Exhibit 99.1
FOR IMMEDIATE RELEASE April 25, 2017 |
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CenterState Banks, Inc. Announces
First Quarter 2017 Earnings Results
(all amounts are in thousands of dollars, except per share data, or unless otherwise noted)
WINTER HAVEN, FL. – April 25, 2017 - CenterState Banks, Inc. (Nasdaq: CSFL) reported net income of $16,600 or diluted earnings per share of $0.32 for the first quarter of 2017 compared to $16,027 for the fourth quarter of 2016. The current quarter’s net income was impacted by merger related costs of $607, net of tax, or $0.01 per share, compared to the net income in the fourth quarter of 2016 which was impacted by merger related costs of $180, net of tax.
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| 1Q17 |
| 4Q16 |
Return on average assets (annualized) | 1.29% |
| 1.25% |
Return on average tangible equity (annualized) (note 1) | 14.1% |
| 15.3% |
Efficiency ratio (note 1) | 59% |
| 58% |
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CURRENT QUARTER HIGHLIGHTS
| • | Loans – 11% annualized increase in loans during the current quarter. |
| • | Deposits – 19% annualized increase in non-time deposits during the current quarter with a cost of deposits of 0.18%, consistent with the fourth quarter of 2016. |
| • | Net Interest Margin (“NIM”) – tax equivalent NIM (Non GAAP) of 4.28% for the current quarter compared to 4.20% for the fourth quarter of 2016 mainly attributable to a 15 basis point increase in the Company’s NIM when excluding PCI loan accretion. |
| • | Tangible book value increased 22% to $10.03 at March 31, 2017 compared to the same period in prior year attributable to strong EPS growth along with an accretive capital raise. |
| • | The Company completed the sale of 2,695,000 shares of common stock pursuant to a public offering which resulted in approximately $63.3 million in net proceeds on January 13, 2017. |
| • | On January 1, 2017, the Company adopted FASB Accounting Standards Update (ASU) 2016-09, Stock Compensation Improvements to Employee Share-Based Payment Activity, which represented a change in accounting for the tax effects related to vesting of common shares and the exercise of stock options previously granted to the Company's employees through its various equity compensation plans. This change resulted in a reduction of first quarter 2017 income tax expense of approximately $1,083. |
Subsequent Events
| • | The Company closed on its previously announced acquisition of Platinum Bank Holding Company (“Platinum”) on April 1, 2017 and converted Platinum’s core system into the Company’s core system on April 21st. |
| • | The Company has received all regulatory approvals on the previously announced acquisition of Gateway Financial Holdings of Florida, Inc. which is scheduled to close May 1, 2017. |
Note 1: See reconciliations starting on page 17, Explanation of Certain Unaudited Non-GAAP Financial Measures.
Condensed Consolidated Income Statement
Quarterly condensed consolidated income statements (unaudited) are shown below for the periods indicated.
Quarterly Condensed Consolidated Statements of Operations (unaudited)
For the quarter ended: | 3/31/17 |
| 12/31/16 |
| 9/30/16 |
| 6/30/16 |
| 3/31/16 |
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Interest income | $ | 51,103 |
| $ | 50,155 |
| $ | 47,703 |
| $ | 47,309 |
| $ | 43,498 |
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Interest expense |
| 2,782 |
|
| 2,621 |
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| 2,384 |
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| 2,312 |
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| 2,023 |
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Net interest income |
| 48,321 |
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| 47,534 |
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| 45,319 |
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| 44,997 |
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| 41,475 |
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Provision for loan losses |
| 995 |
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| 2,266 |
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| 1,275 |
| 911 |
| 510 |
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Net interest income after loan loss provision |
| 47,326 |
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| 45,268 |
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| 44,044 |
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| 44,086 |
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| 40,965 |
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Correspondent banking and capital markets division income |
| 6,449 |
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| 8,091 |
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| 7,528 |
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| 9,291 |
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| 8,775 |
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Gain on sale of securities available for sale |
| — |
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| — |
| 13 |
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| — |
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| — |
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FDIC- IA (negative accretion) (1) |
| — |
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| — |
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| — |
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| — |
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| (1,166 | ) |
FDIC- revenue (1) |
| — |
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| — |
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| — |
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| — |
| 96 |
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Gain on early extinguishment of debt |
| — |
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| — |
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| — |
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| — |
| 308 |
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Gain on sale of bank properties held for sale |
| 129 |
| 730 |
| 67 |
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| — |
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| — |
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All other non interest income |
| 7,924 |
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| 8,335 |
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| 8,073 |
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| 7,680 |
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| 6,548 |
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Total non interest income |
| 14,502 |
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| 17,156 |
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| 15,681 |
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| 16,971 |
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| 14,561 |
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Credit related expenses |
| 655 |
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| 624 |
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| 187 |
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| 611 |
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| 359 |
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Correspondent banking and capital markets division-expense |
| 4,746 |
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| 5,987 |
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| 5,456 |
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| 6,159 |
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| 5,782 |
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Merger and acquisition related expenses |
| 870 |
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| 272 |
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| — |
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| — |
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| 11,172 |
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Impairment (recovery) of bank property held for sale |
| 77 |
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| 116 |
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| 616 |
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| (38 | ) |
| 456 |
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Termination of FDIC loss share agreements (1) |
| — |
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| — |
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| — |
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| — |
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| 17,560 |
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All other non interest expense |
| 31,695 |
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| 31,185 |
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| 30,136 |
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| 30,317 |
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| 27,524 |
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Total non interest expense |
| 38,043 |
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| 38,184 |
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| 36,395 |
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| 37,049 |
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| 62,853 |
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Income (loss) before income tax |
| 23,785 |
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| 24,240 |
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| 23,330 |
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| 24,008 |
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| (7,327 | ) |
Income tax provision (benefit) |
| 7,185 |
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| 8,213 |
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| 7,946 |
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| 8,274 |
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| (2,523 | ) |
NET INCOME (LOSS) | $ | 16,600 |
| $ | 16,027 |
| $ | 15,384 |
| $ | 15,734 |
| $ | (4,804 | ) |
Net income (loss) allocated to common shares | $ | 16,559 |
| $ | 15,970 |
| $ | 15,324 |
| $ | 15,672 |
| $ | (4,804 | ) |
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Earnings (loss) per share (basic) | $ | 0.33 |
| $ | 0.33 |
| $ | 0.32 |
| $ | 0.33 |
| $ | (0.10 | ) |
Earnings (loss) per share (diluted) | $ | 0.32 |
| $ | 0.33 |
| $ | 0.32 |
| $ | 0.32 |
| $ | (0.10 | ) |
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Average common shares outstanding (basic) |
| 50,632 |
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| 47,870 |
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| 47,821 |
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| 47,782 |
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| 46,343 |
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Average common shares outstanding (diluted) |
| 51,408 |
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| 48,800 |
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| 48,603 |
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| 48,454 |
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| 46,343 |
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Common shares outstanding at period end |
| 51,126 |
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| 48,147 |
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| 48,017 |
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| 47,996 |
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| 47,943 |
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note 1: | In February 2016, the Company terminated all existing loss share agreements with the FDIC. As a result, the Company wrote off the remaining indemnification asset and the claw back liability, received cash from the FDIC, and recognized a loss on the transaction of approximately $17,560 during the first quarter. |
2
Loans, excluding PCI loans, increased $100,123 during the quarter, an annualized growth rate of approximately 13%. Total new loans originated during the current quarter approximated $306.1 million, of which $266.9 million were funded. About 44% of funded loan origination was non-owner occupied commercial real estate (“CRE”); 17% commercial and industrial (“C&I”), 17% owner occupied CRE, 14% single family residential, 4% land, development & construction and 4% were all other.
Approximately 23% of the funded loan production was floating rate, 21% was other variable rate and 56% was fixed rate. The loan origination pipeline is approximately $460 million at March 31, 2017 compared to $372 million at December 31, 2016. The graph below summarizes total loan production and funded loan production over the past five quarters.
3
LOAN MIX
The table below summarizes the Company’s loan mix over the most recent five quarter ends.
At quarter ended (unaudited): | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
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Originated Loans |
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Real estate loans |
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Residential | $ | 574,494 |
| $ | 552,749 |
| $ | 534,070 |
| $ | 517,861 |
| $ | 507,835 |
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Commercial |
| 1,201,768 |
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| 1,112,149 |
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| 1,019,458 |
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| 910,687 |
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| 824,702 |
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Land, development and construction loans |
| 125,115 |
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| 115,983 |
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| 94,896 |
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| 100,584 |
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| 99,605 |
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Total real estate loans |
| 1,901,377 |
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| 1,780,881 |
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| 1,648,424 |
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| 1,529,132 |
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| 1,432,142 |
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Commercial loans |
| 407,884 |
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| 382,009 |
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| 339,938 |
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| 301,557 |
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| 290,658 |
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Consumer and other loans |
| 86,902 |
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| 87,266 |
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| 80,391 |
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| 74,398 |
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| 69,528 |
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Total loans before unearned fees and costs |
| 2,396,163 |
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| 2,250,156 |
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| 2,068,753 |
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| 1,905,087 |
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| 1,792,328 |
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Unearned fees and costs |
| 858 |
| 475 |
| 519 |
| 479 |
| 796 |
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Total originated loans |
| 2,397,021 |
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| 2,250,631 |
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| 2,069,272 |
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| 1,905,566 |
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| 1,793,124 |
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Acquired Loans (1) |
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Real estate loans |
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Residential |
| 244,043 |
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| 263,555 |
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| 272,419 |
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| 284,580 |
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| 291,886 |
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Commercial |
| 622,332 |
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| 643,773 |
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| 662,917 |
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| 682,693 |
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| 705,877 |
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Land, development and construction loans |
| 23,470 |
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| 26,061 |
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| 25,435 |
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| 24,797 |
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| 31,541 |
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Total real estate loans |
| 889,845 |
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| 933,389 |
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| 960,771 |
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| 992,070 |
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| 1,029,304 |
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Commercial loans |
| 55,041 |
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| 57,531 |
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| 62,775 |
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| 75,638 |
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| 82,970 |
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Consumer and other loans |
| 2,039 |
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| 2,272 |
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| 4,376 |
| 4834 |
| 6307 |
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Total acquired loans |
| 946,925 |
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| 993,192 |
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| 1,027,922 |
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| 1,072,542 |
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| 1,118,581 |
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PCI loans |
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Real estate loans |
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Residential |
| 67,234 |
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| 72,179 |
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| 74,825 |
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| 78,371 |
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| 82,595 |
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Commercial |
| 94,751 |
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| 99,566 |
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| 106,482 |
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| 120,255 |
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| 127,354 |
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Land, development and construction loans |
| 9,522 |
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| 9,944 |
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| 10,928 |
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| 11,649 |
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| 19,912 |
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Total real estate loans |
| 171,507 |
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| 181,689 |
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| 192,235 |
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| 210,275 |
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| 229,861 |
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Commercial loans |
| 4,177 |
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| 3,825 |
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| 4,649 |
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| 5,974 |
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| 6,020 |
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Consumer and other loans |
| 374 |
| 410 |
| 404 |
| 610 |
| 635 |
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Total PCI loans |
| 176,058 |
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| 185,924 |
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| 197,288 |
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| 216,859 |
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| 236,516 |
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Total Loans | $ | 3,520,004 |
| $ | 3,429,747 |
| $ | 3,294,482 |
| $ | 3,194,967 |
| $ | 3,148,221 |
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| (1) | Acquired loans include the non-PCI loans purchased pursuant to the following acquisitions: |
| o | Branch and loan transaction with TD Bank (year 2011); |
| o | Federal Trust Bank acquisition (year 2011); |
| o | Gulfstream Business Bank acquisition (year 2014); |
| o | First Southern Bank acquisition (year 2014); |
| o | Community Bank of South Florida acquisition (year 2016); and |
| o | Hometown of Homestead Banking Company (year 2016). |
4
During the quarter, the Company’s total deposits increased by $144,579, or approximately 14% on an annualized basis. Non-time deposits increased $167,059 during the current quarter. The increase in non-time deposits was offset by the continued decline in time deposits, which decreased $22,480 during the current quarter. The majority of the increase in non-time deposits during the current quarter was in non-interest bearing commercial checking accounts which was similar to the increase in the first quarter of 2016. Total checking account balances represent 58% of total deposits. The overall cost of total deposits (i.e. includes non-interest bearing checking accounts) during the current quarter was 0.18%, the same as the previous quarter. The table below summarizes the Company’s deposit mix over the periods indicated.
Deposit mix (unaudited) |
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For the quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
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Checking accounts |
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Non-interest bearing | $ | 1,585,963 |
| $ | 1,426,624 |
| $ | 1,406,030 |
| $ | 1,486,600 |
| $ | 1,489,530 |
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Interest bearing |
| 893,945 |
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| 917,004 |
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| 814,123 |
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| 763,614 |
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| 756,129 |
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Savings deposits |
| 384,202 |
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| 362,947 |
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| 352,547 |
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| 347,631 |
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| 341,864 |
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Money market accounts |
| 910,056 |
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| 900,532 |
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| 903,697 |
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| 927,997 |
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| 872,219 |
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Time deposits |
| 522,957 |
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| 545,437 |
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| 579,537 |
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| 606,294 |
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| 632,425 |
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Total deposits | $ | 4,297,123 |
| $ | 4,152,544 |
| $ | 4,055,934 |
| $ | 4,132,136 |
| $ | 4,092,167 |
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Non time deposits as percentage of total deposits |
| 88 | % |
| 87 | % |
| 86 | % |
| 85 | % |
| 85 | % |
Time deposits as percentage of total deposits |
| 12 | % |
| 13 | % |
| 14 | % |
| 15 | % |
| 15 | % |
Total deposits |
| 100 | % |
| 100 | % |
| 100 | % |
| 100 | % |
| 100 | % |
5
NET INTEREST MARGIN (“NIM”)
The Company’s NIM increased 8 basis points from 4.20% in 4Q16 to 4.28% in 1Q17 due to higher loan and securities yields with a stable cost of deposits of 0.18%. When excluding PCI accretion, the Company’s core NIM increased 15 basis points to 3.77% from 3.62% in the prior quarter. The increase in loan yields was attributable to this quarter’s new loan production rate of 4.05%, a 23 basis point increase from 3.82% in the prior quarter. In addition, the increase in short term interest rates had a positive impact on the floating rate loans which represent 32% of the total loan portfolio.
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)
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| 1Q17 |
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| 4Q16 |
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| 1Q16 |
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| average |
| interest |
| avg |
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| average |
| interest |
| avg |
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| average |
| interest |
| avg |
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| balance |
| inc/exp |
| rate |
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| balance |
| inc/exp |
| rate |
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| balance |
| inc/exp |
| rate |
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Loans (TEY)* | $ | 3,300,971 |
| $ | 36,474 |
|
| 4.48 | % |
| $ | 3,160,914 |
| $ | 35,305 |
|
| 4.44 | % |
| $ | 2,569,240 |
| $ | 28,489 |
|
| 4.46 | % |
PCI loans |
| 182,510 |
|
| 8,525 |
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| 18.94 | % |
|
| 192,755 |
|
| 9,256 |
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| 19.10 | % |
|
| 214,998 |
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| 8,908 |
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| 16.66 | % |
Taxable securities |
| 861,031 |
|
| 5,001 |
|
| 2.36 | % |
|
| 871,989 |
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| 4,397 |
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| 2.01 | % |
|
| 791,292 |
|
| 5,062 |
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| 2.57 | % |
Tax -exempt securities (TEY) |
| 155,550 |
|
| 1,791 |
|
| 4.67 | % |
|
| 149,637 |
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| 1,694 |
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| 4.50 | % |
|
| 98,196 |
|
| 1,186 |
|
| 4.86 | % |
Fed funds sold and other |
| 204,125 |
|
| 651 |
|
| 1.29 | % |
|
| 230,418 |
| 539 |
|
| 0.93 | % |
|
| 225,302 |
|
| 538 |
|
| 0.96 | % | |
Tot. interest earning assets(TEY) | $ | 4,704,187 |
| $ | 52,442 |
|
| 4.52 | % |
| $ | 4,605,713 |
| $ | 51,191 |
|
| 4.42 | % |
| $ | 3,899,028 |
| $ | 44,183 |
|
| 4.56 | % |
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Interest bearing deposits | $ | 2,704,860 |
| $ | 1,897 |
|
| 0.28 | % |
| $ | 2,699,762 |
| $ | 1,892 |
|
| 0.28 | % |
| $ | 2,266,700 |
| $ | 1,481 |
|
| 0.26 | % |
Fed funds purchased |
| 259,831 |
| 537 |
|
| 0.84 | % |
|
| 273,691 |
| 393 |
|
| 0.57 | % |
|
| 197,335 |
| 262 |
|
| 0.53 | % | |||
Other borrowings |
| 34,612 |
| 30 |
|
| 0.35 | % |
|
| 27,002 |
| 23 |
|
| 0.34 | % |
|
| 34,285 |
| 32 |
|
| 0.38 | % | |||
Corporate debentures |
| 25,987 |
| 318 |
|
| 4.96 | % |
|
| 25,919 |
| 313 |
|
| 4.80 | % |
|
| 21,052 |
| 248 |
|
| 4.74 | % | |||
Total interest bearing liabilities | $ | 3,025,290 |
| $ | 2,782 |
|
| 0.37 | % |
| $ | 3,026,374 |
| $ | 2,621 |
|
| 0.34 | % |
| $ | 2,519,372 |
| $ | 2,023 |
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| 0.32 | % |
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Net Interest Spread (TEY) |
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| 4.15 | % |
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| 4.08 | % |
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| 4.24 | % |
Net Interest Margin (TEY) |
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| 4.28 | % |
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| 4.20 | % |
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| 4.35 | % |
*TEY = tax equivalent yield (Non-GAAP)
6
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) |
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For the quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
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Yield on loans (TEY)* |
| 4.48% |
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| 4.44% |
|
| 4.46% |
|
| 4.53% |
|
| 4.46% |
|
Yield on PCI loans |
| 18.94% |
|
| 19.10% |
|
| 14.95% |
|
| 14.35% |
|
| 16.66% |
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Yield on securities (TEY) |
| 2.71% |
|
| 2.37% |
|
| 2.41% |
|
| 2.49% |
|
| 2.83% |
|
Yield on fed funds sold and other |
| 1.29% |
|
| 0.93% |
|
| 1.08% |
|
| 0.92% |
|
| 0.96% |
|
Yield on total interest earning assets |
| 4.41% |
|
| 4.33% |
|
| 4.25% |
|
| 4.28% |
|
| 4.49% |
|
Yield on total interest earning assets (TEY) |
| 4.52% |
|
| 4.42% |
|
| 4.33% |
|
| 4.35% |
|
| 4.56% |
|
Cost of interest bearing deposits |
| 0.28% |
|
| 0.28% |
|
| 0.27% |
|
| 0.27% |
|
| 0.26% |
|
Cost of fed funds purchased |
| 0.84% |
|
| 0.57% |
|
| 0.52% |
|
| 0.52% |
|
| 0.53% |
|
Cost of other borrowings |
| 0.35% |
|
| 0.34% |
|
| 0.37% |
|
| 0.41% |
|
| 0.42% |
|
Cost of corporate debentures |
| 4.96% |
|
| 4.80% |
|
| 4.59% |
|
| 4.58% |
|
| 4.66% |
|
Cost of interest bearing liabilities |
| 0.37% |
|
| 0.34% |
|
| 0.33% |
|
| 0.32% |
|
| 0.32% |
|
Net interest margin (TEY) |
| 4.28% |
|
| 4.20% |
|
| 4.12% |
|
| 4.14% |
|
| 4.35% |
|
Cost of total deposits |
| 0.18% |
|
| 0.18% |
|
| 0.18% |
|
| 0.17% |
|
| 0.17% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*TEY = tax equivalent yield (Non-GAAP) |
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SELECTED CONSOLIDATED FINANCIAL DATA |
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The table below summarizes selected financial ratios over the prior five quarters. |
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Selected financial data (unaudited) |
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As of or for the quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Return on average assets (annualized) |
| 1.29% |
|
| 1.25% |
|
| 1.22% |
|
| 1.27% |
|
| -0.44% |
|
Return on average equity (annualized) |
| 10.92% |
|
| 11.51% |
|
| 11.21% |
|
| 11.96% |
|
| -3.88% |
|
Return on average tangible equity (annualized) (note 1) |
| 14.06% |
|
| 15.26% |
|
| 14.95% |
|
| 16.14% |
|
| -4.49% |
|
Loan / deposit ratio |
| 81.9% |
|
| 82.6% |
|
| 81.2% |
|
| 77.3% |
|
| 76.9% |
|
Stockholders’ equity (to total assets) |
| 11.9% |
|
| 10.9% |
|
| 11.0% |
|
| 10.8% |
|
| 10.5% |
|
Common tangible equity (to total tangible assets) (note 1) |
| 9.8% |
|
| 8.7% |
|
| 8.8% |
|
| 8.5% |
|
| 8.2% |
|
Tier 1 capital (to average assets) |
| 10.4% |
|
| 9.1% |
|
| 9.0% |
|
| 8.7% |
|
| 9.6% |
|
Efficiency ratio (note 1) |
| 59.3% |
|
| 58.1% |
|
| 58.7% |
|
| 59.0% |
|
| 80.3% |
|
Common equity per common share | $ | 12.41 |
| $ | 11.47 |
| $ | 11.51 |
| $ | 11.21 |
| $ | 10.84 |
|
Common tangible equity per common share (note 1) | $ | 10.03 |
| $ | 8.93 |
| $ | 8.96 |
| $ | 8.64 |
| $ | 8.25 |
|
note 1: | See reconciliation tables starting on page 17, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
7
CREDIT QUALITY AND ALLOWANCE FOR LOAN LOSSES
During the quarter, the Company recorded a loan loss provision expense of $995 and charge-offs net of recoveries of $217, resulting in an increase in the allowance for loan losses of $778 as shown in the table below.
The total allowance for loan losses (“ALLL") was $27,819 at March 31, 2017 compared to $27,041 at December 31, 2016, an increase of $778. This increase is the result of the aggregate effect of: (1) a net increase of $1,126 on originated loans; (2) a net decrease of $174 on acquired loans; and (3) a decrease of $174 on PCI loans. The changes in the Company’s ALLL components between March 31, 2017 and December 31, 2016 are summarized in the table below (unaudited).
| March 31, 2017 |
|
| December 31, 2016 |
|
| increase (decrease) | ||||||||||||||||||||
| loan |
| ALLL |
|
|
|
|
| loan |
| ALLL |
|
|
|
|
| loan |
| ALLL |
|
| ||||||
| balance |
| balance |
| % |
|
| balance |
| balance |
| % |
|
| balance |
| balance |
|
| ||||||||
Originated loans | $ | 2,380,220 |
| $ | 24,129 |
|
| 1.01 | % |
| $ | 2,232,474 |
| $ | 22,934 |
|
| 1.03 | % |
| $ | 147,746 |
| $ | 1,195 |
| (2) bps |
Impaired originated loans |
| 16,801 |
|
| 583 |
|
| 3.47 | % |
|
| 18,157 |
| 652 |
|
| 3.59 | % |
|
| (1,356 | ) |
| (69 | ) | (12) bps | |
Total originated loans |
| 2,397,021 |
|
| 24,712 |
|
| 1.03 | % |
|
| 2,250,631 |
|
| 23,586 |
|
| 1.05 | % |
|
| 146,390 |
|
| 1,126 |
| (2) bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans (2) |
| 945,120 |
|
| 2,769 |
|
| 0.29 | % |
|
| 991,096 |
|
| 2,940 |
|
| 0.30 | % |
|
| (45,976 | ) |
| (171 | ) | (1) bps |
Impaired acquired loans (1) |
| 1,805 |
|
| 40 |
|
| 2.22 | % |
|
| 2,096 |
| 43 |
|
| 2.05 | % |
|
| (291 | ) |
| (3 | ) | 17 bps | |
Total acquired loans |
| 946,925 |
|
| 2,809 |
|
| 0.30 | % |
|
| 993,192 |
|
| 2,983 |
|
| 0.30 | % |
|
| (46,267 | ) |
| (174 | ) | – bps |
|
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Total non-PCI loans |
| 3,343,946 |
|
| 27,521 |
|
|
|
|
|
| 3,243,823 |
|
| 26,569 |
|
|
|
|
|
| 100,123 |
|
| 952 |
|
|
PCI loans |
| 176,058 |
|
| 298 |
|
|
|
|
|
| 185,924 |
| 472 |
|
|
|
|
|
| (9,866 | ) |
| (174 | ) |
| |
Total loans | $ | 3,520,004 |
| $ | 27,819 |
|
|
|
|
| $ | 3,429,747 |
| $ | 27,041 |
|
|
|
|
| $ | 90,257 |
| $ | 778 |
|
|
| (1) | These are loans that were acquired as performing loans that subsequently became impaired. |
| (2) | Performing acquired loans recorded at estimated fair value on the related acquisition dates. The total net unamortized fair value adjustment at March 31, 2017 was approximately $13,718 or 1.4% of the aggregate outstanding related loan balances. Prior to March 31, 2016, the Company did not previously include loans acquired pursuant to the TD Bank and Federal Trust acquisitions that occurred in 2011. Acquired loans currently include performing loans acquired from the TD Bank acquisition (year 2011), the Federal Trust acquisition (year 2011), the Gulfstream Business Bank acquisition (year 2014), the First Southern Bank acquisition (year 2014), the Community Bank acquisition (year 2016) and the Hometown of Homestead Banking Company acquisition (year 2016). |
ALLL on originated loans increased $1,126 mainly due to the increase in balances of $146,390; however the ALLL ratio decreased 2 basis points due to improved credit conditions (qualitative factors). The company has an allowance of 1.03% on its originated loans versus 1.05% in the previous quarter.
ALLL on acquired loans declined $174 mainly due to the decline in balances of $46,267 and the ALLL ratio remained unchanged from the pervious quarter. The company has an allowance of 0.30% on acquired loans. Acquired loans include loans from the two bank acquisitions (Community Bank and Hometown of Homestead Banking Company), as discussed above in note 2, and were recorded at estimated fair value at the March 1, 2016 acquisition date. As of the end of the current quarter, the Company has a 13 month history with the performing loans acquired from Community and Hometown. Management evaluated the performance of these groups of loans over the period subsequent to the acquisition date and considered the accretion of the credit discount, levels of and trends in non-performing loans, past-due loans, adverse loan grade classification changes, net charge-offs and impaired loans. The loans acquired from Community and Hometown are peforming as expected and therefore no provision for loan loss was recorded for these loans as of March 31, 2017.
The specific loan loss allowance (impaired loans) for both originated loans and acquired loans is the aggregate of the results of individual analyses prepared for each one of the impaired loans, excluding PCI loans.
8
Total impaired loans at March 31, 2017 are equal to $18,606 ($16,801 originated impaired loans plus $1,805 acquired impaired loans). Approximately $9,860 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. Included in impaired loans are $12,271 of troubled debt restructuings (“TDRs”).
PCI loans 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 March 31, 2017. The Company recognized $217 of net charge-offs during the current quarter compared to $724 of net charge-offs during the previous quarter. The net charge-offs recognized during the previous quarter were mainly due to a partial charge-off of approximately $686 on one new impaired loan. 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) |
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|
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|
|
|
|
|
|
as of or for the quarter ending | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Loans, excluding PCI loans |
|
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|
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|
|
|
|
|
|
|
|
|
|
Allowance at beginning of period | $ | 26,569 |
| $ | 25,274 |
| $ | 24,066 |
| $ | 23,002 |
| $ | 22,143 |
|
Charge-offs |
| (902 | ) |
| (1,105 | ) |
| (821 | ) |
| (326 | ) |
| (495 | ) |
Recoveries | 685 |
| 381 |
| 939 |
| 465 |
| 843 |
| |||||
Net (charge-offs) recoveries |
| (217 | ) |
| (724 | ) |
| 118 |
|
| 139 |
|
| 348 |
|
Provision for loan losses |
| 1,169 |
|
| 2,019 |
| 1,090 |
| 925 |
| 511 |
| |||
Allowance at end of period for loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other than PCI loans | $ | 27,521 |
| $ | 26,569 |
| $ | 25,274 |
| $ | 24,066 |
| $ | 23,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance at beginning of period | $ | 472 |
| $ | 225 |
| $ | 106 |
| $ | 120 |
| $ | 121 |
|
Charge-offs |
| — |
|
| — |
|
| (66 | ) |
| — |
|
| — |
|
Recoveries |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Net charge-offs |
| — |
|
| — |
|
| (66 | ) |
| — |
|
| — |
|
Provision (recovery) for loan losses |
| (174 | ) |
| 247 |
|
| 185 |
|
| (14 | ) |
| (1 | ) |
Allowance at end of period for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans | $ | 298 |
| $ | 472 |
| $ | 225 |
| $ | 106 |
| $ | 120 |
|
Total allowance at end of period | $ | 27,819 |
| $ | 27,041 |
| $ | 25,499 |
| $ | 24,172 |
| $ | 23,122 |
|
9
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: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Troubled debt restructure (“TDRs”) (note 1) | $ | 12,271 |
| $ | 13,105 |
| $ | 13,592 |
| $ | 14,895 |
| $ | 15,350 |
|
Impaired loans that were not TDRs |
| 6,335 |
|
| 7,148 |
|
| 5,924 |
|
| 9,989 |
|
| 12,564 |
|
Total impaired loans |
| 18,606 |
|
| 20,253 |
|
| 19,516 |
|
| 24,884 |
|
| 27,914 |
|
Originated non-impaired loans |
| 2,380,220 |
|
| 2,232,474 |
|
| 2,051,764 |
|
| 1,885,349 |
|
| 1,768,628 |
|
Acquired non-impaired loans |
| 945,120 |
|
| 991,096 |
|
| 1,025,914 |
|
| 1,067,875 |
|
| 1,115,163 |
|
Total Non-PCI loans |
| 3,343,946 |
|
| 3,243,823 |
|
| 3,097,194 |
|
| 2,978,108 |
|
| 2,911,705 |
|
Total PCI loans |
| 176,058 |
|
| 185,924 |
|
| 197,288 |
|
| 216,859 |
|
| 236,516 |
|
Total loans | $ | 3,520,004 |
| $ | 3,429,747 |
| $ | 3,294,482 |
| $ | 3,194,967 |
| $ | 3,148,221 |
|
ALLL for Non-PCI loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General loan loss allowance- originated loans | $ | 24,129 |
| $ | 22,934 |
| $ | 21,426 |
| $ | 19,682 |
| $ | 18,417 |
|
General loan loss allowance- acquired loans |
| 2,769 |
|
| 2,940 |
|
| 3,112 |
|
| 3,291 |
|
| 3,501 |
|
Specific loan loss allowance- impaired loans |
| 623 |
| 695 |
|
| 736 |
|
| 1,093 |
|
| 1,084 |
| |
Total allowance for loan losses (note 2) | $ | 27,521 |
| $ | 26,569 |
| $ | 25,274 |
| $ | 24,066 |
| $ | 23,002 |
|
ALLL as a percentage of period end loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Originated non-impaired loans |
| 1.01 | % |
| 1.03 | % |
| 1.04 | % |
| 1.04 | % |
| 1.04 | % |
Total Acquired non-impaired loans (note 3) |
| 0.29 | % |
| 0.30 | % |
| 0.30 | % |
| 0.31 | % |
| 0.31 | % |
Total impaired loans |
| 3.35 | % |
| 3.43 | % |
| 3.77 | % |
| 4.39 | % |
| 3.88 | % |
note 1: | The Company has approximately $12,271 of TDRs. Of this amount $10,976 are performing pursuant to their modified terms, and $1,295 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. |
note 3: | Non-impaired loans acquired pursuant to the March 1, 2016 acquisition of Hometown of Homestead Banking Company and Community Bank of South Florida, Inc. are included in the March 31, 2017 acquired loan balances in the table above. These loans were recorded at estimated fair value as of the acquisition date, and there is no related allowance for loan losses associated with these loans. |
The Company defines 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 0.53% at March 31, 2017 compared to 0.59% at December 31, 2016.
Non-performing assets (“NPAs”) (which the Company defines as NPLs, as defined above, plus (a) OREO (i.e. real estate acquired through foreclosure or deed in lieu of foreclosure), and (b) other repossessed assets that are not real estate, were $24,888 at March 31, 2017, compared to $26,207 at December 31, 2016. The decline resulted from the decrease in nonaccrual loans of approximately $1.4 million which was mainly due to two large nonaccrual loans paid off during the current quarter. NPAs as a percentage of total assets was 0.47% at March 31, 2017 compared to 0.52% at December 31, 2016. NPAs as a percentage of loans plus OREO and other repossessed assets, excluding PCI loans, was 0.74% at March 31, 2017 compared to 0.81% at December 31, 2016.
10
The table below summarizes selected credit quality data for the periods indicated.
Selected credit quality ratios (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Non-accrual loans (note 1) | $ | 17,569 |
| $ | 19,003 |
| $ | 19,704 |
| $ | 25,035 |
| $ | 24,865 |
|
Past due loans 90 days or more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing interest (note 1) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Total non-performing loans (“NPLs”) (note 1) |
| 17,569 |
|
| 19,003 |
|
| 19,704 |
|
| 25,035 |
|
| 24,865 |
|
Other real estate owned (“OREO”) |
| 7,201 |
|
| 7,090 |
|
| 9,005 |
|
| 12,311 |
|
| 15,937 |
|
Repossessed assets other than real estate (note 1) | 118 |
| 114 |
| 170 |
| 104 |
| 86 |
| |||||
Total non-performing assets | $ | 24,888 |
| $ | 26,207 |
| $ | 28,879 |
| $ | 37,450 |
| $ | 40,888 |
|
Non-performing loans as percentage of total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans (note 1) |
| 0.53 | % |
| 0.59 | % |
| 0.64 | % |
| 0.84 | % |
| 0.85 | % |
Non-performing assets as percentage of total assets |
| 0.47 | % |
| 0.52 | % |
| 0.58 | % |
| 0.75 | % |
| 0.82 | % |
Non-performing assets as percentage of loans and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OREO plus other repossessed assets (note 1) |
| 0.74 | % |
| 0.81 | % |
| 0.93 | % |
| 1.25 | % |
| 1.40 | % |
Loans past due 30 thru 89 days and accruing interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a percentage of total loans (note 1) |
| 0.47 | % |
| 0.58 | % |
| 0.36 | % |
| 0.41 | % |
| 0.40 | % |
Net charge-offs (recovery) (note 1) | $ | 217 |
| $ | 724 |
| $ | (118 | ) | $ | (139 | ) | $ | (348 | ) |
Net charge-offs (recovery) as a percentage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of average loans for the period (note 1) |
| 0.01 | % |
| 0.02 | % |
| 0.00 | % |
| 0.00 | % |
| (0.01 | %) |
Net (recovery) charge-offs as a percentage of average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans for the period on an annualized basis (note 1) |
| 0.03 | % |
| 0.09 | % |
| (0.02 | %) |
| (0.02 | %) |
| (0.05 | %) |
Allowance for loan losses as percentage of NPLs (note 1) |
| 157 | % |
| 140 | % |
| 128 | % |
| 96 | % |
| 93 | % |
note 1: Excludes PCI loans.
PURCHASED CREDIT IMPAIRED (“PCI”) LOANS
The table below compares the unpaid principal balance and the carrying balance (book balance) of the Company’s total PCI loans at March 31, 2017.
| Unpaid |
|
|
|
| Principal | Carrying |
|
|
| Balance | Balance | Difference | Percentage |
Total PCI loans | $234,333 | $176,058 | ($58,275) | 25% |
11
CORRESPONDENT BANKING AND CAPITAL MARKETS SEGMENT
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: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Net interest income | $ | 2,095 |
| $ | 1,850 |
| $ | 1,625 |
| $ | 1,555 |
| $ | 1,802 |
|
Provision for loan losses |
| 29 |
|
| 24 |
|
| 28 |
|
| (24 | ) |
| (52 | ) |
Total non-interest income (note 1) |
| 6,449 |
|
| 8,091 |
|
| 7,528 |
|
| 9,291 |
|
| 8,775 |
|
Total non-interest expense (note 2) |
| (4,746 | ) |
| (5,987 | ) |
| (5,456 | ) |
| (6,159 | ) |
| (5,782 | ) |
Income tax provision |
| (1,476 | ) |
| (1,535 | ) |
| (1,437 | ) |
| (1,799 | ) |
| (1,830 | ) |
Net income | $ | 2,351 |
| $ | 2,443 |
| $ | 2,288 |
| $ | 2,864 |
| $ | 2,913 |
|
Contribution to diluted earnings per share | $ | 0.05 |
| $ | 0.05 |
| $ | 0.05 |
| $ | 0.06 |
| $ | 0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of indirect expense net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
inter-company earnings credit, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax benefit (note 3) | $ | (227 | ) | $ | (280 | ) | $ | (244 | ) | $ | (232 | ) | $ | (340 | ) |
Contribution to diluted earnings per share after |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deduction of allocated indirect expenses | $ | 0.04 |
| $ | 0.04 |
| $ | 0.04 |
| $ | 0.05 |
| $ | 0.06 |
|
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 $5,376, $7,016, $6,381, $8,049 and $7,371 for 1Q17, 4Q16, 3Q16, 2Q16 and 1Q16, 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 $2,342, $3,133, $2,908, $3,491 and $3,352 for 1Q17, 4Q16, 3Q16, 2Q16 and 1Q16, 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, 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. |
12
CONDENSED CONSOLIDATED BALANCE SHEETS
Presented below are condensed consolidated balance sheets and average balance sheets for the periods indicated.
Condensed Consolidated Balance Sheets (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Cash and due from banks | $ | 65,114 |
| $ | 66,368 |
| $ | 37,460 |
| $ | 60,522 |
| $ | 65,560 |
|
Fed funds sold and Fed Res Bank deposits |
| 214,369 |
|
| 109,286 |
|
| 161,406 |
|
| 223,533 |
|
| 296,459 |
|
Trading securities |
| — |
|
| 12,383 |
| 2,166 |
|
| — |
|
| 2,719 |
| |
Investment securities, available for sale |
| 819,352 |
|
| 740,702 |
|
| 761,648 |
|
| 744,575 |
|
| 707,573 |
|
Investment securities, held to maturity |
| 243,812 |
|
| 250,543 |
|
| 263,692 |
|
| 267,082 |
|
| 256,849 |
|
Loans held for sale |
| 2,637 |
|
| 2,285 |
|
| 2,333 |
|
| 4,329 |
|
| 2,186 |
|
PCI loans |
| 176,058 |
|
| 185,924 |
|
| 197,288 |
|
| 216,859 |
|
| 236,516 |
|
Loans |
| 3,343,946 |
|
| 3,243,823 |
|
| 3,097,194 |
|
| 2,978,108 |
|
| 2,911,705 |
|
Allowance for loan losses |
| (27,819 | ) |
| (27,041 | ) |
| (25,499 | ) |
| (24,172 | ) |
| (23,122 | ) |
Premises and equipment, net |
| 115,400 |
|
| 114,815 |
|
| 114,567 |
|
| 116,129 |
|
| 116,734 |
|
Goodwill |
| 106,028 |
|
| 106,028 |
|
| 105,492 |
|
| 105,492 |
|
| 105,492 |
|
Core deposit intangible |
| 14,785 |
|
| 15,510 |
|
| 16,267 |
|
| 17,023 |
|
| 17,803 |
|
Bank owned life insurance |
| 99,065 |
|
| 98,424 |
|
| 97,767 |
|
| 97,109 |
|
| 86,455 |
|
OREO |
| 7,201 |
|
| 7,090 |
|
| 9,005 |
|
| 12,311 |
|
| 15,937 |
|
Deferred income tax asset, net |
| 56,792 |
|
| 63,208 |
|
| 58,614 |
|
| 62,774 |
|
| 69,470 |
|
Other assets |
| 92,256 |
|
| 89,211 |
|
| 115,112 |
|
| 113,615 |
|
| 101,319 |
|
TOTAL ASSETS | $ | 5,328,996 |
| $ | 5,078,559 |
| $ | 5,014,512 |
| $ | 4,995,289 |
| $ | 4,969,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits | $ | 4,297,123 |
| $ | 4,152,544 |
| $ | 4,055,934 |
| $ | 4,132,136 |
| $ | 4,092,167 |
|
Federal funds purchased |
| 268,377 |
|
| 261,986 |
|
| 258,329 |
|
| 174,116 |
|
| 225,298 |
|
Other borrowings |
| 63,882 |
|
| 54,385 |
|
| 52,788 |
|
| 56,432 |
|
| 57,906 |
|
Other liabilities |
| 65,213 |
|
| 57,187 |
|
| 94,690 |
|
| 94,634 |
|
| 74,823 |
|
Common stockholders’ equity |
| 634,401 |
|
| 552,457 |
|
| 552,771 |
|
| 537,971 |
|
| 519,461 |
|
TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY | $ | 5,328,996 |
| $ | 5,078,559 |
| $ | 5,014,512 |
| $ | 4,995,289 |
| $ | 4,969,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Average Balance Sheets (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Federal funds sold and other | $ | 204,125 |
| $ | 230,418 |
| $ | 187,906 |
| $ | 272,635 |
| $ | 225,302 |
|
Security investments |
| 1,016,581 |
|
| 1,021,626 |
|
| 1,035,090 |
|
| 1,001,511 |
|
| 889,488 |
|
PCI loans |
| 182,510 |
|
| 192,755 |
|
| 207,406 |
|
| 225,584 |
|
| 214,998 |
|
Loans |
| 3,300,971 |
|
| 3,160,914 |
|
| 3,037,333 |
|
| 2,949,651 |
|
| 2,569,240 |
|
Allowance for loan losses |
| (26,984 | ) |
| (25,679 | ) |
| (24,209 | ) |
| (23,173 | ) |
| (22,616 | ) |
All other assets |
| 538,312 |
|
| 530,848 |
|
| 559,841 |
|
| 556,040 |
|
| 479,454 |
|
TOTAL ASSETS | $ | 5,215,515 |
| $ | 5,110,882 |
| $ | 5,003,367 |
| $ | 4,982,248 |
| $ | 4,355,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits- interest bearing | $ | 2,704,860 |
| $ | 2,699,762 |
| $ | 2,678,638 |
| $ | 2,626,668 |
| $ | 2,266,700 |
|
Deposits- non interest bearing |
| 1,508,058 |
|
| 1,454,963 |
|
| 1,445,140 |
|
| 1,506,762 |
|
| 1,282,422 |
|
Federal funds purchased |
| 259,831 |
|
| 273,691 |
|
| 181,037 |
|
| 188,663 |
|
| 197,335 |
|
Other borrowings |
| 60,599 |
|
| 52,921 |
|
| 54,699 |
|
| 59,126 |
|
| 55,337 |
|
Other liabilities |
| 65,899 |
|
| 75,548 |
|
| 97,830 |
|
| 71,935 |
|
| 56,650 |
|
Stockholders’ equity |
| 616,268 |
|
| 553,997 |
|
| 546,023 |
|
| 529,094 |
|
| 497,422 |
|
TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY | $ | 5,215,515 |
| $ | 5,110,882 |
| $ | 5,003,367 |
| $ | 4,982,248 |
| $ | 4,355,866 |
|
13
Condensed Consolidated Earnings Statement (unaudited)
For quarter ended: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans | $ | 44,249 |
| $ | 44,085 |
| $ | 41,445 |
| $ | 40,977 |
| $ | 37,118 |
|
Investments |
| 6,203 |
|
| 5,531 |
|
| 5,746 |
|
| 5,710 |
|
| 5,842 |
|
Federal funds sold and other |
| 651 |
| 539 |
| 512 |
| 622 |
| 538 |
| ||||
Total interest income |
| 51,103 |
|
| 50,155 |
|
| 47,703 |
|
| 47,309 |
|
| 43,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
| 1,897 |
|
| 1,892 |
|
| 1,821 |
|
| 1,740 |
|
| 1,481 |
|
Securities sold under agreement to repurchase |
| 30 |
| 23 |
| 25 |
| 28 |
| 27 |
| ||||
Federal funds purchased |
| 537 |
| 393 |
| 240 |
| 250 |
| 271 |
| ||||
Corporate debentures |
| 318 |
| 313 |
| 298 |
| 294 |
| 244 |
| ||||
Total interest expense |
| 2,782 |
|
| 2,621 |
|
| 2,384 |
|
| 2,312 |
|
| 2,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
| 48,321 |
|
| 47,534 |
|
| 45,319 |
|
| 44,997 |
|
| 41,475 |
|
Provision for loan losses |
| 995 |
|
| 2,266 |
| 1,275 |
| 911 |
| 510 |
| |||
Net interest income after loan loss provision |
| 47,326 |
|
| 45,268 |
|
| 44,044 |
|
| 44,086 |
|
| 40,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest income (see page 15) |
| 14,502 |
|
| 17,156 |
|
| 15,681 |
|
| 16,971 |
|
| 14,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and employee benefits |
| 22,882 |
|
| 24,049 |
|
| 22,418 |
|
| 22,959 |
|
| 21,455 |
|
Occupancy expense |
| 2,749 |
|
| 2,767 |
|
| 2,414 |
|
| 2,477 |
|
| 2,147 |
|
Depreciation of premises and equipment |
| 1,684 |
|
| 1,659 |
|
| 1,629 |
|
| 1,588 |
|
| 1,497 |
|
Data processing expense |
| 1,826 |
|
| 1,814 |
|
| 1,761 |
|
| 1,765 |
|
| 1,527 |
|
Legal, audit and other professional fees |
| 888 |
| 901 |
| 904 |
| 949 |
| 903 |
| ||||
Amortization of intangibles |
| 762 |
| 791 |
| 791 |
| 814 |
| 678 |
| ||||
Credit related expense |
| 655 |
| 624 |
| 187 |
| 611 |
| 359 |
| ||||
Merger and acquisition related expenses |
| 870 |
| 272 |
|
| — |
|
| — |
|
| 11,172 |
| |
Termination of FDIC loss share agreements |
| — |
|
| — |
|
| — |
|
| — |
|
| 17,560 |
|
Impairment (recovery) bank property held for sale, net |
| 77 |
| 116 |
|
| 616 |
|
| (38 | ) | 456 |
| ||
All other expenses |
| 5,650 |
|
| 5,191 |
|
| 5,675 |
|
| 5,924 |
|
| 5,099 |
|
Total non interest expenses |
| 38,043 |
|
| 38,184 |
|
| 36,395 |
|
| 37,049 |
|
| 62,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes |
| 23,785 |
|
| 24,240 |
|
| 23,330 |
|
| 24,008 |
|
| (7,327 | ) |
Provision for income taxes |
| 7,185 |
|
| 8,213 |
|
| 7,946 |
|
| 8,274 |
|
| (2,523 | ) |
Net income (loss) | $ | 16,600 |
| $ | 16,027 |
| $ | 15,384 |
| $ | 15,734 |
| $ | (4,804 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share diluted | $ | 0.32 |
| $ | 0.33 |
| $ | 0.32 |
| $ | 0.32 |
| $ | (0.10 | ) |
14
NON INTEREST INCOME AND NON INTEREST EXPENSES
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: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Correspondent banking and capital markets division (1) | $ | 5,376 |
| $ | 7,016 |
| $ | 6,381 |
| $ | 8,049 |
| $ | 7,371 |
|
Other correspondent banking related revenue (2) |
| 1,073 |
|
| 1,075 |
|
| 1,147 |
|
| 1,242 |
| 1,404 |
| |
Wealth management related revenue |
| 893 |
| 815 |
| 892 |
| 795 |
| 735 |
| ||||
Service charges on deposit accounts |
| 3,575 |
|
| 3,729 |
|
| 3,770 |
|
| 3,329 |
|
| 2,736 |
|
Debit, prepaid, ATM and merchant card related fees |
| 2,265 |
|
| 2,009 |
|
| 2,017 |
|
| 2,182 |
|
| 2,046 |
|
BOLI income |
| 641 |
| 657 |
| 658 |
| 654 |
| 565 |
| ||||
Other service charges and fees |
| 550 |
| 1,125 |
| 736 |
| 720 |
| 466 |
| ||||
Gain on sale of securities available for sale |
| — |
|
| — |
|
| 13 |
|
| — |
|
| — |
|
Subtotal | $ | 14,373 |
| $ | 16,426 |
| $ | 15,614 |
| $ | 16,971 |
| $ | 15,323 |
|
Gain on early extinguishment of debt |
| — |
|
| — |
|
| — |
|
| — |
|
| 308 |
|
Gain on sale of bank properties held for sale |
| 129 |
|
| 730 |
|
| 67 |
| --- |
|
| — |
| |
FDIC indemnification asset – amortization (see explanation below) |
| — |
|
| — |
|
| — |
|
| — |
|
| (1,166 | ) |
FDIC indemnification income |
| — |
|
| — |
|
| — |
|
| — |
|
| 96 |
|
Total Non Interest Income | $ | 14,502 |
| $ | 17,156 |
| $ | 15,681 |
| $ | 16,971 |
| $ | 14,561 |
|
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. |
15
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: | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Employee salaries and wages | $ | 17,474 |
| $ | 17,757 |
| $ | 17,074 |
| $ | 17,499 |
| $ | 16,137 |
|
Employee incentive/bonus compensation accrued |
| 1,321 |
|
| 2,768 |
|
| 1,610 |
|
| 1,548 |
|
| 1,259 |
|
Employee equity based compensation expense |
| 1,139 |
|
| 1,172 |
|
| 1,109 |
|
| 1,062 |
|
| 1,080 |
|
Deferred compensation expense |
| 144 |
|
| 141 |
|
| 148 |
|
| 160 |
|
| 160 |
|
Health insurance and other employee benefits |
| 1,477 |
|
| 1,379 |
|
| 1,537 |
|
| 1,546 |
|
| 1,260 |
|
Payroll taxes |
| 1,426 |
|
| 960 |
|
| 999 |
|
| 1,111 |
|
| 1,423 |
|
401K employer contributions |
| 507 |
|
| 423 |
|
| 470 |
|
| 479 |
|
| 477 |
|
Other employee related expenses |
| 375 |
|
| 399 |
|
| 322 |
|
| 291 |
|
| 291 |
|
Incremental direct cost of loan origination |
| (981 | ) |
| (950 | ) |
| (851 | ) |
| (737 | ) |
| (632 | ) |
Total salaries, wages and employee benefits |
| 22,882 |
|
| 24,049 |
|
| 22,418 |
|
| 22,959 |
|
| 21,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of OREO |
| (104 | ) |
| (258 | ) |
| (558 | ) |
| (554 | ) |
| (158 | ) |
Valuation write down of OREO |
| 161 |
|
| 220 |
|
| 237 |
|
| 392 |
|
| 22 |
|
(Gain) loss on repossessed assets other than real estate |
| (7 | ) |
| 13 |
|
| (4 | ) |
| 31 |
|
| 6 |
|
Foreclosure and repossession related expenses |
| 605 |
|
| 649 |
|
| 512 |
|
| 742 |
|
| 489 |
|
Total credit related expenses |
| 655 |
|
| 624 |
|
| 187 |
|
| 611 |
|
| 359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy expense |
| 2,749 |
|
| 2,767 |
|
| 2,414 |
|
| 2,477 |
|
| 2,147 |
|
Depreciation of premises and equipment |
| 1,684 |
|
| 1,659 |
|
| 1,629 |
|
| 1,588 |
|
| 1,497 |
|
Supplies, stationary and printing |
| 354 |
|
| 320 |
|
| 341 |
|
| 380 |
|
| 299 |
|
Marketing expenses |
| 852 |
|
| 909 |
|
| 700 |
|
| 826 |
|
| 690 |
|
Data processing expenses |
| 1,826 |
|
| 1,814 |
|
| 1,761 |
|
| 1,765 |
|
| 1,527 |
|
Legal, auditing and other professional fees |
| 888 |
|
| 901 |
|
| 904 |
|
| 949 |
|
| 903 |
|
Bank regulatory related expenses |
| 727 |
|
| 779 |
|
| 863 |
|
| 968 |
|
| 810 |
|
Postage and delivery |
| 428 |
|
| 420 |
|
| 423 |
|
| 486 |
|
| 355 |
|
ATM and debit card related expenses |
| 706 |
|
| 713 |
|
| 725 |
|
| 816 |
|
| 596 |
|
Amortization of intangibles |
| 762 |
|
| 791 |
|
| 791 |
|
| 814 |
|
| 678 |
|
Internet and telephone banking |
| 518 |
|
| 651 |
|
| 559 |
|
| 628 |
|
| 564 |
|
Correspondent account and Federal Reserve charges |
| 190 |
|
| 186 |
|
| 191 |
|
| 203 |
|
| 176 |
|
Conferences, seminars, education and training |
| 232 |
|
| 202 |
|
| 155 |
|
| 102 |
|
| 133 |
|
Director fees |
| 178 |
|
| 150 |
|
| 134 |
|
| 149 |
|
| 209 |
|
Travel expenses |
| 60 |
|
| 158 |
|
| 153 |
|
| 119 |
|
| 79 |
|
Other expenses |
| 1,405 |
|
| 703 |
|
| 1,431 |
|
| 1,247 |
|
| 1,188 |
|
Subtotal |
| 37,096 |
|
| 37,796 |
|
| 35,779 |
|
| 37,087 |
|
| 33,665 |
|
Impairment (recovery) on bank property held for sale |
| 77 |
|
| 116 |
|
| 616 |
|
| (38 | ) |
| 456 |
|
Merger and acquisition related expenses |
| 870 |
|
| 272 |
|
| — |
|
| — |
|
| 11,172 |
|
Termination of FDIC loss share agreements |
| — |
|
| — |
|
| — |
|
| — |
|
| 17,560 |
|
Total Non Interest Expense | $ | 38,043 |
| $ | 38,184 |
| $ | 36,395 |
| $ | 37,049 |
| $ | 62,853 |
|
Note: Certain prior period amounts have been reclassified to conform to the current period presentation format.
16
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, return on average equity, total stockholders’ equity and tangible common equity, and the efficiency ratio. Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance. The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.
Reconciliation of GAAP to non-GAAP Measures (unaudited):
1Q17 |
| 4Q16 |
| 1Q16 |
|
|
|
|
|
|
| ||||
Interest income, as reported (GAAP) | $ | 51,103 |
| $ | 50,155 |
| $ | 43,498 |
|
|
|
|
|
|
|
tax equivalent adjustments |
| 1,339 |
|
| 1,036 |
| 685 |
|
|
|
|
|
|
| |
Interest income (tax equivalent) | $ | 52,442 |
| $ | 51,191 |
| $ | 44,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, as reported (GAAP) | $ | 48,321 |
| $ | 47,534 |
| $ | 41,475 |
|
|
|
|
|
|
|
tax equivalent adjustments |
| 1,339 |
|
| 1,036 |
| 685 |
|
|
|
|
|
|
| |
Net interest income (tax equivalent) | $ | 49,660 |
| $ | 48,570 |
| $ | 42,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Net income (GAAP) | $ | 16,600 |
| $ | 16,027 |
| $ | 15,384 |
| $ | 15,734 |
| $ | (4,804 | ) |
Amortization of intangibles |
| 762 |
|
| 791 |
|
| 791 |
|
| 814 |
|
| 678 |
|
Tax effected using the effective tax rate for the period presented |
| (230 | ) |
| (268 | ) |
| (269 | ) |
| (281 | ) |
| (233 | ) |
Adjusted net income (loss) | $ | 17,132 |
| $ | 16,550 |
| $ | 15,906 |
| $ | 16,267 |
| $ | (4,359 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders' equity (GAAP) | $ | 616,268 |
| $ | 553,997 |
| $ | 546,023 |
| $ | 529,094 |
| $ | 497,422 |
|
Average goodwill |
| (106,028 | ) |
| (105,760 | ) |
| (105,492 | ) |
| (105,492 | ) |
| (91,116 | ) |
Average core deposit intangible |
| (15,148 | ) |
| (15,889 | ) |
| (16,645 | ) |
| (17,413 | ) |
| (14,984 | ) |
Average other intangibles |
| (769 | ) |
| (759 | ) |
| (751 | ) |
| (785 | ) |
| (820 | ) |
Average tangible equity | $ | 494,323 |
| $ | 431,589 |
| $ | 423,135 |
| $ | 405,404 |
| $ | 390,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (annualized) |
| 14.06 | % |
| 15.26 | % |
| 14.95 | % |
| 16.14 | % |
| (4.49 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Total stockholders' equity (GAAP) | $ | 634,401 |
| $ | 552,457 |
| $ | 552,771 |
| $ | 537,971 |
| $ | 519,461 |
|
Goodwill |
| (106,028 | ) |
| (106,028 | ) |
| (105,492 | ) |
| (105,492 | ) |
| (105,492 | ) |
Core deposit intangible |
| (14,785 | ) |
| (15,510 | ) |
| (16,267 | ) |
| (17,023 | ) |
| (17,803 | ) |
Other intangibles |
| (754 | ) |
| (784 | ) |
| (733 | ) |
| (768 | ) |
| (802 | ) |
Tangible common equity | $ | 512,834 |
| $ | 430,135 |
| $ | 430,279 |
| $ | 414,688 |
| $ | 395,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets | $ | 5,328,996 |
| $ | 5,078,559 |
| $ | 5,014,512 |
| $ | 4,995,289 |
| $ | 4,969,655 |
|
Goodwill |
| (106,028 | ) |
| (106,028 | ) |
| (105,492 | ) |
| (105,492 | ) |
| (105,492 | ) |
Core deposit intangible |
| (14,785 | ) |
| (15,510 | ) |
| (16,267 | ) |
| (17,023 | ) |
| (17,803 | ) |
Other intangibles |
| (754 | ) |
| (784 | ) |
| (733 | ) |
| (768 | ) |
| (802 | ) |
Total tangible assets | $ | 5,207,429 |
| $ | 4,956,237 |
| $ | 4,892,020 |
| $ | 4,872,006 |
| $ | 4,845,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets |
| 9.8 | % |
| 8.7 | % |
| 8.8 | % |
| 8.5 | % |
| 8.2 | % |
Common shares outstanding at period end |
| 51,126 |
|
| 48,147 |
|
| 48,017 |
|
| 47,996 |
|
| 47,943 |
|
Common tangible equity per common share | $ | 10.03 |
| $ | 8.93 |
| $ | 8.96 |
| $ | 8.64 |
| $ | 8.25 |
|
17
Explanation of Certain Unaudited Non-GAAP Financial Measures (continued)
For the quarter ended | 3/31/2017 |
| 12/31/2016 |
| 9/30/2016 |
| 6/30/2016 |
| 3/31/2016 |
| |||||
Non interest income (GAAP) | $ | 14,502 |
| $ | 17,156 |
| $ | 15,681 |
| $ | 16,971 |
| $ | 14,561 |
|
Nonrecurring income |
| — |
|
| — |
|
| — |
|
| — |
|
| (308 | ) |
Adjusted non interest income | $ | 14,502 |
| $ | 17,156 |
| $ | 15,681 |
| $ | 16,971 |
| $ | 14,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before provision (GAAP) | $ | 48,321 |
| $ | 47,534 |
| $ | 45,319 |
| $ | 44,997 |
| $ | 41,475 |
|
Total tax equivalent adjustment |
| 1,339 |
|
| 1,036 |
|
| 949 |
|
| 805 |
|
| 685 |
|
Adjusted net interest income | $ | 49,660 |
| $ | 48,570 |
| $ | 46,268 |
| $ | 45,802 |
| $ | 42,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest expense (GAAP) | $ | 38,043 |
| $ | 38,184 |
| $ | 36,395 |
| $ | 37,049 |
| $ | 62,853 |
|
Nonrecurring expense |
| — |
|
| — |
|
| — |
|
| — |
|
| (17,560 | ) |
Adjusted non interest expense | $ | 38,043 |
| $ | 38,184 |
| $ | 36,395 |
| $ | 37,049 |
| $ | 45,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio |
| 59.3 | % |
| 58.1 | % |
| 58.7 | % |
| 59.0 | % |
| 80.3 | % |
About CenterState Banks, Inc.
The Company, headquartered in Winter Haven, Florida between Orlando and Tampa, is a financial holding company with one nationally chartered bank, CenterState Bank of Florida, N.A. Presently, the Company operates through its network of 71 branch banking offices located in 25 counties throughout Florida, providing traditional deposit and lending products and services to its commercial and retail customers. The Company also provides correspondent banking and capital market services to over 600 community banks nationwide.
For additional information contact John C. Corbett (CEO), Stephen D. Young (COO) or Jennifer L. Idell (CFO) at 863-293-4710.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
Some of the statements in this report constitute forward-looking statements, within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements related to future events, other future financial and operating performance, costs, revenues, economic conditions in our markets, loan performance, credit risks, collateral values and credit conditions, or business strategies, including expansion and acquisition activities and may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. We cannot assure you that future results, levels of activity, performance or goals will be achieved, and actual results may differ from those set forth in the forward looking statements.
Forward-looking statements, with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of the Company or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2016, and otherwise in our SEC reports and filings.
18