EX-99.1 2 csfl-ex991_6.htm EX-99.1 csfl-ex991_6.htm

 

Exhibit 99.1

 

 

 

 

CSFL Inc logo

 

 

FOR IMMEDIATE RELEASE

January 26, 2016

 

 

CenterState Banks, Inc. Announces

Fourth Quarter 2015 Operating Results

 

CenterState reports record earnings for year ending December 31, 2015

 

 

DAVENPORT, FL. – January 26, 2016 - CenterState Banks, Inc. (Nasdaq: CSFL) reported earnings per share (“EPS”) of $0.23 on net income of $10,396 for the fourth quarter of 2015, compared to $0.22 per share on net income of $9,916 reported during the prior quarter.  For the year 2015, the Company reported $0.85 EPS ($0.87 Operating EPS) compared to $0.31 EPS ($0.54 Operating EPS) reported for year 2014.  All amounts are in thousands, except per share information, and all earnings per share amounts are reported on a diluted basis unless otherwise noted.  

 

 

CURRENT QUARTER HIGHLIGHTS

 

 

 

 

·

Fourth quarter annualized ROA of 1.02% gaap (1.06% operating) and 1.00% (1.01% operating) for the year 2015.

 

 

 

·

Efficiency ratio of 61% for the fourth quarter and 62% for the year 2015.

 

 

 

·

9% annualized increase in loans during the fourth quarter and 11% for the year 2015 (excluding Purchased Credit Impaired “PCI” loans). (page 4)    

 

 

 

·

10% annualized increase in checking deposits during the fourth quarter and 9% for the year 2015.

 

 

 

·

12% decrease in non-performing assets during the fourth quarter and 35% decrease from December 31, 2014. (page 10)

 

 

 

·

The two complimentary acquisitions in South Miami-Dade County announced in 4Q15 remain on schedule to close late in 1Q16.

 

 

 

1

 


 

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

 

Quarterly Condensed Consolidated Statements of Operations (unaudited)

For the quarter ended:

   12/31/15

   9/30/15

   6/30/15

   3/31/15

   12/31/14

Interest income

$ 41,098

$ 40,112

$ 41,625

$ 39,485

$ 38,019

Interest expense

1,819

1,784

1,818

1,865

1,848

Net interest income

39,279

38,328

39,807

37,620

36,171

Provision for loan losses

484

4

2,330

1,941

210

Recovery for loan losses- PCI loans

59

(4)

(22)

(299)

(192)

Net interest income after loan loss provision

38,736

38,328

37,499

35,978

36,153

 

 

 

 

 

 

Correspondent banking and capital markets division- income

6,241

5,935

8,587

6,800

5,795

Gain on sale of securities available for sale

---

4

---

---

---

FDIC- IA amortization (negative accretion) (1)

(3,420)

(4,144)

(4,649)

(4,350)

(5,599)

FDIC- revenue (2)

633

27

359

667

1,080

All other non-interest  income

6,212

6,308

6,276

5,964

6,259

Total non interest income

9,666

8,130

10,573

9,081

7,535

 

 

 

 

 

 

Credit related expenses

309

439

522

16

299

FDIC credit related expenses

997

(46)

625

(567)

369

Correspondent banking and capital markets division-expense

5,094

5,063

6,008

5,595

4,993

Merger and acquisition related expenses

524

169

---

---

848

Branch closure and efficiency initiatives

---

---

---

---

(417)

All other non-interest  expense

25,162

25,230

25,383

25,559

25,999

Total non interest expense

32,086

30,855

32,538

30,603

32,091

 

 

 

 

 

 

Income before income tax

16,316

15,603

15,534

14,456

11,597

Income tax provision  

5,920

5,687

5,656

5,308

4,316

NET INCOME  

$ 10,396

$ 9,916

$ 9,878

$ 9,148

$ 7,281

Net Income allocated to common shares

$ 10,343

$ 9,862

$ 9,823

$ 9,097

$ 7,250

 

 

 

 

 

 

Earnings per share (basic) (GAAP)

$  0.23

$  0.22

$  0.22

$  0.20

$  0.16

Earnings per share (diluted) (GAAP)

$  0.23

$  0.22

$  0.21

$  0.20

$  0.16

Net operating income per share (Non-GAAP) (3)

$  0.23

$  0.22

$  0.22

$  0.20

$  0.17

 

 

 

 

 

 

Average common shares outstanding (basic)

45,237

45,200

45,161

45,128

45,072

Average common shares outstanding (diluted)

45,935

45,826

45,737

45,658

45,506

Common shares outstanding at period end

45,459

45,469

45,421

45,409

45,324

 

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

 

note 2:  Two FDIC related revenue items are included in this line item.  The first item is FDIC reimbursement income from the sale of OREO.  When OREO (those covered by loss share agreements) is sold for a loss, the FDIC covered portion of the loss is recognized as income and included in this line item per the coverage breakdown in the table on page 10, Selected Credit Quality Ratios.  Second, when a loan pool (with loss share) is impaired, the impairment expense is included in provision for loan losses, and the percentage of the loss that is reimbursable from the FDIC is recognized as income from FDIC reimbursement, and included in this line item as well.

2

 


 

 

note 3:  This non-gaap metric represents gaap net income excluding certain income and expense items net of the effective tax rate for the period presented.  Items excluded are gains on sales of securities held for sale, acquisition and merger related expenses and one time charges related to the Company’s efficiency and profitability initiatives announced in January 2014, which include impairment charges on the real estate of several of the branches closed during April 2014, divided by the average diluted common shares outstanding.  A reconciliation table is presented on page 18, Explanation of Certain Unaudited Non-GAAP Financial Measures.

 

 

 

 

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:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Net interest income

$1,716

$1,545

$1,467

$1,602

$991

Provision for loan losses

(4)

1

(24)

(131)

---

Total non-interest income (note 1)

6,241

5,935

8,587

6,800

5,795

Total non-interest expense (note 2)

(5,094)

(5,063)

(6,008)

(5,595)

(4,993)

Income tax provision

(1,103)

(934)

(1,551)

(1,032)

(692)

Net income

$  1,756

$  1,484

$  2,471

$  1,644

$  1,101

Contribution to diluted earnings per share

$ 0.04

$ 0.03

$ 0.05

$ 0.04

$ 0.02

 

 

 

 

 

 

Allocation of indirect expense net of

 

 

 

 

 

   inter-company earnings credit, net of

 

 

 

 

 

   income tax benefit (note 3)

$(174)

$(304)

$(262)

$(276)

$(163)

Contribution to diluted earnings per share after

 

 

 

 

 

    deduction of allocated indirect expenses

$ 0.03

$ 0.03

$ 0.05

$ 0.03

$ 0.02

 

 

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 $5,254, $4,943, $7,334,  $5,694 and $4,876 for 4Q15, 3Q15, 2Q15, 1Q15 and 4Q14, 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 $2,505, $2,388, $3,461, $2,938 and $2,149 for 4Q15, 3Q15, 2Q15, 1Q15 and 4Q14, 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.

 

3

 


 

LOAN PRODUCTION

 

Loans excluding PCI loans increased $51,395 during the fourth quarter, an annualized growth rate of approximately 8.8% and $230,489 during the year ending December 31, 2015, an annualized growth rate of approximately 10.7%. Total new loans originated during the quarter approximated $203.2 million, of which $157.1 million were funded.  About 51% of funded loan origination was commercial real estate (“CRE”), 19% commercial and industrial (“C&I”), 19% single family residential, 5% land, development & construction and 6% were all other.

Approximately 60% of the funded loan production was a combination of floating and variable rate, and the remaining 40% was fixed rate.  In the aggregate, the funded loan production for the current quarter is expected to result in an estimated duration of approximately 2.3 years.  The loan origination pipeline is approximately $266 million at December 31, 2015 compared to $285 million at September 30, 2015.  The graph above summarizes total loan production and funded loan production over the past nine quarters.

 

LOAN PORTFOLIO MIX, PCI LOANS, FDIC COVERED LOANS AND THE RELATED INDEMNIFICATION ASSET (“IA’)

 

Total PCI loans at December 31, 2015 is equal to $210,528 of which $150,338 (71%) are covered by FDIC loss sharing agreements.  The Company acquired both covered and non-covered PCI loans in its June 1, 2014 acquisition of First Southern Bank (“FSB”).  It also acquired FDIC covered loans that are not included in the PCI loan portfolio.  In addition, the Company also acquired non-covered PCI loans in its January 17, 2014 Gulfstream Business Bank (“GSB”) acquisition.  The table below compares the Company’s total FDIC covered loans and its PCI loan portfolio at December 31, 2015.

 

 

      PCI loans

      Non-PCI

   Total loans

FDIC covered

$ 150,338

$    26,982

$   177,320

not covered

60,190

2,356,266

2,416,456

Total

$ 210,528

$ 2,383,248

$ 2,593,776

 

 

4

 


 

The table below summarizes the Company’s total PCI loans, both covered and not covered by FDIC loss share arrangements.  It also shows the difference between the unpaid principal balance and the carrying balance (book balance) at December 31, 2015.  

 

 

unpaid

 

 

 

 

principal

carrying

 

 

 

balance

balance

difference

percentage

FDIC covered PCI loans

$193,550

$ 150,338

($43,212)

22%

PCI loans not covered

79,873

60,190

(19,683)

25%

Total PCI loans

$273,423

$ 210,528

($62,895)

23%

 

The table below summarizes the Company’s total loans covered by FDIC loss share arrangements, both PCI loans and non-PCI loans.  It also shows the difference between the unpaid principal balance and the carrying balance (book balance) at December 31, 2015.

 

 

unpaid

 

 

 

 

principal

carrying

 

 

 

balance

balance

difference

percentage

FDIC covered PCI loans

$193,550

$150,338

($43,212)

22%

FDIC covered, non-PCI loans

27,367

26,982

(385)

1%

Total FDIC covered loans

$220,917

$177,320

($43,597)

20%

 

The table below summarizes the remaining ten loss share agreements by acquired bank and by term of the related loss share period at December 31, 2015.

 

 

 

 

 

 

est rem

percentage

 

 

Loss

Unpaid

 

 

 

life of

of losses

end of

 

Share

Principal

Carrying

Difference (2)

loans in

reimbursable

loss share

 

Term

Balance

Balance

$

%

years(1)

from FDIC

period

First Commercial Bank

5 yrs

$61,597

$55,048

($6,549)

11%

1.9

70%/30%/75%

Jan-16

First Guaranty Bank

5 yrs

43,584

30,430

(13,154)

30%

2.7

80%

Jan-17

Central FL State Bank

5 yrs

9,274

7,005

(2,269)

24%

2.6

80%

Jan-17

Subtotal

 

114,455

92,483

(21,972)

19%

2.2

 

 

 

 

 

 

 

 

 

 

 

Olde Cypress

10 yrs

25,918

22,904

(3,014)

12%

5.3

80%

Jul-20

Comm Bank Bartow

10 yrs

13,131

9,733

(3,398)

26%

8.5

80%

Aug-20

Independent Nat'l Bank

10 yrs

16,027

11,655

(4,372)

27%

5.9

80%

Aug-20

Haven Trust Bank

10 yrs

3,697

2,775

(922)

25%

3.5

70%/0%/70%

Sep-20

First Commercial Bank

10 yrs

8,262

7,444

(818)

10%

2.6

70%/30%/75%

Jan-21

First Guaranty Bank

10 yrs

34,928

26,850

(8,078)

23%

5.9

80%

Jan-22

Central FL State Bank

10 yrs

4,499

3,476

(1,023)

23%

4.5

80%

Jan-22

Subtotal

 

106,462

84,837

(21,625)

20%

5.6

 

 

 

 

 

 

 

 

 

 

 

Total

 

$220,917

$177,320

($43,597)

20%

3.8

 

 

 

 

(1)

This represents an estimate of the weighted average remaining life or timing of the estimated future cash flows as of December 31, 2015.

 

(2)

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

 

The Company’s total IA at December 31, 2015 was $25,795 of which $4,250 represents a receivable from the FDIC for estimated future loss reimbursements, and $21,545 represents previously estimated loss reimbursements that are no longer expected.  This amount is now expected to be paid

5

 


 

(and/or has been paid) by the borrower (or realized upon the sale of OREO) instead of a reimbursement from the FDIC. At December 31, 2015, the $21,545 previously estimated reimbursements from the FDIC is expected to be written off as amortization expense (negative accretion) in the Company’s non-interest income as summarized below.      

 

Period

 

 

Year

 

1Q16

$ 3,305

 

2017

$ 3,875

2Q16

2,582

 

2018

2,876

3Q16

2,242

 

2019

2,364

4Q16

2,101

 

2020 thru 2022

2,200

 

 

 

Total

$ 21,545

 

The table above is based on the Company’s most recent quarterly updated projections of estimated future losses, cash flows and timing of cash flows.  The above amounts are subject to change, and have changed in past quarters, primarily due to the FDIC covered loan pools performing better than previously estimated.  A summary of the activity in the Company’s IA account during the twelve month period ending December 31, 2015 is presented in the table below.

 

Balance at 12/31/14

$49,054

Amortization, net (excludes clawback)

(16,282)

Indemnification revenue

1,900

Indemnification of foreclosure expenses

(4,001)

Proceeds received from FDIC

(4,662)

Net recovery of loan pool(s) impairments

(214)

Balance 12/31/15

$25,795

 

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

 

        Loan mix (unaudited)

At quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Loans

 

 

 

 

 

Real estate loans

 

 

 

 

 

     Residential

$647,496

$634,106

$620,797

$604,811

$589,068

     Commercial

1,254,782

1,234,383

1,203,639

1,154,682

1,132,933

     Land, development and construction loans        

105,276

100,200

96,020

85,186

79,002

Total real estate loans

2,007,554

1,968,689

1,920,456

1,844,679

1,801,003

Commercial loans

307,321

297,389

301,615

297,442

294,493

Consumer and other loans

67,500

65,397

61,145

58,484

56,334

Total loans before unearned fees and costs

2,382,375

2,331,475

2,283,216

2,200,605

2,151,830

Unearned fees and costs

873

378

411

790

929

Total Non-PCI loans (note 1)

2,383,248

2,331,853

2,283,627

2,201,395

2,152,759

PCI loans

 

 

 

 

 

Real estate loans

 

 

 

 

 

     Residential

86,104

92,243

96,674

101,365

102,009

     Commercial

105,629

119,379

126,058

131,270

140,977

     Land, development and construction loans        

15,548

16,851

21,546

24,294

24,032

Total real estate loans

207,281

228,473

244,278

256,929

267,018

Commercial loans

2,771

2,848

2,735

5,615

8,953

Consumer and other loans

476

457

516

724

795

Total PCI loans (note 2)

210,528

231,778

247,529

263,268

276,766

 

 

 

 

 

 

Total Loans

$2,593,776

$2,563,631

$2,531,156

$2,464,663

$2,429,525

 

6

 


 

note 1:

Included in the $2,383,248 Non-PCI loans at December 31, 2015 are $26,982 that are covered by FDIC loss sharing agreements the Company acquired pursuant to its June 1, 2014 acquisition of FSB. 

note 2:

Included in the $210,528 PCI loans at December 31, 2015 are $150,338 of loans that are covered by FDIC loss sharing agreements and $60,190 are not covered.

  

CREDIT QUALITY AND ALLOWANCE FOR LOAN LOSSES

 

During the quarter, excluding PCI loans, the Company recorded a loan loss provision expense of $484 and charge-offs net of recoveries of $927, resulting in a decrease in the allowance for loan losses (excluding PCI loans) of $443 as shown in the table below.

 

With regard to PCI loans, the Company recorded a loan loss provision expense of $59 resulting in an increase in the allowance for loan losses on PCI loans of $59.  See the table “Allowance for loan losses” for additional information.

 

The allowance for loan losses (“ALLL") was $22,264 at December 31, 2015 compared to $22,648 at September 30, 2015, a decrease of $384.  This decrease is the result of the aggregate effect of a $311 decrease in general loan loss allowance, $132 decrease in the specific loan loss allowance related to impaired loans and a $59 increase in the loan loss allowance related to PCI loans accounted for pursuant to ASC Topic 310-30. The changes in the Company’s ALLL components between December 31, 2015 and September 30, 2015 are summarized in the table below.

 

 

Dec 31, 2015

 

Sept 30, 2015

 

increase (decrease)

 

loan

ALLL

 

 

loan

ALLL

 

 

loan

ALLL

 

 

balance

balance

%

 

balance

balance

%

 

balance

balance

 

Originated loans

$1,770,747

$ 18,351

1.04%

 

$1,694,866

$ 17,979

1.06%

 

$ 75,881

$ 372

(2) bps

Impaired loans

23,175

1,080

4.66%

 

21,858

1,212

5.54%

 

1,317

(132)

(88) bps

subtotal

1,793,922

19,431

1.08%

 

1,716,724

19,191

1.12%

 

77,198

240

(4) bps

Acquired loans

589,326

2,712

 

 

615,129

3,395

 

 

(25,803)

(683)

 

Non-PCI loans

2,383,248

22,143

 

 

2,331,853

22,586

 

 

51,395

(443)

 

PCI loans

210,528

121

 

 

231,778

62

 

 

(21,250)

59

 

Total loans

$2,593,776

$22,264

 

 

$2,563,631

$22,648

 

 

$ 30,145

$(384)

 

 

 

The general loan loss allowance (non-impaired loans) relating to originated loans increased by $372 resulting primarily from an increase in loans outstanding less a decrease resulting from a mixture of decreases and increases in the Company’s various two year historical loss factors and qualitative factors.

 

The general loan loss allowance (non-impaired loans) relating to acquired loans decreased by $683 resulting from both a decrease in loans outstanding and net decreases in loss factors due to management’s estimates of potential incurred losses based on performance since acquisition date.  The loans also have an unamortized acquisition date fair value adjustment equal to $9,354 as of December 31, 2015.      

 

The specific loan loss allowance (impaired loans) is the aggregate of the results of individual analyses prepared for each one of the impaired loans, excluding PCI loans.  Total impaired loans at December 31, 2015 are equal to $23,175.  Approximately $13,718 of the Company’s impaired loans (59%) are accruing performing loans.  This group of impaired loans is not included in the Company’s non-performing loans or non-performing assets categories.  

 

7

 


 

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

 

Management believes the Company’s allowance for loan losses is adequate at December 31, 2015.  However, management recognizes that many factors can adversely impact various segments of the Company’s market and customers, and therefore there is no assurance as to the amount of losses or probable losses which may develop in the future.  The table below summarizes the changes in allowance for loan losses during the previous five quarters.

 

 

 

Allowance for loan losses (unaudited)

 

 

 

 

 

as of or for the quarter ending

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Loans, excluding PCI loans

 

 

 

 

Allowance at beginning of period

$ 22,586

$ 22,818

$ 20,842

$ 19,384

$ 19,035

Charge-offs

(1,266)

(893)

(783)

(949)

(506)

Recoveries

339

657

429

466

645

Net (charge-offs) recoveries

(927)

(236)

(354)

(483)

139

Provision for loan losses

484

4

2,330

1,941

210

Allowance at end of period for loans  

 

 

 

 

 

     other than PCI loans

$ 22,143

$ 22,586

$ 22,818

$ 20,842

$ 19,384

 

 

 

 

 

 

PCI loans

 

 

 

 

Allowance at beginning of period

$ 62

$ 116

$ 138

$ 514

$ 807

Charge-offs

---

(50)

---

(77)

(101)

Recoveries

---

---

---

---

---

Net charge-offs

---

(50)

---

(77)

(101)

Provision (recovery) for loan losses

59

(4)

(22)

(299)

(192)

Allowance at end of period for  

 

 

 

 

 

     PCI loans

$   121

$   62

$   116

$    138

$    514

Total allowance at end of period

$ 22,264

$ 22,648

$ 22,934

$ 20,980

$ 19,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 


 

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:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Troubled debt restructure (“TDRs”) (note 1)

$  15,127

$  15,204

$  15,659

$  14,666

$  15,066

Impaired loans that were not TDRs

8,048

6,654

7,187

7,516

10,184

Total impaired loans

  23,175

  21,858

  22,846

  22,182

  25,250

Originated non-impaired loans    

1,770,747

1,694,866

1,615,315

1,488,536

1,407,781

Acquired non-impaired loans

589,326

615,129

645,466

690,677

719,728

Total Non-PCI loans

2,383,248

2,331,853

2,283,627

2,201,395

2,152,759

Total PCI loans

210,528

231,778

247,529

263,268

276,766

Total loans

$2,593,776

$2,563,631

$2,531,156

$2,464,663

$2,429,525

ALLL for Non-PCI loans

 

 

 

General loan loss allowance- originated loans

$ 18,351

$ 17,979

$ 17,392

$ 16,745

$ 16,587

Specific loan loss allowance- impaired loans

1,080

1,212

1,836

1,101

1,115

General loan loss allowance- acquired loans

2,712

3,395

3,590

2,996

1,682

Total allowance for loan losses (note 2)

$ 22,143

$ 22,586

$ 22,818

$ 20,842

$ 19,384

ALLL as a percentage of period end loans:

 

 

 

 

 

Originated non-impaired loans

1.04%

1.06%

1.08%

1.12%

1.18%

Impaired loans

4.66%

5.54%

8.04%

4.96%

4.42%

subtotal

1.08%

1.12%

1.17%

1.18%

1.24%

 

 

 

 

 

 

Acquired non-impaired loans

0.46%

0.55%

0.56%

0.43%

0.23%

     Total loans (note 2)

0.93%

0.97%

1.00%

0.95%

0.90%

 

note 1:  The Company has approximately $15,127 of TDRs.  Of this amount $10,254 are performing pursuant to their modified terms, and $4,873 are not performing and have been placed on non-accrual status and included in non performing loans (“NPLs”).  Current accounting standards require TDRs to be included in our impaired loans, whether they are performing or not performing.  Only non performing TDRs are included in NPLs.

 

note 2:  Excludes PCI loans.

 

The Company defines non-performing loans (“NPLs”) as non-accrual loans plus loans past due 90 days or more and still accruing interest.  NPLs do not include PCI loans.  PCI loans are accounted for pursuant to ASC Topic 310-30.  NPLs as a percentage of total Non-PCI loans were 0.87% at December 31, 2015 compared to 0.96% at September 30, 2015.    

 

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), excluding OREO covered by FDIC loss share agreement; and (b) other repossessed assets that are not real estate, and are not covered by FDIC loss share agreement) were $22,545 at December 31, 2015, compared to $25,549 at September 30, 2015.  NPAs as a percentage of total assets was 0.56% at December 31, 2015 compared to 0.65% at September 30, 2015.  NPAs as a percentage of loans plus OREO and other repossessed assets, excluding PCI loans and OREO covered by FDIC loss share agreements, was 0.95% at December 31, 2015 compared to 1.09% at September 30, 2015.  

 

 

 

9

 


 

The table below summarizes selected credit quality data for the periods indicated.  

 

Selected credit quality ratios (unaudited)

 

 

 

 

As of or for the quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Non-accrual loans (note 1)

$20,833

$22,450

$25,028

$26,857

$25,595

Past due loans 90 days or more

 

 

 

 

 

     and still accruing interest (note 1)

---

---

---

---

---

Total non-performing loans (“NPLs”) (note 1)

20,833

22,450

25,028

26,857

25,595

Other real estate owned (“OREO”) (note 2)

1,567

2,993

4,691

7,586

8,896

Repossessed assets other than real estate (note 1)

145

106

172

139

87

Total non-performing assets (“NPAs”) (note 2)

$22,545

$25,549

$29,891

$34,582

$34,578

OREO covered by FDIC loss share agreements:

 

 

 

 

 

     80% covered

4,828

3,661

6,531

4,716

7,264

     75% covered

---

---

---

---

606

     70% covered

---

297

249

249

1,755

     30% covered

4,742

3,729

5,224

8,563

9,779

       0% covered

59

---

---

---

---

Total non-performing assets including

 

 

 

 

 

     FDIC covered OREO

$32,174

$33,236

$41,895

$48,110

$53,982

Non-performing loans as percentage of total

 

 

 

 

 

    loans excluding PCI loans

0.87%

0.96%

1.10%

1.22%

1.19%

Non-performing assets as percentage of total assets

 

 

 

 

 

     Excluding FDIC covered OREO

0.56%

0.65%

0.77%

0.89%

0.92%

     Including FDIC covered OREO

0.80%

0.85%

1.08%

1.24%

1.43%

Non-performing assets as percentage of loans and

 

 

 

 

 

   OREO plus other repossessed assets (note 1)

 

 

 

 

 

     Excluding FDIC covered OREO

0.95%

1.09%

1.31%

1.57%

1.60%

     Including FDIC covered OREO

1.34%

1.42%

1.82%

2.16%

2.47%

Loans past due 30 thru 89 days and accruing interest

 

 

 

 

 

    as a percentage of total loans (note 1)

0.62%

0.67%

0.51%

0.61%

0.61%

Net charge-offs (recovery) (note 1)

$927

$236

$354

$483

$(139)

Net charge-offs (recovery) as a percentage

 

 

 

 

 

    of average loans for the period (note 1)

0.04%

0.01%

0.02%

0.02%

(0.01%)

Net charge-offs (recovery) as a percentage of average

 

 

 

 

 

    loans for the period on an annualized basis (note 1)

0.16%

0.04%

0.06%

0.09%

(0.03%)

Allowance for loan losses as percentage of NPLs  (note 1)

106%

101%

91%

78%

76%

 

note 1:  Excludes PCI loans.

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

 

 

NET INTEREST MARGIN (“NIM”)

 

The Company’s NIM decreased from 4.44% in 3Q15 to 4.37% in 4Q15.  The primary reason for this decrease was due to the mix of interest earning assets between the two quarters.  Higher average balances in lower yielding assets, such as taxable securities and federal funds sold, and lower average balance in higher yielding assets, such as PCI loans, in the current quarter compared to the prior quarter.  

 

The average yield on loans, excluding PCI loans, increased from 4.38% in 3Q15 to 4.42% in 4Q15.  During 4Q15 there were certain payoffs of acquired purchased loans that were not PCI loans, and the resulting remaining unamortized fair value mark was recognized as interest income in 4Q15.  If this had not occurred, the yield in 4Q15 would have been approximately 4.30%, which was 8 bps lower than the yield in the prior quarter, primarily due to the average interest rates on new loan production, which

10

 


 

has been averaging over the past several quarters in the 3.75% range.  The Company expects the yield on loans, excluding PCI loans, to continue trending lower until the average portfolio yields approach the average yields of new loan production.  

 

If these certain loan payoffs, described above, had not occurred, the NIM for the current quarter would have approximated 4.29% (versus the 4.37% actual).    

 

The average yield on PCI loans during the current quarter was 16.78% compared to 16.27% during 3Q15.  The PCI loans historically have performed better than previously expected.  Initial loss expectations have been adjusted downward during subsequent quarterly estimates of future cash flows.  The results have been higher yields over the remaining life of the related loan pools.  

 

If the PCI loans were producing a yield similar to the Company’s non-PCI loans, the NIM during the current quarter and previous quarter would have been approximately 3.61%.  However, total PCI loans have a legal balance outstanding equal to $273,423 and a book balance equal to $210,528 resulting in a difference, or discount, of approximately $62,895, or 23%.  The estimated remaining life of the expected cash flows is approximately 3.8 years at December 31, 2015.  As such, management expects several years of favorable yield, albeit balances will be decreasing over time.      

 

  

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)    

 

 

4Q15

 

 

 

3Q15

 

 

 

4Q14

 

 

average

interest

avg

 

average

interest

avg

 

average

interest

avg

 

balance

inc/exp

rate

 

balance

inc/exp

rate

 

balance

inc/exp

rate

Loans (TEY)*

$2,363,060

$26,337

4.42%

 

$2,306,751

$25,465

4.38%

 

$ 2,139,263

$25,055

4.65%

PCI loans

222,685

9,420

16.78%

 

241,393

9,898

16.27%

 

291,862

8,607

11.70%

Taxable securities

737,057

4,480

2.41%

 

676,892

3,895

2.28%

 

569,045

3,623

2.53%

Tax -exempt securities (TEY)

85,329

1,076

5.00%

 

90,376

1,107

4.86%

 

54,636

656

4.76%

Fed funds sold and other

211,112

403

0.76%

 

165,927

355

0.85%

 

177,391

459

1.03%

Tot. interest earning assets(TEY)

$3,619,243

$41,716

4.57%

 

$3,481,339

$40,720

4.64%

 

$3,232,197

$38,400

4.71%

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits

$2,072,838

$1,351

0.26%

 

$2,033,045

$1,339

0.26%

 

$2,033,431

$1,523

0.30%

Fed funds purchased

203,413

186

0.36%

 

173,575

150

0.34%

 

71,545

34

0.19%

Other borrowings

27,061

36

0.53%

 

31,356

51

0.65%

 

27,849

50

0.71%

Corporate debentures

24,070

246

4.05%

 

24,026

244

4.03%

 

23,891

241

4.00%

Total interest bearing liabilities

$2,327,382

$1,819

0.31%

 

$2,262,002

$1,784

0.31%

 

$2,156,716

$1,848

0.34%

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Spread (TEY)

 

 

4.26%

 

 

 

4.33%

 

 

 

4.37%

Net Interest Margin (TEY)

 

 

4.37%

 

 

 

4.44%

 

 

 

4.49%

*TEY = tax equivalent yield

 

 

 

 

 

 

 

11

 


 

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

 

Five quarter trend of yields and costs (unaudited)

 

 

 

 

For the quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Yield on loans (TEY)*

4.42%

4.38%

4.59%

4.57%

4.65%

Yield on PCI loans

16.78%

16.27%

17.75%

14.85%

11.70%

Yield on securities (TEY)

2.68%

2.59%

2.53%

2.75%

2.72%

Yield on fed funds sold and other

0.76%

0.85%

0.87%

0.76%

1.03%

Yield on total interest earning assets

4.51%

4.57%

4.87%

4.70%

4.67%

Yield on total interest earning assets (TEY)

4.57%

4.64%

4.93%

4.75%

4.71%

Cost of interest bearing deposits

0.26%

0.26%

0.27%

0.29%

0.30%

Cost of fed funds purchased

0.36%

0.34%

0.33%

0.30%

0.19%

Cost of other borrowings

0.53%

0.65%

0.62%

0.65%

0.71%

Cost of corporate debentures

4.05%

4.03%

4.03%

4.02%

4.00%

Cost of interest bearing liabilities

0.31%

0.31%

0.32%

0.33%

0.34%

Net interest margin (TEY)

4.37%

4.44%

4.72%

4.53%

4.49%

Cost of total deposits

0.16%

0.17%

0.17%

0.19%

0.19%

 

*TEY = tax equivalent yield

 

 

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

 

Selected financial ratios (unaudited)

 

 

 

 

 

As of or for the quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Return on average assets (annualized)

1.02%

1.01%

1.02%

0.96%

0.78%

Net operating income return on  

 

 

 

 

 

     average assets (annualized)

1.06%

1.02%

1.02%

0.97%

0.81%

Return on average equity (annualized)

8.52%

8.28%

8.49%

8.10%

6.46%

Return on average tangible equity (annualized)

10.47%

10.23%

10.42%

10.00%

8.15%

Loan / deposit ratio

80.7%

80.5%

80.7%

78.3%

78.6%

Stockholders’ equity (to total assets)

12.2%

12.2%

12.1%

11.9%

12.0%

Common tangible equity (to total tangible assets)

10.2%

10.1%

10.0%

9.8%

9.8%

Tier 1 capital (to average assets)

10.5%

10.6%

10.4%

10.0%

10.1%

Efficiency ratio, including correspondent banking (note 1)

60.6%

63.1%

60.9%

65.5%

70.5%

Efficiency ratio, excluding correspondent banking (note 2)

59.2 %

61.0 %

60.1 %

64.0 %

69.4 %

Common equity per common share

$10.79

$10.55

$10.31

$10.20

$9.98

Common tangible equity per common share

$8.82

$8.57

$8.31

$8.18

$7.95

 

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

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

 

 

 

 

 

 

12

 


 

DEPOSIT ACTIVITY

 

During the quarter, the Company’s total deposits increased by $29,989.  Time deposits decreased by $12,058 and non-time deposits increased by $42,047.    

 

The cost of interest bearing deposits in the current quarter was 0.26%, the same as in the prior quarter.  The overall cost of total deposits (i.e. includes non-interest bearing checking accounts) during the current quarter was 0.16% compared to 0.17% in the prior quarter.  The table below summarizes the Company’s deposit mix over the periods indicated.    

 

     Deposit mix (unaudited)    

For the quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Checking accounts

 

 

 

 

 

     Non-interest bearing

$1,133,138

$1,145,474

$1,127,591

$1,112,282

$1,048,874

     Interest bearing

679,714

621,582

621,473

623,370

607,359

Savings deposits

241,605

249,292

240,528

242,782

231,039

Money market accounts

738,301

734,363

706,647

711,903

716,956

Time deposits

422,420

434,478

440,276

459,035

487,812

Total deposits

$3,215,178

$3,185,189

$3,136,515

$3,149,372

$3,092,040

 

 

 

 

 

 

Non time deposits as percentage of total deposits

87%

86%

86%

85%

84%

Time deposits as percentage of total deposits

13%

14%

14%

15%

16%

Total deposits excluding held for sale

100%

100%

100%

100%

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 


 

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

 

Condensed Consolidated Balance Sheets (unaudited)

 

 

 

For the quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Cash and due from banks

$      50,902

$      42,624

$      50,317

$      59,295

$      52,067

Fed funds sold and Fed Res Bank deposits

101,580

185,807

104,805

197,046

106,346

Trading securities

2,107

1,266

1,508

1,017

3,420

Investment securities, available for sale

604,739

490,458

532,440

520,247

517,457

Investment securities, held to maturity

272,840

248,310

250,482

228,870

237,362

Loans held for sale

1,529

806

1,656

522

1,251

PCI loans

210,528

231,778

247,529

263,268

276,766

Loans

2,383,248

2,331,853

2,283,627

2,201,395

2,152,759

Allowance for loan losses

(22,264)

(22,648)

(22,934)

(20,980)

(19,898)

FDIC indemnification assets

25,795

28,596

36,157

41,594

49,054

Premises and equipment, net

101,821

102,675

101,079

100,526

98,848

Goodwill

76,739

76,739

76,739

76,739

76,739

Core deposit intangible

12,164

12,744

13,186

13,789

14,417

Bank owned life insurance

85,890

85,316

84,736

84,137

83,544

OREO covered by FDIC loss share agreements

9,629

7,687

12,004

13,528

19,404

OREO not covered by FDIC loss share agreements

1,567

2,993

4,691

7,586

8,896

Deferred income tax asset, net

46,220

47,516

49,704

48,502

49,587

Other assets

57,683

58,552

45,483

51,491

48,850

TOTAL ASSETS

$    4,022,717

$    3,933,072

$    3,873,209

$    3,888,572

$    3,776,869

 

 

 

 

 

 

Deposits

$    3,215,178

$    3,185,189

$    3,136,515

$    3,149,372

$    3,092,040

Federal funds purchased

200,250

161,303

171,219

187,443

151,992

Other borrowings

76,565

52,561

64,203

55,032

50,939

Other liabilities

40,210

54,207

32,836

33,660

29,421

Common stockholders’ equity

490,514

479,812

468,436

463,065

452,477

TOTAL LIABILITIES AND

 

 

 

 

 

     STOCKHOLDERS’ EQUITY

$    4,022,717

$    3,933,072

$    3,873,209

$    3,888,572

$    3,776,869

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Average Balance Sheets (unaudited)

 

 

 

For quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Federal funds sold and other

$      211,112

$      165,927

$      170,139

$      211,247

$      177,391

Security investments

822,386

767,268

764,359

751,819

623,681

PCI loans

222,685

241,393

257,581

271,135

291,862

Loans

2,363,060

2,306,751

2,237,178

2,172,621

2,139,263

Allowance for loan losses

(22,078)

(22,890)

(20,107)

(20,980)

(20,406)

All other assets

458,087

455,067

479,645

468,645

501,143

TOTAL ASSETS

$    4,055,252

$    3,913,516

$    3,888,795

$    3,854,487

$    3,712,934

 

 

 

 

 

 

Deposits- interest bearing

$    2,072,838

$    2,033,045

$    2,014,726

$    2,034,864

$    2,033,431

Deposits- non interest bearing

1,194,763

1,136,788

1,127,639

1,098,236

1,074,288

Federal funds purchased

203,413

173,575

184,525

176,109

71,545

Other borrowings

51,131

55,382

58,920

54,683

51,740

Other liabilities

48,969

39,740

36,138

32,373

35,024

Stockholders’ equity

484,138

474,986

466,847

458,222

446,906

TOTAL LIABILITIES AND

 

 

 

 

 

     STOCKHOLDERS’ EQUITY

$    4,055,252

$    3,913,516

$    3,888,795

$    3,854,487

$    3,712,934

 

14

 


 

Condensed Consolidated Earnings Statement (unaudited)

For quarter ended:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

 

 

 

 

 

 

Interest income:

 

 

 

 

 

Loans

$35,508

$35,134

$36,786

$34,268

$33,505

Investments

5,187

4,623

4,470

4,821

4,055

Federal funds sold and other

403

355

369

396

459

Total interest income

41,098

40,112

41,625

39,485

38,019

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Deposits

1,351

1,339

1,369

1,447

1,523

Securities sold under agreement to repurchase

32

51

54

49

50

Federal funds purchased

190

150

154

132

34

Corporate debentures

246

244

241

237

241

Total interest expense

1,819

1,784

1,818

1,865

1,848

 

 

 

 

 

 

Net interest income

39,279

38,328

39,807

37,620

36,171

Provision for loan losses

543

---

2,308

1,642

18

Net interest income after loan loss provision

38,736

38,328

37,499

35,978

36,153

 

 

 

 

 

 

Non interest income (see page 16)

9,666

8,130

10,573

9,081

7,535

 

 

 

 

 

 

Non interest expense:

 

 

 

 

 

Salaries, wages and employee benefits

18,977

18,916

19,925

19,580

18,710

Occupancy expense

2,360

2,586

2,566

2,445

2,686

Depreciation of premises and equipment

1,442

1,438

1,403

1,433

1,483

Data processing expense

1,069

1,153

1,127

1,330

1,466

Legal, audit and other professional fees

750

779

690

735

816

Amortization of intangibles

616

615

640

666

694

Credit related expense (see page 17)

309

439

522

50

299

FDIC credit related expenses (see page 17)

997

(46)

625

(567)

369

Merger and acquisition related expenses

524

169

---

---

848

Branch closure and efficiency initiatives

---

---

---

---

(417)

Impairment/sales bank property held for sale, net

94

12

(16)

641

---

Lease termination recovery

---

---

---

(597)

---

All other expenses

4,948

4,794

5,056

4,887

5,137

Total non interest expenses

32,086

30,855

32,538

30,603

32,091

 

 

 

 

 

 

Income before provision for income taxes

16,316

15,603

15,534

14,456

11,597

Provision for income taxes

5,920

5,687

5,656

5,308

4,316

Net income

$10,396

$9,916

$9,878

$9,148

$7,281

 

 

 

 

 

 

Earnings per share (diluted)

$0.23

$0.22

$0.21

$0.20

$0.16

 

 

 

 

 

 

 

 

 

15

 


 

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:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Correspondent banking and capital markets division (1)

$ 5,254

$ 4,943

$ 7,334

$ 5,694

$ 4,876

Other correspondent banking related revenue (2)

987

992

1,253

1,106

919

Wealth management related revenue

913

940

990

970

925

Service charges on deposit accounts

2,576

2,488

2,420

2,261

2,451

Debit, prepaid, ATM and merchant card related fees

1,730

1,659

1,823

1,701

1,637

BOLI income

574

580

599

593

608

Other service charges and fees

419

641

444

439

638

Gain on sale of securities available for sale

---

4

---

---

---

Subtotal

$12,453

$12,247

$14,863

$12,764

$12,054

FDIC indemnification asset – amortization (see explanation below)

(3,420)

(4,144)

(4,649)

(4,350)

(5,599)

FDIC indemnification income

633

27

359

667

1,080

Total non-interest income

$9,666

$8,130

$10,573

$9,081

$7,535

 

note 1:

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

note 2:

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

 

 

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

 

When a FDIC covered OREO property is sold at a loss, the loss is included in non-interest expense as loss on sale of OREO, and the reimbursement for the respective loss share percentage is recorded as FDIC indemnification income and included in non-interest income.  In addition, the FDIC loss share reimbursement percentage of any related loan pool impairments also are reflected in this non-interest income account.  

 

 

 

 

 

 

 

 

16

 


 

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:

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Employee salaries and wages

$14,344

$14,200

$15,130

$14,535

$13,866

Employee incentive/bonus compensation accrued

1,854

1,719

1,749

1,200

1,578

Employee equity based compensation expense

866

775

812

830

542

Deferred compensation expense

148

157

153

161

157

Health insurance and other employee benefits

983

1,240

1,312

1,330

1,556

Payroll taxes

734

825

893

1,403

785

401K employer contributions

358

416

408

435

319

Other employee related expenses

314

328

237

238

438

Incremental direct cost of loan origination

(624)

(744)

(769)

(552)

(531)

Total salaries, wages and employee benefits

18,977

18,916

19,925

19,580

18,710

 

 

 

 

 

 

Loss (gain) on sale of OREO

39

31

74

(547)

(126)

Loss (gain) on sale of FDIC covered OREO

491

(313)

(47)

(981)

(541)

Valuation write down of OREO

22

65

109

61

313

Valuation write down of FDIC covered OREO

169

172

281

328

703

(Gain) loss on repossessed assets other than real estate

(7)

15

---

(1)

11

Foreclosure and repossession related expenses

255

328

339

503

101

Foreclosure and repo expense, FDIC (note 1)

337

95

391

86

207

Total credit related expenses

1,306

393

1,147

(551)

668

 

 

 

 

 

 

Occupancy expense

2,360

2,586

2,566

2,445

2,686

Depreciation of premises and equipment

1,442

1,438

1,403

1,433

1,483

Supplies, stationary and printing

338

382

351

365

383

Marketing expenses

668

630

481

538

746

Data processing expenses

1,069

1,153

1,127

1,330

1,466

Legal, auditing and other professional fees

750

779

690

735

816

Bank regulatory related expenses

606

774

883

910

909

Postage and delivery

337

348

336

368

394

ATM and debit card related expenses

495

515

450

433

510

Amortization of intangibles

616

615

640

666

694

Internet and telephone banking

538

545

550

534

493

Correspondent account and Federal Reserve charges

155

163

169

168

163

Conferences, seminars, education and training

142

110

151

117

132

Director fees

176

164

173

179

244

Travel expenses

117

148

97

84

99

Other expenses

1,376

1,015

1,415

1,225

1,064

Subtotal                    

31,468

30,674

32,554

30,559

31,660

Impairment/sales bank property held for sale

94

12

(16)

641

---

Lease termination recovery

---

---

---

(597)

---

Merger and acquisition related expenses

524

169

---

---

848

Branch closure and efficiency initiatives

---

---

---

---

(417)

Total non- interest expense

$32,086

$30,855

$32,538

$30,603

$32,091

 

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

 

 

 

17

 


 

Explanation of Certain Unaudited Non-GAAP Financial Measures

 

This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The financial highlights provide reconciliations between GAAP interest income, net interest income and tax equivalent basis interest income and net interest income, as well as total stockholders’ equity and tangible common equity. It also reconciles net income and net operating income.  Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance.  The Company believes the non-GAAP measures enhance investors’ understanding of the Company’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.
 
Reconciliation of GAAP to non-GAAP Measures.  All amounts are in thousands except per share data (unaudited):

 

4Q15

3Q15

4Q14

 

 

 

 

 

 

 

 

Interest income, as reported (GAAP)

$41,098

$40,112

$38,019

 

 

tax equivalent adjustments

618

608

381

 

 

Interest income (tax equivalent)

$41,716

$40,720

$38,400

 

 

 

 

 

 

 

 

Net interest income, as reported (GAAP)

$39,279

$38,328

$36,171

 

 

tax equivalent adjustments

618

608

381

 

 

Net interest income (tax equivalent)

$39,897

$38,936

$36,552

 

 

 

 

 

 

 

 

 

12/31/15

9/30/15

6/30/15

3/31/15

12/31/14

Total stockholders' equity (GAAP)

$490,514

$479,812

$468,436

$463,065

$452,477

Goodwill

(76,739)

(76,739)

(76,739)

(76,739)

(76,739)

Core deposit intangible

(12,164)

(12,744)

(13,186)

(13,789)

(14,417)

Trust intangible

(837)

(873)

(909)

(946)

(984)

Tangible common equity

$400,774

$389,456

$377,602

$371,591

$360,337

 

 

4Q15

3Q15

2Q15

1Q15

4Q14

Net income (GAAP)

$10,396

$9,916

$9,878

$9,148

$7,281

Exclude gain on sale of AFS securities

---

(4)

---

---

---

Add back merger and acquisition

 

 

 

 

 

     related expenses

524

169

---

---

848

Add back branch closure and

 

 

 

 

 

     efficiency initiatives

---

---

---

---

(417)

Add back impairment/sales relating to

 

 

 

 

 

     bank property held for sale, net

94

12

(16)

641

---

Subtract lease termination recovery

---

---

---

(597)

---

Tax effected using the effective tax

 

 

 

 

 

     rate for the period presented

(224)

(65)

6

(16)

(161)

Net operating income

$10,790

$10,028

$9,868

$9,176

$7,551

Average diluted shares outstanding

 

 

 

 

 

     during the period presented

45,935

45,826

45,737

45,658

45,506

Net operating income per share

$0.23

$0.22

$0.22

$0.20

$0.17

18

 


 

 

About CenterState Banks, Inc.

 

The Company, headquartered in Davenport, 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 57 branch banking offices located in 20 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 Ernest S. Pinner (Chairman), John C. Corbett (CEO), James J. Antal (CFO) or Stephen D. Young (Treasurer) at 863-419-7750.

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

 

Some of the statements in this report constitute forward-looking statements, within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements related to future events, other future financial and operating performance, costs, revenues, economic conditions in our markets, loan performance, credit risks, collateral values and credit conditions, or business strategies, including expansion and acquisition activities and may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. We cannot assure you that future results, levels of activity, performance or goals will be achieved, and actual results may differ from those set forth in the forward looking statements.

 

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, 2014, and otherwise in our SEC reports and filings.

 

19