Exhibit 99.1
FOR IMMEDIATE RELEASE January 30, 2018 |
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CenterState Bank Corporation Announces
Fourth Quarter 2017 Earnings Results
(all amounts are in thousands, except per share data, or unless otherwise noted)
WINTER HAVEN, FL. – January 30, 2018 - CenterState Bank Corporation (Nasdaq: CSFL) reported net income of $1,912, or diluted earnings per share of $0.03, for the fourth quarter of 2017, as compared to net income of $16,027, or diluted earnings per share of $0.33, for the fourth quarter of 2016. The Company reported net income of $55,795, or diluted earnings per share of $0.95, for the year 2017, as compared to $42,341, or diluted earnings per share of $0.88, for the year 2016. Highlights for the period ended December 31, 2017 and selected performance metrics are set forth in the table below.
| • | Loans: |
| o | 8% annualized net loan growth during the fourth quarter of 2017; |
| o | 9% net loan growth for the twelve months ended December 31, 2017, excluding loans acquired from the two acquisitions completed during the second quarter of 2017. |
| • | Deposits: |
| o | 13% annualized core deposit growth during the fourth quarter of 2017; |
| o | 6% core deposit growth for the twelve months ended December 31, 2017, excluding deposits assumed from the two acquisitions completed during the second quarter of 2017. |
| o | Checking account balances represent 55% of total deposits. |
| • | Tax Equivalent Net Interest Margin (“NIM”) (Non-GAAP(1)): |
| o | Increased to 4.23% for the current quarter compared to 4.20% for the fourth quarter of 2016; |
| o | Cost of deposits during the current quarter equaled 0.24%. |
| • | Credit Quality: |
| o | Total net recoveries of $29 during the fourth quarter of 2017; |
| o | Total net recoveries of $826 during the twelve months ended December 31, 2017. |
| • | Tax Reform: |
| o | Recorded a deferred tax asset write down of $18,575, or $0.30 per diluted earnings per share, as additional income tax expense during the fourth quarter of 2017; |
| o | Expected effective income tax rate for 2018 to range between 22% and 23%. |
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| Three Months Ended December 31, |
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| Twelve Months Ended December 31, |
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| 2017 |
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| 2016 |
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| 2017 |
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| 2016 |
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| Adjusted (2) |
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| Adjusted (2) |
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| Adjusted (2) |
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| Adjusted (2) |
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| Reported |
| (Non-GAAP) |
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| Reported |
| (Non-GAAP) |
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| Reported |
| (Non-GAAP) |
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| Reported |
| (Non-GAAP) |
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| Net income |
| $1,912 |
| $21,492 |
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| $16,027 |
| $16,207 |
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| $55,795 |
| $82,434 |
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| $42,341 |
| $60,969 |
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| Return on average assets |
| 0.11% |
| 1.23% |
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| 1.25% |
| 1.26% |
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| 0.88% |
| 1.30% |
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| 0.87% |
| 1.25% |
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| Return on average tangible equity (Non-GAAP)(1) |
| 1.7% |
| 13.9% |
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| 15.3% |
| 15.4% |
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| 10.1% |
| 14.6% |
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| 10.7% |
| 15.2% |
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| Earnings per share diluted |
| $0.03 |
| $0.35 |
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| $0.33 |
| $0.33 |
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| $0.95 |
| $1.41 |
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| $0.88 |
| $1.27 |
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| Efficiency ratio, tax equivalent (Non-GAAP)(1) |
| 59.7% |
| 55.9% |
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| 58.1% |
| 56.5% |
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| 60.9% |
| 55.5% |
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| 70.6% |
| 57.7% |
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Subsequent Events
| • | On January 1, 2018, the Company completed its separate acquisitions of HCBF Holding Company, Inc. (“Harbor) and Sunshine Bancorp, Inc. (“Sunshine”). The Company is now among the largest community banking companies headquartered in the state of Florida by assets, market capitalization, deposit market share and branch footprint(3). |
| • | On January 18, 2018, the board of directors of the Company declared a quarterly cash dividend on its common stock of $0.10 per share, a 67% increase compared to prior quarter. The dividend is payable on March 30, 2018 to shareholders of record as of March 15, 2018. |
| (1) | See reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
| (2) | Performance metrics presented above are adjusted for merger-related expenses, which for the three months ended December 31, represent system terminations, and legal and professional fees, and for the twelve months ended December 31, respresent direct severance, system terminations, and legal and professionsl fees, in each case that are not duplicative of current operations, and other items. See reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
| (3) | Based on publicly available data on S&P Global Market Intelligence for companies with less than $20 billion in assets. |
Condensed Consolidated Income Statement (unaudited)
Condensed consolidated income statements (unaudited) are shown below for the periods indicated.
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| Three Months Ended |
| Twelve Months Ended | ||||||||||
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| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Interest income |
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Loans |
| $59,982 |
| $59,122 |
| $56,619 |
| $44,249 |
| $44,085 |
| $219,972 |
| $163,625 |
Investment securities |
| 7,382 |
| 7,048 |
| 7,289 |
| 6,203 |
| 5,531 |
| 27,922 |
| 22,829 |
Federal Funds sold and other |
| 1,058 |
| 887 |
| 836 |
| 651 |
| 539 |
| 3,432 |
| 2,211 |
Total interest income |
| 68,422 |
| 67,057 |
| 64,744 |
| 51,103 |
| 50,155 |
| 251,326 |
| 188,665 |
Interest expense |
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Deposits |
| 3,385 |
| 3,178 |
| 2,619 |
| 1,897 |
| 1,892 |
| 11,079 |
| 6,934 |
Securities sold under agreement to repurchase |
| 89 |
| 80 |
| 47 |
| 30 |
| 23 |
| 246 |
| 103 |
Other borrowed funds |
| 977 |
| 866 |
| 728 |
| 537 |
| 393 |
| 3,108 |
| 1,154 |
Corporate debentures |
| 352 |
| 347 |
| 333 |
| 318 |
| 313 |
| 1,350 |
| 1,149 |
Interest expense |
| 4,803 |
| 4,471 |
| 3,727 |
| 2,782 |
| 2,621 |
| 15,783 |
| 9,340 |
Net interest income |
| 63,619 |
| 62,586 |
| 61,017 |
| 48,321 |
| 47,534 |
| 235,543 |
| 179,325 |
Provision for loan losses |
| 968 |
| 1,096 |
| 1,899 |
| 995 |
| 2,266 |
| 4,958 |
| 4,962 |
Net interest income after loan loss provision |
| 62,651 |
| 61,490 |
| 59,118 |
| 47,326 |
| 45,268 |
| 230,585 |
| 174,363 |
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Correspondent banking and capital markets division income |
| 6,616 |
| 7,213 |
| 8,062 |
| 6,449 |
| 8,091 |
| 28,340 |
| 33,685 |
Gain (loss) on sale of securities available for sale |
| (7) |
| — |
| — |
| — |
| — |
| (7) |
| 13 |
FDIC- IA (negative accretion) (1) |
| — |
| — |
| — |
| — |
| — |
| — |
| (1,166) |
FDIC- revenue (1) |
| — |
| — |
| — |
| — |
| — |
| — |
| 96 |
Gain on early extinguishment of debt |
| — |
| — |
| — |
| — |
| — |
| — |
| 308 |
Gain on sale of trust department |
| 1,224 |
| — |
| — |
| — |
| — |
| 1,224 |
| — |
All other non interest income |
| 9,125 |
| 9,528 |
| 8,912 |
| 8,053 |
| 9,065 |
| 35,618 |
| 31,433 |
Total non interest income |
| 16,958 |
| 16,741 |
| 16,974 |
| 14,502 |
| 17,156 |
| 65,175 |
| 64,369 |
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Correspondent banking and capital markets division-expense |
| 4,985 |
| 5,304 |
| 5,544 |
| 4,746 |
| 5,987 |
| 20,579 |
| 23,384 |
Merger related expenses |
| 2,718 |
| — |
| 9,458 |
| 870 |
| 272 |
| 13,046 |
| 11,444 |
Termination of FDIC loss share agreements (1) |
| — |
| — |
| — |
| — |
| — |
| — |
| 17,560 |
All other non interest expense |
| 41,308 |
| 39,318 |
| 39,807 |
| 32,427 |
| 31,925 |
| 152,860 |
| 122,093 |
Total non interest expense |
| 49,011 |
| 44,622 |
| 54,809 |
| 38,043 |
| 38,184 |
| 186,485 |
| 174,481 |
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Income before income tax |
| 30,598 |
| 33,609 |
| 21,283 |
| 23,785 |
| 24,240 |
| 109,275 |
| 64,251 |
Income tax provision (2) |
| 28,686 |
| 11,559 |
| 6,050 |
| 7,185 |
| 8,213 |
| 53,480 |
| 21,910 |
Net income |
| $1,912 |
| $22,050 |
| $15,233 |
| $16,600 |
| $16,027 |
| $55,795 |
| $42,341 |
Net income allocated to common shares |
| $1,909 |
| $22,003 |
| $15,200 |
| $16,559 |
| $15,970 |
| $55,675 |
| $42,178 |
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Earnings per share - Basic |
| $0.03 |
| $0.37 |
| $0.26 |
| $0.33 |
| $0.33 |
| $0.97 |
| $0.89 |
Earnings per share - Diluted |
| $0.03 |
| $0.36 |
| $0.26 |
| $0.32 |
| $0.33 |
| $0.95 |
| $0.88 |
Dividends per share |
| $0.06 |
| $0.06 |
| $0.06 |
| $0.06 |
| $0.04 |
| $0.24 |
| $0.16 |
Average common shares outstanding (basic) |
| 60,001 |
| 59,907 |
| 58,307 |
| 50,632 |
| 47,870 |
| 57,245 |
| 47,409 |
Average common shares outstanding (diluted) |
| 61,276 |
| 61,115 |
| 59,370 |
| 51,408 |
| 48,800 |
| 58,341 |
| 48,192 |
Common shares outstanding at period end |
| 60,161 |
| 60,053 |
| 60,003 |
| 51,126 |
| 48,147 |
| 60,161 |
| 48,147 |
Effective tax rate (2) |
| 93.75% |
| 34.39% |
| 28.43% |
| 30.21% |
| 33.88% |
| 48.94% |
| 34.10% |
| (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 net loss on the transaction of approximately $17,560 during the first quarter of 2016. |
| (2) | Due the reduction of the federal corporate tax rate to 21% effective January 1, 2018, the Company revalued its DTA at December 31, 2017 and recorded a DTA write down of $18,575 as additional income tax expense during the fourth quarter of 2017. Excluding the DTA write down of $18,575, the effective tax rate was 33.04% and 31.94% for the three and twelve months ended December 31, 2017, respectively. |
2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Presented below are condensed consolidated balance sheets for the periods indicated.
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| Ending Balance | ||||||||
Condensed Consolidated Balance Sheets |
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
Assets |
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Cash and due from banks |
| $85,562 |
| $119,233 |
| $108,614 |
| $69,413 |
| $66,368 |
Fed funds sold and Fed Res Bank deposits |
| 195,057 |
| 182,996 |
| 211,037 |
| 214,369 |
| 109,286 |
Trading securities |
| 6,777 |
| 2,973 |
| 1,934 |
| - |
| 12,383 |
Investment securities: |
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Available for sale |
| 1,060,143 |
| 866,657 |
| 868,334 |
| 819,352 |
| 740,702 |
Held to maturity |
| 232,399 |
| 237,874 |
| 238,798 |
| 243,812 |
| 250,543 |
Total investment securities |
| 1,292,542 |
| 1,104,531 |
| 1,107,132 |
| 1,063,164 |
| 991,245 |
Loans held for sale |
| 19,647 |
| 12,243 |
| 8,959 |
| 2,637 |
| 2,285 |
Loans: |
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Originated loans |
| 2,919,350 |
| 2,756,847 |
| 2,610,859 |
| 2,397,021 |
| 2,250,631 |
Acquired loans |
| 1,689,713 |
| 1,760,745 |
| 1,856,310 |
| 946,925 |
| 993,192 |
PCI loans |
| 164,158 |
| 163,975 |
| 179,364 |
| 176,058 |
| 185,924 |
Total gross loans |
| 4,773,221 |
| 4,681,567 |
| 4,646,533 |
| 3,520,004 |
| 3,429,747 |
Allowance for loan losses |
| (32,825) |
| (31,828) |
| (30,132) |
| (27,819) |
| (27,041) |
Loans, net of allowance |
| 4,740,396 |
| 4,649,739 |
| 4,616,401 |
| 3,492,185 |
| 3,402,706 |
Premises and equipment, net |
| 141,527 |
| 141,605 |
| 140,820 |
| 115,400 |
| 114,815 |
Goodwill |
| 257,683 |
| 257,683 |
| 257,683 |
| 106,028 |
| 106,028 |
Core deposit intangible |
| 24,063 |
| 25,140 |
| 26,217 |
| 14,785 |
| 15,510 |
Bank owned life insurance |
| 146,739 |
| 145,755 |
| 115,234 |
| 99,065 |
| 98,424 |
OREO |
| 3,987 |
| 5,904 |
| 6,422 |
| 7,201 |
| 7,090 |
Deferred income tax asset, net |
| 37,725 |
| 56,160 |
| 58,841 |
| 56,792 |
| 63,208 |
Other assets |
| 172,270 |
| 118,899 |
| 108,185 |
| 87,957 |
| 89,211 |
Total Assets |
| $7,123,975 |
| $6,822,861 |
| $6,767,479 |
| $5,328,996 |
| $5,078,559 |
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Liabilities and Stockholders' Equity |
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Deposits: |
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Non-interest bearing |
| $1,999,901 |
| $1,915,662 |
| $1,926,047 |
| $1,585,963 |
| $1,426,624 |
Interest bearing |
| 1,058,985 |
| 996,861 |
| 990,242 |
| 893,945 |
| 917,004 |
Total checking accounts |
| 3,058,886 |
| 2,912,523 |
| 2,916,289 |
| 2,479,908 |
| 2,343,628 |
Money market accounts |
| 1,167,940 |
| 1,156,217 |
| 1,178,109 |
| 910,056 |
| 900,532 |
Savings deposits |
| 501,014 |
| 511,286 |
| 519,964 |
| 384,202 |
| 362,947 |
Time deposits |
| 832,683 |
| 845,444 |
| 861,093 |
| 522,957 |
| 545,437 |
Total deposits |
| $5,560,523 |
| $5,425,470 |
| $5,475,455 |
| $4,297,123 |
| $4,152,544 |
Federal funds purchased |
| 331,490 |
| 335,531 |
| 256,611 |
| 268,377 |
| 261,986 |
Other borrowings |
| 253,272 |
| 72,234 |
| 73,089 |
| 63,882 |
| 54,385 |
Other liabilities |
| 73,940 |
| 80,004 |
| 72,066 |
| 65,213 |
| 57,187 |
Common stockholders’ equity |
| 904,750 |
| 909,622 |
| 890,258 |
| 634,401 |
| 552,457 |
Total Liabilities and |
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Stockholders' Equity |
| $7,123,975 |
| $6,822,861 |
| $6,767,479 |
| $5,328,996 |
| $5,078,559 |
3
SELECTED CONSOLIDATED FINANCIAL DATA
The table below summarizes selected financial data for the periods presented.
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| Three Months Ended |
| Twelve Months Ended | ||||||||||
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| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Selected financial data |
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Return on average assets (annualized) |
| 0.11% |
| 1.29% |
| 0.95% |
| 1.29% |
| 1.25% |
| 0.88% |
| 0.87% |
Adjusted return on average assets (annualized) (Non-GAAP) (1) |
| 1.23% |
| 1.29% |
| 1.37% |
| 1.34% |
| 1.26% |
| 1.30% |
| 1.25% |
Return on average equity (annualized) |
| 0.83% |
| 9.71% |
| 7.27% |
| 10.92% |
| 11.51% |
| 6.81% |
| 7.96% |
Adjusted return on average equity (annualized) (Non-GAAP) (1) |
| 9.29% |
| 9.71% |
| 10.51% |
| 11.32% |
| 11.64% |
| 10.06% |
| 11.47% |
Return on average tangible equity (annualized) (Non-GAAP) (1) |
| 1.67% |
| 14.68% |
| 10.99% |
| 14.06% |
| 15.26% |
| 10.06% |
| 10.72% |
Adjusted return on average tangible equity (annualized) (Non-GAAP) (1) |
| 13.92% |
| 14.68% |
| 15.65% |
| 14.56% |
| 15.43% |
| 14.63% |
| 15.22% |
Efficiency ratio, tax equivalent (Non-GAAP) (1) |
| 59.7% |
| 55.2% |
| 68.9% |
| 59.3% |
| 58.1% |
| 60.9% |
| 70.6% |
Adjusted efficiency ratio, tax equivalent (Non-GAAP) (1) |
| 55.9% |
| 53.8% |
| 55.7% |
| 56.7% |
| 56.5% |
| 55.5% |
| 57.7% |
Dividend payout |
| 200.0% |
| 16.7% |
| 23.1% |
| 18.8% |
| 12.1% |
| 25.3% |
| 18.2% |
Loan / deposit ratio |
| 85.8% |
| 86.3% |
| 84.9% |
| 81.9% |
| 82.6% |
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Stockholders’ equity (to total assets) |
| 12.7% |
| 13.3% |
| 13.2% |
| 11.9% |
| 10.9% |
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Common equity per common share |
| $15.04 |
| $15.15 |
| $14.84 |
| $12.41 |
| $11.47 |
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Tangible common equity per common share (Non-GAAP) (1) |
| $10.35 |
| $10.42 |
| $10.09 |
| $10.03 |
| $8.93 |
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Common tangible equity (to total tangible assets) (Non-GAAP) (1) |
| 9.1% |
| 9.6% |
| 9.3% |
| 9.8% |
| 8.7% |
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Tier 1 capital (to average assets) |
| 9.8% |
| 9.9% |
| 10.0% |
| 10.4% |
| 9.1% |
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(1) | See reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
NET INTEREST MARGIN (“NIM”)
The Company’s NIM decreased 3 basis points (“bps”) from 4.26% in the previous quarter to 4.23% during the current quarter due to an increase in the cost of interest bearing liabilities of 3 bps. Cost of deposits increased 1 bp during the fourth quarter of 2017 compared to the prior quarter. The tax equivalent yield on new loan production increased by 3 basis points from 4.44% in the prior quarter to 4.47% during the current quarter.
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.
| Three Months Ended | ||||||||||||||||
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| Dec. 31, 2016 | ||||||||||||
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average |
| Balance |
| Inc/Exp |
| Rate |
| Balance |
| Inc/Exp |
| Rate |
| Balance |
| Inc/Exp |
| Rate |
Loans (1) | $4,563,084 |
| $53,229 |
| 4.63% |
| $4,492,543 |
| $52,254 |
| 4.61% |
| $3,160,914 |
| $35,305 |
| 4.44% |
PCI loans | 161,165 |
| 7,608 |
| 18.73% |
| 170,924 |
| 7,696 |
| 17.86% |
| 192,755 |
| 9,256 |
| 19.10% |
Taxable securities | 969,456 |
| 6,000 |
| 2.46% |
| 926,367 |
| 5,648 |
| 2.42% |
| 871,989 |
| 4,397 |
| 2.01% |
Tax -exempt securities (1) | 195,490 |
| 2,007 |
| 4.07% |
| 196,988 |
| 2,082 |
| 4.19% |
| 149,637 |
| 1,694 |
| 4.50% |
Fed funds sold and other | 220,105 |
| 1,058 |
| 1.91% |
| 177,254 |
| 887 |
| 1.99% |
| 230,418 |
| 539 |
| 0.93% |
Tot. interest earning assets (1) | $6,109,300 |
| $69,902 |
| 4.54% |
| $5,964,076 |
| $68,567 |
| 4.56% |
| $4,605,713 |
| $51,191 |
| 4.42% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest earnings assets | 799,012 |
|
|
|
|
| 796,143 |
|
|
|
|
| 505,169 |
|
|
|
|
Total Assets | $6,908,312 |
|
|
|
|
| $6,760,219 |
|
|
|
|
| $5,110,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits | $3,537,298 |
| $3,385 |
| 0.38% |
| $3,507,381 |
| $3,178 |
| 0.36% |
| $2,699,762 |
| $1,892 |
| 0.28% |
Fed funds purchased | 282,834 |
| 941 |
| 1.32% |
| 257,967 |
| 819 |
| 1.26% |
| 273,691 |
| 393 |
| 0.57% |
Other borrowings | 53,479 |
| 125 |
| 0.93% |
| 61,149 |
| 127 |
| 0.82% |
| 27,002 |
| 23 |
| 0.34% |
Corporate debentures | 26,162 |
| 352 |
| 5.34% |
| 26,103 |
| 347 |
| 5.27% |
| 25,919 |
| 313 |
| 4.80% |
Total interest bearing liabilities | $3,899,773 |
| $4,803 |
| 0.49% |
| $3,852,600 |
| $4,471 |
| 0.46% |
| $3,026,374 |
| $2,621 |
| 0.34% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits | 2,011,700 |
|
|
|
|
| 1,926,070 |
|
|
|
|
| 1,454,963 |
|
|
|
|
All other liabilities | 79,346 |
|
|
|
|
| 81,057 |
|
|
|
|
| 75,548 |
|
|
|
|
Shareholders' equity | 917,493 |
|
|
|
|
| 900,492 |
|
|
|
|
| 553,997 |
|
|
|
|
Total liabilities and shareholders' equity | $6,908,312 |
|
|
|
|
| $6,760,219 |
|
|
|
|
| $5,110,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Spread (1) |
|
|
|
| 4.05% |
|
|
|
|
| 4.10% |
|
|
|
|
| 4.08% |
Net Interest Margin (1) |
|
|
|
| 4.23% |
|
|
|
|
| 4.26% |
|
|
|
|
| 4.20% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Total Deposits |
|
|
|
| 0.24% |
|
|
|
|
| 0.23% |
|
|
|
|
| 0.18% |
| (1) | Tax equivalent yield (Non-GAAP); see reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
4
CREDIT QUALITY AND ALLOWANCE FOR LOAN LOSSES
Non-performing assets (“NPAs”) totaled $21,422 at December 31, 2017, compared to $25,270 at September 30, 2017. The net decrease in NPAs resulted from a $1,917 decrease in other real estate owned and a $2,031 decrease in nonaccrual loans. NPAs as a percentage of total assets declined to 0.30% at December 31, 2017, compared to 0.37% at September 30, 2017.
The table below summarizes selected credit quality data for the periods indicated.
|
| Ending Balance |
|
|
|
| ||||||||
Non-Performing Assets (1) |
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
|
|
|
|
Non-accrual loans |
| 17,288 |
| $19,319 |
| $19,916 |
| $17,569 |
| $19,003 |
|
|
|
|
Past due loans 90 days or more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing interest |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
Total non-performing loans (“NPLs”) |
| 17,288 |
| 19,319 |
| 19,916 |
| 17,569 |
| 19,003 |
|
|
|
|
Other real estate owned (“OREO”) |
| 3,987 |
| 5,904 |
| 6,422 |
| 7,201 |
| 7,090 |
|
|
|
|
Repossessed assets other than real estate |
| 147 |
| 47 |
| 131 |
| 118 |
| 114 |
|
|
|
|
Total non-performing assets |
| $21,422 |
| $25,270 |
| $26,469 |
| $24,888 |
| $26,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Twelve Months Ended | ||||||||||
Asset Quality Ratios (1) |
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Non-performing loans as percentage of total loans |
| 0.38% |
| 0.43% |
| 0.45% |
| 0.53% |
| 0.59% |
|
|
|
|
Non-performing assets as percentage of total assets |
| 0.30% |
| 0.37% |
| 0.39% |
| 0.47% |
| 0.52% |
|
|
|
|
Non-performing assets as percentage of loans and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OREO plus other repossessed assets |
| 0.46% |
| 0.56% |
| 0.59% |
| 0.74% |
| 0.81% |
|
|
|
|
Loans past due 30 thru 89 days and accruing interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a percentage of total loans |
| 0.30% |
| 0.54% |
| 0.27% |
| 0.47% |
| 0.58% |
|
|
|
|
Allowance for loan losses as percentage of NPLs |
| 188% |
| 163% |
| 149% |
| 157% |
| 140% |
|
|
|
|
Net (recoveries) charge-offs |
| ($28) |
| ($600) |
| ($349) |
| $217 |
| $724 |
| ($760) |
| $119 |
Net (recoveries) charge-offs as a percentage of average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans for the period on an annualized basis |
| 0.00% |
| (0.05%) |
| (0.03%) |
| 0.03% |
| 0.09% |
| (0.02%) |
| 0.00% |
| (1) | Excludes PCI loans. |
The allowance for loan losses (“ALLL") totaled $32,825 at December 31, 2017, compared to $31,828 at September 30, 2017, an increase of $997 due to loan loss provision expense of $968 and net recoveries of $29. The changes in the Company’s ALLL components between December 31, 2017 and September 30, 2017 are summarized in the table below (unaudited).
|
| December 31, 2017 |
| September 30, 2017 |
| Increase (Decrease) | ||||||
|
| Loan | ALLL |
|
| Loan | ALLL |
|
| Loan | ALLL |
|
|
| Balance | Balance | % |
| Balance | Balance | % |
| Balance | Balance |
|
Originated loans |
| $2,902,904 | $29,385 | 1.01% |
| $2,739,348 | $28,243 | 1.03% |
| $ 163,556 | $ 1,142 | (2) bp |
Impaired originated loans |
| 16,446 | 804 | 4.89% |
| 17,499 | 843 | 4.82% |
| (1,053) | (39) | 7 bp |
Total originated loans |
| 2,919,350 | 30,189 | 1.03% |
| 2,756,847 | 29,086 | 1.06% |
| 162,503 | 1,103 | (3) bp |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans (1) |
| 1,685,814 | 2,341 | 0.14% |
| 1,758,937 | 2,457 | 0.14% |
| (73,123) | (116) | – bps |
Impaired acquired loans (2) |
| 3,899 | — | — |
| 1,808 | — | — |
| 2,091 | — | – bps |
Total acquired loans |
| 1,689,713 | 2,341 | 0.14% |
| 1,760,745 | 2,457 | 0.14% |
| (71,032) | (116) | – bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-PCI loans |
| 4,609,063 | 32,530 |
|
| 4,517,592 | 31,543 |
|
| 91,471 | 987 |
|
PCI loans |
| 164,158 | 295 |
|
| 163,975 | 285 |
|
| 183 | 10 |
|
Total loans |
| $4,773,221 | $32,825 |
|
| $4,681,567 | $31,828 |
|
| $ 91,654 | $ 997 |
|
| (1) | Performing acquired loans recorded at estimated fair value on the related acquisition dates. The total net unamortized fair value adjustment at December 31, 2017 was approximately $19,368 or 1.1% of the aggregate outstanding related loan balances. |
| (2) | These are loans that were acquired as performing loans that subsequently became impaired. |
The table below compares the unpaid principal balance and the carrying balance (book balance) of the Company’s total PCI loans at December 31, 2017.
| Unpaid |
|
|
|
| Principal | Carrying |
|
|
| Balance | Balance | Difference | Percentage |
Total PCI loans | $215,333 | $164,158 | ($51,175) | 24% |
5
Non interest income of $16,958 increased in the fourth quarter, primarily due to a gain on the sale of the Company’s trust department of $1,224. The table below summarizes the Company’s non-interest income for the periods indicated.
Condensed Consolidated Non Interest Income (unaudited)
|
| Three Months Ended |
| Twelve Months Ended | ||||||||||
|
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Correspondent banking and capital markets division (1) |
| $5,453 |
| $5,823 |
| $6,868 |
| $5,376 |
| $7,016 |
| $23,520 |
| $28,817 |
Other correspondent banking related revenue (2) |
| 1,163 |
| 1,390 |
| 1,195 |
| 1,073 |
| 1,075 |
| 4,821 |
| 4,868 |
Wealth management related revenue |
| 856 |
| 914 |
| 891 |
| 893 |
| 815 |
| 3,554 |
| 3,237 |
Service charges on deposit accounts |
| 3,719 |
| 3,870 |
| 3,822 |
| 3,575 |
| 3,729 |
| 14,986 |
| 13,564 |
Debit, prepaid, ATM and merchant card related fees |
| 2,319 |
| 2,127 |
| 2,324 |
| 2,265 |
| 2,009 |
| 9,035 |
| 8,254 |
BOLI income |
| 983 |
| 975 |
| 694 |
| 641 |
| 657 |
| 3,293 |
| 2,534 |
Gain on sale of bank properties held for sale |
| 36 |
| 175 |
| — |
| 129 |
| 730 |
| 340 |
| 797 |
Other service charges and fees |
| 1,212 |
| 1,467 |
| 1,180 |
| 550 |
| 1,125 |
| 4,409 |
| 3,047 |
Subtotal |
| $15,741 |
| $16,741 |
| $16,974 |
| $14,502 |
| $17,156 |
| $63,958 |
| $65,118 |
Gain on sale of securities available for sale |
| (7) |
| — |
| — |
| — |
| — |
| (7) |
| 13 |
Gain on early extinguishment of debt |
| — |
| — |
| — |
| — |
| — |
| — |
| 308 |
Gain on sale of trust department |
| 1,224 |
| — |
| — |
| — |
| — |
| 1,224 |
| — |
FDIC indemnification asset – amortization |
| — |
| — |
| — |
| — |
| — |
| — |
| (1,166) |
FDIC indemnification income |
| — |
| — |
| — |
| — |
| — |
| — |
| 96 |
Total Non Interest Income |
| $16,958 |
| $16,741 |
| $16,974 |
| $14,502 |
| $17,156 |
| $65,175 |
| $64,369 |
| (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. |
| (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. |
NON INTEREST EXPENSES
Non interest expense increased $4,389 in the fourth quarter to $49,011. The Company incurred $2,718 of merger-related expenses during the fourth quarter of 2017, which was mainly attributable to the acquisitions of HCBF and Sunshine completed on January 1, 2018. The increase in non-interest expense, excluding merger related expenses, between the third and fourth quarters of 2017 was $1,671 of which $1,495 was related to additional health insurance and incentive accruals of $1,088, and additional loss reserves of $407 at the Company’s non-bank insurance subsidiary during the fourth quarter of 2017. The table below summarizes the Company’s non-interest expense for the periods indicated.
Condensed Consolidated Non Interest Expense (unaudited)
|
| Three Months Ended |
|
| Twelve Months Ended |
| ||||||||||||||||||||||
|
| Dec. 31, 2017 |
|
| Sept. 30, 2017 |
|
| June 30, 2017 |
|
| Mar. 31, 2017 |
|
| Dec. 31, 2016 |
|
| Dec. 31, 2017 |
|
| Dec. 31, 2016 |
| |||||||
Salaries, wages and employee benefits |
|
| 29,698 |
|
|
| 28,515 |
|
|
| 28,317 |
|
|
| 22,882 |
|
|
| 24,049 |
|
|
| 109,412 |
|
|
| 90,881 |
|
Occupancy expense |
|
| 3,324 |
|
|
| 3,422 |
|
|
| 3,191 |
|
|
| 2,840 |
|
|
| 2,888 |
|
|
| 12,777 |
|
|
| 10,217 |
|
Depreciation of premises and equipment |
|
| 1,884 |
|
|
| 1,842 |
|
|
| 1,837 |
|
|
| 1,684 |
|
|
| 1,659 |
|
|
| 7,247 |
|
|
| 6,373 |
|
Supplies, stationary and printing |
|
| 430 |
|
|
| 392 |
|
|
| 434 |
|
|
| 354 |
|
|
| 320 |
|
|
| 1,610 |
|
|
| 1,340 |
|
Marketing expenses |
|
| 1,044 |
|
|
| 955 |
|
|
| 1,078 |
|
|
| 852 |
|
|
| 909 |
|
|
| 3,929 |
|
|
| 3,125 |
|
Data processing expenses |
|
| 2,185 |
|
|
| 2,006 |
|
|
| 2,419 |
|
|
| 1,826 |
|
|
| 1,814 |
|
|
| 8,436 |
|
|
| 6,867 |
|
Legal, auditing and other professional fees |
|
| 970 |
|
|
| 854 |
|
|
| 932 |
|
|
| 888 |
|
|
| 901 |
|
|
| 3,644 |
|
|
| 3,657 |
|
Bank regulatory related expenses |
|
| 767 |
|
|
| 666 |
|
|
| 891 |
|
|
| 727 |
|
|
| 779 |
|
|
| 3,051 |
|
|
| 3,420 |
|
Postage and delivery |
|
| 507 |
|
|
| 512 |
|
|
| 491 |
|
|
| 428 |
|
|
| 420 |
|
|
| 1,938 |
|
|
| 1,684 |
|
Debit, ATM and merchant card related expenses |
|
| 644 |
|
|
| 746 |
|
|
| 741 |
|
|
| 615 |
|
|
| 592 |
|
|
| 2,746 |
|
|
| 2,438 |
|
Credit related expenses |
|
| (23 | ) |
|
| 527 |
|
|
| 876 |
|
|
| 655 |
|
|
| 624 |
|
|
| 2,035 |
|
|
| 1,781 |
|
Amortization of intangibles |
|
| 1,129 |
|
|
| 1,133 |
|
|
| 1,042 |
|
|
| 762 |
|
|
| 791 |
|
|
| 4,066 |
|
|
| 3,074 |
|
Internet and telephone banking |
|
| 672 |
|
|
| 538 |
|
|
| 503 |
|
|
| 518 |
|
|
| 651 |
|
|
| 2,231 |
|
|
| 2,402 |
|
Impairment (recovery) on bank property held for sale |
|
| 12 |
|
|
| — |
|
|
| 430 |
|
|
| 77 |
|
|
| 116 |
|
|
| 519 |
|
|
| 1,150 |
|
Other expenses |
|
| 3,050 |
|
|
| 2,514 |
|
|
| 2,169 |
|
|
| 2,065 |
|
|
| 1,399 |
|
|
| 9,798 |
|
|
| 7,068 |
|
Subtotal |
|
| 46,293 |
|
|
| 44,622 |
|
|
| 45,351 |
|
|
| 37,173 |
|
|
| 37,912 |
|
|
| 173,439 |
|
|
| 145,477 |
|
Merger-related expenses |
|
| 2,718 |
|
|
| — |
|
|
| 9,458 |
|
|
| 870 |
|
|
| 272 |
|
|
| 13,046 |
|
|
| 11,444 |
|
Termination of FDIC loss share agreements |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 17,560 |
|
Total Non Interest Expense |
|
| 49,011 |
|
| $ | 44,622 |
|
| $ | 54,809 |
|
| $ | 38,043 |
|
| $ | 38,184 |
|
| $ | 186,485 |
|
| $ | 174,481 |
|
Note: Certain prior period amounts have been reclassified to conform to the current period presentation format.
6
CORRESPONDENT BANKING AND CAPITAL MARKETS SEGMENT
The condensed quarterly results of the Company’s correspondent banking and capital markets segment are presented below.
Condensed Segment Information - Correspondent banking and capital markets division (unaudited)
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
| Three Months Ended |
|
| Twelve Months Ended |
| ||||||||||||||||||||||
|
| Dec. 31, 2017 |
|
| Sept. 30, 2017 |
|
| June 30, 2017 |
|
| Mar. 31, 2017 |
|
| Dec. 31, 2016 |
|
| Dec. 31, 2017 |
|
| Dec. 31, 2016 |
| |||||||
Net interest income |
| $ | 1,913 |
|
| $ | 1,828 |
|
| $ | 1,918 |
|
| $ | 2,095 |
|
| $ | 1,850 |
|
| $ | 7,754 |
|
| $ | 6,832 |
|
Provision for loan losses |
|
| (4 | ) |
|
| 17 |
|
|
| 37 |
|
|
| 29 |
|
|
| 24 |
|
|
| 79 |
|
|
| (24 | ) |
Total non-interest income (1) |
|
| 6,617 |
|
|
| 7,213 |
|
|
| 8,062 |
|
|
| 6,449 |
|
|
| 8,091 |
|
|
| 28,341 |
|
|
| 33,685 |
|
Total non-interest expense (2) |
|
| (4,985 | ) |
|
| (5,304 | ) |
|
| (5,544 | ) |
|
| (4,746 | ) |
|
| (5,987 | ) |
|
| (20,579 | ) |
|
| (23,384 | ) |
Income tax provision |
|
| (1,366 | ) |
|
| (1,448 | ) |
|
| (1,725 | ) |
|
| (1,476 | ) |
|
| (1,535 | ) |
|
| (6,015 | ) |
|
| (6,599 | ) |
Net income |
| $ | 2,175 |
|
| $ | 2,306 |
|
| $ | 2,748 |
|
| $ | 2,351 |
|
| $ | 2,443 |
|
| $ | 9,580 |
|
| $ | 10,510 |
|
Contribution to diluted earnings per share |
| $ | 0.04 |
|
| $ | 0.04 |
|
| $ | 0.05 |
|
| $ | 0.05 |
|
| $ | 0.05 |
|
| $ | 0.16 |
|
| $ | 0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of indirect expense net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
inter-company earnings credit, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax benefit (3) |
| $ | (97 | ) |
| $ | (214 | ) |
| $ | (202 | ) |
| $ | (227 | ) |
| $ | (280 | ) |
| $ | (740 | ) |
| $ | (1,097 | ) |
Contribution to diluted earnings per share after |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deduction of allocated indirect expenses |
| $ | 0.03 |
|
| $ | 0.03 |
|
| $ | 0.04 |
|
| $ | 0.04 |
|
| $ | 0.04 |
|
| $ | 0.15 |
|
| $ | 0.20 |
|
| (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 $5,453, $5,823, $6,868, $5,376 and $7,016 for the three months ended December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017, and December 31, 2016, respectively, and $23,520 and $28,767 for the twelve months ended December 31, 2017 and 2016, 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. |
| (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 (1) above were $2,357, $2,549, $2,853, $2,342 and $3,133 for the three months ended December 31, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016, respectively, and $10,101 and $12,885 for the twelve months ended December 31, 2017 and 2016, respectively. Expenses in this line item do not include any indirect support allocation costs. |
| (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. |
7
Explanation of Certain Unaudited Non-GAAP Financial Measures
This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”), including adjusted net income, adjusted net income per share diluted, adjusted return on average assets, adjusted return on average tangible equity, adjusted return on average tangible equity, adjusted efficiency ratio, adjusted non-interest income, adjusted non-interest expense, adjusted net-interest income, tangible common equity, tangible common equity to tangible assets, common tangible equity per common share, tax equivalent yields on loans, securities and earning assets, and tax equivalent net interest spread and margin, which we refer to “Non-GAAP financial measures.” The tables below provide reconciliations between these Non-GAAP measures and net income, interest income, net interest income and tax equivalent basis interest income and net interest income, return on average assets, return on average equity, the efficiency ratio, total stockholders’ equity and tangible common equity, as applicable.
Management uses these Non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and enhance investors’ understanding of the Company’s core business and performance without the impact of merger-related expenses. Accordingly, management believes it is appropriate to exclude merger-related expenses because those costs are specific to each acquisition, vary based upon the size, complexity and other specifics of each acquisition, and are not indicative of the costs to operate the Company’s core business.
Non-GAAP 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):
|
| Three months ended |
| Twelve months ended | ||||||||||
|
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Adjusted net income (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
| $1,912 |
| $22,050 |
| $15,233 |
| $16,600 |
| $16,027 |
| $55,795 |
| $42,341 |
Loss (gain) on sale of securities available for sale, net of tax |
| 5 |
| — |
| — |
| — |
| — |
| 5 |
| (9) |
Gain on early extinguishment of debt, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| (202) |
Gain on sale of trust department, net of tax |
| (820) |
| — |
| — |
| — |
| — |
| (820) |
| — |
Termination of FDIC loss share agreements, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| 11,514 |
Merger-related expenses, net of tax |
| 1,820 |
| — |
| 6,769 |
| 607 |
| 180 |
| 8,879 |
| 7,325 |
Deferred tax asset write down |
| 18,575 |
| — |
| — |
| — |
| — |
| 18,575 |
| — |
Adjusted net income (Non-GAAP) |
| $21,492 |
| $22,050 |
| $22,002 |
| $17,207 |
| $16,207 |
| $82,434 |
| $60,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Diluted (GAAP) |
| $0.03 |
| $0.36 |
| $0.26 |
| $0.32 |
| $0.33 |
| $0.95 |
| $0.88 |
Effect to adjust for loss (gain) on sale of securities available for sale, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on early extinguishment of debt, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on sale of trust department, net of tax |
| (0.01) |
| — |
| — |
| — |
| — |
| (0.01) |
| — |
Effect to adjust for termination of FDIC loss share agreements, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| 0.24 |
Effect to adjust for merger-related expenses, net of tax |
| 0.03 |
| — |
| 0.11 |
| 0.01 |
| — |
| 0.15 |
| 0.15 |
Effect to adjust for deferred tax asset write down |
| 0.30 |
| — |
| — |
| — |
| — |
| 0.32 |
| — |
Adjusted net income per share - Diluted (Non-GAAP) |
| $0.35 |
| $0.36 |
| $0.37 |
| $0.33 |
| $0.33 |
| $1.41 |
| $1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on average assets (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets (GAAP) |
| 0.11% |
| 1.29% |
| 0.95% |
| 1.29% |
| 1.25% |
| 0.88% |
| 0.87% |
Effect to adjust for securities available for sale, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on early extinguishment of debt, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on sale of trust department, net of tax |
| (0.05%) |
| — |
| — |
| — |
| — |
| (0.01% | ) | — |
Effect to adjust for termination of FDIC loss share agreements, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| 0.24% |
Effect to adjust for merger-related expenses, net of tax |
| 0.10% |
| — |
| 0.42% |
| 0.05% |
| 0.01% |
| 0.14% |
| 0.14% |
Effect to adjust for deferred tax asset write down |
| 1.07% |
| — |
| — |
| — |
| — |
| 0.29% |
| — |
Adjusted return on average assets (Non-GAAP) |
| 1.23% |
| 1.29% |
| 1.37% |
| 1.34% |
| 1.26% |
| 1.30% |
| 1.25% |
8
Explanation of Certain Unaudited Non-GAAP Financial Measures (continued)
|
| Three months ended |
| Twelve months ended | ||||||||||
|
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
| Dec. 31, 2017 |
| Dec. 31, 2016 |
Adjusted return on average equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity (GAAP) |
| 0.83% |
| 9.71% |
| 7.27% |
| 10.92% |
| 11.51% |
| 6.81% |
| 7.96% |
Effect to adjust for gain on sale of securities available for sale |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on early extinguishment of debt |
| — |
| — |
| — |
| — |
| — |
| — |
| (0.04%) |
Effect to adjust for gain on sale of trust department, net of tax |
| (0.35%) |
| — |
| — |
| — |
| — |
| (0.10%) |
| — |
Effect to adjust for termination of FDIC loss share agreements |
| — |
| — |
| — |
| — |
| — |
| — |
| 2.17% |
Effect to adjust for merger and acquisition related expenses |
| 0.78% |
| — |
| 3.23% |
| 0.40% |
| 0.13% |
| 1.08% |
| 1.38% |
Effect to adjust for deferred tax asset write down |
| 8.03% |
| — |
| — |
| — |
| — |
| 2.27% |
| — |
Adjusted return on average equity (Non-GAAP) |
| 9.29% |
| 9.71% |
| 10.50% |
| 11.32% |
| 11.64% |
| 10.06% |
| 11.47% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
| $1,912 |
| $22,050 |
| $15,233 |
| $16,600 |
| $16,027 |
| $55,795 |
| $42,341 |
Amortization of intangibles, net of tax |
| 756 |
| 743 |
| 746 |
| 532 |
| 523 |
| 2,767 |
| 2,026 |
Adjusted net income for average tangible equity (Non-GAAP) |
| $2,668 |
| $22,793 |
| $15,979 |
| $17,132 |
| $16,550 |
| $58,562 |
| $44,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders' equity (GAAP) |
| $917,493 |
| $900,492 |
| $840,053 |
| $616,268 |
| $553,997 |
| $819,626 |
| $531,734 |
Average goodwill |
| (257,683) |
| (257,683) |
| (232,026) |
| (106,028) |
| (105,760) |
| (213,892) |
| (100,855) |
Average core deposit intangible |
| (24,727) |
| (25,819) |
| (24,118) |
| (15,148) |
| (15,889) |
| (22,508) |
| (16,060) |
Average other intangibles |
| (959) |
| (1,004) |
| (962) |
| (769) |
| (759) |
| (925) |
| (773) |
Average tangible equity (Non-GAAP) |
| $634,124 |
| $615,986 |
| $582,947 |
| $494,323 |
| $431,589 |
| $582,301 |
| $414,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (annualized) (Non-GAAP) |
| 1.67% |
| 14.68% |
| 10.99% |
| 14.06% |
| 15.26% |
| 10.06% |
| 10.72% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on average tangible equity (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (Non-GAAP) |
| 1.67% |
| 14.68% |
| 10.99% |
| 14.06% |
| 15.26% |
| 10.06% |
| 10.72% |
Effect to adjust for loss (gain) on sale of securities available for sale, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Effect to adjust for gain on early extinguishment of debt, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| (0.05%) |
Effect to adjust for gain on sale of trust department, net of tax |
| (0.51%) |
| — |
| — |
| — |
| — |
| (0.14%) |
| — |
Effect to adjust for termination of FDIC loss share agreements, net of tax |
| — |
| — |
| — |
| — |
| — |
| — |
| 2.78% |
Effect to adjust for merger-related expenses, net of tax |
| 1.14% |
| — |
| 4.66% |
| 0.50% |
| 0.17% |
| 1.52% |
| 1.77% |
Deferred tax asset write down |
| 11.62% |
| — |
| — |
| — |
| — |
| 3.19% |
| — |
Adjusted return on average tangible equity (Non-GAAP) |
| 13.92% |
| 14.68% |
| 15.65% |
| 14.56% |
| 15.43% |
| 14.63% |
| 15.22% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax equivalent) (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest income (GAAP) |
| $16,958 |
| $16,741 |
| $16,974 |
| $14,502 |
| $17,156 |
| $65,175 |
| $64,369 |
Gain on early extinguishment of debt |
| — |
| — |
| — |
| — |
| — |
| — |
| (308) |
Gain on sale of trust department |
| (1,224) |
| — |
| — |
| — |
| — |
| (1,224) |
| — |
Adjusted non interest income (Non-GAAP) |
| $15,734 |
| $16,741 |
| $16,974 |
| $14,502 |
| $17,156 |
| $63,951 |
| $64,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before provision (GAAP) |
| $63,619 |
| $62,586 |
| $61,017 |
| $48,321 |
| $47,534 |
| $235,543 |
| $179,325 |
Total tax equivalent adjustment |
| 1,480 |
| 1,510 |
| 1,509 |
| 1,339 |
| 1,036 |
| 5,716 |
| 3,459 |
Adjusted net interest income (Non-GAAP) |
| $65,099 |
| $64,096 |
| $62,526 |
| $49,660 |
| $48,570 |
| $241,259 |
| $182,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest expense (GAAP) |
| $49,011 |
| $44,622 |
| $54,809 |
| $38,043 |
| $38,184 |
| $186,485 |
| $174,481 |
Amortization of intangibles |
| (1,129) |
| (1,133) |
| (1,042) |
| (762) |
| (791) |
| (4,066) |
| (3,074) |
Termination of FDIC loss share agreements |
| — |
| — |
| — |
| — |
| — |
| — |
| (17,560) |
Merger and acquisition related expenses |
| (2,718) |
| — |
| (9,458) |
| (870) |
| (272) |
| (13,046) |
| (11,444) |
Adjusted non interest expense (Non-GAAP) |
| $45,164 |
| $43,489 |
| $44,309 |
| $36,411 |
| $37,121 |
| $169,373 |
| $142,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax equivalent) (Non-GAAP) |
| 59.7% |
| 55.2% |
| 68.9% |
| 59.3% |
| 58.1% |
| 60.9% |
| 70.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted efficiency ratio, tax equivalent (Non-GAAP) |
| 55.9% |
| 53.8% |
| 55.7% |
| 56.7% |
| 56.5% |
| 55.5% |
| 57.7% |
9
Explanation of Certain Unaudited Non-GAAP Financial Measures (continued)
|
| Ending Balance | ||||||||
|
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| June 30, 2017 |
| Mar. 31, 2017 |
| Dec. 31, 2016 |
Tangible common equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (GAAP) |
| $904,750 |
| $909,622 |
| $890,258 |
| $634,401 |
| $552,457 |
Goodwill |
| (257,683) |
| (257,683) |
| (257,683) |
| (106,028) |
| (106,028) |
Core deposit intangible |
| (24,063) |
| (25,140) |
| (26,217) |
| (14,785) |
| (15,510) |
Other intangibles |
| (551) |
| (1,035) |
| (1,011) |
| (754) |
| (784) |
Tangible common equity (Non-GAAP) |
| $622,453 |
| $625,764 |
| $605,347 |
| $512,834 |
| $430,135 |
|
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP) |
| $7,123,975 |
| $6,822,861 |
| $6,767,479 |
| $5,328,996 |
| $5,078,559 |
Goodwill |
| (257,683) |
| (257,683) |
| (257,683) |
| (106,028) |
| (106,028) |
Core deposit intangible |
| (24,063) |
| (25,140) |
| (26,217) |
| (14,785) |
| (15,510) |
Other intangibles |
| (551) |
| (1,035) |
| (1,011) |
| (754) |
| (784) |
Total tangible assets (Non-GAAP) |
| $6,841,678 |
| $6,539,003 |
| $6,482,568 |
| $5,207,429 |
| $4,956,237 |
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (Non-GAAP) |
| 9.1% |
| 9.6% |
| 9.3% |
| 9.8% |
| 8.7% |
Common tangible equity per common share (Non-GAAP) |
| $10.35 |
| $10.42 |
| $10.09 |
| $10.03 |
| $8.93 |
Common shares outstanding at period end |
| 60,161 |
| 60,053 |
| 60,003 |
| 51,126 |
| 48,147 |
|
|
|
|
|
|
|
|
|
|
|
|
| Three months ended |
|
|
|
| ||||
|
| Dec. 31, 2017 |
| Sept. 30, 2017 |
| Dec. 31, 2016 |
|
|
|
|
Tax equivalent yields (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
Loans, excluding PCI loans |
| $52,374 |
| $51,426 |
| $34,829 |
|
|
|
|
PCI loans |
| 7,608 |
| 7,696 |
| 9,256 |
|
|
|
|
Taxable securities |
| 6,000 |
| 5,648 |
| 4,397 |
|
|
|
|
Tax -exempt securities |
| 1,382 |
| 1,400 |
| 1,134 |
|
|
|
|
Fed funds sold and other |
| 1,058 |
| 887 |
| 539 |
|
|
|
|
Interest income (GAAP) |
| $68,422 |
| $67,057 |
| $50,155 |
|
|
|
|
Tax equivalent adjustment for Non-PCI loans |
| 855 |
| 828 |
| 476 |
|
|
|
|
Tax equivalent adjustment for tax-exempt securities |
| 625 |
| 682 |
| 560 |
|
|
|
|
Tax equivalent adjustments |
| 1,480 |
| 1,510 |
| 1,036 |
|
|
|
|
Interest income (tax equivalent) (Non-GAAP) |
| $69,902 |
| $68,567 |
| $51,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (GAAP) |
| $63,619 |
| $62,586 |
| $47,534 |
|
|
|
|
Tax equivalent adjustments |
| 1,480 |
| 1,510 |
| 1,036 |
|
|
|
|
Net interest income (tax equivalent) (Non-GAAP) |
| $65,099 |
| $64,096 |
| $48,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on Non-PCI loans |
| 4.55% |
| 4.54% |
| 4.38% |
|
|
|
|
Effect from tax equivalent adjustment |
| 0.08% |
| 0.07% |
| 0.06% |
|
|
|
|
Yield on Non-PCI loans - tax equivalent (Non-GAAP) |
| 4.63% |
| 4.61% |
| 4.44% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on securities |
| 2.51% |
| 2.49% |
| 2.15% |
|
|
|
|
Effect from tax equivalent adjustment |
| 0.21% |
| 0.24% |
| 0.22% |
|
|
|
|
Yield on securities - tax equivalent (Non-GAAP) |
| 2.73% |
| 2.73% |
| 2.37% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest earning assets (GAAP) |
| 4.44% |
| 4.46% |
| 4.33% |
|
|
|
|
Effect from tax equivalent adjustments |
| 0.10% |
| 0.10% |
| 0.09% |
|
|
|
|
Yield on interest earning assets - tax equivalent (Non-GAAP) |
| 4.54% |
| 4.56% |
| 4.42% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread (GAAP) |
| 3.95% |
| 4.00% |
| 3.99% |
|
|
|
|
Effect for tax equivalent adjustments |
| 0.10% |
| 0.10% |
| 0.09% |
|
|
|
|
Net interest spread (Non-GAAP) |
| 4.05% |
| 4.10% |
| 4.08% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (GAAP) |
| 4.13% |
| 4.16% |
| 4.11% |
|
|
|
|
Effect from tax equivalent adjustments |
| 0.10% |
| 0.10% |
| 0.09% |
|
|
|
|
Net interest margin - tax equivalent (Non-GAAP) |
| 4.23% |
| 4.26% |
| 4.20% |
|
|
|
|
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About CenterState Bank Corporation
The Company, headquartered in Winter Haven, Florida between Orlando and Tampa, is a financial holding company with one nationally chartered bank, CenterState Bank, N.A. Presently, the Company operates through its network of 142 branch banking offices located in 31 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 approximately 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:
This report contains 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 the Company’s control. These forward looking statements, many of which, with respect to future business decisions and actions, are subject to change, 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. Examples of uncertainties and contingencies include, among other important factors, general economic and business conditions, expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution, market and monetary fluctuations, including fluctuations in mortgage markets, responses to any or all of these conditions, the actions of the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and other regulators and agencies, pending, threatened, or possible future regulatory or judicial actions, proceedings or outcomes, changes in laws and regulations applicable to the Company, the possibility that the anticipated benefits of the completed transactions will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the companies acquired, or diversion of management’s attention from ongoing business operations and opportunities, the Company’s success in executing its business plan and strategies and managing the risks involved in the foregoing; and other factors that may affect future results of the Company. Additional factors that could cause results to differ materially from those contemplated by forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and otherwise in our SEC reports and filings under the title “Risk Factors”. 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.
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