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8-K - FORM 8-K - CenterState Bank Corp | d475821d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
January 30, 2013
CenterState Banks, Inc. Announces
Fourth Quarter 2012 Operating Results
(All dollar amounts are in thousands, except per share information)
(All earnings per share amounts are reported on a diluted basis unless otherwise noted)
DAVENPORT, FL. January 30, 2013 CenterState Banks, Inc. (NASDAQ: CSFL) reported earnings per share of $0.07 on net income of $2,236 for the fourth quarter of 2012, compared to $0.09 per share on net income of $2,642 reported during the prior quarter. The decrease was due primarily to the Companys correspondent bond sales activity, which is a volatile business and can materially affect the Companys financial results, which is why the business is segregated and reported as a separate segment. The Companys cost efficiency strategies discussed in prior quarters are being realized as operating expenses have decreased and the efficiency ratio, excluding the correspondent business, has improved over the past five quarters. Credit metrics have improved, loan growth is modest but encouraging and the FDIC covered loans overall are performing better than originally expected at the acquisition dates. Earnings comparisons between the current year periods and prior year periods are presented in the table below.
Three months ended | Twelve months ended | |||||||||||||||
Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2012 | Dec 31, 2011 | |||||||||||||
Net income |
$ | 2,236 | $ | 14,082 | $ | 9,905 | $ | 7,909 | ||||||||
Earnings per share |
$ | 0.07 | $ | 0.47 | $ | 0.33 | $ | 0.26 |
Measurement Period Adjustment: In the current quarter, the Company recorded a measurement period adjustment to reflect a change in the estimate of the acquisition date fair value of the loans acquired in the January 2012 acquisition of First Guaranty Bank (FGB). During the quarter, new appraisals were obtained for certain non-performing loans, and based on these appraisals, management recorded a measurement period adjustment that increased the estimated fair value of the net assets acquired and reduced the goodwill recognized in this acquisition. The measurement period adjustment, which was recorded as of the January 27, 2012 acquisition date, increased loans by $9,933, decreased the related indemnification asset (IA) by $8,078 and decreased goodwill by $1,855. The decrease in goodwill resulted in an increase in the Companys tangible book value of $0.06 per share. Interest income on covered loans, yield on covered loans, net interest margin (NIM), and non-interest income related to the indemnification asset, as well as the balance sheet accounts referred to above and all other related financial metrics, have been adjusted for all interim periods presented.
Loan Growth: The Company continued to experience modest loan growth. Total loans, excluding loans covered by FDIC loss share agreements, increased by $5,129 during the current quarter, an annualized growth rate of 1.8% and by $19,853 during the full year, which is also a growth rate of 1.8%. During the quarter, the net increase in loans was primarily in the commercial real estate category. The net annual loan growth is primarily in the commercial real estate and single family residential real estate categories.
Credit Metrics: The Companys credit metrics continued to improve. Total non-performing assets (NPAs) at the end of the quarter were $33,386, which is 6% less than the prior quarter and 59% less than the peak of $82,334, which occurred in the first quarter of 2011. The current quarter end NPL ratio (non performing loans (NPL) as a percentage of total non FDIC covered loans) is 2.26%, the NPA
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ratio (NPAs as percentage of total assets) is 1.41% and the ratio of NPAs as a percentage of total non FDIC covered loans plus non FDIC covered OREO and ORA (other repossessed assets) was 2.91%. These were the lowest ratios reported by the Company since 2008. Loans past due 30-89 days and still accruing interest was 0.65% of total loans. All ratios exclude loans and OREO covered by FDIC loss sharing agreements.
Efficiency Ratio: The table below summarizes the Companys efficiency ratio with and without the correspondent banking and bond sales division (Correspondent Banking or CB). The first ratio, which includes CB, was calculated as follows: The numerator is equal to 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. The denominator is equal to 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. bargain purchase gain, 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. The second ratio, which does not include CB, was calculated as follows: The numerator starts with the same numerator used in the first ratio, less CB non-interest expense, including indirect expense allocations. The denominator is equal the denominator used in the first ratio, less CB net interest income and less CB non-interest income.
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | ||||||||||||||||
Efficiency Ratio, including Correspondent Banking |
76.4 | % | 76.5 | % | 76.1 | % | 78.9 | % | 85.5 | % | ||||||||||
Efficiency Ratio, excluding Correspondent Banking |
74.3 | % | 76.8 | % | 78.1 | % | 78.3 | % | 87.4 | % |
By including the CB in the efficiency ratio, it can disguise the trends in the commercial and retail banking segment. That is, to the extent the CB does well, it helps the ratio (e.g. quarter ending 6/30/12) and to the extent CB does not do as well, it hurts the ratio (e.g. quarter ending 12/31/12), as compared to the related ratios that do not include the CB segment.
FDIC covered loans and the related indemnification asset (IA): The Company has purchased five loan portfolios from five failed financial institutions with FDIC loss share agreements. Three were purchased in the third quarter of 2010 and two in the first quarter of 2012. The loss share periods are for ten years with respect to single family residential loans and five years with respect to all other purchased loans, except consumer loans. All of the purchased loans are being accounted for pursuant to ASC Topic 310-30. There are approximately 50 pools of loans. Each quarter, the Company reviews the cash flows and determines: (1) if any of the pools are impaired; and, (2) to the extent that future expected cash flows have improved (i.e. future expected losses have decreased), the additional expected future cash flows are accreted into interest income over the remaining expected life of the related loan pool, thereby increasing the pools yield. There has been some impairment in some of the worst loan pools acquired, but overall, the yields on the aggregate covered loan portfolio have been trending upward due to lower expected losses than originally estimated at the respective acquisition dates. During the last several quarters, the yields on the covered loan portfolio were as follows:
(unaudited) |
4Q12 | 3Q12 | 2Q12 | 1Q12 | 4Q11 | 3Q11 | 2Q11 | |||||||||||||||||||||
FDIC covered loan portfolio |
7.71 | % | 7.03 | % | 7.51 | % | 6.69 | % | 6.80 | % | 6.21 | % | 5.51 | % |
When future expected cash flows of the covered loans increase, this increase is accreted into interest income over the remaining life of the related loan pools. The IA represents the receivable from the FDIC for reimbursement of 80% of the expected losses in the covered pools. When the Company increases its expected loan cash flows, it decreases the expected reimbursement, or IA, by 80% of this amount. The decrease in expected reimbursements is amortized (negative accretion) over the remaining life of the
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related loss share term, and is included in the Companys non-interest income as a negative amount. At December 31, 2012, the Companys cumulative estimate of excess loan cash flows over the initial estimates is approximately $24,566. This additional amount is being accreted into interest income over the life of the related loan pools. Approximately 80% of this estimated additional cash flow, or $19,653, is being amortized (negative accretion) in non-interest income over a nine year period (the end of the last loss share term agreement). The net effect is that, as of December 31, 2012, the Company has estimated that it will improve its pre-tax income, over time, by approximately $4,913 ($24,566 estimated additional cash flows from covered loans minus $19,653 expected reduction in reimbursements from the FDIC).
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: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Interest income |
$ | 23,265 | $ | 23,608 | $ | 24,587 | $ | 23,490 | $ | 21,324 | ||||||||||
Interest expense |
1,726 | 1,941 | 2,304 | 2,510 | 2,757 | |||||||||||||||
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Net interest income |
21,539 | 21,667 | 22,283 | 20,980 | 18,567 | |||||||||||||||
Provision for loan losses |
(2,169 | ) | (2,425 | ) | (1,894 | ) | (2,732 | ) | (18,065 | ) | ||||||||||
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Net interest income after loan loss provision |
19,370 | 19,242 | 20,389 | 18,248 | 502 | |||||||||||||||
Income from correspondent banking and bond sales division |
6,450 | 8,606 | 9,966 | 7,784 | 6,661 | |||||||||||||||
Gain on sale of securities available for sale |
420 | 675 | 726 | 602 | 130 | |||||||||||||||
Bargain purchase gains on bank acquisitions |
| | | 453 | 45,891 | |||||||||||||||
FDIC- IA amortization (negative accretion) (note 1) |
(1,540 | ) | (671 | ) | (348 | ) | (537 | ) | (699 | ) | ||||||||||
FDIC- revenue (note 2) |
2,025 | 2,199 | 1,229 | 564 | (845 | ) | ||||||||||||||
All other non-interest income |
5,385 | 5,526 | 4,968 | 4,779 | 4,465 | |||||||||||||||
Credit related expenses |
(3,573 | ) | (3,844 | ) | (2,198 | ) | (1,591 | ) | (3,306 | ) | ||||||||||
Acquisition and conversion related expenses |
(55 | ) | (177 | ) | (614 | ) | (1,868 | ) | (6,246 | ) | ||||||||||
Correspondent banking division expenses |
(6,069 | ) | (7,235 | ) | (7,896 | ) | (6,968 | ) | (6,373 | ) | ||||||||||
Impairment bank owned property held for sale |
| (449 | ) | (165 | ) | | | |||||||||||||
All other non-interest expense |
(18,833 | ) | (20,001 | ) | (20,785 | ) | (19,659 | ) | (18,799 | ) | ||||||||||
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Income before income tax |
3,580 | 3,871 | 5,272 | 1,807 | 21,381 | |||||||||||||||
Income tax provision |
(1,344 | ) | (1,229 | ) | (1,558 | ) | (494 | ) | (7,299 | ) | ||||||||||
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NET INCOME |
$ | 2,236 | $ | 2,642 | $ | 3,714 | $ | 1,313 | $ | 14,082 | ||||||||||
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Earnings per share (basic) |
$ | 0.07 | $ | 0.09 | $ | 0.12 | $ | 0.04 | $ | 0.47 | ||||||||||
Earnings per share (diluted) |
$ | 0.07 | $ | 0.09 | $ | 0.12 | $ | 0.04 | $ | 0.47 | ||||||||||
Average common shares outstanding (basic) |
30,079,767 | 30,077,933 | 30,072,395 | 30,065,631 | 30,041,089 | |||||||||||||||
Average common shares outstanding (diluted) |
30,153,775 | 30,142,167 | 30,140,009 | 30,088,188 | 30,041,089 | |||||||||||||||
Common shares outstanding at period end |
30,079,767 | 30,079,767 | 30,074,927 | 30,071,127 | 30,055,499 | |||||||||||||||
PTPP earnings (note 3) |
$ | 6,932 | $ | 7,892 | $ | 8,188 | $ | 6,379 | $ | 3,822 | ||||||||||
PTPP diluted earnings per share (note 4) |
$ | 0.23 | $ | 0.26 | $ | 0.27 | $ | 0.21 | $ | 0.13 |
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 for approximately 80% 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 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 approximately 80% of these losses 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 by negative accretion (amortization) in this line item. |
note 2: | Two FDIC related revenue items are included in this line item. The two items are disaggregated in the non-interest income table displayed later in this document. The first item is FDIC reimbursement income from the sale of OREO. |
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When OREO (those covered by loss share agreements) is sold for a loss, approximately 80% of the loss is recognized as income and included in this line item. Second, when a loan pool (with loss share) is impaired, the impairment expense is included in provision for loan losses, and approximately 80% of that loss is recognized as income from FDIC reimbursement, and included in this line item. |
note 3: | Pre-tax pre-provision earnings (PTPP) is a non-GAAP measure that is defined as income before income tax excluding the provision for loan losses and gain on sale of available for sale (AFS) securities. In addition the Company also excludes other credit related costs including losses on repossessed real estate and other assets, and other foreclosure related expenses. It also excludes non-recurring items as listed in the following reconciliation table. |
note 4: | PTPP earnings per share means, PTPP as defined in note 3 above divided by the average number of diluted common shares outstanding. |
A reconciliation of the quarterly condensed PTPP is presented below (unaudited):
For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Income before income tax |
$ | 3,580 | $ | 3,871 | $ | 5,272 | $ | 1,807 | $ | 21,381 | ||||||||||
exclude provision for loan losses |
2,169 | 2,425 | 1,894 | 2,732 | 18,065 | |||||||||||||||
FDIC income from pool impairment |
(261 | ) | (619 | ) | (886 | ) | (66 | ) | (37 | ) | ||||||||||
exclude other credit related costs |
3,573 | 3,844 | 2,198 | 1,591 | 3,306 | |||||||||||||||
OREO indemnification income from FDIC |
(1,764 | ) | (1,580 | ) | (343 | ) | (498 | ) | 882 | |||||||||||
exclude gain on sale of AFS securities |
(420 | ) | (675 | ) | (726 | ) | (602 | ) | (130 | ) | ||||||||||
exclude non-recurring items: |
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bargain purchase gain |
| | | (453 | ) | (45,891 | ) | |||||||||||||
impairment bank owned property held for sale |
| 449 | 165 | | | |||||||||||||||
acquisition and conversion related expenses |
55 | 177 | 614 | 1,868 | 6,246 | |||||||||||||||
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PTPP earnings |
$ | 6,932 | $ | 7,892 | $ | 8,188 | $ | 6,379 | $ | 3,822 | ||||||||||
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The condensed quarterly results of the Companys correspondent banking and bond sales segment are presented below.
Quarterly Condensed Segment Information - Correspondent banking and bond sales division (unaudited) |
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For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Net interest income |
$ | 878 | $ | 925 | $ | 1,042 | $ | 1,178 | $ | 965 | ||||||||||
Total non-interest income (note 1) |
7,193 | 9,453 | 10,707 | 8,354 | 7,203 | |||||||||||||||
Total non-interest expense (note 2) |
(6,069 | ) | (7,235 | ) | (7,896 | ) | (6,968 | ) | (6,373 | ) | ||||||||||
Income tax provision |
(753 | ) | (1,183 | ) | (1,450 | ) | (965 | ) | (675 | ) | ||||||||||
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Net income |
$ | 1,249 | $ | 1,960 | $ | 2,403 | $ | 1,599 | $ | 1,120 | ||||||||||
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Contribution to diluted earnings per share |
$ | 0.04 | $ | 0.07 | $ | 0.08 | $ | 0.05 | $ | 0.04 | ||||||||||
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Allocation of indirect expenses (note 3) |
$ | (592 | ) | $ | (641 | ) | $ | (546 | ) | $ | (704 | ) | $ | (232 | ) | |||||
Income tax benefit |
223 | 241 | 205 | 265 | 87 | |||||||||||||||
Contribution to diluted earnings per share after deduction of allocated indirect expenses |
$ | 0.03 | $ | 0.05 | $ | 0.07 | $ | 0.04 | $ | 0.03 | ||||||||||
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note 1: | The primary component in this line item is gross commissions earned on bond sales (income from correspondent banking and bond sales division) which was $6,450, $8,606, $9,966, $7,784 and $6,661 for 4Q12, 3Q12, 2Q12, 1Q12 and 4Q11 respectively. The remaining non interest income items in this category 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: | The majority of these expenses are variable in nature and are a derivative of the income from correspondent banking and bond sales division. The amounts do not include any indirect support allocation costs. |
note 3: | A portion of the cost of the Companys indirect departments such as human resources, accounting, deposit operations, item processing, information technology, compliance and others have been allocated to the correspondent banking and bond sales division based on managements estimates. |
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Net Interest Margin (NIM)
The NIM increased 1bp to 4.31% in the current quarter compared to 4.30% in the prior quarter. In summary, the slight increase in NIM was primarily due to a 4bps decrease in cost of interest bearing liabilities which was partially offset by a 2bps decrease in yield on interest earning assets. A discussion of the primary underlying components is summarized below.
Loans, excluding FDIC covered loans: Noncovered loans are the largest category in the Companys interest earning assets. In the previous quarter the reported average yield for this category was 5.22%, but as discussed last quarter that included an adjustment to a noncovered purchased pool of loans accounted for pursuant to ASC Topic 310-30 and another adjustment relating to purchased loans put back to The Hartford Insurance Group pursuant to the related purchase agreement. The yield for this category last quarter, excluding these two items was 5.08%. In the current quarter the reported average yield for this category was 5.12%, but also included adjustments to noncovered purchased pools of loans accounted for pursuant to ASC Topic 310-30. The yield for this category in the current quarter, excluding those adjustments was 5.02%, as summarized in the table below.
4Q12 | 3Q12 | |||||||||||||||
(unaudited) |
interest income |
average yield |
interest income |
average yield |
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as reported |
$ | 14,640 | 5.12 | % | $ | 14,815 | 5.22 | % | ||||||||
noncovered ASC 310-30 events |
(266 | ) | (214 | ) | ||||||||||||
put back loan adjustment |
(167 | ) | ||||||||||||||
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yield excluding above items |
$ | 14,374 | 5.02 | % | $ | 14,434 | 5.08 | % | ||||||||
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New loans funded during the current quarter averaged approximately 4.37%, 4.40% during the prior quarter, and 4.43% during 2Q12. As such, the yield for this category of loans is expected to decrease slightly each quarter until the average yield for the category approaches the average yield of new loans being funded.
Covered loans (loans covered by FDIC loss share agreements): The yield on covered loans, accounted for pursuant to ASC Topic 310-30, continues to increase due to improvements of estimated future expected cash flows. However, this is a smaller portfolio compared to the noncovered loans. The increase in yield (i.e. increase in expected future cash flows, or decrease in expected future losses) also affects the FDIC indemnification asset (IA or receivable from the FDIC for reimbursable losses). To the extent some future expected losses are no longer expected, then expected reimbursement from the FDIC for 80% of these losses are also no longer expected, and the IA is written down through amortization expense (negative accretion) included in non-interest income, over the shorter of the remaining life of the loan or the contractual loss share period. A sort of mismatch occurs here, as the amount related to the loan pool(s) is accreted to interest income over the remaining life of the related loan pool(s), which is often longer than the remaining life of the contractual loss share period.
NIM, excluding items: As indicated above, the NIM was similar between the two most recent quarters. However, during the current and prior quarters, excess cash flows beyond the carrying value of certain loan pools relating to FDIC assisted transactions accounted for pursuant to ASC Topic 310-30 were received, and as such were immediately recognized as interest income. Also, there was an adjustment to noncovered loans during 3Q12 relating to loans purchased from The Hartford Insurance Group with put back options. Excluding these items and adjusting for the measurement period adjustment discussed earlier in this document, the NIM for the current quarter is approximately 4.25% compared to 4.19% in the prior quarter as summarized in the table below. The data presented below is presented on a tax equivalent yield (TEY) basis.
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4Q12 | 3Q12 | |||||||||||||||
(unaudited) |
net int income |
NIM | net int income |
NIM | ||||||||||||
as reported |
$ | 21,859 | 4.31 | % | $ | 22,010 | 4.30 | % | ||||||||
ASC 310-30 events |
(266 | ) | (393 | ) | ||||||||||||
put back loan adjustment |
(167 | ) | ||||||||||||||
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NIM excluding above items |
$ | 21,593 | 4.25 | % | $ | 21,450 | 4.19 | % | ||||||||
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The primary reasons for the increase in adjusted NIM (i.e. excluding the items described above) are 1) change in the mix of total interest earning assets (IEA(s)), that is, loans are a larger percentage of total IEAs during the current quarter compared to the prior quarter (also note that total average IEAs are lower during the current quarter, which is the primary reason why net interest income decreased between quarters); and, 2) the cost of interest bearing liabilities decreased 4bps between quarters.
The table below summarizes yields and costs by various interest earning asset and interest bearing liability account types for the current quarter, the previous calendar quarter and the same quarter last year.
Yield and cost table (unaudited) |
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4Q12 | 3Q12 | 4Q11 | ||||||||||||||||||||||||||||||||||
average balance |
interest inc/exp |
avg rate |
average Balance |
interest inc/exp |
avg rate |
average balance |
interest inc/exp |
avg rate |
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Loans (TEY)* (note 1) |
$ | 1,138,127 | $ | 14,640 | 5.12 | % | $ | 1,129,783 | $ | 14,815 | 5.22 | % | $ | 1,099,754 | $ | 14,434 | 5.21 | % | ||||||||||||||||||
Covered loans (note 2) |
309,502 | 6,001 | 7.71 | % | 327,847 | 5,796 | 7.03 | % | 167,512 | 2,873 | 6.80 | % | ||||||||||||||||||||||||
Taxable securities |
393,362 | 2,211 | 2.24 | % | 438,317 | 2,653 | 2.41 | % | 528,673 | 3,650 | 2.74 | % | ||||||||||||||||||||||||
Tax -exempt securities (TEY) |
40,697 | 539 | 5.27 | % | 39,770 | 538 | 5.38 | % | 37,644 | 562 | 5.92 | % | ||||||||||||||||||||||||
Fed funds sold and other |
138,236 | 194 | 0.56 | % | 102,627 | 149 | 0.58 | % | 152,550 | 146 | 0.38 | % | ||||||||||||||||||||||||
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Tot. interest earning assets(TEY) |
$ | 2,019,924 | $ | 23,585 | 4.65 | % | $ | 2,038,344 | $ | 23,951 | 4.67 | % | $ | 1,986,133 | $ | 21,665 | 4.33 | % | ||||||||||||||||||
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Interest bearing deposits |
$ | 1,490,327 | $ | 1,545 | 0.41 | % | $ | 1,532,538 | $ | 1,748 | 0.45 | % | $ | 1,456,253 | $ | 2,576 | 0.70 | % | ||||||||||||||||||
Fed funds purchased |
44,520 | 6 | 0.05 | % | 47,885 | 6 | 0.05 | % | 57,049 | 8 | 0.06 | % | ||||||||||||||||||||||||
Other borrowings |
20,004 | 19 | 0.38 | % | 23,202 | 27 | 0.46 | % | 17,145 | 34 | 0.79 | % | ||||||||||||||||||||||||
Corporate debentures |
16,968 | 156 | 3.66 | % | 16,962 | 160 | 3.75 | % | 14,704 | 139 | 3.75 | % | ||||||||||||||||||||||||
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Total interest bearing liabilities |
$ | 1,571,819 | $ | 1,726 | 0.44 | % | $ | 1,620,587 | $ | 1,941 | 0.48 | % | $ | 1,545,151 | $ | 2,757 | 0.71 | % | ||||||||||||||||||
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Net Interest Spread (TEY) |
4.21 | % | 4.19 | % | 3.62 | % | ||||||||||||||||||||||||||||||
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Net Interest Margin (TEY) |
4.31 | % | 4.30 | % | 3.78 | % | ||||||||||||||||||||||||||||||
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*TEY = tax equivalent yield
note 1: | loans not covered by FDIC loss share agreements |
note 2: | loans covered by FDIC loss share agreements, and accounted for pursuant to ASC Topic 310-30. |
6
The table below summarizes the Companys yields on interest earning assets and costs of interest bearing liabilities over the prior five quarters.
Five quarter trend of yields and costs (unaudited) |
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For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Yield on loans (TEY)* |
5.12 | % | 5.22 | % | 5.27 | % | 5.23 | % | 5.21 | % | ||||||||||
Yield on FDIC covered loans |
7.71 | % | 7.03 | % | 7.51 | % | 6.69 | % | 6.80 | % | ||||||||||
Yield on securities (TEY) |
2.52 | % | 2.66 | % | 2.81 | % | 2.76 | % | 2.95 | % | ||||||||||
Yield on fed funds sold and other |
0.56 | % | 0.58 | % | 0.50 | % | 0.47 | % | 0.38 | % | ||||||||||
Yield on total interest earning assets |
4.58 | % | 4.61 | % | 4.71 | % | 4.44 | % | 4.26 | % | ||||||||||
Yield on total interest earning assets (TEY) |
4.65 | % | 4.67 | % | 4.78 | % | 4.50 | % | 4.33 | % | ||||||||||
Cost of interest bearing deposits |
0.41 | % | 0.45 | % | 0.51 | % | 0.56 | % | 0.70 | % | ||||||||||
Cost of fed funds purchased |
0.05 | % | 0.05 | % | 0.05 | % | 0.05 | % | 0.06 | % | ||||||||||
Cost of other borrowings |
0.38 | % | 0.46 | % | 1.58 | % | 1.62 | % | 0.79 | % | ||||||||||
Cost of corporate debentures |
3.66 | % | 3.75 | % | 3.75 | % | 3.89 | % | 3.75 | % | ||||||||||
Cost of interest bearing liabilities |
0.44 | % | 0.48 | % | 0.55 | % | 0.59 | % | 0.71 | % | ||||||||||
Net interest margin (TEY) |
4.31 | % | 4.30 | % | 4.33 | % | 4.03 | % | 3.78 | % | ||||||||||
Cost of total deposits |
0.31 | % | 0.34 | % | 0.38 | % | 0.43 | % | 0.55 | % |
*TEY = tax equivalent yield
The table below summarizes selected financial ratios over the prior five quarters.
Selected financial ratios (unaudited) |
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As of or for the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Return on average assets (annualized) |
0.37 | % | 0.44 | % | 0.60 | % | 0.21 | % | 2.49 | % | ||||||||||
Return on average equity (annualized) |
3.25 | % | 3.85 | % | 5.59 | % | 2.01 | % | 21.57 | % | ||||||||||
Loan / deposit ratio |
71.9 | % | 72.8 | % | 71.3 | % | 68.8 | % | 66.9 | % | ||||||||||
Stockholders equity (to total assets) |
11.6 | % | 11.5 | % | 11.0 | % | 10.4 | % | 11.5 | % | ||||||||||
Common tangible equity (to total tangible assets) |
9.6 | % | 9.5 | % | 9.1 | % | 8.5 | % | 9.8 | % | ||||||||||
Tier 1 capital (to average assets) |
9.9 | % | 9.7 | % | 9.3 | % | 9.1 | % | 10.5 | % | ||||||||||
Common equity per common share |
$ | 9.09 | $ | 9.10 | $ | 8.95 | $ | 8.77 | $ | 8.74 | ||||||||||
Common tangible equity per common share |
$ | 7.36 | $ | 7.36 | $ | 7.19 | $ | 6.99 | $ | 7.30 |
7
Loan portfolio mix and covered loans
Approximately 20.6% of the Companys loans, or $296,295, are covered by FDIC loss sharing agreements related to the acquisition of three failed financial institutions during the third quarter of 2010 and two during the first quarter of 2012. Pursuant to the terms of the loss sharing agreements, the FDIC is obligated to reimburse the Company for 80% of losses with respect to the covered loans beginning with the first dollar of loss incurred, subject to the terms of the agreements. The Company will reimburse the FDIC for its share of recoveries with respect to the covered loans. The loss sharing agreements applicable to single family residential mortgage loans provide for FDIC loss sharing and the Company reimbursement to the FDIC for recoveries for ten years. The loss sharing agreements applicable to commercial loans provides for FDIC loss sharing for five years and Company reimbursement to the FDIC for a total of eight years for recoveries. All of the covered loans acquired are accounted for pursuant to ASC Topic 310-30.
Approximately 3.9% of the Companys loans, or $56,383, are subject to a two year put back option, commencing January 20, 2011, with TD Bank, N.A., such that if any of these loans becomes 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loan to TD Bank, N.A. The Company has put back loans with an aggregate outstanding balance of approximately $14,400, approximately 11% of the initial purchase. When the loans are put back to TD Bank, the Company is reimbursed 90% of the outstanding loan balance (i.e. the original discounted purchase price). The loans were recorded on the Companys books at market value as of the acquisition date. The average fair value as of the acquisition date was approximately 98% of the outstanding loan balances. The difference between the reimbursed amount (90% of the loans outstanding balance) and the carrying value of the loan (approximately 98% of the outstanding balance) is recognized as a credit related expense and is included in credit related expenses in non-interest expense in the Companys Condensed Consolidated Statements of Earnings and Comprehensive Income.
Approximately 9.3% of the Companys loans, or $134,202, were subject to a one year put back option that ended on November 1, 2012, with The Hartford Insurance Group (Hartford), such that if any of these loans became 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company had the option to put back the loan to Hartford. The Company put back loans with an aggregate outstanding balance of approximately $10,100, approximately 6% of the initial purchase. When the loans were put back to Hartford, the Company was reimbursed 73% of the outstanding loan balance (i.e. the original discounted purchase price). The loans were recorded on the Companys books at market value as of the acquisition date, approximately 98% of the outstanding loan balances. At the acquisition date, the Company estimated that the loan put back amount could approximate $6,000 and made the appropriate provision. The difference between the reimbursed amount (73% of the loans outstanding balance) and the carrying value of the loan (approximately 98% of the outstanding balance), first reduces the provision for estimated put backs, then the excess was recognized as a credit related expense and included in credit related expenses in non-interest expense in the Companys Condensed Consolidated Statements of Earnings and Comprehensive Income.
8
The table below summarizes the Companys loan mix over the most recent five quarter ends.
Loan mix (unaudited) |
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At quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
(note 2) | ||||||||||||||||||||
Loans not covered by FDIC loss share agreements |
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Real estate loans |
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Residential |
$ | 428,554 | $ | 428,138 | $ | 422,687 | $ | 413,626 | $ | 405,923 | ||||||||||
Commercial |
480,494 | 468,261 | 461,405 | 440,183 | 447,459 | |||||||||||||||
Land, development and construction loans |
55,474 | 56,454 | 66,890 | 80,295 | 89,517 | |||||||||||||||
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Total real estate loans |
964,522 | 952,853 | 950,982 | 934,104 | 942,899 | |||||||||||||||
Commercial loans |
124,225 | 131,302 | 127,880 | 125,752 | 126,064 | |||||||||||||||
Consumer and other loans, (note 1) |
2,732 | 1,998 | 2,072 | 1,759 | 1,392 | |||||||||||||||
Consumer and other loans |
48,547 | 48,808 | 47,973 | 48,122 | 49,999 | |||||||||||||||
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Total loans before unearned fees and costs |
1,140,026 | 1,134,961 | 1,128,907 | 1,109,737 | 1,120,354 | |||||||||||||||
Unearned fees and costs |
(458 | ) | (522 | ) | (644 | ) | (732 | ) | (639 | ) | ||||||||||
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Total loans not covered by FDIC loss share agreements |
1,139,568 | 1,134,439 | 1,128,263 | 1,109,005 | 1,119,715 | |||||||||||||||
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Loans covered by FDIC loss share agreements |
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Real estate loans |
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Residential |
142,480 | 161,827 | 168,786 | 157,601 | 99,270 | |||||||||||||||
Commercial |
134,413 | 133,069 | 140,628 | 159,324 | 54,184 | |||||||||||||||
Land, development and construction loans |
13,259 | 18,478 | 19,780 | 30,566 | 8,231 | |||||||||||||||
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Total real estate loans |
290,152 | 313,374 | 329,194 | 347,491 | 161,685 | |||||||||||||||
Commercial loans |
6,143 | 6,374 | 8,248 | 10,311 | 2,366 | |||||||||||||||
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Total loans covered by FDIC loss share agreements |
296,295 | 319,748 | 337,442 | 357,802 | 164,051 | |||||||||||||||
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Total Loans |
$ | 1,435,863 | $ | 1,454,187 | $ | 1,465,705 | $ | 1,466,807 | $ | 1,283,766 | ||||||||||
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Note 1: | Consumer loans acquired pursuant to five FDIC assisted transactions of failed financial institutions during the third quarter of 2010 and first quarter of 2012. These loans are not covered by an FDIC loss share agreement and are being accounted for pursuant to ASC Topic 310-30. |
Note 2: | During the second quarter of 2012 the Company reclassified approximately $10,182 of construction and development loans to commercial real estate ($7,051), commercial loans ($838) and residential real estate ($2,293). |
Credit quality and allowance for loan losses
During the quarter, excluding loans covered by FDIC loss share agreements, the Company recorded a charge of $1,842 to loan loss provision expense and charge-offs net of recoveries of $1,828.
With regard to loans covered by FDIC loss share agreements, the Company recorded a charge of $327 to loan loss provision expense. See the table Allowance for loan losses for additional information.
The allowance for loan losses (ALLL) was $26,682 at December 31, 2012 compared to $26,341 at September 30, 2012, an increase of $341. This increase is the result of the aggregate effect of a $59 decrease in general loan loss allowance, a $73 increase in the specific loan loss allowance related to impaired loans and a $327 increase in the loan loss allowance related to certain loan pools of FDIC covered loans accounted for pursuant to ASC Topic 310-30. The changes in the Companys ALLL components between December 31, 2012 and September 30, 2012 are summarized in the table below.
9
Dec 31, 2012 | Sept 30, 2012 | increase (decrease) | ||||||||||||||||||||||||||||||||||
loan balance | ALLL Balance |
% | loan balance | ALLL balance |
% | loan balance |
ALLL balance |
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Non impaired loans |
$ | 900,804 | $ | 22,024 | 2.44 | % | $ | 883,427 | $ | 23,070 | 2.61 | % | $ | 17,377 | $ | (1,046 | ) | -17 bps | ||||||||||||||||||
TD loans (note 1) |
56,383 | | 65,937 | | (9,554 | ) | | | ||||||||||||||||||||||||||||
FTB loans (note 2) |
134,202 | 987 | 0.74 | % | 140,264 | | (6,062 | ) | 987 | 74 bps | ||||||||||||||||||||||||||
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Total non impaired loans |
1,091,389 | 23,011 | 2.11 | % | 1,089,628 | 23,070 | 2.12 | % | 1,761 | (59 | ) | -1 bps | ||||||||||||||||||||||||
Impaired loans |
48,179 | 1,022 | 2.12 | % | 44,811 | 949 | 2.12 | % | 3,368 | 73 | | |||||||||||||||||||||||||
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Loans (note 3) |
1,139,568 | 24,033 | 2.11 | % | 1,134,439 | 24,019 | 2.12 | % | 5,129 | 14 | -1 bps | |||||||||||||||||||||||||
Covered loans (note 4) |
296,295 | 2,649 | 319,748 | 2,322 | (23,453 | ) | 327 | |||||||||||||||||||||||||||||
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Total loans |
$ | 1,435,863 | $ | 26,682 | 1.86 | % | $ | 1,454,187 | $ | 26,341 | 1.81 | % | $ | (18,324 | ) | $ | 341 | 5 bps |
Note 1: | Performing loans purchased from TD Bank subject to a two year put back option commencing on January 20, 2011, such that if any of these loans becomes 30 days past due or are adversely classified pursuant to bank regulatory guidelines, the Company has the option to put back the loans to TD Bank. |
Note 2: | Performing loans purchased from Hartfords then wholly owned bank, Federal Trust Bank (FTB) subject to a one year put back option commencing on November 1, 2011, such that if any of these loans became 30 days past due or were adversely classified pursuant to bank regulatory guidelines, the Company had the option to put back the loans to Hartford. The put back period ended November 1, 2012. The Company evaluates this group of loans as a separate segment. |
Note 3: | Total loans not covered by FDIC loss share agreements. |
Note 4: | Loans covered by FDIC loss share agreements. Eighty percent of any losses in this portfolio will be reimbursed by the FDIC and recognized as FDIC indemnification income and included in non-interest income within the Companys condensed consolidated statement of operations. Six loan pools with an aggregate carrying value of $12,202 are impaired as of December 31, 2012, and have a specific allowance of $2,649. The aggregate carrying value of $12,202 represents approximately 69% of the underlying loan balances outstanding. |
The general loan loss allowance (non-impaired loans) decreased by $59 due to the Companys continued improvement in credit metric trends (decrease of $1,046) less an increase related to loans purchased from FTB in November 2011, due to the November 2012 expiration of the related put back option. Management evaluates this group of loans as a separate segment and has recorded a general loan loss allowance of $987 at December 31, 2012 related to this category. Prior to November 2012 there was no general loan loss allowance associated with the performing loans purchased from FTB for the reasons described above in note 2.
Currently, there is no general loan loss allowance associated with the performing loans purchased from TD Bank for the reasons described in note 1 above. The Company expects to provide an allowance for loan losses for the TD Bank purchased loans, however, because these were selected performing loans and because the Company put back past due and adversely classified loans, the initial allowance for loan losses related to this group of loans is not expected to be material.
The specific loan loss allowance (impaired loans) is the aggregate of the results of individual analyses prepared for each one of the impaired loans not covered by an FDIC loss share agreement on a loan level basis. The Company recorded partial charge offs in lieu of specific allowance for a number of the impaired loans. The Companys impaired loans have been written down by $4,350 to $48,179 ($47,157 when the $1,022 specific allowance is considered) from their legal unpaid principal balance outstanding of $52,529. In the aggregate, total impaired loans have been written down to approximately 92% of their legal unpaid principal balance, and non-performing impaired loans have been written down to approximately 75% of their legal unpaid principal balance. The Companys total non-performing loans (non-accrual loans plus loans past due greater than 90 days and still accruing, $25,741 at December 31, 2012) have been written down to approximately 77% of their legal unpaid principal balance.
10
Approximately $24,785 of the Companys impaired loans (51%) are not past due and have sufficient collateral, based on a current appraisal, such that based on managements evaluation, management has concluded that in their judgment the Company is not expected to incur a loss. Therefore, management has not recorded a specific allowance or a partial charge-off on any of these performing impaired loans. This group of impaired loans is not included in the Companys non-performing loans or non-performing assets categories.
Any losses in loans covered by FDIC loss share agreements, as described in note 4 above, are reimbursable from the FDIC to the extent of 80% of such losses. These loans are being accounted for pursuant to ASC Topic 310-30. Loan pools in this portfolio are evaluated for impairment each quarter. If a pool is impaired, an allowance for potential loan loss is recorded.
Management believes the Companys allowance for loan losses is adequate at December 31, 2012. However, management recognizes that many factors can adversely impact various segments of the Companys market and customers, and therefore there is no assurance as to the amount of losses or probable losses which may develop in the future. The table below summarizes the changes in allowance for loan losses during the previous five quarters.
Allowance for loan losses (unaudited) |
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as of or for the quarter ending |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Loans not covered by FDIC loss share agreements |
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Allowance at beginning of period |
$ | 24,019 | $ | 23,634 | $ | 25,569 | $ | 27,585 | $ | 25,879 | ||||||||||
Charge-offs |
(2,121 | ) | (2,245 | ) | (3,322 | ) | (4,826 | ) | (5,487 | ) | ||||||||||
Charge-offs related to loan sales |
| | | | (11,971 | ) | ||||||||||||||
Recoveries |
293 | 978 | 601 | 160 | 1,145 | |||||||||||||||
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Net charge-offs |
(1,828 | ) | (1,267 | ) | (2,721 | ) | (4,666 | ) | (16,313 | ) | ||||||||||
Provision for loan losses |
1,842 | 1,652 | 786 | 2,650 | 18,019 | |||||||||||||||
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Allowance at end of period for loans not covered by FDIC loss share agreements |
$ | 24,033 | $ | 24,019 | $ | 23,634 | $ | 25,569 | $ | 27,585 | ||||||||||
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Loans covered by FDIC loss share agreements |
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Allowance at beginning of period |
$ | 2,322 | $ | 1,549 | $ | 441 | $ | 359 | $ | 313 | ||||||||||
Charge-offs |
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Recoveries |
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Net charge-offs |
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Provision for loan losses |
327 | 773 | 1,108 | 82 | 46 | |||||||||||||||
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Allowance at end of period for loans covered by FDIC loss share agreements |
$ | 2,649 | $ | 2,322 | $ | 1,549 | $ | 441 | $ | 359 | ||||||||||
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Total allowance at end of period |
$ | 26,682 | $ | 26,341 | $ | 25,183 | $ | 26,010 | $ | 27,944 | ||||||||||
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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 loans covered by FDIC loss share agreements, which are accounted for pursuant to ASC Topic 310-30. NPLs as a percentage of total loans not covered by FDIC loss share agreements were 2.26% at December 31, 2012 compared to 2.54% at September 30, 2012.
Non-performing assets (NPAs) (which the Company defines as NPLs, as defined above, plus (a) OREO (i.e. real estate acquired through foreclosure, in-substance foreclosure, or deed in lieu of
11
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 $33,386 at December 31, 2012, compared to $35,633 at September 30, 2012. NPAs as a percentage of total assets was 1.41% at December 31, 2012 compared to 1.50% at September 30, 2012. NPAs as a percentage of loans plus OREO and other repossessed assets, excluding loans and OREO covered by FDIC loss share agreements, was 2.91% at December 31, 2012 compared to 3.12% at September 30, 2012.
NPA inflows for the quarter were approximately $1,887. Outflows were approximately $4,134, which included approximately $1,277 of previously non-performing loans upgraded to accrual status during the current quarter. Outflows consist primarily of net charge offs, loan sales, OREO sales, OREO valuation write downs, and loan upgrades. Inflows consist primarily of additions of new nonaccrual loans net of any prior nonaccrual loans returning to accrual status and also net of any principal pay-downs or pay-offs. Prior to the second quarter of 2012, loan upgrades were generally few and small in balance and were included in inflows as a net number. The Company upgraded loans with an aggregate balance of $7,456, $2,873 and $1,277 from nonaccrual to accrual status during 2Q12, 3Q12 and 4Q12, respectively. Because these were significant and easily identifiable amounts, they were included as an outflow. Any small homogeneous loan (e.g. single family home mortgages or consumer loans) that may have been upgraded during any of the previous quarters presented below, were netted in the aggregate inflow amount.
The table below summarizes the approximate NPA inflows and outflows during the quarters presented.
4Q12 | 3Q12 | 2Q12 | 1Q12 | 4Q11 | 3Q11 | 2Q11 | 1Q11 | |||||||||||||||||||||||||
Inflows |
$ | 1,887 | $ | 2,384 | $ | 1,463 | $ | 10,519 | $ | 11,584 | $ | 7,220 | $ | 14,828 | $ | 16,927 | ||||||||||||||||
Outflows |
(4,134 | ) | (6,134 | ) | (13,358 | ) | (8,550 | ) | (38,260 | ) | (9,264 | ) | (19,133 | ) | (13,117 | ) | ||||||||||||||||
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net change incr(decr) |
($ | 2,247 | ) | ($ | 3,750 | ) | ($ | 11,895 | ) | $ | 1,969 | ($ | 26,676 | ) | ($ | 2,044 | ) | ($ | 4,305 | ) | $ | 3,810 | ||||||||||
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NPA balance qrt end |
$ | 33,386 | $ | 35,633 | $ | 39,383 | $ | 51,278 | $ | 49,309 | $ | 75,985 | $ | 78,029 | $ | 82,334 | ||||||||||||||||
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12
The table below summarizes selected credit quality data for the periods indicated.
Selected credit quality ratios (unaudited) |
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As of or for the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Non-accrual loans (note 1) |
$ | 25,448 | $ | 28,658 | $ | 31,769 | $ | 42,598 | $ | 38,858 | ||||||||||
Past due loans 90 days or more and still accruing interest (note 1) |
293 | 121 | 118 | 127 | 120 | |||||||||||||||
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Total non-performing loans (NPLs) (note 1) |
25,741 | 28,779 | 31,887 | 42,725 | 38,978 | |||||||||||||||
Other real estate owned (OREO) (note 1) |
6,875 | 5,858 | 6,855 | 6,726 | 8,712 | |||||||||||||||
Repossessed assets other than real estate (note 1) |
770 | 996 | 641 | 1,827 | 1,619 | |||||||||||||||
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Total non-performing assets (NPAs) (note 1) |
$ | 33,386 | $ | 35,633 | $ | 39,383 | $ | 51,278 | $ | 49,309 | ||||||||||
Non-performing loans as percentage of total loans not covered by FDIC loss share agreements |
2.26 | % | 2.54 | % | 2.83 | % | 3.85 | % | 3.48 | % | ||||||||||
Non-performing assets as percentage of total assets |
1.41 | % | 1.50 | % | 1.61 | % | 2.02 | % | 2.16 | % | ||||||||||
Non-performing assets as percentage of loans and |
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OREO plus other repossessed assets (note 1) |
2.91 | % | 3.12 | % | 3.47 | % | 4.59 | % | 4.36 | % | ||||||||||
Net charge-offs (recoveries) |
$ | 1,828 | $ | 1,267 | $ | 2,721 | $ | 4,666 | $ | 16,313 | ||||||||||
Net charge-offs as a percentage of average loans for the period (note 1) |
0.16 | % | 0.11 | % | 0.25 | % | 0.41 | % | 1.48 | % | ||||||||||
Net charge-offs as a percentage of average loans for the period on an annualized basis (note 1) |
0.64 | % | 0.44 | % | 1.00 | % | 1.64 | % | 5.92 | % | ||||||||||
Loans past due 30 thru 89 days and accruing interest as a percentage of total loans (note 1) |
0.65 | % | 0.87 | % | 0.61 | % | 0.68 | % | 1.45 | % | ||||||||||
Allowance for loan losses as percentage of NPLs (note 1) |
93 | % | 83 | % | 74 | % | 60 | % | 71 | % | ||||||||||
Troubled debt restructure (TDRs) (note 2) |
$ | 14,660 | $ | 15,428 | $ | 11,722 | $ | 11,666 | $ | 12,361 | ||||||||||
Impaired loans that were not TDRs |
33,519 | 29,383 | 36,373 | 42,039 | 41,307 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total impaired loans |
48,179 | 44,811 | 48,095 | 53,705 | 53,668 | |||||||||||||||
Loans acquired pursuant to TD transaction (note 3) |
56,383 | 65,937 | 74,617 | 81,189 | 90,457 | |||||||||||||||
Loans acquired pursuant to FTB transaction (note 4) |
134,202 | 140,264 | 147,172 | 152,723 | 155,823 | |||||||||||||||
All other non impaired loans |
900,804 | 883,427 | 858,379 | 821,388 | 819,767 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans not covered by FDIC loss share agreements |
1,139,568 | 1,134,439 | 1,128,263 | 1,109,005 | 1,119,715 | |||||||||||||||
Total loans covered by FDIC loss share agreements |
296,295 | 309,743 | 327,325 | 347,793 | 164,051 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans |
$ | 1,435,863 | $ | 1,444,182 | $ | 1,455,588 | $ | 1,456,798 | $ | 1,283,766 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
As of or for the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Allowance for loan losses for loans not covered by FDIC loss share agreements |
||||||||||||||||||||
Specific loan loss allowance- impaired loans |
$ | 1,022 | $ | 949 | $ | 634 | $ | 1,033 | $ | 3,304 | ||||||||||
General loan loss allowance- TD transaction (note 3) |
| | | | | |||||||||||||||
General loan loss allowance- FTB transaction (note 4) |
987 | | | | | |||||||||||||||
General loan loss allowance- all other non impaired |
22,024 | 23,070 | 23,000 | 24,536 | 24,281 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total allowance for loan losses |
$ | 24,033 | $ | 24,019 | $ | 23,634 | $ | 25,569 | $ | 27,585 | ||||||||||
Allowance for loan loss percentage of period end loans: |
||||||||||||||||||||
Impaired loans (note 1) |
2.12 | % | 2.12 | % | 1.32 | % | 1.92 | % | 6.16 | % | ||||||||||
Loans acquired pursuant to TD transaction (note 3) |
| | | | | |||||||||||||||
Loans acquired pursuant to FTB transaction (note 4) |
0.74 | % | | | | | ||||||||||||||
All other non impaired loans (note 1) |
2.44 | % | 2.61 | % | 2.68 | % | 2.99 | % | 2.96 | % | ||||||||||
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|
|
|
|
|
|
|
|
|
|||||||||||
Total loans (note 1) |
2.11 | % | 2.12 | % | 2.09 | % | 2.31 | % | 2.46 | % | ||||||||||
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|
|
|
|
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|
|
13
Note 1: | Excludes loans, OREO and other repossessed assets covered by FDIC loss share agreements. |
Note 2: | The Company has approximately $14,660 of TDRs. Of this amount $8,841 are performing pursuant to their modified terms, and $5,819 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 our NPLs. |
Note 3: | Performing loans purchased from TD Bank, N.A. during the first quarter of 2011. The performing loans were selected by CenterState and are subject to a two year put back option. If any loan in this category becomes past due 30 days or is adversely classified pursuant to bank regulatory guidelines, CenterState has the option to put it back to TD Bank, N.A. anytime during a two year period beginning as of the January 20, 2011 purchase date. The Company has not allocated any loan loss allowance to this group of loans as of December 31, 2012. |
Note 4: | Performing loans purchased from Hartfords then wholly owned bank FTB during the fourth quarter of 2011. The performing loans were selected by CenterState and are subject to a one year put back option. If any loan in this category became past due 30 days or was adversely classified pursuant to bank regulatory guidelines, CenterState had the option to put it back to Hartford anytime during a one year period beginning as of the November 1, 2011 purchase date. Prior to the November 2012 expiration of the put back period, the Company had not allocated any loan loss allowance to this group of loans. The Company evaluates this group of loans as a separate segment and has initiated a general loan loss allowance amount of $987 as of December 31, 2012. |
As shown in the table on the previous page, the largest component of non-performing assets is non-accrual loans. The Companys non-accrual loans decreased from 210 loans with an aggregated balance of $28,658 at September 30, 2012 to 184 loans with an aggregate balance of $25,448 at December 31, 2012. Non-accrual loans at December 31, 2012 are further delineated by collateral category and number of loans in the table below.
collateral category (unaudited) |
total amount |
percentage of total non- accrual loans |
number of non- accrual loans in category |
|||||||||
Residential real estate loans |
$ | 9,993 | 39 | % | 79 | |||||||
Commercial real estate loans |
11,459 | 45 | % | 33 | ||||||||
Land, development, construction loans |
2,032 | 8 | % | 22 | ||||||||
Non real estate commercial loans |
1,650 | 7 | % | 27 | ||||||||
Non real estate consumer and other loans |
314 | 1 | % | 23 | ||||||||
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|
|
|
|
|
|||||||
Total non-accrual loans at December 31, 2012 |
$ | 25,448 | 100 | % | 184 | |||||||
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|
|
|
The second largest component of non-performing assets after non-accrual loans is OREO, excluding OREO covered by FDIC loss share agreements. At December 31, 2012, total OREO was $33,658. Of this amount, $26,783 was acquired pursuant to the acquisition of five failed financial institutions. The acquired OREO is covered by FDIC loss share agreements. Pursuant to the terms of the loss sharing agreements, the FDIC is obligated to reimburse the Company for 80% of losses with respect to the covered OREO beginning with the first dollar of loss incurred, subject to the terms of the agreements. The Company will reimburse the FDIC for its share of recoveries with respect to the covered OREO. The loss sharing agreements applicable to single family residential mortgage loans provide for FDIC loss sharing and the Company reimbursement to the FDIC for recoveries for ten years. The loss sharing agreements applicable to commercial loans provide for FDIC loss sharing for five years and Company reimbursement to the FDIC for a total of eight years for recoveries.
OREO not covered by FDIC loss share agreements is $6,875 at December 31, 2012. OREO is carried at the lower of cost or market less the estimated cost to sell. Further declines in real estate values can affect the market value of these assets. Any further decline in market value beyond its cost basis is
14
recorded as a current expense in the Companys Statement of Operations. The current carrying value represents approximately 40% of the unpaid legal balance of the related loan when the asset was repossessed. OREO is further delineated in the table below.
(unaudited) | carrying amount | |||
Description of repossessed real estate |
at Dec 31, 2012 | |||
8 single family homes |
$ | 834 | ||
35 residential building lots |
1,233 | |||
13 commercial buildings |
2,273 | |||
Land / various acreages |
2,535 | |||
|
|
|||
Total, excluding OREO covered by FDIC loss share agreements |
$ | 6,875 |
Deposit activity
During the quarter, total deposits decreased by $617 (time deposits decreased by $52,733 and non-time deposits increased by $53,350). The loan to deposit ratio was approximately 72% at quarter end. The cost of interest bearing deposits decreased 4 bps to 0.41% in the current quarter compared to 0.45% in the prior quarter. The overall cost of total deposits (i.e. includes non-interest bearing checking accounts) decreased by 3 bps to 0.31% in the current quarter compared to 0.34% in the prior quarter. The table below summarizes the Companys deposit mix over the periods indicated.
Deposit mix (unaudited) |
||||||||||||||||||||
For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Checking accounts |
||||||||||||||||||||
Non-interest bearing |
$ | 519,510 | $ | 504,528 | $ | 500,871 | $ | 500,683 | $ | 423,128 | ||||||||||
Interest bearing |
452,961 | 410,517 | 408,877 | 400,492 | 344,303 | |||||||||||||||
Savings deposits |
238,216 | 240,326 | 243,390 | 247,442 | 205,387 | |||||||||||||||
Money market accounts |
311,241 | 314,441 | 325,751 | 354,885 | 340,053 | |||||||||||||||
Time deposits |
475,304 | 528,037 | 577,208 | 629,306 | 606,918 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
$ | 1,997,232 | $ | 1,997,849 | $ | 2,056,097 | $ | 2,132,808 | $ | 1,919,789 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Non time deposits as percentage of total deposits |
76 | % | 74 | % | 72 | % | 70 | % | 68 | % | ||||||||||
Time deposits as percentage of total deposits |
24 | % | 26 | % | 28 | % | 30 | % | 32 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
15
Presented below are condensed consolidated balance sheets and average balance sheets for the periods indicated.
Condensed Consolidated Balance Sheets (unaudited) |
||||||||||||||||||||
For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Cash and due from banks |
$ | 19,160 | $ | 20,259 | $ | 23,444 | $ | 31,471 | $ | 17,893 | ||||||||||
Fed funds sold and Fed Res Bank deposits |
117,588 | 82,872 | 93,361 | 103,427 | 133,202 | |||||||||||||||
Trading securities |
5,048 | | 1,061 | 552 | | |||||||||||||||
Investments securities, available for sale |
425,758 | 458,796 | 474,105 | 545,559 | 591,164 | |||||||||||||||
Loans held for sale |
2,709 | 1,707 | 1,692 | 298 | 3,741 | |||||||||||||||
Loans covered by FDIC loss share agreements |
296,295 | 319,748 | 337,442 | 357,802 | 164,051 | |||||||||||||||
Loans not covered by FDIC loss share agreements |
1,139,568 | 1,134,439 | 1,128,263 | 1,109,005 | 1,119,715 | |||||||||||||||
Allowance for loan losses |
(26,682 | ) | (26,341 | ) | (25,183 | ) | (26,010 | ) | (27,944 | ) | ||||||||||
FDIC indemnification assets |
119,289 | 121,871 | 132,880 | 134,126 | 50,642 | |||||||||||||||
Premises and equipment, net |
97,954 | 97,749 | 100,902 | 97,060 | 94,358 | |||||||||||||||
Goodwill |
44,924 | 44,924 | 44,930 | 44,924 | 38,035 | |||||||||||||||
Core deposit intangible |
5,944 | 6,229 | 6,522 | 6,821 | 5,203 | |||||||||||||||
Bank owned life insurance |
47,957 | 47,601 | 47,241 | 46,878 | 36,520 | |||||||||||||||
OREO covered by FDIC loss share agreements |
26,783 | 25,967 | 30,243 | 29,934 | 9,469 | |||||||||||||||
OREO not covered by FDIC loss share agreements |
6,875 | 5,858 | 6,855 | 6,726 | 8,712 | |||||||||||||||
Other assets |
34,070 | 35,936 | 36,805 | 44,565 | 39,698 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
TOTAL ASSETS |
$ | 2,363,240 | $ | 2,377,615 | $ | 2,440,563 | $ | 2,533,138 | $ | 2,284,459 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deposits |
$ | 1,997,232 | $ | 1,997,849 | $ | 2,056,097 | $ | 2,132,808 | $ | 1,919,789 | ||||||||||
Federal funds purchased |
38,932 | 46,574 | 45,337 | 74,459 | 54,624 | |||||||||||||||
Other borrowings |
35,762 | 38,005 | 50,725 | 48,126 | 31,597 | |||||||||||||||
Other liabilities |
17,783 | 21,338 | 19,031 | 14,118 | 15,816 | |||||||||||||||
Common stockholders equity |
273,531 | 273,849 | 269,373 | 263,627 | 262,633 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,363,240 | $ | 2,377,615 | $ | 2,440,563 | $ | 2,533,138 | $ | 2,284,459 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Condensed Consolidated Average Balance Sheets (unaudited) |
||||||||||||||||||||
For quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Federal funds sold and other |
$ | 138,236 | $ | 102,627 | $ | 116,153 | $ | 128,479 | $ | 152,550 | ||||||||||
Security investments |
434,059 | 478,087 | 513,854 | 567,438 | 566,317 | |||||||||||||||
Loans covered by FDIC loss share agreements |
309,502 | 327,847 | 347,191 | 316,421 | 167,512 | |||||||||||||||
Loans not covered by FDIC loss share agreements |
1,138,127 | 1,129,783 | 1,122,268 | 1,116,804 | 1,099,754 | |||||||||||||||
Allowance for loan losses |
(26,930 | ) | (25,893 | ) | (26,254 | ) | (28,421 | ) | (26,866 | ) | ||||||||||
All other assets |
395,267 | 401,145 | 413,498 | 395,308 | 286,824 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
TOTAL ASSETS |
$ | 2,388,261 | $ | 2,413,596 | $ | 2,486,710 | $ | 2,496,029 | $ | 2,246,091 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Deposits- interest bearing |
$ | 1,490,327 | $ | 1,532,538 | $ | 1,590,953 | $ | 1,610,176 | $ | 1,456,253 | ||||||||||
Deposits- non interest bearing |
521,890 | 503,654 | 507,138 | 494,898 | 418,373 | |||||||||||||||
Federal funds purchased |
44,520 | 47,885 | 54,131 | 68,842 | 57,049 | |||||||||||||||
Other borrowings |
36,972 | 40,164 | 51,328 | 43,240 | 31,849 | |||||||||||||||
Other liabilities |
20,860 | 16,655 | 15,720 | 15,665 | 23,592 | |||||||||||||||
Stockholders equity |
273,692 | 272,700 | 267,440 | 263,208 | 258,975 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,388,261 | $ | 2,413,596 | $ | 2,486,710 | $ | 2,496,029 | $ | 2,246,091 | ||||||||||
|
|
|
|
|
|
|
|
|
|
16
Non interest income and non interest expense
The table below summarizes the Companys non-interest income for the periods indicated.
Quarterly Condensed Consolidated Non Interest Income (unaudited) |
||||||||||||||||||||
For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Income from correspondent banking and bond sales division |
$ | 6,450 | $ | 8,606 | $ | 9,966 | $ | 7,784 | $ | 6,661 | ||||||||||
Other correspondent banking related fees |
558 | 590 | 608 | 426 | 454 | |||||||||||||||
Wealth management related fees |
624 | 683 | 631 | 660 | 487 | |||||||||||||||
Trust fees |
318 | 317 | 319 | 208 | | |||||||||||||||
Trading securities revenue |
156 | 257 | 133 | 144 | 88 | |||||||||||||||
Service charges on deposit accounts |
1,825 | 1,695 | 1,595 | 1,483 | 1,713 | |||||||||||||||
Debit card and ATM fees |
1,079 | 1,012 | 1,017 | 915 | 769 | |||||||||||||||
Loan related fees |
152 | 116 | 85 | 200 | 77 | |||||||||||||||
BOLI income |
355 | 360 | 363 | 358 | 266 | |||||||||||||||
Other service charges and fees |
318 | 496 | 217 | 385 | 611 | |||||||||||||||
Gain on sale of securities available for sale |
420 | 675 | 726 | 602 | 130 | |||||||||||||||
FDIC indemnification asset amortization of discount rate |
(1,540 | ) | (671 | ) | (348 | ) | (537 | ) | (699 | ) | ||||||||||
FDIC indemnification income |
2,025 | 2,199 | 1,229 | 564 | (845 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Subtotal |
$ | 12,740 | $ | 16,335 | $ | 16,541 | $ | 13,192 | $ | 9,712 | ||||||||||
Bargain purchase gains related to acquisitions |
| | | 453 | 45,891 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-interest income |
$ | 12,740 | $ | 16,335 | $ | 16,541 | $ | 13,645 | $ | 55,603 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The FDIC indemnification asset (IA) is producing amortization (versus accretion) due to reductions in the estimated losses in the FDIC covered loan portfolio. That is, to the extent current projected losses in the covered 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 corresponds to the increase in yields in the FDIC covered 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 income over the life of the related loan pool. The lower expected reimbursement from the FDIC (i.e. 80% of the lower expected future losses) is amortized over the loss share period, which many times are shorter periods than the life of the related loan pools.
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 eighty percent of the loss is recorded as FDIC indemnification income and included in non-interest income. Eighty percent of any related loan pool impairments also are reflected in this non-interest income account.
17
The table below summarizes the Companys non-interest expense for the periods indicated.
Quarterly Condensed Consolidated Non Interest Expense (unaudited) |
||||||||||||||||||||
For the quarter ended: |
12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | |||||||||||||||
Employee salaries and wages |
$ | 12,580 | $ | 14,083 | $ | 15,650 | $ | 13,919 | $ | 12,711 | ||||||||||
Employee incentive/bonus compensation accrued |
1,032 | 1,247 | 897 | 762 | 1,024 | |||||||||||||||
Employee stock based compensation expense |
153 | 154 | 164 | 160 | 170 | |||||||||||||||
Deferred compensation expense |
124 | 131 | 123 | 123 | 115 | |||||||||||||||
Health insurance and other employee benefits |
878 | 1,034 | 1,052 | 1,021 | 1,068 | |||||||||||||||
Payroll taxes |
610 | 718 | 814 | 1,093 | 644 | |||||||||||||||
401K employer contributions |
236 | 268 | 303 | 337 | 243 | |||||||||||||||
Other employee related expenses |
336 | 298 | 231 | 186 | 158 | |||||||||||||||
Incremental direct cost of loan origination |
(228 | ) | (227 | ) | (184 | ) | (140 | ) | (158 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total salaries, wages and employee benefits |
15,721 | 17,706 | 19,050 | 17,461 | 15,975 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(Gain) loss on sale of OREO |
(17 | ) | 33 | (120 | ) | (36 | ) | 190 | ||||||||||||
Loss (gain) on sale of FDIC covered OREO |
548 | 120 | 349 | 308 | (7 | ) | ||||||||||||||
Valuation write down of OREO |
287 | 368 | 418 | (62 | ) | 1,993 | ||||||||||||||
Valuation write down of FDIC covered OREO |
1,146 | 1,367 | 417 | 317 | 99 | |||||||||||||||
(Gain) loss on repossessed assets other than real estate |
(52 | ) | 37 | 40 | 98 | 56 | ||||||||||||||
Loan put back expense |
734 | 852 | 22 | 24 | 91 | |||||||||||||||
Foreclosure and repossession related expenses |
355 | 858 | 649 | 625 | 701 | |||||||||||||||
Foreclosure and repo expense, FDIC (note 1) |
572 | 209 | 423 | 317 | 183 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total credit related expenses |
3,573 | 3,844 | 2,198 | 1,591 | 3,306 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Occupancy expense |
1,909 | 2,246 | 2,481 | 2,061 | 2,027 | |||||||||||||||
Depreciation of premises and equipment |
1,530 | 1,465 | 1,416 | 1,267 | 1,196 | |||||||||||||||
Supplies, stationary and printing |
245 | 261 | 303 | 315 | 301 | |||||||||||||||
Marketing expenses |
655 | 716 | 609 | 584 | 692 | |||||||||||||||
Data processing expenses |
1,131 | 890 | 962 | 1,005 | 915 | |||||||||||||||
Legal, auditing and other professional fees |
755 | 551 | 601 | 620 | 853 | |||||||||||||||
Bank regulatory related expenses |
448 | 623 | 658 | 700 | 559 | |||||||||||||||
Postage and delivery |
279 | 282 | 264 | 323 | 206 | |||||||||||||||
ATM and debit card related expenses |
377 | 312 | 256 | 262 | 556 | |||||||||||||||
Amortization of CDI |
284 | 294 | 299 | 278 | 219 | |||||||||||||||
Internet and telephone banking |
235 | 209 | 224 | 277 | 243 | |||||||||||||||
Visa/Mastercard processing expenses |
35 | 35 | 30 | 40 | 35 | |||||||||||||||
Put back option amortization expense |
134 | 182 | 182 | 182 | 158 | |||||||||||||||
Operational write-offs and losses |
86 | 378 | 91 | 142 | 146 | |||||||||||||||
Correspondent account and Federal Reserve charges |
115 | 133 | 146 | 133 | 115 | |||||||||||||||
Conferences, seminars, education and training |
114 | 105 | 161 | 130 | 168 | |||||||||||||||
Director fees |
103 | 100 | 80 | 91 | 89 | |||||||||||||||
Travel expenses |
114 | 112 | 63 | 28 | 27 | |||||||||||||||
Impairment of bank property held for sale |
| 449 | 165 | | | |||||||||||||||
Other expenses |
632 | 636 | 805 | 728 | 692 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Subtotal |
28,475 | 31,529 | 31,044 | 28,218 | 28,478 | |||||||||||||||
Merger, acquisition and conversion related expenses |
55 | 177 | 614 | 1,868 | 6,246 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non- interest expense |
$ | 28,530 | $ | 31,706 | $ | 31,658 | $ | 30,086 | $ | 34,724 | ||||||||||
|
|
|
|
|
|
|
|
|
|
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. |
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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. Management uses these non-GAAP financial measures in its analysis of the Companys performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Companys performance. The Company believes the non-GAAP measures enhance investors understanding of the Companys business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these non-GAAP measures. These disclosures should not be considered an alternative to GAAP.
Reconciliation of GAAP to non-GAAP Measures (unaudited):
4Q12 | 3Q12 | 4Q11 | ||||||||||
Interest income, as reported (GAAP) |
$ | 23,265 | $ | 23,608 | $ | 21,324 | ||||||
tax equivalent adjustments |
320 | 343 | 341 | |||||||||
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Interest income (tax equivalent) |
$ | 23,585 | $ | 23,951 | $ | 21,665 | ||||||
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Net interest income, as reported (GAAP) |
$ | 21,539 | $ | 21,667 | $ | 18,567 | ||||||
tax equivalent adjustments |
320 | 343 | 341 | |||||||||
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Net interest income (tax equivalent) |
$ | 21,859 | $ | 22,010 | $ | 18,908 | ||||||
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12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | ||||||||||||||||
Total stockholders equity (GAAP) |
$ | 273,531 | $ | 273,849 | $ | 269,373 | $ | 263,627 | $ | 262,633 | ||||||||||
Goodwill |
(44,924 | ) | (44,924 | ) | (44,930 | ) | (44,924 | ) | (38,035 | ) | ||||||||||
Core deposit intangible |
(5,944 | ) | (6,229 | ) | (6,522 | ) | (6,821 | ) | (5,203 | ) | ||||||||||
Trust intangible |
(1,363 | ) | (1,422 | ) | (1,481 | ) | (1,541 | ) | | |||||||||||
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Tangible common equity |
$ | 221,300 | $ | 221,274 | $ | 216,440 | $ | 210,341 | $ | 219,395 | ||||||||||
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About CenterState Banks, Inc.
The Company, headquartered in Davenport, Florida, between Orlando and Tampa, is a bank holding company that was formed in June 2000 as part of a merger of three independent commercial banks. Currently, the Company operates through one subsidiary bank with 55 full service branch banking locations in 18 counties throughout central Florida. Through its subsidiary bank the Company provides a range of consumer and commercial banking services to individuals, businesses and industries.
In addition to providing traditional deposit and lending products and services to its commercial and retail customers in central Florida, the Company also operates a correspondent banking and bond sales division. The division is integrated with and part of the Companys subsidiary bank located in Winter Haven, Florida, although the majority of the bond salesmen, traders and operations personnel are
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physically housed in leased facilities located in Birmingham, Alabama, Atlanta, Georgia and Winston-Salem, North Carolina. The customer base includes small to medium size financial institutions primarily located in southeastern United States.
For additional information contact Ernest S. Pinner, CEO, John C. Corbett, EVP, or James J. Antal, CFO, 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, 2011, and otherwise in our SEC reports and filings.
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