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EX-99.2 - FEDERAL TRUST CORPORATION CONSOLIDATED FINANCIAL STATEMENTS - CenterState Bank Corp | d282806dex992.htm |
EX-99.1 - FEDERAL TRUST CORPORATION CONSOLIDATED FINANCIAL STATEMENTS - CenterState Bank Corp | d282806dex991.htm |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 1, 2011
CENTERSTATE BANKS, INC.
(Exact name of registrant as specified in its charter)
Florida | 000-32017 | 59-3606741 | ||
(State or other jurisdiction of incorporation) |
(Commission file number) |
(IRS employer identification no.) | ||
42745 U.S. Highway 27, Davenport, FL | 33837 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrants telephone number, including area code: (863) 419-7750
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Explanatory Note
On November 2, 2011, CenterState Banks, Inc. (the Company or CSFL) furnished a Current Report on Form 8-K to report the November 1, 2011 completion of the its previously announced transaction as described in the Agreement and Plan of Merger (the Agreement) with The Hartford Financial Services Group, Inc. (Hartford), and Federal Trust Corporation (FTC), a wholly owned subsidiary of Hartford, whereby FTC merged with and into the Company. Pursuant to and simultaneously with the merger of FTC with and into the Company, FTCs wholly owned subsidiary bank, Federal Trust Bank (FTB), merged with and into the Companys wholly owned subsidiary bank, CenterState Bank of Florida, N.A. (the Bank).
This Current Report on Form 8-K/A amends and supplements the disclosures provided in Item 2.01 and 9.01 of the Current Report on Form 8-K furnished on November 2, 2011. Except as otherwise provided herein, the other disclosures made in the Current Report furnished on November 2, 2011 remain unchanged. The Company does not anticipate that it will further amend this Current Report.
Statements made in this amendment, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements regarding the Companys expectations concerning its financial condition, operating results, cash flows, liquidity and capital resources, including the effects of the FTC and FTB acquisitions and the final determination of the assets and liabilities acquired and their respective valuations. A discussion of risks, uncertainties and other factors that could cause actual results to differ materially from managements expectations is set forth under the captions BusinessNote about Forward-Looking Statements, Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in the Companys Annual Report on Form 10-K for the year ended December 31, 2010.
Item 2.01. | Completion of Acquisition of Assets |
On November 1, 2011 the Company completed its previously announced transaction as set forth in the Agreement with Hartford, and FTC, whereby FTC merged with and into the Company. Pursuant to and simultaneously with the merger of FTC with and into the Company, FTCs wholly owned subsidiary bank, FTB merged with and into the Bank.
Pursuant to the terms of the Agreement, the Company purchased approximately $161.4 million of selected performing loans. The purchase price of the loans was approximately $118.0 million or 73% of their outstanding unpaid principal balance (UPB). The estimated fair market value of the purchased loans, as of the purchase date was approximately $156.8 million. The Company has the option, for a period of one year beginning November 1, 2011, to put back to Hartford any loan that is 30 days past due or is adversely classified pursuant to bank regulatory guidelines.
The Company acquired five of FTBs 11 banking offices. Four were purchased at market value based on current appraisals, approximately $3.9 million, and the Company assumed the existing lease on the fifth location. The other six offices were closed by FTB immediately prior to the acquisition date.
All of the deposits, approximately $197.2 million, were assumed by the Bank. The majority of the deposits were from the five branches acquired. The Company did not pay a premium for the deposits assumed.
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The Company also assumed a $5 million Trust Preferred Security issued by FTC which qualifies for Tier 1 capital. Interest payments are due quarterly at a rate of LIBOR plus 2.95%. The instrument matures in 2033.
Approximately 40 days subsequent to the acquisition date (December 9, 2011), the five purchased FTB branches were converted to the Companys core processing system and general ledger. Approximately 30 former FTB employees, about 30% of FTBs former work force, were hired by the Bank, primarily to operate the five acquired FTB branches.
During the fourth quarter of 2011, the Company expects to recognize a gain on this acquisition, after merger related expenses, of approximately $40.6 million pre-tax and about $25.3 million after tax. In a large part, this gain is calculated based on the fair values of the assets acquired and liabilities assumed as of the acquisition date. These fair value estimates are based on the information available, and are subject to change for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.
The foregoing summary is not complete and is qualified in its entirety by reference to the full text of the form of the Agreement, incorporated by reference to Exhibit 2.1 to the Companys Form 8-K dated May 22, 2010.
Item 9.01 | Financial Statements and Exhibits |
(a) Financial Statements of Business Acquired
Discussion
As set forth in Item 2.01 above, on November 1, 2011, the Company acquired certain assets and assumed all of the deposits and certain other liabilities of FTC and FTB pursuant to the Agreement. A narrative description of the anticipated effects of the FTC acquisition (the Acquisition) on the Companys financial condition, liquidity, capital resources and operating results is presented below. This discussion should be read in conjunction with the historical financial statements and the related notes of the Company, which have been filed with the Securities and Exchange Commission (the Commission) and the Audited Statements, which are attached hereto as Exhibits 99.1 and 99.2.
The Acquisition increased the Companys total assets and total deposits by approximately 11.0% and 11.0%, respectively, as compared with the balances at September 30, 2011, and is expected to positively affect the Companys operating results, to the extent the Company earns more from interest earning assets than it pays in interest on its interest bearing liabilities. The ability of the Company to successfully collect interest and principal on loans acquired and collect reimbursement from Hartford on potential put backs of loans during the first year will also impact cash flows and operating results.
The Company estimated the acquisition date fair value of the acquired assets and assumed liabilities in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations (ASC Topic 805) and ASC Topic 820, Fair Value Measurements. However, the amount that the Company realizes on these assets may differ materially from these carrying values primarily as a result of changes in the timing and amount of collections on the acquired loans in future periods.
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Financial Condition
In the Acquisition, the Company purchased $156.8 million of loans at fair value, net of $4.6 million, or 2.9%, estimated discount to the outstanding principal balance, representing 13.5% of the Companys total loans at September 30, 2011. The loans were purchased for approximately 73% of the aggregate outstanding principal balance, which was the primary reason for the gain on purchase. The list below summarizes the preliminary estimates of the fair value of the assets purchased and liabilities assumed as of the November 1, 2011 purchase date. Amounts are in thousands of dollars.
Fair Value at Nov 1, 2011 |
||||
Cash and cash items |
$73,228 | |||
Loans |
156,803 | |||
Interest receivable |
647 | |||
Branch real estate |
3,860 | |||
Furniture and fixtures |
140 | |||
FHLB stock |
4,243 | |||
Bank owned life insurance |
8,113 | |||
Prepaid FDIC insurance |
2,287 | |||
Core deposit intangible |
1,235 | |||
Receivable from Hartford |
404 | |||
Other assets |
472 | |||
|
|
|||
Total assets acquired |
$251,432 | |||
|
|
|||
Deposits |
$197,841 | |||
Interest payable |
80 | |||
Official checks outstanding |
1,564 | |||
Escrow deposits |
1,341 | |||
Trust Preferred Security |
4,440 | |||
Other liabilities |
275 | |||
|
|
|||
Total liabilities assumed |
$205,541 | |||
|
|
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Net assets acquired |
$45,891 | |||
|
|
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Deferred tax impact |
$17,269 | |||
|
|
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Net assets acquired, including deferred tax impact |
$28,622 | |||
|
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The following table reconciles the bargain purchase gain (net assets acquired) net of certain merger related expenses. Amounts are in thousands of dollars.
Bargain purchase gain |
$45,891 | |||
Data processing deconversion expense |
(2,909) | |||
Severance payments expense |
(2,052) | |||
Other merger related expenses |
(630) | |||
|
|
|||
Bargain purchase gain, net of merger related expenses |
$40,300 | |||
Deferred tax impact |
15,165 | |||
|
|
|||
Bargain purchase gain, after merger expense, net of tax |
$25,135 |
In terms of a purchase price calculation table, the Company purchased selected performing loans for 73% of the unpaid principal balance outstanding as of the acquisition date. This is the primary factor creating the bargain purchase gain. In addition to the discount, the Company has an option to put back to Hartford any loan that becomes 30 days past due or adversely classified during a one year period beginning with
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the November 1, 2011 acquisition date. The Company purchased four FTB branches at fair value based on current appraisals, and assumed the lease on a fifth FTB branch. FTC closed the remaining six branches not acquired by the Company immediately prior to the close of the transaction and transferred all the deposits from those six branches to the five branches acquired by the Company. The Company did not acquire any investment securities, non-performing assets, OREO or other repossessed assets. The Company assumed all the deposits and did not pay a premium on any of the deposits assumed. The Company did not assume any debt other than a $5 million trust preferred security issued by FTC. The table below summarizes the purchase price calculation. Amounts are in thousands of dollars.
Assets purchased: |
||||
Cash acquired |
$ | 73,228 | ||
Loans acquired |
117,993 | |||
Banking office real estate purchased |
3,860 | |||
FHLB stock purchased |
4,178 | |||
Prepaid FDIC insurance purchased |
2,287 | |||
Bank owned life insurance policies purchased |
8,113 | |||
All other assets purchased |
1,373 | |||
|
|
|||
Total assets acquired |
$ | 211,032 | ||
|
|
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Liabilities assumed: |
||||
Deposits |
$ | 197,221 | ||
Official checks outstanding |
1,564 | |||
Escrow deposits payable |
1,341 | |||
Trust preferred security |
5,000 | |||
All other liabilities assumed |
5,906 | |||
|
|
|||
Total liabilities assumed |
$ | 211,032 | ||
|
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The table below presents information with respect to the fair value of acquired loans and other interest earning assets, as well as their unpaid principal balance (Book Balance) at acquisition date, contractual term and average contractual yield as of the November 1, 2011 acquisition date. Amounts are in thousands of dollars.
book balance | fair value | weighted average months to maturity |
average contractual interest rate |
effective interest rate | ||||||||||
|
| |||||||||||||
Interest bearing deposits at Federal Home Loan Bank |
$ | 1,487 | $ | 1,487 | | 0.02% | 0.02% | |||||||
Interest bearing deposits at Federal Reserve Bank |
62,976 | 62,976 | | 0.25% | 0.25% | |||||||||
Loans: |
||||||||||||||
Single family residential real estate |
153,043 | 148,482 | 270 | 3.56% | 4.26% | |||||||||
Commercial real estate |
7,279 | 7,264 | 56 | 6.90% | 6.94% | |||||||||
Commercial loans |
624 | 569 | 12 | 4.52% | 17.26% | |||||||||
Consumer and other loans |
504 | 488 | 10 | 3.32% | 7.26% | |||||||||
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| |||||||||||||
Total loans |
$ | 161,450 | $ | 156,803 | 259 | 3.72% | 4.44% | |||||||
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| |||||||||||||
Total earning assets |
$ | 225,913 | $ | 221,266 | ||||||||||
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The difference between the fair value of the loans acquired and their related book balance will be accreted into interest income over the life of the related loan. The following table reflects the scheduled maturities of the acquired loans at November 1, 2011. Amounts are in thousands of dollars.
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single family residential real estate |
commercial real estate |
commercial | consumer | total loans |
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Contractual maturities: |
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1 year or less |
$ | | $ | 245 | $ | 456 | $ | 488 | $ | 1,189 | ||||||||||
1-5 years |
235 | 1,382 | 113 | | 1,730 | |||||||||||||||
After 5 years |
148,247 | 5,637 | | | 153,884 | |||||||||||||||
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Total |
$ | 148,482 | $ | 7,264 | $ | 569 | $ | 488 | $ | 156,803 | ||||||||||
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Rate sensitivity: |
||||||||||||||||||||
Fixed |
$ | 10,084 | $ | 6,705 | $ | 456 | $ | 488 | $ | 17,733 | ||||||||||
Variable |
138,398 | 559 | 113 | | 139,070 | |||||||||||||||
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Total |
$ | 148,482 | $ | 7,264 | $ | 569 | $ | 488 | $ | 156,803 | ||||||||||
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In the acquisition, the Company assumed $197.8 million in deposits at estimated fair value. The amount represents approximately 11% of the Companys total deposits of $1,791.9 million at September 30, 2011. Time deposits comprise about 32% and money market accounts comprise about 51% of the assumed deposits. The remainder is in checking accounts and regular savings accounts. A schedule of the deposits assumed at November 1, 2011 at fair value is listed in the table below. Amounts are in thousands of dollars.
fair value at Nov 1, 2011 |
weighted average interest rate |
|||||||
|
|
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Non-interest bearing deposits |
$ | 16,538 | % | |||||
Interest bearing deposits: |
||||||||
Interest bearing demand deposits |
15,062 | 0.23% | ||||||
Savings deposits |
2,452 | 0.26% | ||||||
Money market deposits |
99,681 | 0.51% | ||||||
Time deposits less than $100,000 |
39,926 | 1.62% | ||||||
Time deposits of $100,000 or greater |
24,182 | 2.15% | ||||||
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|
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Total deposits assumed |
$ | 197,841 | 0.87% | |||||
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The following table presents the amount of time deposits assumed at November 1, 2011, maturing during the periods reflected below. Amounts are in thousands of dollars.
Amount | ||||
November 1, 2011 thru October 31, 2012 |
$ | 51,877 | ||
November 1, 2012 thru October 31, 2013 |
6,758 | |||
November 1, 2013 thru October 31, 2014 |
3,386 | |||
November 1, 2014 thru October 31, 2015 |
568 | |||
Thereafter |
1,519 | |||
|
|
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Total |
$ | 64,108 | ||
|
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In its assumption of the deposit liabilities, the Company believed that these deposits have an intangible value. The Company applied ASC Topic 805, which prescribes the accounting for goodwill and other intangible assets such as core deposit intangibles, in a business combination. The Company determined the estimated fair value of the core deposit intangible asset totaled $1.2 million, which will be amortized utilizing an accelerated amortization method over an estimated economic life not to exceed ten years. In
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determining the valuation amount, deposits were analyzed based on factors such as type of deposit, deposit retention, interest rates and age of deposit relationships. The table below presents the estimated amortization expense for each of the next ten years. Amounts are in thousands of dollars.
amount | amount | |||||||||||
year 1 |
$185 | year 6 | $108 | |||||||||
year 2 |
$158 | year 7 | $107 | |||||||||
year 3 |
$134 | year 8 | $107 | |||||||||
year 4 |
$114 | year 8 | $107 | |||||||||
year 5 |
$108 | year 10 | $107 | |||||||||
|
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Total | $1,235 | |||||||||||
|
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Future amortization of this core deposit intangible asset over the estimated life will decrease results of operations, net of any potential tax effect. Since amortization is a non cash item, it will have no effect upon future liquidity and cash flows. For the calculation of regulatory capital, core deposit intangible asset is disallowed and is a reduction to equity capital. The Company expects that disallowing this intangible asset should not materially adversely affect the Companys regulatory capital ratios.
The core deposit intangible asset is subject to significant estimates by management of the Company related to the value and the life of the asset. These estimates could change over time. The Company will review the valuation of this asset periodically to ensure that no impairment has occurred. If any impairment is subsequently determined, the Company will record the impairment as an expense in its consolidated statement of operations.
Non performing loans
The Company has the option to put back any loan that becomes 30 days past due or adversely classified during a one year period beginning with the November 1, 2011 acquisition date. As of the acquisition date there were nine single family residential loans that were more than thirty days past due. The loans had an aggregate principal balance of $1,116 and a fair value of $1,095. The Company expects to put back these loans to Hartford.
Operating results and cash flows
Management has from time to time become aware of acquisition opportunities and has performed various levels of review related to potential acquisitions in the past. The FTC acquisition was attractive to the Company for a variety of reasons including the following:
| attractiveness in the pricing of the acquired selected performing loans including the put back option and strength of the counterparty; |
| ability to increase the Companys market share in central Florida; |
| attractiveness of core deposit customer relationships; |
| opportunities to enhance income and efficiency due to duplications of effort and decentralized processes as the Company expects to enhance income by centralizing some duties and removing duplications of effort. |
Based on these and other factors, including the level of support related to the acquired loans, the Company believes that the FTC acquisition will have an immediate positive impact on its earnings.
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The FTC acquisition had an immediate accretive impact to the Companys financial results as the Company recognized a closing date pre-tax gain upon acquisition of $40.3 million after merger related expenses of approximately $5.6 million. The transaction resulted in an after merger related expenses, after-tax expense, gain of approximately $25.1 million. The total assets acquired, approximately $235.6 million including the net deferred tax liability, represented approximately 11% of the Companys $2,153.8 million of total assets as of September 30, 2011, and total deposits assumed, approximately $197.8 million, represented approximately 11% of the Companys $1,791.9 million of total deposits reported as of September 30, 2011. The Company believes that the transaction will improve net interest income, as the Company earns more from interest earned on its loans and investments than it pays in interest on deposits.
Liquidity and capital resources
The FTC acquisition enhanced the liquidity position of the Company. The Company acquired $73.2 million of cash and cash equivalents. This addition to the Companys balance sheet represents additional support for the Companys liquidity needs.
Deposits with an estimated fair value of $197.8 million were also assumed. Of this amount approximately 51% is in time deposits, 32% is in money market accounts and the remainder is in checking accounts and regular savings accounts.
In the FTC acquisition, the Company also assumed a $5 million Trust Preferred Security issued by FTC that qualifies for Tier 1 capital. The security pays interest on a quarterly basis at a rate of LIBOR plus 2.95% and matures in 2033. The Company estimated the fair value of this instrument to approximate $4.4 million at the November 1, 2011 acquisition date.
At September 30, 2011 the Company and the Bank were considered well-capitalized based on calculations of relevant regulatory ratios. The Company and the Bank had the following capital ratios at September 30, 2011.
Regulatory guideline amounts |
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to be considered | Actual at Sept 30, 2011 | |||||
well capitalized | Company | CSB | ||||
|
| |||||
Tier 1 leverage ratio |
5.0% | 10.3% | 8.0% | |||
Tier 1 risk base ratio |
6.0% | 17.4% | 14.2% | |||
Total risk base ratio |
10.0% | 18.7% | 15.5% |
The FTC acquisition was self-capitalizing because the $25.1 million after tax gain was more than enough to support the $235.6 million of assets acquired.
Financial Statements
Attached hereto as Exhibit 99.1 and incorporated by reference into this Item 9.01(a) is an audited consolidated financial statement for FTC for the nine month period ending September 30, 2011. Attached hereto as Exhibit 99.2 and incorporated by reference into this Item 9.01(a) is an audited consolidated financial statement for FTC for the one year period ending December 31, 2010.
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(b) | Pro Forma Financial Statements |
The pro forma consolidated condensed balance sheet presented below assumes the transaction occurred at September 30, 2011. Adjusting entries are explained below. All amounts are in thousands of dollars.
CSFL Actual |
FTC Actual 9/30/11 |
Debit | Credit | ProForma 9/30/11 |
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Cash and cash equivalents |
$182,864 | $54,794 | 44,113 | d | $281,771 | |||||||||||||||||||||||
Securities available for sale |
557,129 | | 557,129 | |||||||||||||||||||||||||
Loans |
1,162,918 | 171,341 | 4,647 | e | 1,329,612 | |||||||||||||||||||||||
Allowance for loan losses |
(26,192) | (15,183) | (41,375) | |||||||||||||||||||||||||
Bank premises and equipment |
88,995 | 8,478 | 97,473 | |||||||||||||||||||||||||
Goodwill and CDI |
42,222 | 2,363 | 1,235 | b | 45,820 | |||||||||||||||||||||||
BOLI |
28,141 | 8,617 | 36,758 | |||||||||||||||||||||||||
OREO |
21,695 | 2,257 | m | 23,952 | ||||||||||||||||||||||||
FDIC indemnification asset |
53,820 | | 53,820 | |||||||||||||||||||||||||
Deferred tax asset (liability) |
10,302 | 60,966 | 15,402 | h | 55,866 | |||||||||||||||||||||||
All other assets |
31,911 | 32,569 | 290 | a | 64,770 | |||||||||||||||||||||||
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|
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Total assets |
$2,153,805 | $326,202 | $2,505,596 | |||||||||||||||||||||||||
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|
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Deposits |
$1,791,938 | $202,279 | $620 | f | $1,994,837 | |||||||||||||||||||||||
Other borrowed funds |
91,325 | 30,000 | 560 | c | 120,765 | |||||||||||||||||||||||
All other liabilities |
20,506 | 8,123 | 28,629 | |||||||||||||||||||||||||
Stockholders equity |
250,036 | 85,800 | 25,529 | g | 361,365 | |||||||||||||||||||||||
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Total liabilities & stockholders equity |
$2,153,805 | $326,202 | $2,505,596 | |||||||||||||||||||||||||
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Adjusting entries:
debit | credit | |||||||
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a Put back option |
$ | 290 | ||||||
b Core deposit intangible |
1,235 | |||||||
c Fair value adjustment- Trust preferred security |
560 | |||||||
d Net cash receivable from Hartford |
44,113 | |||||||
e Fair value adjustment- loans |
4,647 | |||||||
f Fair value adjustment- time deposits |
620 | |||||||
g Bargain purchase gain, net of merger and tax expense |
25,529 | |||||||
h Deferred tax liability |
15,402 |
a. | Estimated fair value as of the acquisition date of the Banks option agreement to put back any purchased loan that becomes thirty days past due or is adversely classified. |
b. | Estimated fair value of the Bankss core deposit intangible. |
c. | Amount to adjust the acquired Trust Preferred Security to fair value. |
d. | Cash received from Hartford that is primarily attributable to the difference between the carrying amount of loans and the price paid to acquire the loans, which was 73% of the carrying value. |
e. | Estimated fair value adjustment to loans purchase as determined by independent valuation firm. |
f. | Estimated fair value adjustment to time deposits assumed as internally calculated. |
g. | Bargain purchase gain, net of deferred tax, as calculated and explained in Item 9.01(a). |
h. | Deferred tax related to gross bargain purchase gain. |
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The pro forma consolidated condensed income statements for the nine month period ending September 30, 2011 and the twelve month period ending December 31, 2010 presented below assume the transaction occurred at the beginning of the earliest period presented. Adjusting entries are explained below. All amounts are in thousands of dollars.
CSFL Actual |
FTC Actual |
Debit | Credit | ProForma nine months ended Sept 30, 2011 |
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Interest income- loans |
$48,745 | $12,084 | $217 | d | $61,046 | |||||||||||||||||||||||
Interest income- all other |
12,174 | 655 | 12,829 | |||||||||||||||||||||||||
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|
|||||||||||||||||||||||||
Total interest income |
60,919 | 12,739 | 73,875 | |||||||||||||||||||||||||
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|
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Interest expense- deposits |
8,922 | 1,745 | 370 | c | 10,297 | |||||||||||||||||||||||
Interest expense- all other |
528 | 660 | $19 | e | 1,207 | |||||||||||||||||||||||
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Total interest expense |
9,450 | 2,405 | 11,504 | |||||||||||||||||||||||||
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|
|||||||||||||||||||||||||
Net interest income |
51,469 | 10,334 | 62,371 | |||||||||||||||||||||||||
Provision for loan losses |
27,926 | 22,050 | 49,976 | |||||||||||||||||||||||||
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|
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Net interest income (expense) after loan loss provision |
23,543 | (11,716) | 12,395 | |||||||||||||||||||||||||
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|
|||||||||||||||||||||||||
Bond sales commissions |
18,228 | | 18,228 | |||||||||||||||||||||||||
Bargain purchase gain |
11,129 | | 11,129 | |||||||||||||||||||||||||
Gain on sales of securities |
3,334 | 716 | 4,050 | |||||||||||||||||||||||||
All other non interest income |
13,678 | 530 | 355 | a,b | 13,853 | |||||||||||||||||||||||
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|||||||||||||||||||||||||
Total non interest income |
46,369 | 1,246 | 47,260 | |||||||||||||||||||||||||
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|
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Compensation and related expense |
42,270 | 5,053 | 47,323 | |||||||||||||||||||||||||
Occupancy expense |
9,255 | 1,828 | 11,083 | |||||||||||||||||||||||||
Data processing expense |
3,765 | 789 | 4,554 | |||||||||||||||||||||||||
Credit related expenses |
9,390 | 14,218 | 23,608 | |||||||||||||||||||||||||
All other non interest expense |
15,285 | 9,724 | 25,009 | |||||||||||||||||||||||||
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|
|
|||||||||||||||||||||||||
Total non interest expense |
79,965 | 31,612 | 111,577 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Loss before income taxes |
(10,053) | (42,082) | 213 | f | (51,922) | |||||||||||||||||||||||
Benefit for income taxes |
(3,880) | (14,850) | 80 | f | (18,650) | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Net loss |
(6,173) | (27,232) | (33,272) | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
average shares outstanding |
30,032 | 30,032 | ||||||||||||||||||||||||||
EPS- basic |
($0.21) | ($1.11) | ||||||||||||||||||||||||||
EPS- diluted |
($0.21) | ($1.11) |
10
CSFL Actual |
FTC Actual |
Debit | Credit | ProForma twelve months ended Dec 31, 2010 |
||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Interest income- loans |
$55,697 | $25,472 | $269 | d | $81,438 | |||||||||||||||||||||||
Interest income- all other |
18,883 | 903 | 19,786 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total interest income |
74,580 | 26,375 | 101,224 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Interest expense- deposits |
15,722 | 3,410 | 493 | c | 18,639 | |||||||||||||||||||||||
Interest expense- all other |
1,020 | 2,251 | $26 | e | 3,297 | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total interest expense |
16,742 | 5,661 | 21,936 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Net interest income |
57,838 | 20,714 | 79,288 | |||||||||||||||||||||||||
Provision for loan losses |
29,624 | 3,019 | 32,643 | |||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Net interest income after loan loss provision |
28,214 | 17,695 | 46,645 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Bond sales commissions |
32,696 | | 32,696 | |||||||||||||||||||||||||
Bargain purchase gain |
1,377 | | 1,377 | |||||||||||||||||||||||||
Gain on sales of securities |
7,034 | 42 | 7,076 | |||||||||||||||||||||||||
All other non interest income |
13,826 | 934 | 475 | a,b | 14,285 | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total non interest income |
54,933 | 976 | 55,434 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Compensation and related expense |
55,033 | 6,916 | 61,949 | |||||||||||||||||||||||||
Occupancy expense |
10,002 | 2,477 | 12,479 | |||||||||||||||||||||||||
Data processing expense |
2,789 | 1,033 | 2,789 | |||||||||||||||||||||||||
Credit related expenses |
6,278 | 7,725 | 14,003 | |||||||||||||||||||||||||
Impairment of goodwill |
| 174,562 | 174,562 | |||||||||||||||||||||||||
All other non interest expense |
19,223 | 8,779 | 29,035 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total non interest expense |
93,325 | 201,492 | 294,817 | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Loss before income taxes |
(10,178) | (182,821) | 261 | f | (192,738) | |||||||||||||||||||||||
Benefit for income taxes |
(4,240) | (62,201) | 98 | f | (66,343) | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Net loss |
(5,938) | (120,620) | (126,395) | |||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
average shares outstanding |
27,608 | 27,608 | ||||||||||||||||||||||||||
EPS- basic |
($0.22) | ($4.58) | ||||||||||||||||||||||||||
EPS- diluted |
($0.22) | ($4.58) |
a. | Represents nine months of amortization expense of the $1.2 million core deposit intangible. The intangible is amortized on an accelerated basis over a ten year period. A ten year amortization schedule is included in Item 9.01(a). |
b. | The Company has a one year put back option agreement, whereby for a period of one year beginning at the acquisition date, it has the option to put back to Hartford any loan that becomes thirty days past due or becomes adversely classified. The fair value of this option as of the acquisition date was estimated to be $290,000. This amount is being amortized on a straight line basis over the one year option period. |
c. | The Company has estimated the fair value adjustment to the assumed time deposits to be $620,000 as of the acquisition date. This amount is being amortized into interest expense (reduction of interest expense) over the maturity period of the related time deposit. |
d. | The fair value adjustment was approximately $4.6 million and is being accreted into interest income over the life of the related loans. |
e. | The Company assumed a $5 million Trust Preferred security pursuant to the FTC acquisition, and estimated the fair value adjustment of this instrument to approximate $560,000. The fair value adjustment is being amortized into interest expense (increase to interest expense) over its remaining term. The instrument matures in August 2033. The amortization expense is $2,136 per month. |
f. | Represents the effect on net income before income taxes and the estimated income tax provision. |
11
(d) | Exhibits |
2.1 | Agreement and Plan of Merger by and among CenterState Banks, Inc., Federal Trust Corporation and The Harford Financial Services Group, Inc., dated as of May 22, 2011. Incorporated by reference to Exhibit 2.1 to the Companys Form 8-K dated May 22, 2010. |
99.1 | Report of Independent Registered Public Accounting Firm, Federal Trust Corporation Consolidated Financial Statements for the nine month period ending September 30, 2011, and Notes to the Consolidated Financial Statements |
99.2 | Report of Independent Registered Public Accounting Firm, Federal Trust Corporation Consolidated Financial Statements for the one year period ending December 31, 2010, and Notes to the Consolidated Financial Statements |
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CENTERSTATE BANKS, INC. | ||||||
By: | /s/ James J. Antal | |||||
James J. Antal | ||||||
Senior Vice President and | ||||||
Chief Financial Officer |
Date: January 13, 2012
13