prepaid, ATM and merchant card related fees |
|
| 6,245 |
|
|
|
|
|
|
|
|
|
|
| 6,245 |
|
|
|
|
|
|
| 329 | r |
|
|
|
|
|
| 6,574 |
|
Wealth management related revenue |
|
| 2,422 |
|
|
|
|
|
|
|
|
|
|
| 2,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,422 |
|
FDIC indemnification income |
|
| 96 |
|
|
|
|
|
|
|
|
|
|
| 96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 96 |
|
FDIC indemnification asset amortization |
|
| (1,166 | ) |
|
|
|
|
|
|
|
|
|
| (1,166 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,166 | ) |
Bank owned life insurance income |
|
| 1,877 |
|
|
|
|
|
|
|
|
|
|
| 1,877 |
|
|
|
|
|
|
| 274 | q |
|
|
|
|
|
| 2,151 |
|
Net gain on sale of securities available for sale |
|
| 13 |
|
|
|
|
|
|
|
|
|
|
| 13 |
|
|
| 786 |
|
|
|
|
|
|
|
|
|
|
| 799 |
|
Other service charges and fees |
|
| 2,230 |
|
|
| 311 |
|
|
|
|
|
|
| 2,541 |
|
|
| 1,209 |
|
|
| (603 | )q,r |
|
|
|
|
|
| 3,147 |
|
Total non interest income |
|
| 47,146 |
|
|
| 621 |
|
|
|
|
|
|
| 47,767 |
|
|
| 2,731 |
|
|
|
|
|
|
|
|
|
|
| 50,498 |
|
5
Unaudited Pro Forma Combined Consolidated Statement of Income (continued)
For the nine months ended September 30, 2016
(in thousands, except per share data)
|
| CenterState Sept 30, 2016 as reported |
|
| Platinum Sept 30, 2016 as reported |
|
| Pro Forma adjustments |
|
|
| CenterState Platinum Pro Forma Sept 30, 2016 |
|
| Gateway Sept 30, 2016 as reported |
|
| Gateway reclass |
| Pro Forma adjustments |
|
| Pro Forma Sept 30, 2016 combined |
| |||||||
Non interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary, wages and employee benefits |
|
| 66,832 |
|
|
| 7,131 |
|
|
|
|
|
|
|
| 73,963 |
|
|
| 8,768 |
|
|
|
|
|
|
|
|
| 82,731 |
|
Occupancy expense |
|
| 11,752 |
|
|
| 910 |
|
|
|
|
|
|
|
| 12,662 |
|
|
| 1,636 |
|
|
|
|
|
|
|
|
| 14,298 |
|
Data processing expense |
|
| 5,053 |
|
|
| 525 |
|
|
|
|
|
|
|
| 5,578 |
|
|
| 1,224 |
|
|
|
|
|
|
|
|
| 6,802 |
|
Professional fees |
|
| 2,756 |
|
|
| 384 |
|
|
|
|
|
|
|
| 3,140 |
|
|
| 345 |
|
|
|
|
|
|
|
|
| 3,485 |
|
Bank regulatory expenses |
|
| 2,641 |
|
|
| 344 |
|
|
|
|
|
|
|
| 2,985 |
|
|
| 342 |
|
|
|
|
|
|
|
|
| 3,327 |
|
Credit related expenses |
|
| 1,157 |
|
|
| 414 |
|
|
|
|
|
|
|
| 1,571 |
|
|
| 31 |
|
|
|
|
|
|
|
|
| 1,602 |
|
Marketing expenses |
|
| 2,216 |
|
|
| 294 |
|
|
|
|
|
|
|
| 2,510 |
|
|
| 247 |
|
|
|
|
|
|
|
|
| 2,757 |
|
Merger and acquisition related expenses |
|
| 11,172 |
|
|
|
|
|
|
|
|
|
|
|
| 11,172 |
|
|
|
|
|
|
|
|
|
|
|
|
| 11,172 |
|
Loss from termination of FDIC loss share agreements |
|
| 17,560 |
|
|
|
|
|
|
|
|
|
|
|
| 17,560 |
|
|
|
|
|
|
|
|
|
|
|
|
| 17,560 |
|
All other expenses |
|
| 15,091 |
|
|
| 759 |
|
|
| 341 | s |
|
|
| 16,191 |
|
|
| 2,479 |
|
|
|
|
| 811 | s |
|
| 19,481 |
|
|
|
| 136,230 |
|
|
| 10,761 |
|
|
|
|
|
|
|
| 147,332 |
|
|
| 15,072 |
|
|
|
|
|
|
|
|
| 163,215 |
|
Income before provision for income taxes |
|
| 40,011 |
|
|
| 4,569 |
|
|
|
|
|
|
|
| 44,998 |
|
|
| 6,235 |
|
|
|
|
|
|
|
|
| 50,911 |
|
Provision for income taxes |
|
| 13,697 |
|
|
|
|
|
|
| 1,725 | v,w |
|
|
| 15,422 |
|
|
| 1,747 |
|
|
|
|
| (124 | )v |
|
| 17,045 |
|
Net income |
|
| 26,314 |
|
|
| 4,569 |
|
|
|
|
|
|
|
| 29,576 |
|
|
| 4,488 |
|
|
|
|
|
|
|
|
| 33,866 |
|
Less: earnings allocated to participating securities |
|
| 104 |
|
|
|
|
|
|
|
|
|
|
|
| 104 |
|
|
|
|
|
|
|
|
|
|
|
|
| 104 |
|
Less: preferred stock dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| 97 |
|
|
|
|
| (97 | )x |
|
| - |
|
Net income available to common shareholders |
| $ | 26,210 |
|
| $ | 4,569 |
|
|
|
|
|
|
| $ | 29,472 |
|
| $ | 4,391 |
|
|
|
|
|
|
|
| $ | 33,762 |
|
Basic earnings (loss) per common share |
| $ | 0.55 |
|
| $ | 4.15 |
|
|
|
|
|
|
| $ | 0.57 |
|
| $ | 0.69 |
|
|
|
|
|
|
|
| $ | 0.61 |
|
Diluted earnings (loss) per common share |
| $ | 0.55 |
|
| $ | 4.14 |
|
|
|
|
|
|
| $ | 0.57 |
|
| $ | 0.67 |
|
|
|
|
|
|
|
| $ | 0.60 |
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 47,254 |
|
|
| 1,102 |
|
|
|
|
|
|
|
| 51,458 |
|
|
| 6,363 |
|
|
|
|
|
|
|
|
| 55,689 |
|
Diluted |
|
| 47,955 |
|
|
| 1,104 |
|
|
|
|
|
|
|
| 52,159 |
|
|
| 6,536 |
|
|
|
|
|
|
|
|
| 56,720 |
|
See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(all amounts are in thousands, except per share data, unless otherwise indicated)
Note 1 - Basis of Pro Forma Presentation
The unaudited pro forma combined balance sheet as of September 30, 2016 and the unaudited pro forma combined income statements for the year ended December 31, 2015 and nine months ended September 30, 2016 are based on the historical financial statements of CenterState, Platinum and Gateway after giving effect to the completion of the mergers and the assumptions and adjustments described in the accompanying notes. Such financial statements do not reflect cost savings or operating synergies expected to result from the mergers, or the costs to achieve these cost savings or operating synergies, or any anticipated disposition of assets that may result from the integration of the operations of the three companies. Certain historical financial information has been reclassified to conform to the current presentation.
The transactions will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.
Under ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. Subsequent to the completion of the merger, CenterState, Platinum and Gateway will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company. For those assets in the combined company that will be phased out or will no longer be used, additional amortization, depreciation and possibly impairment charges will be recorded after management completes the integration plan.
The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.
Note 2 – Preliminary Estimated Acquisition Consideration
Under the terms of the Platinum merger agreement, Platinum shareholders are entitled to receive 3.7832 shares of CenterState common stock and $7.60 in cash for each share of Platinum stock. For additional information relating to the merger agreement between CenterState and Platinum, see CenterState’s Form 8-K filed on October 18, 2016.
7
Based on Platinum’s estimate of shares of Platinum common stock outstanding as of September 30, 2016, the preliminary estimated acquisition consideration is as follows.
(dollars are in thousands, except per share data) |
|
|
|
|
Number of shares of Platinum common stock outstanding at September 30, 2016 |
|
| 1,111,134 |
|
Per share exchange ratio |
|
| 3.7832 |
|
Number of shares of CenterState common stock - as exchanged |
|
| 4,203,642 |
|
Multiplied by CenterState common stock price on September 30, 2016 |
| $ | 17.73 |
|
Estimated fair value of CenterState common stock issued ("Stock Consideration") |
| $ | 74,531 |
|
|
|
|
|
|
Number of shares of Platinum common stock outstanding at September 30, 2016 |
|
| 1,111,134 |
|
Multiplied by the cash consideration each Platinum share is entitled to receive |
| $ | 7.60 |
|
Estimated total "Cash Consideration" |
| $ | 8,445 |
|
|
|
|
|
|
Total Stock Consideration |
| $ | 74,531 |
|
Total Cash Consideration |
|
| 8,445 |
|
Preliminary estimated total consideration to be paid to Platinum common shareholders |
| $ | 82,976 |
|
Platinum stock options cashed out |
|
| 791 |
|
Total Preliminary Estimated Acquisition Consideration for Platinum |
| $ | 83,767 |
|
Under the terms of the Gateway merger agreement, Gateway shareholders will be entitled to receive 0.95 shares of CenterState common stock or $18.00 in cash for each share of Gateway common stock, provided however that the aggregate cash payment shall constitute 30% of the merger consideration. For additional information relating to the merger agreement between CenterState and Gateway, see CenterState’s Form 8-K filed on November 30, 2016.
Based on Gateway’s estimate of shares of Gateway common stock outstanding as of September 30, 2016, the preliminary estimated acquisition consideration is as follows.
(dollars are in thousands, except per share data) |
|
|
|
|
Number of shares of Gateway common stock outstanding at September 30, 2016 |
|
| 5,443,839 |
|
Gateway preferred shares that convert to Gateway common shares upon a change in control |
|
| 919,236 |
|
Total Gateway common shares including conversion of preferred shares |
|
| 6,363,075 |
|
Per share exchange ratio |
|
| 0.95 |
|
Multiplied by 70% |
|
| 70 | % |
Number of shares of CenterState common stock - as exchanged |
|
| 4,231,445 |
|
Multiplied by CenterState common stock price on September 30, 2016 |
| $ | 17.73 |
|
Estimated fair value of CenterState common stock issued ("Stock Consideration") |
| $ | 75,024 |
|
|
|
|
|
|
Total Gateway common shares including conversion of preferred shares |
|
| 6,363,075 |
|
Multiplied by the cash consideration each Gateway share is entitled to receive |
| $ | 18.00 |
|
Multiplied by 30% |
|
| 30 | % |
Estimated "Cash Consideration" |
| $ | 34,361 |
|
|
|
|
|
|
Total Stock Consideration |
| $ | 75,024 |
|
Total Cash Consideration |
|
| 34,361 |
|
Preliminary estimated total consideration to be paid to Gateway common shareholders |
| $ | 109,385 |
|
Fair value of Gateway stock options converted to CenterState stock options |
|
| 7,545 |
|
Total Preliminary Estimated Acquisition Consideration for Gateway |
| $ | 116,930 |
|
Note 3 - Preliminary Estimated Acquisition Consideration Allocation
Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of Platinum and Gateway based on their estimated fair values as of the closing of the merger. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.
8
The allocation of the estimated acquisition consideration with regard to Platinum and Gateway is preliminary because the proposed mergers have not yet been completed. The preliminary allocation is based on estimates, assumptions, valuations, and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation unaudited pro forma adjustments will remain preliminary until CenterState management determines the final acquisition consideration and the fair values of assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the mergers and will be based on the value of the CenterState common stock at the closing of the mergers. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma combined consolidated financial statements.
The total preliminary estimated acquisition consideration as shown in the tables above is allocated to Platinum and Gateway’s tangible and intangible assets and liabilities as of September 30, 2016 based on their preliminary estimated fair values as follows.
|
| Platinum |
|
| Gateway |
| ||
Cash and cash equivalents |
| $ | 43,380 |
|
| $ | 38,258 |
|
Interest-bearing time deposits |
|
| 40,518 |
|
|
| 24,538 |
|
Investment securities |
|
| 33,500 |
|
|
| 218,818 |
|
Loans |
|
| 438,045 |
|
|
| 534,002 |
|
OREO (foreclosed assets) |
|
| 1,186 |
|
|
| 1,603 |
|
Bank premises and equipment |
|
| 14,447 |
|
|
| 19,300 |
|
Bank owned life insurance |
|
| - |
|
|
| 15,262 |
|
Deferred income tax asset, net |
|
| (299 | ) |
|
| 6,864 |
|
Other assets |
|
| 3,216 |
|
|
| 7,742 |
|
Intangible assets |
|
| 3,570 |
|
|
| 8,482 |
|
Goodwill |
|
| 36,744 |
|
|
| 38,364 |
|
Deposits |
|
| (494,190 | ) |
|
| (722,665 | ) |
Other borrowings |
|
| (33,552 | ) |
|
| (67,976 | ) |
Other liabilities |
|
| (2,798 | ) |
|
| (5,662 | ) |
Total Preliminary Estimated Acquisition Consideration |
| $ | 83,767 |
|
| $ | 116,930 |
|
Approximately $3,570 and $8,482 for Platinum, and Gateway, respectively, has been preliminarily allocated to amortizable intangible assets acquired. The amortization related to the preliminary fair value of net amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined financial statements.
Identifiable intangible assets. The preliminary fair values of intangible assets were determined based on the provisions of ASC 805, which defines fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The preliminary allocation to intangible assets is allocated to core deposit intangibles.
Goodwill. Goodwill represents the excess of the preliminary estimated acquisition consideration over the preliminary fair value of the underlying net tangible and intangible assets. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets are the skill sets, operations, customer base and organizational cultures that can be leveraged to enable the combined company to build an enterprise greater than the sum of its parts. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. In the event management determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the period in which the determination is made.
9
Note 4 - Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments
The unaudited pro forma financial information is not necessarily indicative of what the financial position actually would have been had the merger been completed at the date indicated. Such information includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-merger periods. The unaudited pro forma financial information does not give consideration to the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the merger.
The following unaudited pro forma adjustments result from accounting for the merger, including the determination of fair value of the assets, liabilities, and commitments which CenterState, as the acquirer, will acquire from Platinum and Gateway. The descriptions related to these preliminary adjustments are as follows.
Balance Sheet – the explanations and descriptions below are referenced to the September 30, 2016 Unaudited Pro Forma Combined Consolidated Balance Sheet on page 2.
|
|
| Platinum |
|
| Gateway |
| ||||||||||
Pro Forma Adjusting entries (Balance Sheet): |
| Debit |
|
| Credit |
|
| Debit |
|
| Credit |
| |||||
a | Cash |
|
|
|
|
|
| 9,236 |
|
|
|
|
|
|
| 34,361 |
|
b | Common stock |
|
|
|
|
|
| 42 |
|
|
|
|
|
|
| 42 |
|
b | Additional paid in capital, common |
|
|
|
|
|
| 74,489 |
|
|
|
|
|
|
| 82,527 |
|
c | Cash |
|
|
|
|
|
| 5,456 |
|
|
|
|
|
|
| 5,234 |
|
c | Deferred tax (included in other assets) |
|
|
|
|
|
|
|
|
|
| 1,636 |
|
|
|
|
|
c | Retained earnings |
|
| 5,456 |
|
|
|
|
|
|
| 3,598 |
|
|
|
|
|
d | Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,212 |
|
e | Loans |
|
|
|
|
|
| 7,100 |
|
|
|
|
|
|
| 8,550 |
|
f | Allowance for loan losses |
|
| 5,084 |
|
|
|
|
|
|
| 7,227 |
|
|
|
|
|
g | Other real estate owned ("OREO") |
|
|
|
|
|
| 450 |
|
|
|
|
|
|
| 178 |
|
h | Property and equipment, net |
|
| 5,500 |
|
|
|
|
|
|
|
|
|
|
| 4,575 |
|
i | Core deposit intangible ("CDI") |
|
| 3,570 |
|
|
|
|
|
|
| 8,482 |
|
|
|
|
|
j | Deferred tax asset |
|
|
|
|
|
| 299 |
|
|
| 167 |
|
|
|
|
|
k | Preliminary goodwill estimate |
|
| 36,744 |
|
|
|
|
|
|
| 38,364 |
|
|
|
|
|
l | Deposits |
|
|
|
|
|
| 1,128 |
|
|
|
|
|
|
| 1,400 |
|
m | Federal Home Loan Bank advances |
|
|
|
|
|
| 111 |
|
|
|
|
|
|
| 226 |
|
n | Notes payable (included in other borrowings) |
|
| 7,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
n | Interest payable (included in other liabilities) |
|
| 60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
n | Loans |
|
|
|
|
|
| 7,276 |
|
|
|
|
|
|
|
|
|
n | Interest receivable (included in other assets) |
|
|
|
|
|
| 60 |
|
|
|
|
|
|
|
|
|
o | Preferred Stock |
|
|
|
|
|
|
|
|
|
| 12 |
|
|
|
|
|
o | Additional paid in capital |
|
|
|
|
|
|
|
|
|
| 2,584 |
|
|
|
|
|
o | Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,596 |
|
p | Preferred Stock |
|
|
|
|
|
|
|
|
|
| 4,596 |
|
|
|
|
|
p | Common Stock |
|
| 5,556 |
|
|
|
|
|
|
| 27,219 |
|
|
|
|
|
p | Additional paid in capital |
|
| 10,649 |
|
|
|
|
|
|
| 37,890 |
|
|
|
|
|
p | Retained earnings |
|
| 25,259 |
|
|
|
|
|
|
| 7,388 |
|
|
|
|
|
p | Accumulated other comprehensive loss |
|
| 493 |
|
|
|
|
|
|
| 1,738 |
|
|
|
|
|
a. | Payment of the cash consideration component of total merger consideration to Platinum and Gateway’s shareholders. Also includes additional cash payments for all “in the money” outstanding stock options cashed out pursuant to the Platinum merger agreement. |
b. | CenterState common shares issued to Platinum and Gateway’s shareholders representing the stock consideration component of the total respective merger consideration. For the purpose of this pro-forma presentation, the value of a share of CenterState common stock was assumed to equal its closing price on September 30, 2016, the pro forma date, as reported by NASDAQ ($17.73 per share). |
10
d. | Adjust certain security investments to estimated fair value. |
e. | Adjustment to loans to reflect the preliminary estimated fair value at acquisition date. |
f. | Adjustment to allowance for loan losses to reflect the reversal of Platinum and Gateway’s allowance for loan and lease losses. |
g. | Adjustment to OREO to reflect the preliminary estimated fair value at acquisition date. |
h. | Adjustment to branch real estate to reflect the preliminary estimated fair value at acquisition date. |
i. | Adjustment to intangible assets to reflect the preliminary estimate of the core deposit intangible at the acquisition date. |
j. | Adjustment to reflect the net deferred tax asset generated by the net fair value adjustments and existing pre-merger timing differences using an assumed effective tax rate equal to 38.575%. |
k. | Adjustment to reflect the preliminary estimated goodwill generated as a result of consideration paid in excess of the fair value of the net assets acquired. |
l. | Adjustment to time deposits to reflect preliminary estimated fair value at acquisition date. |
m. | Adjust Federal Home Loan Bank advances to estimated fair value. |
n. | Payment by Platinum for note payable, plus accrued interest, with CenterState which is expected to be paid prior to the merger closing date. |
o. | Redemption of preferred series B stock by Gateway prior to the merger closing date. |
p. | Reflects the reversal of stockholders’ equity after adjustments in c and o above. |
Income Statements – the explanations and descriptions below are referenced to the Unaudited Pro Forma Combined Consolidated Statements of Income for the year ended December 31, 2015 and nine months ended September 30, 2016 starting on page 3.
Income Statements – reclassifications
The following reclassifications adjusted Platinum and Gateway’s historical income statements to conform to CenterState’s historical income statements.
q. | Income on bank owned life insurance included in Gateway’s all other income has been reclassified to bank owned life insurance income to conform to CenterState’s historical income statement. |
r. | Income and fees from automated teller machines (“ATM”), bank card and credit card interchange fees and Visa and Mastercard fees included in Gateway’s all other income have been reclassified to debit, prepaid, ATM and merchant card related fees to conform to CenterState’s historical income statement. |
11
Income Statements – Pro Forma Adjustments
|
|
| Year ended Dec 31, 2015 |
| |||||
Pro Forma Adjusting entries (Income Statements): |
| Platinum |
|
| Gateway |
| |||
s | Amortization of CDI |
| $ | 536 |
|
| $ | 1,272 |
|
t | Time Deposits amortization of fair value adjustment at acquisition date |
|
| (514 | ) |
|
| (691 | ) |
u | Preliminary estimate of loan interest accretion |
|
| 708 |
|
|
| 352 |
|
v | Income tax expense of pro-forma adjustments |
|
| 265 |
|
|
| (88 | ) |
w | Income tax expense on Platinum's pretax income |
|
| 2,082 |
|
|
|
|
|
x | Effect of redeeming perpetual preferred stock, series B |
|
|
|
|
|
| (195 | ) |
|
|
| Nine months ended Sept. 30, 2016 |
| |||||
Pro Forma Adjusting entries (Income Statements): |
| Platinum |
|
| Gateway |
| |||
s | Amortization of CDI |
| $ | 341 |
|
| $ | 811 |
|
t | Time Deposits amortization of fair value adjustment at acquisition date |
|
| (214 | ) |
|
| (291 | ) |
u | Preliminary estimate of loan interest accretion |
|
| 323 |
|
|
| 198 |
|
v | Income tax expense of pro-forma adjustments |
|
| 161 |
|
|
| (124 | ) |
w | Income tax expense on Platinum's pre-merger pre-tax income |
|
| 1,564 |
|
|
|
|
|
x | Effect of redeeming perpetual preferred stock, series B |
|
|
|
|
|
| (97 | ) |
y | Remove interest expense of existing note payable with CenterState |
|
| (222 | ) |
|
|
|
|
s. | The preliminary estimates of CDI related to CenterState’s acquisition of Platinum and Gateway are expected to approximate $3,570 and $8,482, respectively, and will be amortized over a ten year period on an accelerated basis. The CDI amortization expense for Platinum and Gateway is expected to be approximately $536 and $1,272, respectively, during the first year of combined operations. The CDI amortization expense for Platinum and Gateway is expected to be approximately $455 and $1,081, respectively, during the second year of combined operations. Below is the preliminary estimated amortization schedule. |
Year |
| Platinum |
|
| Gateway |
|
| Year |
|
| Platinum |
|
| Gateway |
| |||||
1 |
| $ | 536 |
|
| $ | 1,272 |
|
|
| 6 |
|
| $ | 311 |
|
| $ | 738 |
|
2 |
|
| 455 |
|
|
| 1,081 |
|
|
| 7 |
|
|
| 311 |
|
|
| 738 |
|
3 |
|
| 387 |
|
|
| 919 |
|
|
| 8 |
|
|
| 311 |
|
|
| 738 |
|
4 |
|
| 329 |
|
|
| 781 |
|
|
| 9 |
|
|
| 311 |
|
|
| 738 |
|
5 |
|
| 311 |
|
|
| 738 |
|
|
| 10 |
|
|
| 308 |
|
|
| 739 |
|
t. | The time deposits acquired from Platinum and Gateway will be adjusted to fair value at the acquisition date. The preliminary estimate of the fair value adjustment at acquisition date is expected to approximate $1,128 and $1,400, respectively. This amount will be amortized as a decrease to interest expense on a pro rata basis based on the maturities of the underlying time deposits. The amortization for Platinum is preliminarily estimated to approximate $514 and $270, respectively, during the first and second year of combined operations. The amortization for Gateway is preliminarily estimated to approximate $691 and $355, respectively, during the first and second year of combined operations. |
u. | Represents the preliminary estimate of interest income accretion related to the preliminary estimate of the fair value adjustment of the loans acquired pursuant to the merger. |
v. | Adjustment to reflect the income tax provision of the Pro Forma Adjustments using 38.575% as the incremental effective tax rate. |
w. | Adjustment to reflect the income tax provision on Platinum’s pre-merger pre-tax income assuming CenterState’s effective tax rate for the periods presented. |
x. | Adjustment to reflect Gateway’s redemption of the non-cumulative perpetual preferred stock, series B prior to the closing date of the merger. This is a condition of closing the transaction. |
y. | Remove the interest expense related to Platinum’s note payable with CenterState as Platinum is expected to pay off the note payable prior to the merger acquisition date. |
12
Note 5 - Earnings per Common Share
Unaudited pro forma earnings per common share for the year ended December 31, 2015 and nine months ended September 30, 2016 have been calculated using CenterState’s historic weighted average common shares outstanding plus the common shares assumed to be issued to Platinum and Gateway’s shareholders in each of their mergers.
The following table sets forth the calculation of basic and diluted unaudited pro forma earnings per common share for the year ended December 31, 2015 and nine months ended September 30, 2016. In the table below, amounts are in thousands except for per share data.
|
| Nine months ended |
|
| Year ended |
| ||||||||||
|
| September 30, 2016 |
|
| December 31, 2015 |
| ||||||||||
|
| Basic |
|
| Diluted |
|
| Basic |
|
| Diluted |
| ||||
Pro forma net income available to common shareholders |
| $ | 33,762 |
|
| $ | 33,762 |
|
| $ | 47,650 |
|
| $ | 47,650 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Centerstate |
|
| 47,254 |
|
|
| 47,955 |
|
|
| 45,182 |
|
|
| 45,789 |
|
Common shares issued to Platinum shareholders |
|
| 4,204 |
|
|
| 4,204 |
|
|
| 4,204 |
|
|
| 4,204 |
|
Common shares issued to Gateway shareholders |
|
| 4,231 |
|
|
| 4,561 |
|
|
| 4,231 |
|
|
| 4,414 |
|
Pro forma weighted average common shares outstanding |
|
| 55,689 |
|
|
| 56,720 |
|
|
| 53,617 |
|
|
| 54,407 |
|
Pro forma net income per common share |
| $ | 0.61 |
|
| $ | 0.60 |
|
| $ | 0.89 |
|
| $ | 0.88 |
|
Note 6 – Merger Related Charges
CenterState’s preliminary estimated transaction expenses, net of tax, related to the Platinum and Gateway merger are approximately $3,639 and $4,961, respectively. These one-time merger related expenses have not been included in the Unaudited Pro Forma Combined Consolidated Statement of Income, as the pro forma adjustments does not give consideration to non-recurring items, the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the merger. Platinum and Gateway’s preliminary estimated transaction expenses, net of tax, related to the merger are approximately $5,456 and $3,598, net of tax. These preliminary estimated merger transaction expenses (CenterState, Platinum and Gateway) are still being developed and will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment, and service contracts to determine where they may take advantage of redundancies. The preliminary estimated pro forma presentation of merger transaction costs is in the following table.
|
| (Seller) |
|
| (Buyer) |
| ||
|
| Platinum |
|
| CenterState |
| ||
Change in control and severance expenses |
| $ | 4,456 |
|
| $ | 787 |
|
System termination fees and system conversion expenses |
|
| - |
|
|
| 1,920 |
|
Investment bankers, accounting, auditing and legal |
|
| 1,000 |
|
|
| 1,155 |
|
Other related expenses |
|
| - |
|
|
| 1,403 |
|
Total non-interest expense |
|
| 5,456 |
|
|
| 5,265 |
|
Tax benefit |
|
| - |
|
|
| 1,626 |
|
Net expense after tax benefit |
| $ | 5,456 |
|
| $ | 3,639 |
|
|
| (Seller) |
|
| (Buyer) |
| ||
|
| Gateway |
|
| CenterState |
| ||
Change in control and severance expenses |
| $ | 3,834 |
|
| $ | 2,240 |
|
System termination fees and system conversion expenses |
|
| - |
|
|
| 1,959 |
|
Investment bankers, accounting, auditing and legal |
|
| 1400 |
|
|
| 1,765 |
|
Other related expenses |
|
| - |
|
|
| 1,205 |
|
Total non-interest expense |
| $ | 5,234 |
|
| $ | 7,169 |
|
Tax benefit |
|
| 1,636 |
|
|
| 2,208 |
|
Net expense after tax benefit |
| $ | 3,598 |
|
| $ | 4,961 |
|
13
