WINTER HAVEN, Fla.,
April 23, 2020 /PRNewswire/
-- CenterState Bank Corporation (Nasdaq: CSFL) (the "Company"
or "CenterState") announced first quarter 2020 results.
Highlights for the period ended March 31,
2020 and selected performance metrics are set forth
below.
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Earnings
Highlights: The Company reported first quarter 2020 net income
of $35.4 million compared to $71.1 million for the fourth quarter
2019. Diluted Earnings per Share ("EPS") was $0.28 in the
first quarter 2020 compared to $0.56 in the fourth quarter
2019. Return on Average Assets ("ROAA") for the current
quarter was 0.82% compared to 1.63% for the fourth quarter 2019
while Return on Tangible Average Common Equity ("ROTCE")
(non-GAAP(1)) and adjusted ROTCE
(non-GAAP(1)) for the current quarter were each 9.9%
compared to 18.8% and 19.1%, respectively, for the fourth quarter
2019.
During the current
quarter, the Company repurchased a total of 1.45 million shares or
1.2% of its outstanding shares, resulting in Tangible Book Value
per share ("TBV") (non-GAAP(1)) of $12.68 and Tangible
Common Equity ("TCE") ratio of 9.1%, after the adoption of CECL on
January 1, 2020 and higher Q1 2020 provision for credit losses for
loans held for investment and credit loss expense for unfunded
commitments.
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- Other Financial Results:
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- Adjusted pre-tax pre-provision income (non-GAAP(1)):
$90.4 million for the current quarter
compared to $95.0 for the fourth
quarter 2019 on record revenue(2) of $209.1 million, up $889 or 0.4% from fourth quarter 2019
- Net Interest Margin, tax equivalent ("NIM")
(Non-GAAP(1)): decreased 8 bps to 4.17% from the fourth
quarter 2019; core NIM excluding all loan accretion
(Non-GAAP(1)) of 3.74%, a decrease of 3 bps from the
fourth quarter 2019 reflecting, in part, the declining interest
rate environment and volatility following the onset of the COVID-19
pandemic
- Non-interest income(3): 1.29% of average assets for
the current quarter compared with 1.15% in the fourth quarter
2019
- Efficiency ratio (Non-GAAP(1)): 58.5% reported,
54.9% adjusted for the first quarter 2020 compared to 54.3% and
52.1%, respectively, in the fourth quarter 2019
- Loan growth: loan growth of $43.3
million or 1% annualized
- Deposit growth: non-CD deposits growth of $348 million or 13% annualized; DDA growth of
$271 million or 17% annualized
- CECL and Provision for Credit Losses:
-
- CECL adopted January 1, 2020,
with initial Allowance for Credit Losses ("ACL") of $115.3 million, and a $6.0
million reserve for unfunded commitments (reported as other
liability on the balance sheet); reflects a combined $80.7 million increase in these reserves at
adoption compared to fiscal year-end 2019 levels; the March 31, 2020 ending ACL and reserve for
unfunded commitments increased by $125.2
million over the balance at December
31, 2019
- $44.9 million provision for
credit losses on loans during the first quarter of 2020, bringing
the ACL to $158.7 million, reflecting
an increase of 37.7% above the level at adoption; $1.0 million provision for credit losses on
unfunded commitments leaving a $7.1
million reserve for unfunded commitments; total expense for
reserve build of $45.9 million during
the quarter, the vast majority of which was associated with the
effects of COVID-19
- Net charge-off of $1,444 in the
first quarter 2020 compared to $4,384
in the fourth quarter 2019
- Small Business Administration ("SBA") Paycheck Protection
Program ("PPP"): In April 2020,
the Company generated over 6,700 loans for a total loan amount over
$1.1 billion in the SBA system
through April 16, 2020
- Quarterly Dividend Declaration: On April 23rd, 2020, the Board of
Directors declared a quarterly cash dividend on the Company's
common stock of $0.14 per share. The
dividend is payable on May
15th, 2020 to shareholders of record as of
May 8th, 2020
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Three Months Ended
March 31,
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2020
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2019
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Adjusted
(4)
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Adjusted
(4)
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Reported
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(Non-GAAP)
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Reported
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(Non-GAAP)
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Net income
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$35,432
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$35,491
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$44,643
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$49,463
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ROAA
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0.82%
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0.82%
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1.47%
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1.63%
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ROTCE
(Non-GAAP)(1) and adjusted ROTCE
(Non-GAAP)(1)
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9.9%
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9.9%
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16.8%
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18.5%
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EPS
(diluted)
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$0.28
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$0.28
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$0.46
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$0.51
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Efficiency ratio, tax
equivalent (Non-GAAP)(1)
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58.5%
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54.9%
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58.7%
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52.3%
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(1)
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See reconciliation
tables starting on page 9, Explanation of Certain Unaudited
Non-GAAP Financial Measures.
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(2)
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Revenue is defined as
net interest income plus non-interest income.
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(3)
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Non-interest income
excludes gain or loss on sale of available for sale
securities.
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(4)
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Performance metrics
presented above are adjusted for gain or loss on sale of available
for sale securities, merger-related expenses, deferred tax asset
write down and other tax benefit adjustments, and amortization of
intangible assets, which for the three months ended March 31, 2020,
represent direct severance, system terminations, and legal and
professional fees, that are not duplicative of current operations,
and other items. See reconciliation tables starting on page
9, Explanation of Certain Unaudited Non-GAAP Financial
Measures.
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Condensed
Consolidated Income Statement (unaudited)
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Condensed
consolidated income statements (unaudited) are shown below for the
periods indicated.
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Three Months
Ended
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Mar. 31,
2020
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Dec. 31,
2019
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Sep. 30,
2019
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Jun. 30,
2019
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Mar. 31,
2019
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Interest
income
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Loans
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$160,675
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$167,685
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$166,479
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$167,676
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$116,285
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Investment
securities
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14,271
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13,404
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13,472
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14,453
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14,002
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Federal Funds sold and
other
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1,813
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2,783
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3,974
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3,124
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1,995
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Total interest
income
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176,759
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183,872
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183,925
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185,253
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132,282
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Interest
expense
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Deposits
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19,836
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22,276
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24,463
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23,037
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13,323
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Securities sold under
agreement to repurchase
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252
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278
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293
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299
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236
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Other borrowed
funds
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2,321
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2,364
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3,164
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2,166
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3,978
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Corporate and
subordinated debentures
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997
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1,029
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1,058
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1,070
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570
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Interest
expense
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23,406
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25,947
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28,978
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26,572
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18,107
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Net interest
income
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153,353
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157,925
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154,947
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158,681
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114,175
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Provision for credit
losses
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44,914
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3,048
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3,692
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2,792
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1,053
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Net interest
income after credit loss provision
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108,439
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154,877
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151,255
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155,889
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113,122
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Gain (loss) on sale
of securities available for sale
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—
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13
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—
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(5)
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17
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All other
non-interest income
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55,790
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50,316
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48,488
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37,948
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29,283
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Total non-interest
income
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55,790
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50,329
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48,488
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37,943
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29,300
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Merger related
expenses
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3,051
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159
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16,994
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15,739
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6,365
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All other
non-interest expense
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119,721
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113,250
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110,042
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106,250
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78,108
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Total non-interest
expense
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122,772
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113,409
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127,036
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121,989
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84,473
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Income before income
tax
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41,457
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91,797
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72,707
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71,843
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57,949
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Income tax
provision
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6,025
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20,665
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17,006
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16,721
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13,306
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Net income before
earnings attributable to noncontrolling interest
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35,432
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71,132
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55,701
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55,122
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44,643
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Earnings attributable
to noncontrolling interest
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—
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—
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603
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599
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—
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Net
income
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$35,432
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$71,132
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$55,098
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$54,523
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$44,643
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Net income
attributable to CenterState Bank Corporation
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$35,424
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$71,109
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$55,077
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$54,502
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$44,620
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Earnings per share -
Basic
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$0.28
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$0.57
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$0.43
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$0.42
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$0.47
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Earnings per share -
Diluted
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$0.28
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$0.56
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$0.43
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$0.42
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$0.46
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Dividends per
share
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$0.14
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$0.11
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$0.11
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$0.11
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$0.11
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Average common shares
outstanding (basic)
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124,799
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125,147
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127,840
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129,848
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95,741
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Average common shares
outstanding (diluted)
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125,341
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126,082
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128,739
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130,768
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96,501
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Common shares
outstanding at period end
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124,131
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125,174
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126,037
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129,006
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95,913
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Effective tax
rate
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14.53%
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22.51%
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23.59%
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23.47%
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22.96%
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Note: Certain
prior period amounts have been reclassified to conform to the
current period presentation format.
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CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
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Presented below are
condensed consolidated balance sheets for the periods
indicated.
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Ending
Balance
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Condensed
Consolidated Balance Sheets
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Mar. 31,
2020
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Dec. 31,
2019
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Sep. 30,
2019
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Jun. 30,
2019
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Mar. 31,
2019
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Assets
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Cash and due from
banks
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$685,439
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$326,168
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$598,808
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$399,952
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$256,580
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Fed funds sold and
Fed Reserve Bank deposits
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461,252
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163,890
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238,470
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437,386
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339,223
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Trading
securities
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8,432
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4,987
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4,273
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651
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—
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Investment
securities:
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Available for
sale
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2,138,442
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1,886,724
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1,779,956
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1,792,757
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1,701,396
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Held to maturity, net
of allowance
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195,948
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202,903
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207,209
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210,756
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214,240
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Total investment
securities
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2,334,390
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2,089,627
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1,987,165
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2,003,513
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1,915,636
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Loans held for
sale
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188,316
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142,801
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125,182
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95,108
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49,474
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Loans:
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Originated
loans
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6,331,914
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5,922,879
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5,494,738
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4,888,357
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4,349,627
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Acquired
loans
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5,544,995
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5,925,596
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6,278,686
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6,667,101
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3,850,312
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Purchased Credit
Deteriorated ("PCD") loans
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150,322
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135,468
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142,982
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157,303
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149,456
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Total gross
loans
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12,027,231
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11,983,943
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11,916,406
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11,712,761
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8,349,395
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Allowance for credit
losses
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(158,733)
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(40,655)
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(41,991)
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(40,653)
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(40,052)
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Loans, net of
allowance
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11,868,498
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11,943,288
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11,874,415
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11,672,108
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8,309,343
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Premises, equipment
and right of use assets, net
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329,533
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328,869
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327,977
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324,974
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248,625
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Goodwill
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1,204,417
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1,204,417
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1,204,417
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1,204,417
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802,880
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Core deposit
intangible
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87,295
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91,157
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95,175
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99,200
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63,511
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Bank owned life
insurance
|
|
331,713
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330,155
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328,736
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326,689
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269,144
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OREO
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|
9,942
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5,092
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6,558
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5,881
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|
5,981
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Deferred income tax
asset, net
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37,687
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28,786
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37,921
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44,637
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38,030
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Market value of
derivatives hedged
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831,891
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273,068
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367,950
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229,735
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130,122
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Other
assets
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217,487
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209,720
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223,329
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|
192,346
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|
159,088
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Total
Assets
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$18,596,292
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$17,142,025
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$17,420,376
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$17,036,597
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$12,587,637
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Liabilities and
Equity
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Deposits:
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Non-interest
bearing
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$4,164,091
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$3,929,183
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$4,081,078
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$3,990,883
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$3,152,251
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Interest bearing
|
|
2,650,252
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|
2,613,933
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2,430,149
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2,493,870
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1,813,028
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Total checking
accounts
|
|
6,814,343
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6,543,116
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6,511,227
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6,484,753
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4,965,279
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Money market
accounts
|
|
3,519,441
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3,525,571
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3,648,449
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|
3,569,025
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|
2,156,667
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Savings
deposits
|
|
894,332
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|
811,150
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|
780,052
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725,124
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|
703,949
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Time
deposits
|
|
2,893,383
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|
2,256,555
|
|
2,423,335
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|
2,433,183
|
|
1,921,130
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Total
deposits
|
|
14,121,499
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|
13,136,392
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|
13,363,063
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13,212,085
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|
9,747,025
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Federal funds
purchased
|
|
255,433
|
|
379,193
|
|
259,077
|
|
276,963
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|
303,017
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Other
borrowings
|
|
364,092
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|
325,484
|
|
423,662
|
|
310,595
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|
302,534
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|
Reserve for unfunded
commitments
|
|
7,110
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|
—
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|
—
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|
—
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|
—
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Market value of
derivatives hedged
|
|
842,451
|
|
275,033
|
|
371,889
|
|
231,735
|
|
130,790
|
|
Other
liabilities
|
|
135,455
|
|
129,205
|
|
144,983
|
|
114,707
|
|
76,719
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|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
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Common stockholders'
equity
|
|
2,870,252
|
|
2,896,718
|
|
2,857,702
|
|
2,878,377
|
|
2,027,552
|
|
Noncontrolling
interest
|
|
—
|
|
—
|
|
—
|
|
12,135
|
|
—
|
|
Total
equity
|
|
2,870,252
|
|
2,896,718
|
|
2,857,702
|
|
2,890,512
|
|
2,027,552
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$18,596,292
|
|
$17,142,025
|
|
$17,420,376
|
|
$17,036,597
|
|
$12,587,637
|
|
|
Note: Certain
prior period amounts have been reclassified to conform to the
current period presentation format.
|
|
SELECTED
CONSOLIDATED FINANCIAL DATA
|
|
|
The table below
summarizes selected financial data for the periods
presented.
|
|
|
|
Three Months
Ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Selected financial
data
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (annualized)
|
|
0.82%
|
|
1.63%
|
|
1.27%
|
|
1.30%
|
|
1.47%
|
|
Adjusted return on
average assets (annualized) (Non-GAAP) (1)
|
|
0.82%
|
|
1.66%
|
|
1.57%
|
|
1.59%
|
|
1.63%
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
common equity (annualized)
|
|
4.94%
|
|
9.80%
|
|
7.56%
|
|
7.63%
|
|
9.05%
|
|
Adjusted return on
average common equity (annualized) (Non-GAAP)
(1)
|
|
4.95%
|
|
9.95%
|
|
9.34%
|
|
9.31%
|
|
10.03%
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible equity (annualized) (Non-GAAP) (1)
|
|
9.87%
|
|
18.77%
|
|
14.61%
|
|
14.95%
|
|
16.80%
|
|
Adjusted return on
average tangible equity (annualized) (Non-GAAP)
(1)
|
|
9.88%
|
|
19.05%
|
|
17.85%
|
|
18.04%
|
|
18.54%
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax
equivalent) (Non-GAAP) (1)
|
|
58.5%
|
|
54.3%
|
|
62.3%
|
|
61.9%
|
|
58.7%
|
|
Adjusted efficiency
ratio, tax equivalent (Non-GAAP) (1)
|
|
54.9%
|
|
52.1%
|
|
51.9%
|
|
51.7%
|
|
52.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
payout
|
|
50.0%
|
|
19.6%
|
|
25.6%
|
|
26.2%
|
|
23.9%
|
|
Loan / deposit
ratio
|
|
85.2%
|
|
91.2%
|
|
89.2%
|
|
88.7%
|
|
85.7%
|
|
Common stockholders'
equity (to total assets)
|
|
15.4%
|
|
16.9%
|
|
16.4%
|
|
16.9%
|
|
16.1%
|
|
Common equity per
common share
|
|
$23.12
|
|
$23.14
|
|
$22.67
|
|
$22.31
|
|
$21.14
|
|
Common tangible
equity per common share (Non-GAAP) (1)
|
|
$12.68
|
|
$12.76
|
|
$12.32
|
|
$12.17
|
|
$12.08
|
|
Common tangible
equity (to total tangible assets) (Non-GAAP)
(1)
|
|
9.1%
|
|
10.1%
|
|
9.6%
|
|
10.0%
|
|
9.9%
|
|
Tier 1 capital (to
average assets)
|
|
9.7%
|
|
9.7%
|
|
9.5%
|
|
9.9%
|
|
10.3%
|
|
|
|
(1)
|
See reconciliation
tables starting on page 9, Explanation of Certain Unaudited
Non-GAAP Financial Measures.
|
IMPACT OF ADOPTION OF CURRENT EXPECTED CREDIT LOSSES
("CECL")
CECL Impact on Adoption Date
The Company adopted CECL effective January 1, 2020. The final adoption model
resulted in an increase to ACL as a percentage of total loans by 62
bps. This increase included the reclassification of the
credit mark on PCD loans from loan discount to ACL. In
addition, the Company recorded a reserve for credit losses on
unfunded commitments of $6 million
and a reserve for credit losses on held to maturity securities of
$10 thousand. The impact to
retained earnings, net of deferred taxes, of the increase in ACL,
reserve for the unfunded commitments and credit losses on debt
securities held to maturity was $48
million, resulting in 28 bps reduction in tangible common
equity as a percentage of total tangible assets (non-GAAP). See
table on page 12, Explanation of Certain Unaudited Non-GAAP
Financial Measures for the impact of CECL adoption on the
tangible common equity ratio.
The table below summarizes the CECL impact on ACL as a
percentage of total loans.
|
Loan
Balance
|
|
Dec. 31,
2019
|
|
|
|
Non-PCD
loans
|
|
$11,848,475
|
|
|
|
PCD loans
|
|
135,468
|
|
|
|
Total
loans
|
|
$11,983,943
|
|
|
|
|
|
|
Impact of
CECL
|
|
ACL
|
|
Dec. 31,
2019
|
|
Adoption
|
|
Non-PCD
loans
|
|
$40,429
|
|
$57,604
|
|
PCD loans
|
|
226
|
|
17,004
|
|
Total ACL on
loans
|
|
$40,655
|
|
$74,608
|
|
|
|
|
|
|
ACL increase over
total loans post CECL
implementation
|
|
0.62%
|
|
|
|
|
|
|
|
Loan
Portfolio
|
|
|
The table below
summarizes the Company's loan portfolio over the most recent
five-quarter ends.
|
|
|
|
Ending
Balance
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Real estate
loans
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$2,580,019
|
|
$2,558,339
|
|
$2,530,119
|
|
$2,536,324
|
|
$1,818,228
|
|
Commercial
|
|
6,484,256
|
|
6,406,684
|
|
6,297,425
|
|
6,153,379
|
|
4,481,375
|
|
Land, development and
construction loans
|
|
934,461
|
|
1,004,578
|
|
1,061,701
|
|
1,057,532
|
|
658,373
|
|
Total real estate
loans
|
|
9,998,736
|
|
9,969,601
|
|
9,889,245
|
|
9,747,235
|
|
6,957,976
|
|
Commercial
loans
|
|
1,788,282
|
|
1,762,416
|
|
1,772,266
|
|
1,714,121
|
|
1,181,628
|
|
Consumer and other
loans
|
|
235,259
|
|
247,407
|
|
250,225
|
|
247,049
|
|
206,754
|
|
Total loans before
unearned fees and costs
|
|
12,022,277
|
|
11,979,424
|
|
11,911,736
|
|
11,708,405
|
|
8,346,358
|
|
Unearned fees and
costs
|
|
4,954
|
|
4,519
|
|
4,670
|
|
4,356
|
|
3,037
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Loans
|
|
$12,027,231
|
|
$11,983,943
|
|
$11,916,406
|
|
$11,712,761
|
|
$8,349,395
|
Loan production
|
DEPOSITS
|
|
|
|
Ending
Balance
|
|
Deposit
mix
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Checking
accounts
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
$4,164,091
|
|
$3,929,183
|
|
$4,081,078
|
|
$3,990,883
|
|
$3,152,251
|
|
Interest bearing
|
|
2,650,252
|
|
2,613,933
|
|
2,430,149
|
|
2,493,870
|
|
1,813,028
|
|
Savings
deposits
|
|
894,332
|
|
811,150
|
|
780,052
|
|
725,124
|
|
703,949
|
|
Money market
accounts
|
|
3,519,441
|
|
3,525,571
|
|
3,648,449
|
|
3,569,025
|
|
2,156,667
|
|
Time
deposits
|
|
2,893,383
|
|
2,256,555
|
|
2,423,335
|
|
2,433,183
|
|
1,921,130
|
|
Total
deposits
|
|
$14,121,499
|
|
$13,136,392
|
|
$13,363,063
|
|
$13,212,085
|
|
$9,747,025
|
|
|
|
|
|
|
|
|
|
|
|
|
Non time deposits as
percentage of total deposits
|
|
80%
|
|
83%
|
|
82%
|
|
82%
|
|
80%
|
|
Time deposits as
percentage of total deposits
|
|
20%
|
|
17%
|
|
18%
|
|
18%
|
|
20%
|
|
Total
deposits
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
NET INTEREST MARGIN
The Company's NIM decreased 8 bps from 4.25% in the previous
quarter to 4.17% during the current quarter, primarily as a result
of reduced accretion (5 bps) and a decline in loan yields due to a
reduction in the federal funds rate and in LIBOR rates. The
first quarter 2020 loan accretion of $15,834 impacted NIM by 43 bps, as compared with
the previous quarter's $18,093, which
increased NIM by 48 bps. Interest earning assets yield
excluding loan accretion in the current quarter decreased by 10 bps
compared with the previous quarter, which was offset by a decrease
of 7 bps in cost of deposits.
The table below summarizes yields and costs by various interest
earning asset and interest bearing liability account types for the
current quarter, the previous calendar quarter and the same quarter
last year.
|
Three Months
Ended
|
|
Mar. 31,
2020
|
|
|
Dec. 31,
2019
|
|
|
Mar. 31,
2019
|
|
|
Average
|
|
Interest
|
|
Average
|
|
|
Average
|
|
Interest
|
|
Average
|
|
|
Average
|
|
Interest
|
|
Average
|
|
|
Balance
|
|
Inc/Exp
|
|
Rate
|
|
|
Balance
|
|
Inc/Exp
|
|
Rate
|
|
|
Balance
|
|
Inc/Exp
|
|
Rate
|
|
|
Originated loans
(1)
|
$6,196,409
|
|
$72,890
|
|
4.73%
|
|
|
$5,819,393
|
|
$71,101
|
|
4.85%
|
|
|
$4,243,258
|
|
$50,907
|
|
4.87%
|
|
|
Acquired loans
(1)
|
5,733,217
|
|
76,683
|
|
5.38%
|
|
|
6,115,107
|
|
88,716
|
|
5.76%
|
|
|
3,964,231
|
|
55,561
|
|
5.68%
|
|
|
PCD loans
|
153,738
|
|
11,544
|
|
30.20%
|
|
|
138,584
|
|
8,224
|
|
23.54%
|
|
|
155,584
|
|
10,140
|
|
26.43%
|
|
|
Taxable
securities
|
1,895,781
|
|
12,534
|
|
2.66%
|
|
|
1,803,467
|
|
11,664
|
|
2.57%
|
|
|
1,707,002
|
|
12,286
|
|
2.92%
|
|
|
Tax-exempt securities
(1)
|
220,310
|
|
1,980
|
|
3.61%
|
|
|
221,438
|
|
1,948
|
|
3.49%
|
|
|
220,244
|
|
1,940
|
|
3.57%
|
|
|
Fed funds sold and
other
|
673,552
|
|
1,813
|
|
1.08%
|
|
|
681,768
|
|
2,783
|
|
1.62%
|
|
|
289,347
|
|
1,995
|
|
2.80%
|
|
|
Total interest
earning assets (1)
|
$14,873,007
|
|
$177,444
|
|
4.80%
|
|
|
$14,779,757
|
|
$184,436
|
|
4.95%
|
|
|
$10,579,666
|
|
$132,829
|
|
5.09%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest earnings
assets
|
2,554,559
|
|
|
|
|
|
|
2,531,319
|
|
|
|
|
|
|
1,747,886
|
|
|
|
|
|
|
Total
assets
|
$17,427,566
|
|
|
|
|
|
|
$17,311,076
|
|
|
|
|
|
|
$12,327,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing
deposits
|
$9,224,690
|
|
$19,836
|
|
0.86%
|
|
|
$9,207,290
|
|
$22,276
|
|
0.96%
|
|
|
$6,430,085
|
|
$13,323
|
|
0.84%
|
|
|
Fed funds
purchased
|
300,539
|
|
1,133
|
|
1.52%
|
|
|
304,489
|
|
1,330
|
|
1.73%
|
|
|
259,590
|
|
1,618
|
|
2.53%
|
|
|
Other
borrowings
|
310,298
|
|
1,440
|
|
1.87%
|
|
|
271,812
|
|
1,312
|
|
1.92%
|
|
|
402,624
|
|
2,596
|
|
2.61%
|
|
|
Corporate and
subordinated debentures
|
71,348
|
|
997
|
|
5.62%
|
|
|
71,335
|
|
1,029
|
|
5.72%
|
|
|
32,459
|
|
570
|
|
7.12%
|
|
|
Total interest
bearing liabilities
|
$9,906,875
|
|
$23,406
|
|
0.95%
|
|
|
$9,854,926
|
|
$25,947
|
|
1.04%
|
|
|
$7,124,758
|
|
$18,107
|
|
1.03%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing
deposits
|
4,035,991
|
|
|
|
|
|
|
4,081,634
|
|
|
|
|
|
|
3,032,471
|
|
|
|
|
|
|
All other
liabilities
|
602,056
|
|
|
|
|
|
|
494,914
|
|
|
|
|
|
|
169,912
|
|
|
|
|
|
|
Total
equity
|
2,882,644
|
|
|
|
|
|
|
2,879,602
|
|
|
|
|
|
|
2,000,411
|
|
|
|
|
|
|
Total liabilities and
equity
|
$17,427,566
|
|
|
|
|
|
|
$17,311,076
|
|
|
|
|
|
|
$12,327,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Spread
(1)
|
|
|
|
|
3.85%
|
|
|
|
|
|
|
3.91%
|
|
|
|
|
|
|
4.06%
|
|
|
Net Interest Margin
(1)
|
|
|
|
|
4.17%
|
|
|
|
|
|
|
4.25%
|
|
|
|
|
|
|
4.40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Total
Deposits
|
|
|
|
|
0.60%
|
|
|
|
|
|
|
0.67%
|
|
|
|
|
|
|
0.57%
|
|
|
|
|
(1)
|
Tax equivalent yield
(Non-GAAP); see reconciliation tables starting on page 9,
Explanation of Certain Unaudited Non-GAAP Financial
Measures.
|
|
Note: Certain
prior period amounts have been reclassified to conform to the
current period presentation format.
|
The table below summarizes accretion income for the periods
presented.
|
Three Months
Ended
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
PCD
accretion
|
$9,157
|
|
$5,908
|
|
$5,418
|
|
$5,248
|
|
$7,904
|
|
Non-PCD
accretion
|
6,677
|
|
12,185
|
|
8,151
|
|
10,335
|
|
4,951
|
|
Total loan
accretion
|
$15,834
|
|
$18,093
|
|
$13,569
|
|
$15,583
|
|
$12,855
|
The table below compares the unpaid principal balance and the
carrying balance (book balance) of the Company's total Acquired and
PCD loans at March 31,
2020.
|
|
Principal
|
|
Carrying
|
|
Total
Loan
|
|
|
|
|
Balance
|
|
Balance
|
|
Discount(1)
|
|
Percentage
|
|
Acquired
loans
|
|
$5,589,475
|
|
$5,544,995
|
|
($44,480)
|
|
0.8%
|
|
PCD loans
|
|
187,020
|
|
150,322
|
|
(36,698)
|
|
19.6%
|
|
Total purchased
loans
|
|
$5,776,495
|
|
$5,695,317
|
|
($81,178)
|
|
1.4%
|
|
|
|
(1) Represents a
non-credit discount.
|
NON-INTEREST INCOME
Non-interest income increased $5,461 to $55,790
during the current quarter compared to $50,329 in the previous quarter. The
increase is mainly attributable to higher interest rate swap and
fixed income revenue in the correspondent banking division and
mortgage banking revenue. The table below summarizes the
Company's non-interest income for the periods indicated.
|
Condensed
Consolidated Non-Interest Income (unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Correspondent banking
revenue
|
|
$27,808
|
|
$23,346
|
|
$21,018
|
|
$11,534
|
|
$9,000
|
|
Mortgage banking
revenue
|
|
10,973
|
|
9,113
|
|
9,444
|
|
6,803
|
|
4,193
|
|
SBA
revenue
|
|
1,403
|
|
1,785
|
|
1,411
|
|
1,252
|
|
688
|
|
Wealth management
related revenue
|
|
831
|
|
878
|
|
801
|
|
875
|
|
607
|
|
Service charges on
deposit accounts
|
|
7,522
|
|
7,993
|
|
7,990
|
|
7,507
|
|
6,678
|
|
Debit, prepaid, ATM
and merchant card related fees
|
|
3,667
|
|
3,082
|
|
3,923
|
|
6,376
|
|
5,018
|
|
Other non-interest
income
|
|
3,586
|
|
4,119
|
|
3,901
|
|
3,601
|
|
3,099
|
|
Subtotal
|
|
$55,790
|
|
$50,316
|
|
$48,488
|
|
$37,948
|
|
$29,283
|
|
Gain (loss) on sale
of securities available for sale
|
|
—
|
|
13
|
|
—
|
|
(5)
|
|
17
|
|
Total Non-Interest
Income
|
|
$55,790
|
|
$50,329
|
|
$48,488
|
|
$37,943
|
|
$29,300
|
|
|
Note: Certain
prior period amounts have been reclassified to conform to the
current period presentation format.
|
NON-INTEREST EXPENSES
Excluding merger-related expenses, non-interest expense
increased $6,471 in the first quarter
to $119,721 compared to the previous
quarter. The increase was primarily driven by a $4,104 increase in salary, wage and benefit
expenses which were largely due to increases of approximately
$3.0 million and $1.2 million in health insurance and payroll
taxes, respectively. Bank regulatory related expenses
increased by $1,084. The
Company also recorded $1,027 in
credit loss expense for unfunded commitments during the current
quarter as a result of increase in potential credit losses
resulting from the COVID-19 pandemic. The table below
summarizes the Company's non-interest expense for the periods
indicated.
|
Condensed
Consolidated Non-Interest Expense (unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Salaries, wages and
employee benefits
|
|
$77,077
|
|
$72,973
|
|
$71,352
|
|
$67,516
|
|
$48,393
|
|
Occupancy
expense
|
|
7,346
|
|
7,267
|
|
7,729
|
|
7,752
|
|
5,602
|
|
Depreciation of
premises and equipment
|
|
4,045
|
|
4,151
|
|
3,887
|
|
3,550
|
|
2,850
|
|
Marketing
expenses
|
|
2,158
|
|
1,958
|
|
1,765
|
|
1,797
|
|
2,020
|
|
Data processing
expenses
|
|
5,617
|
|
5,242
|
|
5,182
|
|
5,525
|
|
3,656
|
|
Legal, auditing and
other professional fees
|
|
2,682
|
|
2,958
|
|
2,364
|
|
2,106
|
|
1,442
|
|
Bank regulatory
related expenses
|
|
1,807
|
|
723
|
|
635
|
|
2,074
|
|
1,616
|
|
Debit, ATM and
merchant card related expenses
|
|
1,598
|
|
1,362
|
|
1,382
|
|
1,304
|
|
1,453
|
|
Credit related
expenses
|
|
944
|
|
879
|
|
795
|
|
760
|
|
729
|
|
Amortization of
intangibles
|
|
4,535
|
|
4,552
|
|
4,229
|
|
4,435
|
|
2,814
|
|
Impairment on bank
property held for sale
|
|
31
|
|
808
|
|
506
|
|
315
|
|
107
|
|
Credit loss expense
for unfunded commitments
|
|
1,027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
expenses
|
|
10,854
|
|
10,377
|
|
10,216
|
|
9,116
|
|
7,426
|
|
Subtotal
|
|
$119,721
|
|
$113,250
|
|
$110,042
|
|
$106,250
|
|
$78,108
|
|
Merger-related
expenses
|
|
3,051
|
|
159
|
|
16,994
|
|
15,739
|
|
6,365
|
|
Total Non-Interest
Expense
|
|
$122,772
|
|
$113,409
|
|
$127,036
|
|
$121,989
|
|
$84,473
|
|
|
Note: Certain
prior period amounts have been reclassified to conform to the
current period presentation format.
|
CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
Non-performing assets ("NPAs") totaled $89,762 at March 31,
2020, compared to $43,870 at
December 31, 2019. NPAs as a
percentage of total assets increased to 0.48% at March 31, 2020, compared to 0.26% at December 31, 2019 and 0.33% at March 31, 2019. With the adoption of ASC
326 and the new accounting treatment for PCD loans, the Company
began to include non-accrual PCD loans in its non-performing assets
and related credit metrics starting with the current quarter.
Previous periods do not include PCD loans as these loans were not
considered non-performing under ASC 310-30.
The table below summarizes selected credit quality data for the
periods indicated.
|
|
Ending
Balance
|
|
Non-Performing
Assets (1)
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Non-accrual loans,
non-PCD loans
|
|
$45,305
|
|
$36,916
|
|
$39,048
|
|
$26,334
|
|
$35,181
|
|
Non-accrual loans,
PCD loans
|
|
33,893
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Past due loans 90
days or more and still accruing
interest
|
|
535
|
|
1,692
|
|
473
|
|
—
|
|
—
|
|
Total non-performing
loans ("NPLs")
|
|
79,733
|
|
38,608
|
|
39,521
|
|
26,334
|
|
35,181
|
|
Other real estate
owned ("OREO")
|
|
9,942
|
|
5,092
|
|
6,558
|
|
5,881
|
|
5,981
|
|
Repossessed assets
other than real estate
|
|
87
|
|
170
|
|
258
|
|
236
|
|
313
|
|
Total non-performing
assets
|
|
$89,762
|
|
$43,870
|
|
$46,337
|
|
$32,451
|
|
$41,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios (1)
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans
as percentage of total loans
|
|
0.66%
|
|
0.33%
|
|
0.34%
|
|
0.23%
|
|
0.43%
|
|
Non-performing assets
as percentage of total assets
|
|
0.48%
|
|
0.26%
|
|
0.27%
|
|
0.19%
|
|
0.33%
|
|
Non-performing assets
as percentage of loans and OREO
plus other repossessed assets
|
|
0.75%
|
|
0.37%
|
|
0.39%
|
|
0.28%
|
|
0.51%
|
|
Loans past due 30
thru 89 days and accruing interest as a percentage of total loans
|
|
0.53%
|
|
0.48%
|
|
0.52%
|
|
0.44%
|
|
0.42%
|
|
Allowance for credit
losses as percentage of NPLs
|
|
199%
|
|
105%
|
|
106%
|
|
154%
|
|
113%
|
|
Net
charge-offs
|
|
$1,444
|
|
$4,384
|
|
$2,354
|
|
$2,191
|
|
$771
|
|
Net charge-offs as a
percentage of average loans for
the period on an annualized basis
|
|
0.05%
|
|
0.15%
|
|
0.08%
|
|
0.08%
|
|
0.04%
|
|
|
|
(1)
|
The three months
ended December 31, September 30, June 30, and March 31, 2019
exclude PCD (formally PCI) loans.
|
The ACL totaled $158,733 at
March 31, 2020, compared to
$40,655 at December 31, 2019, an increase of $118,078 due to the effect of CECL adoption of
$74,608, provision for credit losses
of $44,914 and net charge-offs of
$1,444. The changes in the
Company's ACL components between March 31,
2020 and December 31, 2019 are
summarized in the table below (unaudited).
|
|
Three Months
Ended
|
|
Allowance for
credit losses (unaudited)
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Loans, excluding PCD
loans
|
|
|
|
|
|
Allowance at
beginning of period
|
|
$40,429
|
|
$41,758
|
|
Effect of adopting
ASC 326 (CECL)
|
|
57,604
|
|
—
|
|
Charge-offs
|
|
(2,350)
|
|
(5,324)
|
|
Recoveries
|
|
1,201
|
|
940
|
|
Net
charge-offs
|
|
(1,149)
|
|
(4,384)
|
|
Provision for credit
losses
|
|
43,919
|
|
3,055
|
|
Allowance at end of
period for loans other than PCD
loans
|
|
$140,803
|
|
$40,429
|
|
|
|
|
|
|
PCD loans
|
|
|
|
|
|
Allowance at
beginning of period
|
|
$226
|
|
$233
|
|
Effect of adopting
ASC 326 (CECL)
|
|
17,004
|
|
—
|
|
Charge-offs
|
|
(1,257)
|
|
—
|
|
Recoveries
|
|
962
|
|
—
|
|
Net
charge-offs
|
|
(295)
|
|
—
|
|
Provision (recovery)
for credit losses
|
|
995
|
|
(7)
|
|
Allowance at end of
period for
|
|
|
|
|
|
PCD loans
|
|
$17,930
|
|
$226
|
|
Total allowance at
end of period
|
|
$158,733
|
|
$40,655
|
EXPLANATION OF CERTAIN UNAUDITED NON-GAAP FINANCIAL MEASURES
This press release contains financial information determined by
methods other than U.S. Generally Accepted Accounting Principles
("GAAP"), including adjusted net income, adjusted pre-tax
pre-provision income, adjusted net income per share diluted,
adjusted return on average assets, adjusted return on average
equity, return on average tangible equity, adjusted return on
average tangible equity, adjusted efficiency ratio, adjusted
non-interest income, adjusted non-interest expense, adjusted
net-interest income, tangible common equity, tangible common equity
to tangible assets, common tangible equity per common share, tax
equivalent yields on loans, securities and earning assets, and tax
equivalent net interest spread and margin, which we refer to
"Non-GAAP financial measures." The tables below provide
reconciliations between these Non-GAAP measures and net income,
interest income, net interest income and tax equivalent basis
interest income and net interest income, return on average assets,
return on average equity, the efficiency ratio, total stockholders'
equity and tangible common equity, as applicable.
Management uses these Non-GAAP financial measures in its
analysis of the Company's performance and believes these
presentations provide useful supplemental information, and enhance
investors' understanding of the Company's core business and
performance without the impact of merger-related expenses and
provision for credit losses. Management believes it is
appropriate to exclude merger-related expenses because those costs
are specific to each acquisition, vary based upon the size,
complexity and other specifics of each acquisition, and are not
indicative of the costs to operate the Company's core
business. In addition, management excludes provision for
credit losses from pre-tax income to present the periods on a more
comparable basis without the effect of the higher provision for
credit losses resulting from the adoption of CECL and COVID-19
pandemic.
Non-GAAP measures are also useful in understanding performance
trends and facilitate comparisons with the performance of other
financial institutions. The limitations associated with operating
measures are the risk that persons might disagree as to the
appropriateness of items comprising these measures and that
different companies might calculate these measures differently. The
Company provides reconciliations between GAAP and these Non-GAAP
measures. These disclosures should not be considered an
alternative to GAAP.
|
Reconciliation of
GAAP to non-GAAP Measures (unaudited):
|
|
|
|
Three months
ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Adjusted net
income (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$35,432
|
|
$71,132
|
|
$55,098
|
|
$54,523
|
|
$44,643
|
|
(Gain) loss on sale
of securities available for sale, net of tax
|
|
—
|
|
(10)
|
|
—
|
|
4
|
|
(13)
|
|
Merger-related
expenses, net of tax
|
|
2,332
|
|
122
|
|
12,939
|
|
11,962
|
|
4,833
|
|
Deferred tax asset
write down
|
|
—
|
|
987
|
|
—
|
|
—
|
|
—
|
|
Tax benefit
adjustments(1)
|
|
(2,273)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted net income
(Non-GAAP)
|
|
$35,491
|
|
$72,231
|
|
$68,037
|
|
$66,489
|
|
$49,463
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
pre-provision income (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$35,432
|
|
$71,132
|
|
$55,098
|
|
$54,523
|
|
$44,643
|
|
Income tax
provision
|
|
6,025
|
|
20,665
|
|
17,006
|
|
16,721
|
|
13,306
|
|
Provision for credit
losses
|
|
44,914
|
|
3,048
|
|
3,692
|
|
2,792
|
|
1,053
|
|
Credit loss for
unfunded commitments
|
|
1,027
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gross gain (loss) on
sale of securities available for sale
|
|
—
|
|
13
|
|
—
|
|
(5)
|
|
17
|
|
Gross merger-related
expenses
|
|
3,051
|
|
159
|
|
16,994
|
|
15,739
|
|
6,365
|
|
Adjusted pre-tax
pre-provision income (Non-GAAP)
|
|
$90,449
|
|
$95,017
|
|
$92,790
|
|
$89,770
|
|
$65,384
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income per share - Diluted
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted (GAAP)
|
|
$0.28
|
|
$0.56
|
|
$0.43
|
|
$0.42
|
|
$0.46
|
|
Effect to adjust for
merger-related expenses, net of tax
|
|
0.02
|
|
—
|
|
0.10
|
|
0.09
|
|
0.05
|
|
Effect to adjust for
deferred tax asset write down
|
|
—
|
|
0.01
|
|
—
|
|
—
|
|
—
|
|
Effect to adjust for
tax benefit adjustments(1)
|
|
(0.02)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted net income
per share - Diluted (Non-GAAP)
|
|
$0.28
|
|
$0.57
|
|
$0.53
|
|
$0.51
|
|
$0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on
average assets (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (GAAP)
|
|
0.82%
|
|
1.63%
|
|
1.27%
|
|
1.30%
|
|
1.47%
|
|
Effect to adjust for
merger-related expenses, net of tax
|
|
0.05%
|
|
—
|
|
0.30%
|
|
0.29%
|
|
0.16%
|
|
Effect to adjust for
deferred tax asset write down
|
|
—
|
|
0.03%
|
|
—
|
|
—
|
|
—
|
|
Effect to adjust for
tax benefit adjustments(1)
|
|
(0.05)%
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted return on
average assets (Non-GAAP)
|
|
0.82%
|
|
1.66%
|
|
1.57%
|
|
1.59%
|
|
1.63%
|
|
|
|
(1)
|
Tax benefit
adjustment on net operating loss carryback available under the
CARES Act.
|
|
Explanation of
Certain Unaudited Non-GAAP Financial Measures
(continued)
|
|
|
|
Three months
ended
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Adjusted return on
average equity (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity (GAAP)
|
|
4.94%
|
|
9.80%
|
|
7.56%
|
|
7.63%
|
|
9.05%
|
|
Effect to adjust for
merger and acquisition related expenses, net of tax
|
|
0.33%
|
|
0.02%
|
|
1.78%
|
|
1.68%
|
|
0.98%
|
|
Effect to adjust for
deferred tax asset write down
|
|
—
|
|
0.13%
|
|
—
|
|
—
|
|
—
|
|
Effect to adjust for
tax benefit adjustments(1)
|
|
(0.32)%
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted return on
average equity (Non-GAAP)
|
|
4.95%
|
|
9.95%
|
|
9.34%
|
|
9.31%
|
|
10.03%
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible equity (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$35,432
|
|
$71,132
|
|
$55,098
|
|
$54,523
|
|
$44,643
|
|
Amortization of
intangibles, net of tax
|
|
3,466
|
|
3,491
|
|
3,220
|
|
3,371
|
|
2,136
|
|
Adjusted net income
for average tangible equity (Non-GAAP)
|
|
$38,898
|
|
$74,623
|
|
$58,318
|
|
$57,894
|
|
$46,779
|
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders'
equity (GAAP)
|
|
$2,882,644
|
|
$2,879,606
|
|
$2,902,333
|
|
$2,876,244
|
|
$2,000,411
|
|
Average
noncontrolling interest
|
|
—
|
|
—
|
|
(11,723)
|
|
(11,844)
|
|
—
|
|
Average
goodwill
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,203,052)
|
|
(802,880)
|
|
Average core deposit
intangible
|
|
(89,175)
|
|
(93,355)
|
|
(97,483)
|
|
(103,369)
|
|
(65,116)
|
|
Average other
intangibles
|
|
(4,275)
|
|
(4,644)
|
|
(4,682)
|
|
(4,602)
|
|
(2,934)
|
|
Average tangible
equity (Non-GAAP)
|
|
$1,584,777
|
|
$1,577,190
|
|
$1,584,028
|
|
$1,553,377
|
|
$1,129,481
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible equity (annualized) (Non-GAAP)
|
|
9.87%
|
|
18.77%
|
|
14.61%
|
|
14.95%
|
|
16.80%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on
average tangible equity (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible equity (Non-GAAP)
|
|
9.87%
|
|
18.77%
|
|
14.61%
|
|
14.95%
|
|
16.80%
|
|
Effect to adjust for
merger-related expenses, net of tax
|
|
0.59%
|
|
0.03%
|
|
3.24%
|
|
3.09%
|
|
1.74%
|
|
Effect to adjust for
deferred tax asset write down
|
|
—
|
|
0.25%
|
|
—
|
|
—
|
|
—
|
|
Effect to adjust for
tax benefit adjustments(1)
|
|
(0.58)%
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted return on
average tangible equity (Non-GAAP)
|
|
9.88%
|
|
19.05%
|
|
17.85%
|
|
18.04%
|
|
18.54%
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
(tax equivalent) (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
(GAAP)
|
|
$55,790
|
|
$50,329
|
|
$48,488
|
|
$37,943
|
|
$29,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
before provision (GAAP)
|
|
$153,353
|
|
$157,925
|
|
$154,947
|
|
$158,681
|
|
$114,175
|
|
Total tax equivalent
adjustment
|
|
685
|
|
564
|
|
491
|
|
495
|
|
547
|
|
Adjusted net interest
income (Non-GAAP)
|
|
$154,038
|
|
$158,489
|
|
$155,438
|
|
$159,176
|
|
$114,722
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense
(GAAP)
|
|
$122,772
|
|
$113,409
|
|
$127,036
|
|
$121,989
|
|
$84,473
|
|
Amortization of
intangibles
|
|
(4,535)
|
|
(4,552)
|
|
(4,229)
|
|
(4,435)
|
|
(2,814)
|
|
Merger and
acquisition related expenses
|
|
(3,051)
|
|
(159)
|
|
(16,994)
|
|
(15,739)
|
|
(6,365)
|
|
Adjusted non-interest
expense (Non-GAAP)
|
|
$115,186
|
|
$108,698
|
|
$105,813
|
|
$101,815
|
|
$75,294
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax
equivalent) (Non-GAAP)
|
|
58.5%
|
|
54.3%
|
|
62.3%
|
|
61.9%
|
|
58.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted efficiency
ratio, tax equivalent (Non-GAAP)
|
|
54.9%
|
|
52.1%
|
|
51.9%
|
|
51.7%
|
|
52.3%
|
|
|
|
(1)
|
Tax benefit
adjustment on net operating loss carryback available under the
CARES Act.
|
|
Explanation of
Certain Unaudited Non-GAAP Financial Measures
(continued)
|
|
|
|
Ending
Balance
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Tangible common
equity (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Total common
stockholders' equity (GAAP)
|
|
$2,870,252
|
|
$2,896,718
|
|
$2,857,702
|
|
$2,878,377
|
|
$2,027,552
|
|
Goodwill
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(802,880)
|
|
Core deposit
intangible
|
|
(87,295)
|
|
(91,157)
|
|
(95,175)
|
|
(99,200)
|
|
(63,511)
|
|
Other
intangibles
|
|
(4,131)
|
|
(4,507)
|
|
(4,700)
|
|
(4,620)
|
|
(2,996)
|
|
Common tangible
equity (Non-GAAP)
|
|
$1,574,409
|
|
$1,596,637
|
|
$1,553,410
|
|
$1,570,140
|
|
$1,158,165
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
(GAAP)
|
|
$18,596,292
|
|
$17,142,025
|
|
$17,420,376
|
|
$17,036,597
|
|
$12,587,637
|
|
Goodwill
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(1,204,417)
|
|
(802,880)
|
|
Core deposit
intangible
|
|
(87,295)
|
|
(91,157)
|
|
(95,175)
|
|
(99,200)
|
|
(63,511)
|
|
Other
intangibles
|
|
(4,131)
|
|
(4,507)
|
|
(4,700)
|
|
(4,620)
|
|
(2,996)
|
|
Total tangible assets
(Non-GAAP)
|
|
$17,300,449
|
|
$15,841,944
|
|
$16,116,084
|
|
$15,728,360
|
|
$11,718,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Common tangible
equity to tangible assets (Non-GAAP)
|
|
9.1%
|
|
10.1%
|
|
9.6%
|
|
10.0%
|
|
9.9%
|
|
Common tangible
equity per common share (Non-GAAP)
|
|
$12.68
|
|
$12.76
|
|
$12.32
|
|
$12.17
|
|
$12.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
|
Mar. 31,
2020
|
|
Dec. 31,
2019
|
|
Mar. 31,
2019
|
|
|
|
|
|
Tax equivalent
yields (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Originated
loans
|
|
$72,489
|
|
$70,784
|
|
$50,621
|
|
|
|
|
|
Acquired
loans
|
|
76,642
|
|
88,677
|
|
55,524
|
|
|
|
|
|
PCD loans
|
|
11,544
|
|
8,224
|
|
10,140
|
|
|
|
|
|
Taxable
securities
|
|
12,534
|
|
11,665
|
|
12,286
|
|
|
|
|
|
Tax-exempt
securities
|
|
1,737
|
|
1,739
|
|
1,716
|
|
|
|
|
|
Fed funds sold and
other
|
|
1,813
|
|
2,783
|
|
1,995
|
|
|
|
|
|
Interest income
(GAAP)
|
|
$176,759
|
|
$183,872
|
|
$132,282
|
|
|
|
|
|
Tax equivalent
adjustment for originated loans
|
|
401
|
|
316
|
|
286
|
|
|
|
|
|
Tax equivalent
adjustment for acquired loans
|
|
41
|
|
39
|
|
37
|
|
|
|
|
|
Tax equivalent
adjustment for tax-exempt securities
|
|
243
|
|
209
|
|
224
|
|
|
|
|
|
Tax equivalent
adjustments
|
|
685
|
|
564
|
|
547
|
|
|
|
|
|
Interest income (tax
equivalent) (Non-GAAP)
|
|
$177,444
|
|
$184,436
|
|
$132,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(GAAP)
|
|
$153,353
|
|
$157,925
|
|
$114,175
|
|
|
|
|
|
Tax equivalent
adjustments
|
|
685
|
|
564
|
|
547
|
|
|
|
|
|
Net interest income
(tax equivalent) (Non-GAAP)
|
|
$154,038
|
|
$158,489
|
|
$114,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on originated
loans
|
|
4.71%
|
|
4.83%
|
|
4.84%
|
|
|
|
|
|
Effect from tax
equivalent adjustment
|
|
0.02%
|
|
0.02%
|
|
0.03%
|
|
|
|
|
|
Yield on originated
loans - tax equivalent (Non-GAAP)
|
|
4.73%
|
|
4.85%
|
|
4.87%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on acquired
loans
|
|
5.38%
|
|
5.75%
|
|
5.68%
|
|
|
|
|
|
Effect from tax
equivalent adjustment
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
Yield on acquired
loans - tax equivalent (Non-GAAP)
|
|
5.38%
|
|
5.76%
|
|
5.68%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on tax exempted
securities
|
|
3.17%
|
|
3.12%
|
|
3.16%
|
|
|
|
|
|
Effect from tax
equivalent adjustment
|
|
0.44%
|
|
0.37%
|
|
0.41%
|
|
|
|
|
|
Yield on tax exempted
securities - tax equivalent (Non-GAAP)
|
|
3.61%
|
|
3.49%
|
|
3.57%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest
earning assets (GAAP)
|
|
4.78%
|
|
4.94%
|
|
5.07%
|
|
|
|
|
|
Effect from tax
equivalent adjustments
|
|
0.02%
|
|
0.01%
|
|
0.02%
|
|
|
|
|
|
Yield on interest
earning assets - tax equivalent (Non-GAAP)
|
|
4.80%
|
|
4.95%
|
|
5.09%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread
(GAAP)
|
|
3.83%
|
|
3.90%
|
|
4.04%
|
|
|
|
|
|
Effect for tax
equivalent adjustments
|
|
0.02%
|
|
0.01%
|
|
0.02%
|
|
|
|
|
|
Net interest spread
(Non-GAAP)
|
|
3.85%
|
|
3.91%
|
|
4.06%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(GAAP)
|
|
4.15%
|
|
4.24%
|
|
4.38%
|
|
|
|
|
|
Effect from tax
equivalent adjustments
|
|
0.02%
|
|
0.01%
|
|
0.02%
|
|
|
|
|
|
Net interest margin -
tax equivalent (Non-GAAP)
|
|
4.17%
|
|
4.25%
|
|
4.40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin -
tax equivalent (Non-GAAP)
|
|
4.17%
|
|
4.25%
|
|
4.40%
|
|
|
|
|
|
Effect of loan
accretion
|
|
(0.43%)
|
|
(0.48%)
|
|
(0.50%)
|
|
|
|
|
|
Net interest margin
excluding loan accretion (Non-GAAP)
|
|
3.74%
|
|
3.77%
|
|
3.90%
|
|
|
|
|
|
Explanation of
Certain Unaudited Non-GAAP Financial Measures
(continued)
|
|
|
Adjusted Common
Tangible Equity per Common Share (Non-GAAP) post CECL
Adoption
|
|
|
|
|
|
|
Total common
stockholders' equity (GAAP) at Dec. 31, 2019
|
2,896,718
|
|
Goodwill
|
(1,204,417)
|
|
Core deposit
intangible
|
(91,157)
|
|
Other
intangibles
|
(4,507)
|
|
Common tangible equity
(Non-GAAP) at Dec. 31, 2019
|
1,596,637
|
|
CECL
impact
|
(47,751)
|
|
Adjusted Common
tangible equity (Non-GAAP) at Jan. 1, 2020
|
1,548,886
|
|
|
|
|
Total assets (GAAP)
at Dec. 31, 2019
|
17,142,025
|
|
Goodwill
|
(1,204,417)
|
|
Core deposit
intangible
|
(91,157)
|
|
Other
intangibles
|
(4,507)
|
|
Total tangible assets
(Non-GAAP) at Dec. 31, 2019
|
15,841,944
|
|
Increase in ACL
(excluding PCD loans)
|
(57,614)
|
|
Increase in deferred
tax asset
|
15,947
|
|
Adjusted Total
tangible assets (Non-GAAP) at Jan. 1, 2020
|
15,800,277
|
|
|
|
|
TCE ratio post
CECL implementation
|
9.80%
|
|
Actual TCE ratio at
Dec. 31, 2019
|
10.08%
|
|
Net
change
|
(0.28)%
|
About CenterState Bank Corporation
CenterState operates as one of the leading Southeastern regional
bank franchises headquartered in the state of Florida. Both
CenterState and its nationally chartered bank subsidiary,
CenterState Bank, N.A. (the "Bank"), are based in Winter Haven, Florida, between Orlando and Tampa. With over
$18 billion in assets, the Bank
provides traditional retail, commercial, mortgage, wealth
management and SBA services throughout its Florida, Georgia and Alabama branch network and customer
relationships in neighboring states. The Bank also has a
national footprint, serving clients coast to coast through its
correspondent banking division.
For additional information contact John
C. Corbett (CEO), Stephen D.
Young (COO) or William E.
Matthews (CFO) at 863-293-4710.
Forward Looking Statements
Information in this Press Release, other than statements of
historical facts, may constitute forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to,
statements about the benefits of the proposed merger of South State
and CenterState, including future financial and operating results
(including the anticipated impact of the transaction on South
State's and CenterState's respective earnings and tangible book
value), statements related to the expected timing of the completion
of the merger, the combined company's plans, objectives,
expectations and intentions, and other statements that are not
historical facts. Forward-looking statements may be
identified by terminology such as "may," "will," "should,"
"scheduled," "plans," "intends," "anticipates," "expects,"
"believes," "estimates," "potential," or "continue" or negatives of
such terms or other comparable terminology.
All forward-looking statements are subject to risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of South State or CenterState to differ
materially from any results expressed or implied by such
forward-looking statements. Such factors include, among
others, (1) the risk that the cost savings and any revenue
synergies from the merger may not be fully realized or may take
longer than anticipated to be realized, (2) disruption to the
parties' businesses as a result of the announcement and pendency of
the merger, (3) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement, (4) the risk that the integration of each party's
operations will be materially delayed or will be more costly or
difficult than expected or that the parties are otherwise unable to
successfully integrate each party's businesses into the other's
businesses, (5) the failure to obtain the necessary approvals by
the shareholders of South State or CenterState, (6) the amount of
the costs, fees, expenses and charges related to the merger, (7)
the ability by each of South State and CenterState to obtain
required governmental approvals of the merger (and the risk that
such approvals may result in the imposition of conditions that
could adversely affect the combined company or the expected
benefits of the transaction), (8) reputational risk and the
reaction of each company's customers, suppliers, employees or other
business partners to the merger, (9) the failure of the closing
conditions in the merger agreement to be satisfied, or any
unexpected delay in closing the merger, (10) the possibility that
the merger may be more expensive to complete than anticipated,
including as a result of unexpected factors or events, (11) the
dilution caused by South State's issuance of additional shares of
its common stock in the merger, (12) a material adverse change in
the financial condition of South State or CenterState, (13) general
competitive, economic, political and market conditions, (14) major
catastrophes such as earthquakes, floods or other natural or human
disasters, including infectious disease outbreaks, including the
recent outbreak of a novel strain of coronavirus, a respiratory
illness, the related disruption to local, regional and global
economic activity and financial markets, and the impact that any of
the foregoing may have on South State or CenterState and its
customers and other constituencies, and (15) other factors that may
affect future results of CenterState and South State including
changes in asset quality and credit risk; the inability to sustain
revenue and earnings growth; changes in interest rates and capital
markets; inflation; customer borrowing, repayment, investment and
deposit practices; the impact, extent and timing of technological
changes; capital management activities; and other actions of the
Federal Reserve Board and legislative and regulatory actions and
reforms. Additional factors which could affect future results
of CenterState and South State can be found in the registration
statement on Form S-4, as amended, as well as South State's Annual
Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q,
and Current Reports on Form 8-K, and CenterState's Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on
Form 8-K, in each case filed with the SEC and available on the
SEC's website at http://www.sec.gov. CenterState and South
State disclaim any obligation and do not intend to update or revise
any forward-looking statements contained in this communication,
which speak only as of the date hereof, whether as a result of new
information, future events or otherwise, except as required by
federal securities laws.
Important Information About the Merger and Where to Find
It
South State has filed a registration statement on Form S-4 and
an amendment thereto with the SEC to register the shares of South
State's common stock that will be issued to CenterState's
shareholders in connection with the transaction. The
registration statement contains a joint proxy statement of South
State and CenterState that also constitutes a prospectus of South
State. The registration statement on Form S-4, as amended,
was declared effective by the SEC on April
20, 2020, and South State and CenterState commenced mailing
the definitive joint proxy statement/prospectus to their respective
shareholders on or about April 20,
2020. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT AND DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS (AS WELL ANY OTHER DOCUMENTS FILED WITH THE
SEC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE
INTO THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH
DOCUMENTS CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED
MERGER AND RELATED MATTERS. Investors and security holders
may obtain free copies of these documents and other documents filed
with the SEC by South State or CenterState through the website
maintained by the SEC at http://www.sec.gov or by contacting the
investor relations department of South State or CenterState at:
|
South State
Corporation
|
CenterState Bank
Corporation
|
|
520 Gervais
Street
|
1101 First Street
South, Suite 202
|
|
Columbia, SC
29201-3046
|
Winter Haven, FL
33880
|
|
Attention:
Investor Relations
|
Attention:
Investor Relations
|
|
(800)
277-2175
|
(863)
293-4710
|
Participants in Solicitation
South State, CenterState and certain of their directors and
executive officers may be deemed participants in the solicitation
of proxies from the shareholders of each of South State and
CenterState in connection with the merger. Information
regarding the directors and executive officers of South State and
CenterState and other persons who may be deemed participants in the
solicitation of the shareholders of South State or of CenterState
in connection with the merger is contained in the definitive joint
proxy statement/prospectus related to the proposed merger.
Information about the directors and executive officers of South
State and their ownership of South State common stock can also be
found in South State's definitive proxy statement in connection
with its 2019 annual meeting of shareholders, as filed with the SEC
on March 6, 2019, and other documents
subsequently filed by South State with the SEC, including, but not
limited to, Amendment No. 1 to South State's Annual Report on Form
10-K/A, as filed with the SEC on March
6, 2020. Information about the directors and executive
officers of CenterState and their ownership of CenterState common
stock can also be found in CenterState's definitive proxy statement
in connection with its 2020 annual meeting of shareholders, as
filed with the SEC on March 10, 2020,
and other documents subsequently filed by CenterState with the
SEC. Additional information regarding the interests of such
participants is included in the definitive joint proxy
statement/prospectus and other relevant documents regarding the
merger filed with the SEC.
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SOURCE CenterState Bank Corporation