Exhibit 99.2

Community & Southern Holdings, Inc.

Unaudited consolidated financial statements

for the three months ended March 31, 2016 and 2015.

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Community & Southern Holdings, Inc.

Consolidated Balance Sheets (Unaudited)

 

 

(In thousands of dollars, except share data)

 

		March 31, 2016				December 31, 2015
Assets
Cash and due from banks		$	166,832			$	218,338
Investment securities available-for-sale (amortized cost of $437,078 and $463,913, respectively)			441,958				464,481
Investment securities held-to-maturity (market value of $81,637 and $83,480, respectively)			78,020				80,368
Loans held for sale			4,441				2,373
Loans held for investment			3,124,515				3,147,558
Allowance for loan losses			(39,946	)			(41,417	)
Loans, net of allowance for loan losses			3,084,569				3,106,141
Premises and equipment			74,795				79,826
Other real estate owned			7,870				8,292
Goodwill			44,514				44,514
Core deposit intangibles			13,350				14,428
Bank owned life insurance			85,710				85,040
Other assets			70,162				67,984
Total assets		$	4,072,221			$	4,171,785
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing		$	509,132			$	548,838
Interest-bearing			3,066,396				3,139,949
Total deposits			3,575,528				3,688,787
Other liabilities			19,417				22,854
Total liabilities			3,594,945				3,711,641
Shareholders’ equity
Common stock ($0.01 par value; 100,000,000 shares authorized; 36,969,052 and 36,949,266 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively)			369				369
Additional paid-in capital			375,345				374,893
Retained earnings			98,010				84,110
Accumulated other comprehensive income			3,552				772
Total shareholders’ equity			477,276				460,144
Total liabilities and shareholders’ equity		$	4,072,221			$	4,171,785

The accompanying notes are an integral part of these consolidated financial statements.

 

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Community & Southern Holdings, Inc.

Consolidated Statements of Income (Unaudited)

 

 

(In thousands of dollars)

 

		Three Months Ended March 31,
		2016				2015
Interest income
Interest and fees on loans		$	41,786			$	34,159
Interest and dividends on investment securities			3,283				3,114
Interest on other earning assets			182				75
Total interest income			45,251				37,348
Interest expense
Deposits			5,040				3,568
Other borrowings			—				347
Total interest expense			5,040				3,915
Net interest income			40,211				33,433
Provision for credit losses			1,664				4,376
Net interest income after provision for credit losses			38,547				29,057
Noninterest income
Service charges on deposit accounts			3,202				2,693
Gain on sales of mortgage loans			447				817
Gain on sales of other loans, net			2,299				—
Other			2,096				2,828
Total noninterest income			8,044				6,338
Noninterest expense
Salaries and employee benefits			11,982				12,146
Occupancy and equipment expense			3,214				3,017
Technology and data processing			2,679				2,268
Professional services			1,558				1,288
Expense on loans and other real estate owned			1,066				601
Amortization expense			1,167				871
FDIC loss share receivable amortization			—				3,165
Other			3,191				3,715
Total noninterest expense			24,857				27,071
Income before income taxes			21,734				8,324
Income tax expense			7,834				2,213
Net income		$	13,900			$	6,111

The accompanying notes are an integral part of these consolidated financial statements.

 

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Community & Southern Holdings, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

 

 

(In thousands of dollars)

 

		Three Months Ended March 31
		2016				2015
Net Income		$	13,900			$	6,111
Components of other comprehensive income:
Unrealized gains on available-for-sale investment securities arising during period (net of $1,444 and $1,277 tax, respectively)			2,802				2,479
Amortization of unrealized gains on investment securities transferred from available-for-sale to held-to-maturity			(22	)			(28	)
Total other comprehensive income			2,780				2,451
Comprehensive income		$	16,680			$	8,562

The accompanying notes are an integral part of these consolidated financial statements.

 

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Community & Southern Holdings, Inc.

Consolidated Statements of Shareholders’ Equity (Unaudited)

 

 

(In thousands of dollars)

 

		Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income				Total Shareholders’ Equity
Balance at December 31, 2014		$	369			$	372,670			$	59,461			$	2,570			$	435,070
Net income			—				—				6,111				—				6,111
Change in accumulated other comprehensive income			—				—				—				2,451				2,451
Stock-based compensation expense			—				656				—				—				656
Balance at March 31, 2015		$	369			$	373,326			$	65,572			$	5,021			$	444,288
Balance at December 31, 2015		$	369			$	374,893			$	84,110			$	772			$	460,144
Net income			—				—				13,900				—				13,900
Change in accumulated other comprehensive income			—				—				—				2,780				2,780
Stock-based compensation expense			—				452				—				—				452
Balance at March 31, 2016		$	369			$	375,345			$	98,010			$	3,552			$	477,276

The accompanying notes are an integral part of these consolidated financial statements.

 

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Community & Southern Holdings, Inc.

Consolidated Statements of Cash Flows (Unaudited)

 

 

(In thousands of dollars)

 

		Three Months Ended March 31,
		2016				2015
Cash flows from operating activities
Net income		$	13,900			$	6,111
Adjustments to reconcile net income to cash provided by operating activities:
Net amortization/accretion of premiums and discounts			(6,809	)			(8,646	)
Provision for credit losses			1,664				4,376
Other real estate owned and repossession losses, net			59				201
Gain on sale of other loans, net			(2,299	)			—
Stock-based compensation expense			452				656
Deferred income tax expense (benefit)			3,332				(3,150	)
Depreciation, amortization and accretion			1,202				1,083
Net change in loans held for sale			(177	)			(290	)
Net change in FDIC loss share receivable			—				8,311
Increase in cash surrender value of bank owned life insurance			(670	)			(572	)
Net change in other assets			4,596				(15,409	)
Net change in other liabilities			(3,437	)			(3,352	)
Net cash provided by (used in) operating activities			11,813				(10,681	)
Cash flows from investing activities
Net change in loans held for investment (originations, net of principal repayments)			(43,324	)			(126,297	)
Purchases of investment securities available-for-sale			(136	)			(50,120	)
Proceeds from maturities and calls of investment securities available-for-sale			26,426				16,391
Proceeds from calls and maturities of investment securities held-to-maturity			2,260				2,455
Proceeds from sales of of other loans			64,295				—
Purchases of investment securities held-to-maturity			—				(2,025	)
Purchases of premises and equipment			(27	)			(687	)
Disposals of premises and equipment			18				548
Other adjustments in other real estate owned			19				1,716
Proceeds from sales of other real estate owned			409				6,026
Purchases of bank owned life insurance			—				(20,000	)
Net cash provided by (used in) investing activities			49,940				(171,993	)
Cash flows from financing activities
Net change in deposits			(113,259	)			1,478
Proceeds from other borrowings			—				100,000
Net cash (used in) provided by financing activities			(113,259	)			101,478
Change in cash and due from banks			(51,506	)			(81,196	)
Beginning of period			218,338				203,956
End of period		$	166,832			$	122,760
Supplemental disclosure of cash flow information
Transfers of loans to other real estate owned		$	65			$	2,722
Transfers of loans held for investment to loans held for sale			1,891				—
Transfers of fixed assets to other assets			3,806				—
Loan sale awaiting settlement			7,765				—
Cash paid for interest			5,066				3,929
Cash paid for income taxes			172				13,379
Change in unrealized gain on investment securities available-for-sale			4,311				3,814

The accompanying notes are an integral part of these consolidated financial statements.

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

1.	Significant Accounting Policies

Community & Southern Holdings, Inc. (the “Company”), headquartered in Atlanta, Georgia, is a financial holding company that was incorporated under the laws of the State of Delaware on September 18, 2009 to serve as the holding company for Community & Southern Bank (“C&S Bank”). The Company operates two subsidiaries: (1) C&S Bank, a Georgia-state chartered bank that was incorporated on January 29, 2010, which provides traditional credit and depository banking services to its retail and commercial customers in northern and central Georgia, including metro Atlanta, as well as Jacksonville, Florida, and (2) CSB Risk Management, Inc., a captive insurance company established with the specific objective of insuring risks for the Company, its subsidiaries, and a group of unaffiliated member banks. C&S Bank is the parent company of CSB Investments, Inc., a Nevada corporation that owns all of the investment securities of the Company.

Principles of Consolidation and Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information. Accordingly, certain information normally presented for complete consolidated financial statements required by US GAAP has been omitted. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could vary from these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

These financial statements should be read in conjunction with the 2015 Consolidated Financial Statements of Community & Southern Holdings, Inc. There have been no significant changes to the Company’s accounting policies as disclosed in the 2015 Consolidated Financial Statements.

Recent Accounting Pronouncements

The following relevant accounting pronouncements, issued during 2016, could have a material effect on the Company’s financial statements. The 2015 Consolidated Financial Statements summarize relevant pronouncements issued prior to 2016.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The ASU establishes a right of use model that requires a lessee to record a right of use asset and a lease liability for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The amendments are effective for fiscal years beginning after December 15, 2019 for non-public entities. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is assessing the impact of ASU 2016-02 on its financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU requires all income tax effects of awards to be recognized in the income statement when the awards vest or are exercised. It also allows

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

an employer to repurchase more of an employee’s shares than it can currently for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. The guidance is effective for fiscal years beginning after December 15, 2017 for non-public entities. Early adoption is permitted. The Company is assessing the impact of ASU 2016-09 on its financial statements.

 

2.	Investment Securities

The aggregate values of investment securities at March 31, 2016 and December 31, 2015, along with unrealized gains and losses determined on an individual security basis are as follows (dollars in thousands):

 

		Held-to-Maturity As of March 31, 2016																Available-for-Sale As of March 31, 2016
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value				Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
U.S. government		$	—			$	—			$	—			$	—			$	30,081			$	180			$	73			$	30,188
Certificates of deposit			23,523				153				27				23,649				—				—				—				—
FNMA, GNMA and FHLMC mortgage-backed securities			—				—				—				—				211,155				3,359				89				214,425
Asset backed securities			—				—				—				—				10,798				—				370				10,428
Collateralized mortgage obligations			—				—				—				—				137,614				1,813				171				139,256
State, county and municipal			54,497				3,492				1				57,988				8,153				240				—				8,393
Corporate bonds			—				—				—				—				35,503				104				113				35,494
Equity securities			—				—				—				—				3,774				—				—				3,774
Total investment securities		$	78,020			$	3,645			$	28			$	81,637			$	437,078			$	5,696			$	816			$	441,958
		Held-to-Maturity As of December 31, 2015																Available-for-Sale As of December 31, 2015
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value				Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
U.S. government		$	—			$	—			$	—			$	—			$	35,087			$	20			$	396			$	34,711
Certificates of deposit			24,882				18				197				24,703				—				—				—				—
FNMA, GNMA and FHLMC mortgage-backed securities			—				—				—				—				219,413				2,066				1,089				220,390
Asset backed securities			—				—				—				—				16,333				—				439				15,894
Collateralized mortgage obligations			—				—				—				—				145,061				875				742				145,194
State, county and municipal			55,486				3,299				8				58,777				8,832				160				—				8,992
Corporate bonds			—				—				—				—				35,529				165				52				35,642
Equity securities			—				—				—				—				3,658				—				—				3,658
Total investment securities		$	80,368			$	3,317			$	205			$	83,480			$	463,913			$	3,286			$	2,718			$	464,481

The following table provides contractual maturity information for investment securities as of March 31, 2016 (dollars in thousands). Callable investment securities are assumed to mature on their earliest call date. Actual maturities may differ from contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

		Held-to-Maturity As of March 31, 2016								Available-for-Sale As of March 31, 2016
		Cost				Fair Value				Cost				Fair Value
Maturing in
One year or less		$	2,724			$	2,727			$	9,346			$	9,414
One through five years			35,678				37,029				268,283				272,074
Five through ten years			32,830				34,730				145,341				146,319
Over ten years			6,788				7,151				10,334				10,377
Equity securities			—				—				3,774				3,774
Total investment securities		$	78,020			$	81,637			$	437,078			$	441,958

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

The following table provides information regarding investment securities with unrealized losses as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		Less Than 12 Months												As of March 31, 2016 More Than 12 Months												Total
		Investment Positions				Fair Value				Unrealized Losses				Investment Positions				Fair Value				Unrealized Losses				Investment Positions				Fair Value				Unrealized Losses
U.S. government			0			$	—			$	—				1			$	4,922			$	73				1			$	4,922			$	73
Certificates of deposit			22				4,337				16				9				2,015				11				31				6,352				27
FNMA, GNMA and FHLMC mortgage-backed securities			4				18,159				89				—				—				—				4				18,159				89
Asset backed securities			2				4,739				117				2				5,689				253				4				10,428				370
Collateralized mortgage obligations			1				1,706				4				2				7,703				167				3				9,409				171
State, county and municipal			1				556				1				—				—				—				1				556				1
Corporate bonds			4				19,392				113				—				—				—				4				19,392				113
Total investment securities			34			$	48,889			$	340				14			$	20,329			$	504				48			$	69,218			$	844
		Less Than 12 Months												As of December 31, 2015 More Than 12 Months												Total
		Investment Positions				Fair Value				Unrealized Losses				Investment Positions				Fair Value				Unrealized Losses				Investment Positions				Fair Value				Unrealized Losses
U.S. government			3			$	14,966			$	138				2			$	9,725			$	258				5			$	24,691			$	396
Certificates of deposit			74				15,799				138				13				2,872				59				87				18,671				197
FNMA, GNMA and FHLMC mortgage-backed securities			17				99,635				926				3				10,864				163				20				110,499				1,089
Asset backed securities			2				5,173				135				3				10,721				304				5				15,894				439
Collateralized mortgage obligations			7				52,584				294				4				20,400				448				11				72,984				742
State, county and municipal			1				551				8				—				—				—				1				551				8
Corporate bonds			3				15,371				52				—				—				—				3				15,371				52
Total investment securities			107			$	204,079			$	1,691				25			$	54,582			$	1,232				132			$	258,661			$	2,923

The Company held certain investment securities having unrealized loss positions. As of March 31, 2016, the Company did not intend to sell these investment securities nor was it more likely than not that the Company would be required to sell these investment securities before their anticipated recovery or maturity. The Company has reviewed its portfolio for other-than-temporary impairment (“OTTI”) in accordance with the accounting policies outlined in Note 1, “Summary of Significant Accounting Policies and Nature of Business”, to the 2015 Consolidated Financial Statements. Market changes in interest rates and credit spreads will result in temporary unrealized losses as the market price of investment securities fluctuates. As a result, the Company had no OTTI for the three months ended March 31, 2016 and the year ended December 31, 2015.

The Company had pledged held-to-maturity and available-for-sale investment securities having aggregate fair values of $22.8 million and $327.8 million, respectively, at March 31, 2016, and $19.2 million and $329.0 million, respectively, at December 31, 2015 to secure public funds on deposit and certain other borrowings, and for other purposes as required by law.

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

3.	Loans Held for Investment

Composition of Loan Portfolio

The Company’s recorded investment in loans outstanding at March 31, 2016 and December 31, 2015 is summarized as follows (dollars in thousands):

 

		March 31, 2016				December 31, 2015
Commercial loans:
Construction		$	364,907			$	350,026
Commercial real estate			1,154,699				1,165,464
Commercial & industrial			282,385				347,194
Total commercial loans			1,801,991				1,862,684
Consumer loans:
Residential real estate			217,151				219,739
Automobile			425,590				401,184
Marine and recreational vehicle			433,516				391,058
Other consumer purpose			11,050				9,950
Total consumer loans			1,087,307				1,021,931
Purchased credit-impaired loans:
Construction			14,503				18,281
Commercial real estate			133,576				150,341
Commercial & industrial			8,190				9,054
Residential real estate			78,132				84,362
Other consumer purpose			816				905
Total purchased credit-impaired loans			235,217				262,943
Loans held for investment		$	3,124,515			$	3,147,558
Loans held for sale		$	4,441			$	2,373

Under a line of credit agreement with the Federal Home Loan Bank of Atlanta (“FHLBA”), at March 31, 2016 and December 31, 2015, the Company had pledged certain loans under a blanket lien as collateral for its FHLBA borrowings. The loans subject to the blanket lien included all qualifying 1-4 family first mortgage loans, multi-family first mortgage loans, and commercial real estate loans, and had a recorded investment of $2.6 billion and $2.7 billion at March 31, 2016 and December 31, 2015, respectively.

During the three months ended March 31, 2016, the Company sold a portfolio of classified loans with a recorded investment of $16.7 million and recorded a gain of $4.8 million on the sale, which is included within the gain on sale of other loans on the Consolidated Statements of Income. The Company also sold a portfolio of syndicated loans with a recorded investment of $52.4 million and recorded a loss of $2.5 million on the sale, which is also included within the gain on sale of other loans.

Credit Quality

The Company monitors the credit quality of its commercial loan portfolio using internal credit risk ratings. These credit risk ratings are based upon established regulatory guidance and are assigned upon initial approval of credit to borrowers. Credit risk ratings are updated at least annually after the initial assignment or whenever management becomes aware of information affecting the borrowers’ ability to fulfill their obligations. The Company utilizes the following categories of credit grades to evaluate its commercial loan portfolio:

Pass. Higher quality loans that do not fit any of the other categories described below.

Special Mention. The Company assigns a special mention rating to loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or the Company’s credit position at some future date.

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Substandard. The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have well-defined weaknesses that jeopardize repayment of the debt. Substandard loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not addressed.

Doubtful. The Company assigns a doubtful rating to loans with all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the credit quality of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

The following tables show the credit quality indicators associated with the Company’s commercial loan portfolio (excluding purchased credit impaired (“PCI”) loans) as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
		Construction				Commercial Real Estate				Commercial & Industrial				Total
Pass		$	357,617			$	1,087,677			$	255,531			$	1,700,825
Special Mention			5,158				18,753				9,195				33,106
Substandard			2,132				48,269				16,743				67,144
Doubtful			—				—				916				916
		$	364,907			$	1,154,699			$	282,385			$	1,801,991
		As of December 31, 2015
		Construction				Commercial Real Estate				Commercial & Industrial				Total
Pass		$	344,612			$	1,091,937			$	312,911			$	1,749,460
Special Mention			3,669				25,951				7,627				37,247
Substandard			1,745				47,576				20,081				69,402
Doubtful			—				—				6,575				6,575
		$	350,026			$	1,165,464			$	347,194			$	1,862,684

The Company monitors the credit quality of its consumer portfolio based primarily on payment activity and credit scores. Payment activity is the primary factor considered in determining whether a consumer loan should be classified as nonperforming.

The following tables show the credit quality indicators associated with the Company’s consumer loan portfolio (excluding PCI loans) as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
		Residential Real Estate				Automobile				Marine & RV				Other Consumer				Total
Performing		$	214,004			$	424,715			$	433,373			$	11,047			$	1,083,139
Nonperforming			3,147				875				143				3				4,168
		$	217,151			$	425,590			$	433,516			$	11,050			$	1,087,307

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

		As of December 31, 2015
		Residential Real Estate				Automobile				Marine & RV				Other Consumer				Total
Performing		$	217,236			$	400,335			$	390,877			$	9,944			$	1,018,392
Nonperforming			2,503				849				181				6				3,539
		$	219,739			$	401,184			$	391,058			$	9,950			$	1,021,931

The following tables show the credit quality indicators associated with the Company’s commercial PCI loans as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
		Construction				Commercial Real Estate				Commercial & Industrial				Total
Pass		$	5,091			$	83,812			$	6,449			$	95,352
Special Mention			2,206				16,478				1,462				20,146
Substandard			7,206				31,443				273				38,922
Doubtful			—				1,843				6				1,849
		$	14,503			$	133,576			$	8,190			$	156,269
		As of December 31, 2015
		Construction				Commercial Real Estate				Commercial & Industrial				Total
Pass		$	5,664			$	88,084			$	6,618			$	100,366
Special Mention			1,764				16,887				1,984				20,635
Substandard			10,738				43,097				447				54,282
Doubtful			115				2,273				5				2,393
		$	18,281			$	150,341			$	9,054			$	177,676

The following tables show the credit quality indicators associated with the Company’s consumer PCI loans as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
		Residential Real Estate				Other Consumer				Total
Performing		$	69,532			$	801			$	70,333
Nonperforming			8,600				15				8,615
		$	78,132			$	816			$	78,948
		As of December 31, 2015
		Residential Real Estate				Other Consumer				Total
Performing		$	74,614			$	882			$	75,496
Nonperforming			9,748				23				9,771
		$	84,362			$	905			$	85,267

 

13

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Delinquency

An aging analysis for the Company’s loan portfolio (excluding PCI loans) at March 31, 2016 and December 31, 2015, is shown in the tables below (dollars in thousands):

 

		As of March 31, 2016
		Current				30 - 89 Days Past Due				90+ Days Past Due				Total				90+ Days Accruing				Nonaccrual
Commercial loans:
Construction		$	364,535			$	224			$	148			$	364,907			$	22			$	331
Commercial real estate			1,153,143				108				1,448				1,154,699				382				4,083
Commercial & industrial			279,917				1,366				1,102				282,385				29				7,849
Consumer loans:
Residential real estate			214,575				1,076				1,500				217,151				323				3,147
Automobile			422,300				2,561				729				425,590				208				875
Marine & RV			433,156				288				72				433,516				—				143
Other consumer purpose			10,980				64				6				11,050				3				3
		$	2,878,606			$	5,687			$	5,005			$	2,889,298			$	967			$	16,431
		As of December 31, 2015
		Current				30 - 89 Days Past Due				90+ Days Past Due				Total				90+ Days Accruing				Nonaccrual
Commercial loans:
Construction		$	349,164			$	478			$	384			$	350,026			$	—			$	583
Commercial real estate			1,162,133				1,561				1,770				1,165,464				123				5,196
Commercial & industrial			340,057				381				6,756				347,194				214				14,933
Consumer loans:
Residential real estate			216,860				1,426				1,453				219,739				712				2,503
Automobile			396,760				3,785				639				401,184				99				849
Marine & RV			390,399				631				28				391,058				—				181
Other consumer purpose			9,826				111				13				9,950				9				6
		$	2,865,199			$	8,373			$	11,043			$	2,884,615			$	1,157			$	24,251

For PCI loans, if the Company has a reasonable expectation about the timing and amount of cash flows expected to be collected, the loans meet the criteria for the recognition of income and are considered to be accruing loans.

An aging analysis for the Company’s PCI loans at March 31, 2016 and December 31, 2015 is shown in the tables below (dollars in thousands):

 

		As of March 31, 2016
		Current				30 - 89 Days Past Due				90+ Days Past Due				Total				90+ Days Accruing				Nonaccrual
PCI loans:
Construction		$	13,653			$	445			$	405			$	14,503			$	405			$	—
Commercial real estate			124,510				651				8,415				133,576				8,415				—
Commercial & industrial			8,157				22				11				8,190				11				—
Residential real estate			73,695				2,021				2,416				78,132				2,416				—
Other consumer purpose			794				7				15				816				15				—
		$	220,809			$	3,146			$	11,262			$	235,217			$	11,262			$	—
		As of December 31, 2015
		Current				30 - 89 Days Past Due				90+ Days Past Due				Total				90+ Days Accruing				Nonaccrual
PCI loans:
Construction		$	16,507			$	307			$	1,467			$	18,281			$	1,467			$	—
Commercial real estate			135,869				2,151				12,321				150,341				12,321				—
Commercial & industrial			8,979				25				50				9,054				50				—
Residential real estate			78,385				2,657				3,320				84,362				3,320				—
Other consumer purpose			882				—				23				905				23				—
		$	240,622			$	5,140			$	17,181			$	262,943			$	17,181			$	—

 

14

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

4.	Allowance for Loan Losses

Activity in the Allowance for Loan Losses (“ALL”) for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively, is summarized in the tables below (dollars in thousands):

 

		For the Period Ended March 31, 2016
		Commercial				Consumer				PCI				Total
Beginning Balance		$	24,535			$	11,636			$	5,246			$	41,417
Charge-offs			(4,227	)			(1,027	)			(116	)			(5,370	)
Recoveries			63				242				645				950
Provision1			788				2,161				—				2,949
Ending Balance		$	21,159			$	13,012			$	5,775			$	39,946
Period-end ALL allocated to:
Loans individually evaluated for impairment		$	159			$	145			$	—			$	304
Loans collectively evaluated for impairment			21,000				12,867				—				33,867
Loans acquired with deteriorated credit quality			—				—				5,775				5,775
Ending Balance		$	21,159			$	13,012			$	5,775			$	39,946
Period-end recorded investment in loans:
Individually evaluated for impairment		$	12,263			$	4,168			$	—			$	16,431
Collectively evaluated for impairment			1,789,728				1,083,139				—				2,872,867
Acquired with deteriorated credit quality			—				—				235,217				235,217
Ending Balance		$	1,801,991			$	1,087,307			$	235,217			$	3,124,515
		For the Year Ended December 31, 2015
		Commercial				Consumer				PCI				Total
Beginning Balance		$	23,675			$	9,059			$	5,176			$	37,910
Charge-offs			(5,183	)			(2,841	)			(2,653	)			(10,677	)
Recoveries			697				929				2,659				4,285
Provision2			5,346				4,489				64				9,899
Ending Balance		$	24,535			$	11,636			$	5,246			$	41,417
Year-end ALL allocated to:
Loans individually evaluated for impairment		$	3,666			$	142			$	—			$	3,808
Loans collectively evaluated for impairment			20,869				11,494				—				32,363
Loans acquired with deteriorated credit quality			—				—				5,246				5,246
Ending Balance		$	24,535			$	11,636			$	5,246			$	41,417
Year-end recorded investment in loans:
Individually evaluated for impairment		$	20,712			$	3,539			$	—			$	24,251
Collectively evaluated for impairment			1,841,972				1,018,392				—				2,860,364
Acquired with deteriorated credit quality			—				—				262,943				262,943
Ending Balance		$	1,862,684			$	1,021,931			$	262,943			$	3,147,558

 

1	Does not include $(1,285) in release of provision for unfunded commitments.

2	Does not include $1,683 in provision for unfunded commitments.

In addition to the ALL, the Company also estimates probable and reasonably estimable credit losses related to unfunded lending commitments, such as letters of credit and binding unfunded loan commitments. This reserve for unfunded lending commitments totaled $3.9 million and $5.2 million at March 31, 2016 and December 31, 2015, respectively, and is included within the other liabilities section of the Consolidated Balance Sheet.

 

15

---

Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

5.

Deposits

Deposits at March 31, 2016 and December 31, 2015, are summarized as follows (dollars in thousands):

 

		March 31, 2016				December 31, 2015
Noninterest-bearing demand		$	509,132			$	548,838
Interest-bearing demand			596,329				547,473
Money market			902,936				903,999
Savings			119,193				112,428
Time			1,447,938				1,576,049
Total deposits		$	3,575,528			$	3,688,787

Time deposits with a minimum denomination of $250 thousand totaled $279.8 million and $287.3 million at March 31, 2016 and December 31, 2015, respectively.

At March 31, 2016, the scheduled maturities of time deposits were (dollars in thousands):

 

2016		$	626,525
2017			501,981
2018			106,229
2019			85,839
2020 and thereafter			127,364
Total time deposits		$	1,447,938

 

6.	Fair Values Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, US GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Level 1 and 2 of the hierarchy) and reporting entity’s own assumptions developed based on the best information available in the circumstances (unobservable inputs classified within Level 3 of the hierarchy).

Fair Value Hierarchy

The fair value hierarchy gives the highest priority to valuations based on unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement.

Level 1

Valuation is based on inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

16

---

Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Level 2

Valuation is based on inputs, other than quoted prices included within Level 1, that are observable for the asset and liability, either directly or indirectly, such as interest rates, yield curves observable at commonly quoted intervals, and other market-corroborated inputs.

Level 3

Valuation inputs are unobservable inputs for the asset or liability, which shall be used to measure fair value to the extent that observable inputs are not available. The inputs shall reflect the Company’s own assessment regarding assumptions that market participants would use in pricing the asset or liability.

Fair value estimates are made at a specific point in time based upon relevant market information and information about each asset and liability. Where information regarding the fair value of an asset or liability is available, those values are used, as is the case with investment securities and residential mortgage loans. In these cases, an open market exists in which these assets are actively traded.

Because no market exists for many assets and liabilities, fair value estimates are based upon judgments regarding future expected loss experience, current economic conditions, risk characteristics and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. For those assets or liabilities with a fixed interest rate, an analysis of the related cash flows was the basis for estimating fair values. The expected cash flows were then discounted to the valuation date using an appropriate discount rate. The discount rates used represent the rates under which similar transactions would be currently negotiated. For assets or liabilities with fixed and variable rates, fair value estimates also consider the impact of liquidity discounts appropriate as of the measurement date.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company evaluates fair value measurement inputs on an ongoing basis in order to determine if there is a change of sufficient significance to warrant a transfer between levels. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s valuation process. There were no significant transfers between levels during the three months ended March 31, 2016 or year ended December 31, 2015.

Fair Value of Financial Instruments Measured on a Recurring Basis

The following methods and assumptions were used by the Company in estimating the fair value of its financial assets on a recurring basis:

Investment Securities

Investment securities classified as available-for-sale are recorded at fair value on a recurring basis. The Company’s investment portfolio primarily consists of U.S. government agency mortgage-backed securities, non-agency mortgage-backed securities, U.S. government securities, corporate bonds and municipal securities. The fair value of investment securities classified as available-for-sale are generally determined using widely accepted valuation techniques including matrix pricing and broker-quote-based applications. Inputs may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other relevant items. The Company reviews the prices supplied by the independent pricing service, as well as their underlying pricing methodologies, for reasonableness and to ensure such prices are aligned with traditional pricing matrices. From time to time, the Company validates the appropriateness of the valuations provided by the independent pricing service to prices obtained from an additional third party or prices derived using internal models.

 

17

---

Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

The following tables summarize the financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
Description		Fair Value				Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Quoted Prices for Similar Assets and Liabilities (Level 2)				Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale
U.S. government		$	30,188			$	—			$	30,188			$	—
FNMA, GNMA, and FHLMC mortgage-backed securities			214,425				—				214,425				—
Asset backed securities			10,428				—				10,428				—
Collateralized mortgage obligations			139,256				—				139,256				—
State, county and municipal			8,393				—				8,393				—
Corporate bonds			35,494				—				35,494				—
Equity securities			3,774				—				—				3,774
		$	441,958			$	—			$	438,184			$	3,774
		As of December 31, 2015
Description		Fair Value				Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Quoted Prices for Similar Assets and Liabilities (Level 2)				Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale
U.S. government		$	34,711			$	—			$	34,711			$	—
FNMA, GNMA, and FHLMC mortgage-backed securities			220,390				—				220,390				—
Asset backed securities			15,894				—				15,894				—
Collateralized mortgage obligations			145,194				—				145,194				—
State, county and municipal			8,992				—				8,992				—
Corporate bonds			35,642				—				35,642				—
Equity securities			3,658				—				—				3,658
		$	464,481			$	—			$	460,823			$	3,658

During the three months ended March 31, 2016, the Company purchased level 3 investment securities of $184 thousand, received settlements of $68 thousand and recognized no gains or losses in earnings or other comprehensive income. During 2015, the Company purchased level 3 investment securities of $1.5 million, received settlements of $1.6 million, and recognized no gains or losses in earnings or other comprehensive income.

 

18

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Fair Value of Financial Instruments Measured on a Nonrecurring Basis

The following methods and assumptions were used by the Company in estimating the fair value of its financial assets on a nonrecurring basis:

Impaired Loans

Loans are considered impaired when it is determined to be probable that all amounts due under the contractual terms of the loans will not be collected when due. Loans considered individually impaired are evaluated and a specific allowance is established if required based on the underlying collateral value of the impaired loans or the estimated discounted cash flows for such loans. A specific allowance is required if the fair value of the expected repayments or the fair value of the collateral is less than the recorded investment in the loan. The Company records impaired loans as nonrecurring level 3.

Loans Held for Sale

Loans held for sale consist of mortgage and other loans accounted for at lower of cost or market. The fair value of mortgage loans held for sale is determined based upon pricing assigned on a loan-by-loan basis, at the time a loan is locked with the borrower, through correspondent relationships that the Company maintains in order to sell loans held for sale. The fair value of other loans held for sale, which are commercial loans, is determined on a loan-by-loan basis and is estimated based upon binding sales agreements.

Other Real Estate Owned

The fair value of Other Real Estate Owned (“OREO”) is determined when the asset is transferred to foreclosed assets. The assets are carried at the lower of the carrying value or fair value less estimated costs to sell. Fair value is based upon appraised values of the collateral or management’s estimation of the value of the collateral. Management requires a new appraisal at the time of foreclosure or repossession of the underlying collateral. Updated appraisals are obtained on at least an annual basis on all OREO and are considered to contain Level 3 inputs. Management has also determined, in some cases, that fair value of collateral is further impaired based upon real estate market trends and declining foreclosed property pricing. Therefore, all OREO is recorded as a nonrecurring Level 3 hierarchy.

For assets and liabilities carried at fair value on a nonrecurring basis, the following table provides fair value information as of March 31, 2016 and December 31, 2015 (dollars in thousands):

 

		As of March 31, 2016
Description		Net Carrying Value				Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Quoted Prices for Similar Assets and Liabilities (Level 2)				Significant Unobservable Inputs (Level 3)
Impaired loans		$	16,431			$	—			$	—			$	16,431
Loans held for sale			4,441				4,441				—				—
OREO			7,870				—				—				7,870
		As of December 31, 2015
Description		Net Carrying Value				Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Quoted Prices for Similar Assets and Liabilities (Level 2)				Significant Unobservable Inputs (Level 3)
Impaired loans		$	24,251			$	—			$	—			$	24,251
Loans held for sale			2,373				2,373				—				—
OREO			8,292				—				—				8,292

 

19

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at March 31, 2016 and December 31, 2015 (dollars in thousands):

 

As of March 31, 2016

Financial Instrument

Net Carrying Value

Valuation Technique

Unobservable Input

Range of Inputs

Impaired loans

1) Non-Collateral

1)

a)  Loss given default

1)

a)  0%

Dependent: Discounted

b)  Probability of default

b)  100%

$

16,431

cash flow analysis

c)  Discount rate

c)  6% - 9%

2) Collateral Dependent: Third party appraisal

2) Management discount for property type, recent market volatility, lien position, and costs to sell.

2)

0% - 88%

OREO

$

7,870

Third party appraisal

Management discount for property type, recent market volatility and time on the market

0% - 40%

As of December 31, 2015

Financial Instrument

Net Carrying Value

Valuation Technique

Unobservable Input

Range of Inputs

Impaired loans

1) Non-Collateral

1)

a)  Loss given default

1)

a)  0% - 83%

Dependent: Discounted

b)  Probability of default

b)  100%

$

24,251

cash flow analysis

c)  Discount rate

c)  5% - 10%

2) Collateral Dependent: Third party appraisal

2) Management discount for property type, recent market volatility, lien position, and costs to sell.

2)

0% - 88%

OREO

$

8,292

Third party appraisal

Management discount for property type, recent market volatility and time on the market

0% - 40%

Fair Value of Financial Instruments

The following table includes the estimated fair value of the Company’s financial assets and financial liabilities (dollars in thousands). The methodologies for estimating the fair value of financial assets and financial liabilities measured on a recurring and nonrecurring basis are discussed above. The methodologies for estimating the fair value for other financial assets and financial liabilities are discussed below. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data in order to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation techniques may have a material effect on the estimated fair value amounts at March 31, 2016 and December 31, 2015:

 

		March 31, 2016								December 31, 2015
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
Cash and due from banks		$	166,832			$	166,832			$	218,338			$	218,338
Investment securities available-for-sale			441,958				441,958				464,481				464,481
Investment securities held-to-maturity			78,020				81,637				80,368				83,480
Loans held for sale			4,441				4,504				2,373				2,449
Loans held for investment, net			3,084,569				3,131,560				3,106,141				3,179,156
Bank owned life insurance (“BOLI”)			85,710				85,710				85,040				85,040
FHLBA Stock			3,752				3,752				3,193				3,193
Deposits			3,575,528				3,549,344				3,688,787				3,639,479

Cash and Due From Banks

The carrying amount approximates fair value for these instruments.

Investment Securities

The fair value of investment securities are generally determined using widely accepted valuation techniques including matrix pricing and broker-quote-based applications.

 

20

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

Loans Held For Sale

Loans held for sale are carried at the lower of cost or fair value. These loans currently consist of one-to-four family residential real estate loans originated for sale to qualified third parties and commercial loans. The fair value of mortgage loans held for sale is based upon the contractual price to be received from these third parties, which may be different than cost. The fair value of other loans held for sale is determined on a loan-by-loan basis and is estimated based upon binding sales agreement.

Loans Held for Investment

Fair values are estimated for portfolios of loans with similar financial characteristics if collateral-dependent. Loans are segregated by type. The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect observable market information incorporating the credit, liquidity, yield and other risks inherent in the loan. The estimate of maturity is based upon the Company’s historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of the current economic and lending conditions.

Fair value for significant non-performing loans is generally based upon recent external appraisals. If appraisals are not available, estimated cash flows are discounted using a rate commensurate with the risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information.

Fair values for PCI loans are valued based upon a discounted expected cash flow methodology that considers various factors including the type of loan and related collateral, credit quality, fixed or variable interest rate, term of loan and whether or not the loan was amortizing and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. PCI loans are grouped together according to common risk characteristics and are evaluated in aggregated pools when applying various valuation techniques. The Company estimated the gross cash flows expected to be collected on these loans based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments. The carrying amounts of PCI loans approximate fair value.

BOLI

The carrying amount approximates fair value for these instruments.

FHLBA Stock

FHLBA stock is carried at its original cost basis, as cost approximates fair value and there is no ready market for such investments.

Deposits

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and money market and checking accounts, is based on the discounted value of estimated cash flows. The fair value of time deposits is based upon the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

Commitments and Contingencies

For off-balance sheets commitments and contingencies, carrying amounts are reasonable estimates of the fair values for such financial instruments. Carrying amounts include unamortized fee income and, in some cases, reserves for any credit losses from those financial instruments. These amounts are not material to the Company’s financial position.

 

21

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

7.	Accumulated Other Comprehensive Income (AOCI)

In addition to presenting the Consolidated Statements of Comprehensive Income herein, the following table shows the tax effects allocated to each component of AOCI for the three month periods ending March 31, 2016 and March 31, 2015, respectively (dollars in thousands):

 

		Three Months Ended
		March 31, 2016												March 31, 2015
		Before-Tax Amount				Tax				Net-of-Tax Amount				Before-Tax Amount				Tax				Net-of-Tax Amount
AOCI, beginning balance		$	1,195			$	(423	)		$	772			$	3,961			$	(1,391	)		$	2,570
Unrealized gains on securities:
Net unrealized gains arising during the period			4,246				(1,444	)			2,802				3,756				(1,277	)			2,479
Amortization of unrealized gains on investment securities transferred from available-for-sale to held-to-maturity			(33	)			11				(22	)			(42	)			14				(28	)
AOCI, ending balance		$	5,408			$	(1,856	)		$	3,552			$	7,675			$	(2,654	)		$	5,021

Reclassifications out of AOCI consisted of the following (dollars in thousands):

 

Details about components of AOCI		Three Months Ended March 31								Affected line item in the Consolidated Financial Statements
		2016				2015
Amortization of unrealized gains on investment securities transferred from available-for-sale to held-to-maturity:		$	(33	)		$	(42	)		Investment securities held-to-maturity
			11				14			Income tax expense
		$	(22	)		$	(28	)

 

8.	Other noninterest expense

Other noninterest expense for the three months ended March 31, 2016 and 2015 included the following (dollars in thousands):

 

		Three Months Ended March 31,
		2016				2015
Printing and supplies		$	225			$	184
Advertising			195				376
Insurance expense			313				319
Postage			256				187
FDIC deposit insurance expense			846				758
FDIC recovery expense1			—				764
FDIC loss share receivable valuation adjustments1			—				156
Other			1,356				971
Total other noninterest expense		$	3,191			$	3,715

 

1	During the 4th Quarter of 2015, C&S Bank entered into an early termination agreement with the FDIC to terminate all loss share agreements. As a result, there is no FDIC recovery expense or loss share receivable valuation adjustments during the three months ended in 2016.

 

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Community & Southern Holdings, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

9.	Income Taxes

For the three months ended March 31, 2016 and 2015, income tax expense was $7.8 million and $2.2 million representing effective tax rates of 36.0% and 26.6%, respectively. The higher effective tax rate was primarily due to higher year-to-date pre-tax income. The provision for income taxes includes both federal and state income taxes and differs from the provision using statutory rates primarily due to favorable permanent tax items such as income from nontaxable loans and investments and tax exempt income on Bank owned life insurance. The Company calculated provision for income taxes for the three months ended March 31, 2016 by using the actual effective tax rate, and calculated provision for income taxes for the three month ended March 31, 2015 by applying the estimated annual effective tax rate to year-to-date pretax income.

 

10.	Subsequent Events

Management has evaluated the effects of subsequent events through May 6, 2016 and has determined that the following event requires disclosure:

Acquisition by Bank of the Ozarks, Inc.

On October 19, 2015, the Company entered into a definitive merger agreement with Bank of the Ozarks, Inc. (“OZRK”). The Company and OZRK jointly announced the signing of a definitive agreement and plan of merger (“Agreement”) whereby OZRK will acquire the Company and its wholly owned bank subsidiary, C&S Bank, in an all-stock transaction valued at approximately $799.6 million, or approximately $20.50 per fully diluted Company share, subject to potential adjustments as described in the Agreement.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, each holder of outstanding shares of common stock of the Company will receive shares of common stock of OZRK. The number of OZRK shares to be issued will be determined based on the fifteen day volume weighted average stock price of OZRK’s common stock as of the second business day prior to the closing date, subject to a minimum and maximum price of $34.10 and $56.84, retrospectively.

Upon the closing of the transaction, the Company will merge into OZRK and C&S Bank will merge into OZRK’s wholly-owned bank subsidiary, Bank of the Ozarks. Completion of the transaction is subject to certain closing conditions, including customary regulatory approvals. The transaction is expected to close during the second quarter of 2016.

 

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