1 Fixed Income Investor Presentation May 2020 Issuer Free Writing Prospectus Filed Pursuant to Rule 433 Registration No. 333-238144 May 21, 2020 |
2 Information in this presentation, 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 Corporation (“South State”) and CenterState Bank Corporation (“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. Additional Information and Where to Find It CenterState has filed a registration statement (including a prospectus) (File No. 333-238144) and a preliminary prospectus supplement with the SEC for the offering to which this presentation relates. Before you invest, you should read the prospectus and the preliminary prospectus supplement in that registration statement and the other documents that CenterState has filed with the SEC for more complete information about the company and the offering. You may get these documents for free by visiting EDGAR on the SEC’s web site at www.sec.gov. Alternatively, CenterState, any underwriter or any dealer participating in the offering will arrange to send you copies of the prospectus and the preliminary prospectus supplement relating to the offering if you request it by contacting: Keefe Bruyette & Woods, Inc. at (800) 966-1559 or U.S. Bancorp Investments, Inc. at (877) 558-2607. Certain information contained in this presentation and statements made orally during this presentation relate to or are based on publications and other data obtained from third party sources. While CenterState believes these third party sources to be reliable as of the date of this presentation, CenterState has not independently verified, and makes no representation as to the adequacy, fairness, accuracy or completeness of, any information obtained from such third party sources. Notes Regarding the Use of Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company’s performance. Management believes these non-GAAP financial measures allow for better comparability of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non- GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in the Appendix to this presentation. Forward Looking Statements |
3 Preliminary Term Sheet Issuer Security Offered Security Rating Structure Issuance Type Term Call Date Use of Proceeds Joint Bookrunners CenterState Bank Corporation (Nasdaq: CSFL) Holding Company Subordinated Debt Due 2030 BBB by Kroll Bond Rating Agency Fixed-to-Floating Rate Subordinated Notes SEC Registered 10 years 5 years General Corporate Purposes Keefe, Bruyette & Woods, U.S. Bancorp Investments, Inc. |
4 Click to edit Master title style Edit Master text styles Presentation Contents I. About CenterState Bank Corporation II. Financial Highlights III. Appendix |
5 Merger Update Progress 1/27 Announce Strategic Merger of Equals 1/28-2/9 Town Halls with Executive Leadership reached ~50% of employees February Integration Kickoff and Team selection Weekly Integration Team Meetings Weekly Executive Team Meetings March All Regulatory Applications Filed 3/5/20 Core Provider Selected 3/5/20 Named Line of Business and Market Leaders 4/20/20 S-4 Became Effective Next Steps 5/21/20 Shareholder Vote 3Q 20 Anticipated Close 2Q 21 Expected System Conversion |
6 Proven Performance and Stability ~0.5% / ~0.6% Cost of Total Deposits ~12.2% Total Capital Ratio (1) ~8.6% TCE / TA (1) ~0.6% / ~0.8% NPAs / Loans + OREO Overview of Pro Forma Company Source: Company documents, S&P Global Market Intelligence Data as of or for the three months ended 3/31/20 Note: Nonperforming asset include nonaccrual loans, loans past due 90 days or more and still accruing, OREO / ORA and performing restructured loans (1) Pro Forma for merger of equals with South State Corporation as of 3/31/20 (2) Includes loans held for sale (3) Includes top 15 largest markets in the Southeast sorted by projected ’20 – ’25 population growth markets $35B Assets $24B Gross Loans (2) $26B Deposits Meaningful Scale Through Partnership (1) Winter Haven Tampa Orlando Charleston Atlanta Charlotte Richmond CSFL + SSB (304) Dominant Southeast Franchise (3) 300+ Branch Locations #8 Largest Bank Headquartered in the Southeast 10 15 Southeast Growth Markets of the top CSFL + SSB |
7 $2.7 $3.6 $3.9 $5.1 $7.9 $7.8 $8.6 $8.9 $14.5 $14.7 $15.9 $16.6 $1.8 $2.1 $2.3 $2.4 $2.4 $3.8 $4.0 $5.1 $7.1 $12.3 $17.1 $18.6 $34.6 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 SSB CSFL Pro Forma Proven Successful Acquirors Source: Company documents, S&P Global Market Intelligence Data as of 12/31 for each respective year; Q1 2020 data as of 3/31/20 Note: Total assets for targets as of fiscal year end before announcement date (1) FDIC-assisted acquisition (2) Whole bank acquisition (3) Branch deal (4) Pro Forma for merger of equals with South State Corporation Peoples Bancorporation Inc. ~$0.5B Assets (2) Savannah Bancorp Inc ~$1.0B Assets (2) First Financial Holdings Inc ~$3.2B Assets (2) Southeastern Bank Financial Corp ~$1.8B Assets (2) Park Sterling Corp ~$3.3B Assets (2) South State Corporation + CenterState Bank Corporation MOE South State Corporation + CenterState Bank Corporation MOE Community National Bank at Bartow <$0.1B Assets (1) Independent National Bank ~$0.2B Assets (1) Federal Trust Corp ~$0.6B Assets (2) Central Florida State Bank <$0.1B Assets (1) First Guaranty Bank & Trust Co of Jacksonville ~$0.4B Assets (1) Gulfstream Bancshares Inc. ~$0.6B Assets (2) First Southern Bancorp Inc. ~$1.1B Assets (2) Community Bank of South Florida Inc ~$0.5B Assets (2) Hometown of Homestead Banking Co. ~$0.3B Assets (2) Platinum Bank Holding Co. ~$0.6B Assets (2) Gateway Financial Holdings of Florida Inc ~$0.8B Assets (2) HCBF Holding Co Inc. ~$2.2B Assets (2) Sunshine Bancorp Inc. ~$0.9B Assets (2) Charter Financial Corp ~$1.6B Assets (2) National Commerce Corp ~$4.2B Assets (2) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Community Bank & Trust ~$1.1B Assets (1) Habersham Bank ~$0.4B Assets (1) BankMeridian, NA ~$0.2B Assets (1) Total Assets Over Time ($B) 13 Bank of America Corp. Branches ~$0.4B Deposits (3) (4) Asset CAGR: 25.9% Asset CAGR: 19.4% |
8 Key Investment Highlights High-Powered Franchise with Proven Business Model Fortress Balance Sheet and Sound Capital Allocation Conservative Credit Culture and Risk Management Continued Investment in Technology and Mobile Banking Track Record of Well-Executed Mergers and Acquisitions Deep and Experienced Leadership Team Diversified Footprint Across Attractive Southeast Markets |
9 Deep and Experienced Management Team Will Matthews Chief Financial Officer Steve Young Chief Strategy Officer Richard Murray President Robert Hill Executive Chairman John Corbett Chief Executive Officer John Pollok SEVP and Director Renee Brooks Chief Operating Officer Greg Lapointe Chief Banking Officer |
10 Attractive Markets of Operation Source: S&P Global Market Intelligence Dollars in billions Deposit data as of 6/30/19 Note: Blue bars denote markets in which the pro forma company operates (1) Includes all MSAs with population over 500,000 with pro forma deposits greater than $350 million (2) Top 15 largest markets in the Southeast sorted by projected ’20 – ’25 population growth Meaningful Presence in 10 of the 15 most populous markets in the Southeast Pro Forma Company 15 Largest Markets in the Southeast Sorted by Pop. Growth (2) 1.6% 1.9% 2.4% 2.6% 4.2% 4.7% 6.1% 6.1% 6.3% 6.4% 6.7% 6.8% 7.0% 7.7% 7.9% Birmingham, AL Memphis, TN New Orleans, LA Virginia Beach, VA Richmond, VA Washington, D.C. Greenville, SC Atlanta, GA Miami, FL Nashville, TN Tampa, FL Jacksonville, FL Charlotte, NC Raleigh, NC Orlando, FL Alabama Georgia Florida South Carolina North Carolina Virginia $0.4 $0.5 $1.7 $2.2 $1.2 $1.0 $0.7 $1.3 $0.9 $1.3 $0.4 $1.6 $1.1 $1.9 $0.6 Deposits by Market (1) |
11 5.7% 6.0% 6.4% 0.60% 0.54% 0.48% Peer-leading Pro Forma Demographics and Deposit Base Pro Forma MRQ Cost of Deposits (2) Pro Forma Source: Company documents, S&P Global Market Intelligence Includes all banks headquartered nationwide with total assets between $25 and $50 billion (1) Population growth deposit weighted by county; deposit data as of 6/30/19 (2) Pro forma cost of deposits calculated by combining SSB and CSFL interest expense on average deposits for the three months ended 3/31/20 2020 - 2025 Projected Population Growth (1) |
12 Southeast Deposit Market Share Source: S&P Global Market Intelligence Deposit and branch data as of 6/30/19; pro forma for announced transactions Note: Deposits capped at $1.0B per branch; Southeast defined as AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, VA and WV SE Deposits Market Rank Institution ($B) Share Branches 1 Truist Financial Corp. $218.2 13.1 % 2,309 2 Wells Fargo & Co. 183.9 11.1 1,614 3 Bank of America Corp. 167.9 10.1 1,084 4 Regions Financial Corp. 77.8 4.7 1,176 5 JPMorgan Chase & Co. 65.0 3.9 716 6 First Horizon National Corp. 48.3 2.9 481 7 PNC Financial Services Group Inc. 37.4 2.3 615 8 Synovus Financial Corp. 33.8 2.0 295 9 First Citizens BancShares Inc. 30.7 1.8 503 10 Fifth Third Bancorp 25.8 1.6 364 Pro Forma 24.7 1.5 306 11 Toronto-Dominion Bank 22.0 1.3 258 12 Hancock Whitney Corp. 21.9 1.3 209 13 Capital One Financial Corp. 19.2 1.2 144 14 Citigroup Inc. 16.0 1.0 60 15 Pinnacle Financial Partners Inc. 14.8 0.9 113 16 United Bankshares Inc. 14.5 0.9 192 17 Ameris Bancorp 13.7 0.8 177 18 CenterState Bank Corp. 12.8 0.8 150 19 Banco Bilbao Vizcaya Argentaria SA 12.5 0.8 133 20 Atlantic Union Bankshares Corp. 12.3 0.7 147 21 United Community Banks Inc. 12.2 0.7 157 22 BancorpSouth Bank 12.0 0.7 228 23 South State Corp. 11.9 0.7 156 24 Home BancShares Inc. 10.9 0.7 165 25 Bank OZK 10.5 0.6 219 26 Trustmark Corp. 10.5 0.6 188 27 BankUnited Inc. 10.4 0.6 74 28 Renasant Corp. 10.2 0.6 173 29 Arvest Bank Group Inc. 9.6 0.6 122 30 TowneBank 9.3 0.6 44 |
13 COVID-19 Impact Source: Company documents (1) Data as of 5/4/20 • Branches limited to drive-through beginning 3/20 • 12 branches without drive-through open by appointment only beginning 3/20 Alabama “Safer at home” until 5/22 10 of 10 branches open Employees • Over 90% of non-branch employees working remotely • Increased paid leave for employees unable to work due to lack of child or dependent care • Branches restricted to drive through traffic • Additional compensation for employees with essential in- office jobs Customers • Began offering loan payment deferrals, fee waivers for ATMs and CD withdrawals • Increased mobile deposit limits • PPP loan ramp up for our small business clients • Secured SBA PPP funding for nearly 9,600 loans totaling $1.3 billion (1) • Funding for PPP through liquidity on hand, deposit growth, and potential use of FRB PPP facility CenterState COVID Response South State COVID Response Employees • Expanded insurance coverage for testing and treatment of COVID-19 • Increased paid leave for team members unable to work due to lack of child or dependent care • Paid leave for team members under quarantine due to COVID- 19 exposure • Additional compensation for team members with essential in-office jobs Customers • Expanded communication through digital channels (online, mobile, app) to adjust to reduced branch interaction • Record usage of digital channels with no service disruption • 65% increase in Mobile Deposits • 30% increase in Consumer Loan Applications • 40% increase in Bank to Bank Transfers • Secured funding for nearly 9,500 loans totaling ~$1.1 billion (1) • Funding through deposit and excess liquidity • Branches limited to drive-through beginning 3/19 • ~80% of employees working from home Georgia Shelter in Place expired 4/29 18 of 18 branches open Florida Shelter in Place expired 4/29 120 of 121 branches open North Carolina Shelter in Place expired 5/8 24 of 24 branches open Virginia Shelter in Place until 6/10 7 of 7 branches open South Carolina Shelter in Place lifted 5/4 92 of 93 branches open Georgia Shelter in Place expired 4/29 30 of 31 branches open |
14 Presentation Contents I. About CenterState Bank Corporation II. Financial Highlights III. Appendix |
15 Update of Pro Forma Financials Source: Company documents Data and purchase accounting entries are as of 3/31/20 and subject to change at closing Pro Forma Balance Sheet & Reg. Capital SSB CSFL P.A.A. & SSB+CSFL $ millions 3/31/20 3/31/20 Reclassifications 3/31/20 Assets: Cash and equivalents $1,263 $1,147 $2,410 Investment securities $2,034 $2,443 $10 $4,487 Loans HFS $72 $188 $260 Loans $11,507 $12,027 $140 $23,674 Less allowance for credit losses ($145) ($159) ($304) Loans, net $11,362 $11,868 $23,370 Other real estate owned $13 $10 ($1) $22 Goodwill $1,003 $1,204 ($850) $1,357 Other intangible assets $47 $87 $104 $238 Other Assets $849 $1,649 ($58) $2,440 Total Assets $16,643 $18,596 ($655) $34,584 Liabilities & Equity: Deposits $12,345 $14,121 $25 $26,491 Borrowings $1,526 $538 $2,064 Subordinated debt -- $49 $49 Trust Preferred $116 $33 $149 Other Liabilities $335 $985 $68 $1,388 Total Liabilities $14,322 $15,726 $93 $30,141 Common Equity $2,321 $2,870 ($748) $4,443 Total Equity $2,321 $2,870 ($748) $4,443 Total Liabilities & Equity $16,643 $18,596 ($655) $34,584 Balance Sheet Ratios Tang. Common Equity / Tg. Assets 8.2% 9.1% 8.6% C&D / Total RBC 75% 57% 66% CRE / Total RBC 236% 276% 260% Hold Co. Regulatory Capital Leverage Ratio 9.6% 9.7% 9.1% CET1 Ratio 11.1% 10.6% 10.9% Tier 1 Capital Ratio 12.0% 10.6% 10.9% Total Capital Ratio 12.7% 11.7% 12.2% |
16 1Q 2020 Highlights – Linked Quarter Source: Company documents Data for the three months ended each respective quarter The increase in nonperforming assets between Q4 2019 and Q1 2020 is due to the inclusion of PCD non-accrual loans as required by CECL Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, OREO / ORA and performing restructured loans Loans exclude held for sale Please see appendix for reconciliation of non-GAAP financial metrics SSB CSFL Q4 2019 Q1 2020 QoQ Change Q4 2019 Q1 2020 QoQ Change Balance Sheet Assets $15,921 $16,643 4.5% $17,142 $18,596 8.5% Loans (excl. HFS) 11,435 11,579 1.3% 11,984 12,027 0.4% Deposits 12,177 12,344 1.4% 13,136 14,121 7.5% Loan / Deposit Ratio 93.4% 93.2% (20) bps 91.2% 85.2% (606) bps Income Statement Net Interest Income $126.5 $128.0 1.2% $157.9 $153.4 (2.8%) Provision Expense 3.6 36.5 927.1% 3.0 44.9 1,396.7% Noninterest Income 36.3 44.1 21.6% 50.3 55.8 10.9% Noninterest Expense 99.1 103.1 4.0% 113.4 122.8 8.3% Net Income 49.1 24.1 (50.9%) 71.1 35.4 (50.2%) EPS - Diluted $1.45 $0.71 (51.0%) $0.56 $0.28 (50.0%) Profitability Adjusted ROAA 1.26% 0.69% (57) bps 1.66% 0.82% (84) bps Adjusted ROATE 16.2% 9.5% (672) 19.1% 9.9% (920) Net Interest Margin (FTE) 3.64% 3.68% 4 4.25% 4.17% (8) Adjusted Efficiency Ratio 60.7% 59.7% (101) 52.1% 54.9% 280 Adjusted PTPP ROAA 1.59% 1.73% 14 2.18% 2.09% (9) Asset Quality NPAs / Loans + OREO + ORA 0.41% 0.61% 20 bps 0.44% 0.81% 37 bps ACL / Loans 0.54% 1.26% 72 0.34% 1.32% 98 NCOs / Average Loans 0.05% 0.05% -- 0.15% 0.05% (10) Capital TCE / TA 8.88% 8.15% (73) bps 10.08% 9.10% (98) bps Leverage Ratio 9.73% 9.56% (17) 9.74% 9.65% (9) CET1 Ratio 11.30% 11.09% (21) 11.34% 10.63% (71) Tier 1 Ratio 12.25% 12.03% (22) 11.34% 10.63% (71) Total Capital Ratio 12.78% 12.72% (6) 12.19% 11.65% (54) |
17 1.3% 1.0% 1.0% 1.0% 1.3% 3.2% 2.9% 2.9% 2.8% 2.8% 2016 2017 2018 2019 Q1 2020 NII / Avg. Assets NIE / Avg. Assets 10.7% 10.1% 17.7% 16.2% 9.9% 15.2% 14.6% 20.5% 18.4% 9.9% 2016 2017 2018 2019 Q1 2020 ROATE Adjusted ROATE 71% 61% 60% 59% 59% 58% 55% 51% 52% 55% 2016 2017 2018 2019 Q1 2020 Efficiency Ratio Adjusted Efficiency Ratio 0.87% 0.88% 1.43% 1.42% 0.82% 1.25% 1.30% 1.67% 1.61% 0.82% 2016 2017 2018 2019 Q1 2020 ROAA Adjusted ROAA CenterState Profitability Source: Company documents Data for the twelve months ended 12/31 for each respective year, Q1 2020 data for the three months ended 3/31/20 (annualized for the quarter ended ROAA, ROATE and NII and NIE / Avg. Assets data) Note: Please see appendix for reconciliation of non-GAAP financial metrics (1) Excluding non-recurring items Return on Average Tangible Equity (%) Efficiency Ratio (%) Return on Average Assets (%) Adjusted PTPP ROAA NII and NIE / Avg. Assets (%) (1) 1.66% 2.01% 2.20% 2.15% 2.09% |
18 1.5% 1.3% 1.0% 0.9% 1.1% 3.4% 3.3% 2.9% 2.6% 2.7% 2016 2017 2018 2019 Q1 2020 NII / Avg. Assets NIE / Avg. Assets 14.7% 9.6% 14.9% 15.1% 8.4% 15.9% 15.5% 16.8% 15.8% 9.5% 2016 2017 2018 2019 Q1 2020 ROATE Adjusted ROATE 63% 67% 64% 63% 62% 63% 58% 59% 60% 60% 2016 2017 2018 2019 Q1 2020 Efficiency Ratio Adjusted Efficiency Ratio 1.16% 0.77% 1.23% 1.21% 0.60% 1.26% 1.28% 1.39% 1.27% 0.69% 2016 2017 2018 2019 Q1 2020 ROAA Adjusted ROAA South State Profitability Return on Average Assets (%) Return on Average Tangible Equity (%) Efficiency Ratio (%) NII and NIE / Avg. Assets (%) (1) Adjusted PTPP ROAA Source: Company documents Data for the twelve months ended 12/31 for each respective year, Q1 2020 data for the three months ended 3/31/20 (annualized for the quarter ended ROAA, ROATE and NII and NIE / Avg. Assets data) Note: Please see appendix for reconciliation of non-GAAP financial metrics (1) Excluding non-recurring items 1.73% 1.59% 1.85% 1.98% 1.94% |
19 Net Interest Margin Source: Company documents Annual data as of or for the twelve months ended each respective year, quarterly data as of or for the three months ended 3/31/20 (annualized for quarter ended data) *Tax equivalent Please see appendix for reconciliation of non-GAAP financial metrics CenterState Net Interest Margin (%) South State Net Interest Margin (%) |
20 Diversified Revenue Streams Source: Company documents Data for the three months ended 3/31/20 (1) Pro Forma for merger of equals with South State Corporation Q1 2020 Total: $55.8 million • Total noninterest income grew 10.9% quarter over quarter • Mortgage banking income grew 20.4% from Q4 2019 • Record quarter with $27.8 million of correspondent banking income; a $4.5 million or 19.1% increase from Q4 2019 primarily driven by interest rate swaps and fixed income revenue CenterState Noninterest Income Pro Forma Noninterest Income (1) Pro Forma Q1 2020 Total: $99.9 million |
21 Deposit Portfolio Source: Company documents Data as of 12/31 for each respective year, Q1 2020 data as of or for the three months ended 3/31/20 Note: Core deposits defined as total deposits less time deposits greater than $250,000 (1) Pro Forma for merger of equals with South State Corporation (2) Pro forma cost of deposits calculated by combining SSB and CSFL interest expense on average deposits for the three months ended 3/31/20 CSFL Standalone Deposit Composition (%) Cost of Deposits: 0.60% Total: $14.1B Pro Forma Deposit Composition (1) (%) Total: $26.5B Core Deposits Over Time ($B) $3.8 $5.4 $9.1 $12.5 $13.5 $25.6 $7.0 $11.3 $11.3 $11.9 $12.1 2016 2017 2018 2019 Q1 2020 Q1 2020 Pro Forma CSFL SSB CSFL Standalone CAGR: 47.4% • ~1.1 million Total Deposit Accounts • ~772 thousand Checking Accounts (1) SSB Standalone CAGR: 18.1% Standalone Core Deposits: 95.8% Pro Forma Core Deposits: 96.7% Pro Forma Cost of Deposits (2) : 0.54% |
22 57% 66% 276% 260% Q1 2020 CSFL Standalone Q1 2020 Pro Forma C&D / TRBC CRE / TRBC Loan Portfolio CSFL Standalone Loan Composition (%) Pro Forma Loan Composition (%) Total: $12.0B Yield on Loans & Leases*: 5.36% Source: Company documents, S&P Global Market Intelligence Data as of or for the three months ended 3/31/20 Note: Excludes purchase accounting adjustments; Total loans excludes HFS *Tax equivalent (1) Pro Forma for merger of equals with South State Corporation and includes preliminary purchase accounting entries as of 3/31/20, which are subject to change at closing (2) Loan totals exclude loans held for sale Loan Concentration (%) Total: $23.7B (1) • Less than 1% total exposure to SNC’s, Leverage Lending, Oil & Gas, and Aviation • 99% of loan portfolio is in footprint • Granular loan portfolio with average loan size of $230 thousand CSFL & SSB Loan Portfolio Highlights • Minimal exposure to Oil & Gas, Aviation, Steel or Mining • Leverage Lending & SNC’s exposure < $100 million • Over 98% of loan portfolio is in footprint • Granular loan portfolio with average loan size of $134 thousand (2) (2) (1) (2) |
23 Industry Exposure Source: Company documents Data as of 3/31/20 Dollars in millions, unless otherwise noted (1) Excludes loans held for sale Selected Industries (% of total loan portfolio) Lodging $389 3.3% Restaurants 307 2.6% Retail CRE 1,632 13.8% CenterState Industry Exposure (1) South State Industry Exposure (1) Selected Industries (% of total loan portfolio) Total Portfolio $12.0B Lodging $590 5.1% Restaurants 225 2.0% Retail CRE 558 4.8% Total Portfolio $11.5B |
24 Loan Deferral Requests • Proactively offered to customers • $2.2 billion in customer deferrals in process • Standard deferral is 90 days principal and interest Source: Company documents Data as of 4/30/20 Dollars in millions, unless otherwise noted CenterState Loan Deferrals South State Loan Deferrals • Proactive communication with customers • $2.4 billion in customer deferrals in process • Commercial standard deferral is 90 days principal and interest or 120 days principal • Consumer and Mortgage standard deferral is 120 days principal and interest |
25 Lodging Portfolio • Lodging is $389 million or 3.3% of loan portfolio • 54% weighted average loan to value • Underwriting policy is 65% loan to value; 1.5x DSC based on a 20-year amortization • Average loan amount of $1.7 million • 72% of portfolio under deferral (1) • Top 3 MSAs: Tampa, Jacksonville, Atlanta Source: Company documents Data as of 3/31/20, deferral data as of 4/30/20 Dollars in millions, unless otherwise noted (1) Includes approved/processed and considered deferrals CenterState Lodging Portfolio South State Lodging Portfolio • Lodging is $590 million or 5.1% of loan portfolio • 57% weighted average loan to value • Underwriting policy is 80% loan to value; 1.4x DSC based on a 20-year amortization • Average loan amount of $8.2 million • 100% of portfolio under deferral |
26 Restaurant Portfolio • Restaurant is $307 million or 2.6% of loan portfolio • 55% weighted average loan to value • Underwriting policy is 75% loan to value; 1.4x DSC based on a 20-year amortization • Average loan amount $453 thousand • 38% of portfolio under deferral (1) Source: Company documents Data as of 3/31/20, deferral data as of 4/30/20 Dollars in millions, unless otherwise noted (1) Includes approved/processed and considered deferrals CenterState Restaurant Portfolio South State Restaurant Portfolio • Restaurant is $225 million or 2.0% of loan portfolio • 66% weighted average loan to value • Average loan balance of real estate secured loans is $692 thousand • 64% of portfolio under deferral |
27 Retail CRE Portfolio • Retail CRE is $1.63 billion or 13.8% of loan portfolio • 58% weighted average loan to value • Underwriting policy is 75% loan to value; 1.3x DSC based on a 20-year amortization • Average loan amount of $1.0 million • 28% of portfolio under deferral (1) Source: Company documents Data as of 3/31/20, deferral data as of 4/30/20 Dollars in millions, unless otherwise noted (1) Includes approved/processed and considered deferrals CenterState Retail CRE Portfolio South State Retail CRE Portfolio • Retail CRE is $558 million or 4.8% of loan portfolio • 59% weighted average loan to value • Underwriting policy is 80% loan to value; 1.35x DSC based on a 20-year amortization • Average loan amount of $888 thousand • 41% of portfolio under deferral |
28 Credit Quality & Credit Risk Management CSFL Net Charge Offs & Provision Expense Source: Company documents Data as of or for the twelve months ended 12/31 for each respective year; Q1 2020 data as of or for the three months ended 3/31/20 Dollars in millions Note: The increase in nonperforming assets between Q4 2019 and Q1 2020 is due to the inclusion of PCD nonaccrual loans as required by CECL Note: Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, OREO / ORA and performing restructured loans CSFL Nonperforming Assets / Loans + OREO + ORA SSB Nonperforming Assets / Loans + OREO + ORA SSB Net Charge Offs & Provision Expense NCOs $mm $0.2 ($0.8) $1.4 $9.7 $1.4 $3.3 $3.3 $4.9 $5.9 $1.3 |
29 Q4 2019 1/1/2020 Q1 2020 Loans CRE and Other Inc. Producing Prop. 20,800 40,688 57,437 CRE-Owner Occup. and C&I 18,189 35,583 40,345 Consumer Mortgage 5,076 9,931 16,033 Home equity 4,310 8,432 12,050 Land 3,055 5,977 7,254 Mobile Home 2,176 4,257 4,458 Consumer Non Mobile Home 1,142 2,235 2,732 BEX and Micro 1,148 2,245 2,665 Overdrafts 561 1,098 855 Ready Reserves 231 451 513 Other 239 468 443 ACL-loan and lease losses (1) 56,927 111,365 144,785 ACL-unfunded commitments (1) 335 6,756 8,555 South State ACL / Total Loans (%) Current Expected Credit Losses (CECL) Source: Company documents Data as of the three months ended each respective quarter Dollars in millions unless otherwise noted (1) Beginning 1/1/20, calculation is based on current expected credit loss methodology CenterState ACL / Total Loans (%) CenterState ACL by Loan Type ($000s) South State ACL by Loan Type ($000s) Q4 2019 1/1/2020 Q1 2020 Loans Commercial Real Estate $18,552 $66,114 $103,629 Commercial, industr. & factored receiv. 11,282 16,201 13,649 Residential 4,257 18,690 23,083 Land, development & construction 2,496 9,507 14,439 Consumer & other 4,068 4,751 3,933 ACL-loan and lease losses (1) $40,655 $115,263 $158,733 ACL-unfunded commitments (1) -- $6,084 $7,110 |
30 Capital Source: Company documents Data as of 12/31 for each respective year, Q1 2020 data as of 3/31/20 (1) Pro Forma for merger of equals with South State Corporation CET1 Ratio (%) Total Capital Ratio (%) Tier 1 Ratio (%) Leverage Ratio (%) |
31 Holding Company Cash - CSFL $33.6 CSFL Dividend Capacity from the Bank - Q1 2020* 184.0 Holding Company Cash - SSB 48.7 SSB Dividend Capacity from the Bank - Q1 2020* 10.0 SSB Unsecured Line of Credit** 25.0 Other 3.3 Pro Forma Sources of Liquidity $304.6 Strong Pro Forma Liquidity Position Source: Company documents Dollars in millions Data as of 3/31/20 *Includes data from 2018, 2019 and the three month ended 3/31/20 **$25.0 million unsecured line of credit with U.S. Bank, National Association ($0 drawn at 3/31/20) CSFL Securities Portfolio Pro Forma Securities Portfolio Holding Company Sources of Liquidity • In addition to the $26.5 billion of deposits on a combined basis, CSFL and SSB have access to the following additional sources of funding at the bank: o FHLB borrowings o Fed funds o Brokered Funding o Fed discount window Bank Level Sources of Liquidity |
32 Presentation Contents I. About CenterState Bank Corporation II. Financial Highlights III. Appendix |
33 CenterState Consolidated Financial Highlights Source: Company documents Note: The increase in nonperforming assets between Q4 2019 and Q1 2020 is due to the inclusion of PCD nonaccrual loans as required by CECL Note: Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, OREO / ORA and performing restructured loans Year Ended December 31, Quarter Ended, ($mm except per share data) 2016 2017 2018 2019 3/31/20 Summary Balance Sheet: Total Assets $5,079 $7,124 $12,338 $17,142 $18,596 Loans (excl. HFS) 3,430 4,773 8,341 11,984 12,027 Deposits 4,153 5,561 9,477 13,136 14,121 Loans / Deposits 82.6% 85.8% 88.0% 91.2% 85.2% Performance Metrics: Net Income $42.3 $55.8 $156.4 $225.4 $35.4 Diluted EPS 0.88 0.95 1.76 1.87 0.28 Adjusted ROAA 1.25% 1.30% 1.67% 1.61% 0.82% Adjusted ROATE 15.2% 14.6% 20.5% 18.4% 9.9% Net Interest Margin (FTE) 4.20% 4.28% 4.39% 4.31% 4.17% Adjusted Efficiency Ratio 57.7% 55.5% 51.4% 51.9% 54.9% Non-interest Income / Total Revenue 26.4% 21.7% 20.3% 22.1% 26.7% Dividends Per Share $0.16 $0.24 $0.40 $0.44 $0.14 Asset Quality: NPAs / Loans + OREO + ORA 1.15% 0.73% 0.43% 0.44% 0.81% Reserves / Total Loans 0.79% 0.69% 0.48% 0.34% 1.32% NPLs / Total Loans 0.59% 0.38% 0.29% 0.33% 0.66% NCOs / Avg. Loans 0.01% (0.02%) 0.02% 0.09% 0.05% Capital Ratios: TCE / TA 8.7% 9.1% 9.6% 10.1% 9.1% Leverage Ratio 9.1% 9.8% 10.0% 9.7% 9.7% CET1 Ratio 11.3% 11.5% 11.9% 11.3% 10.6% Tier 1 Capital Ratio 11.8% 12.0% 12.3% 11.3% 10.6% Total Capital Ratio 12.5% 12.6% 12.7% 12.2% 11.7% |
34 South State Consolidated Financial Highlights Year Ended December 31, Quarter Ended, Pro Forma ($mm except per share data) 2016 2017 2018 2019 3/31/20 3/31/20 Summary Balance Sheet: Total Assets $8,901 $14,467 $14,676 $15,921 $16,643 $34,584 Loans (excl. HFS) 6,684 10,623 11,018 11,375 11,507 23,674 Deposits 7,334 11,533 11,647 12,177 12,345 26,491 Loans / Deposits 91.1% 92.1% 94.6% 93.4% 93.2% 89.4% Performance Metrics: Net Income $101.3 $87.6 $178.9 $186.5 $24.1 -- Diluted EPS 4.18 2.93 4.86 5.36 0.71 -- Adjusted ROAA 1.26% 1.28% 1.39% 1.27% 0.69% -- Adjusted ROATE 15.9% 15.5% 16.8% 15.8% 9.5% -- Net Interest Margin (FTE) 4.22% 4.15% 4.09% 3.77% 3.68% -- Adjusted Efficiency Ratio 62.9% 58.5% 59.1% 60.3% 59.7% -- Non-interest Income / Total Revenue 27.2% 25.4% 22.2% 21.8% 25.6% -- Dividends Per Share $1.21 $1.32 $1.38 $1.67 $0.47 -- Asset Quality: NPAs / Loans + OREO + ORA 0.58% 0.34% 0.37% 0.41% 0.61% -- Reserves / Total Loans 0.60% 0.45% 0.51% 0.54% 1.26% -- NPLs / Total Loans 0.29% 0.23% 0.26% 0.30% 0.49% -- NCOs / Avg. Loans 0.06% 0.04% 0.05% 0.05% 0.05% -- Capital Ratios: TCE / TA 8.9% 9.2% 9.6% 8.9% 8.2% 8.6% Leverage Ratio 9.9% 10.4% 10.7% 9.7% 9.6% 9.1% CET1 Ratio 11.7% 11.6% 12.1% 11.3% 11.1% 10.9% Tier 1 Capital Ratio 12.4% 12.6% 13.1% 12.3% 12.0% 10.9% Total Capital Ratio 13.0% 13.0% 13.6% 12.8% 12.7% 12.2% Source: Company documents Note: The increase in nonperforming assets between Q4 2019 and Q1 2020 is due to the inclusion of PCD nonaccrual loans as required by CECL Note: Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, OREO / ORA and performing restructured loans |
35 Kroll Ratings Source: Kroll Bond Rating Agency Entity Type Rating Outlook CenterState Bank Corporation Senior Unsecured Debt BBB+ Stable Subordinated Debt BBB Stable Short-Term Debt K2 N/A CenterState Bank Deposit A- Stable Senior Unsecured Debt A- Stable Subordinated Debt BBB+ Stable Short-Term Deposit K2 N/A Short-Term Debt K2 N/A |
36 Historical Interest Coverage Source: Company documents Data as of 12/31 for each respective year; Q1 2020 data as of 3/31/20 Dollars in thousands, unless otherwise noted Note: Assumes all net proceeds from subordinated debt offering are downstreamed to the bank for illustrative purposes Please see appendix for reconciliation of non-GAAP financial metrics For the Twelve Months Ended Three Months Ended PF for PF for $150mm $150mm Sub Debt Sub Debt Raise Raise 12/31/16 12/31/17 12/31/18 12/31/19 12/31/19 3/31/20 3/31/20 Bank-Level Equity $548,653 $903,882 $1,999,963 $2,967,040 $3,114,665 $2,961,145 $3,108,770 Consolidated Equity 552,457 904,750 1,971,344 2,896,718 2,896,718 2,870,252 2,870,252 Double Leverage Ratio 99% 100% 101% 102% 108% 103% 108% Interest Coverage Total Deposit Interest $6,934 $11,079 $33,260 $83,099 $83,099 $19,836 $19,836 Total Debt Interest 2,406 4,704 14,290 16,505 24,755 3,570 5,633 Total Interest Expense $9,340 $15,783 $47,550 $99,604 $107,854 $23,406 $25,469 Pre-tax Adjusted Income 92,934 121,104 231,782 332,326 324,076 44,508 42,446 Interest Coverage (Excluding Deposit Interest Expense) 42.5x 29.1x 19.5x 26.2x 17.4x 19.0x 12.1x Interest Coverage (Including Deposit Interest Expense) 11.0x 8.7x 5.9x 4.3x 4.0x 2.9x 2.7x |
37 CenterState Non-GAAP Reconciliation Source: Company documents (1) Tax benefit adjustment on net operating loss carryback available under the CARES Act (2) Annualized for quarter ended data Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Adjusted net income (non-GAAP) Net Income (GAAP) $42,341 $55,795 $156,435 $225,396 $71,132 $35,432 (Gain) loss on sale of AFS securities, net of tax (9) 5 17 (19) (10) -- Gain on sale of deposits, net of tax -- -- (465) -- -- -- Gain on early extinguishment of debt, net of tax (202) -- -- -- -- -- Gain on sale of trust department, net of tax -- (820) -- -- -- -- Termination of FDIC loss share agreements, net of tax 11,514 -- -- -- -- -- Merger-related expenses, net of tax 7,325 8,879 26,584 29,856 122 2,332 Deferred tax asset write down -- 18,575 -- 987 987 -- Tax benefit adjustments (1) -- -- -- -- -- (2,273) Adjusted net income (non-GAAP) $60,969 $82,434 $182,571 $256,220 $72,231 $35,491 Adjusted return on average assets (non-GAAP) (2) Return on average assets (GAAP) 0.87% 0.88% 1.43% 1.42% 1.63% 0.82% Effect to adjust for merger-related expenses, net of tax 0.14% 0.14% 0.24% 0.18% -- 0.05% Effect to adjust for gain on sale of trust department, net of tax -- (0.01%) -- -- -- -- Effect to adjust for termination of FDIC loss share agreements, net of tax 0.24% -- -- -- -- -- Effect to adjust for deferred tax asset write down -- 0.29% -- 0.01% 0.03% -- Effect to adjust for tax benefit adjustments (1) -- -- -- -- -- (0.05%) Adjusted return on average assets (non-GAAP) 1.25% 1.30% 1.67% 1.61% 1.66% 0.82% Return on average tangible equity (non-GAAP) (2) Net Income (GAAP) $42,341 $55,795 $156,435 $225,396 $71,132 $35,432 Amortization of intangibles, net of tax 2,026 2,767 7,937 12,221 3,491 3,466 Adjusted net income for average tangible equity (non-GAAP) $44,367 $58,562 $164,372 $237,617 $74,623 $38,898 Average stockholders' equity (GAAP) $531,734 $819,626 $1,662,815 $2,667,709 $2,879,606 $2,882,644 Average noncontrolling interest -- -- -- (5,909) -- -- Average goodwill (100,855) (213,892) (673,115) (1,105,068) (1,204,417) (1,204,417) Average core deposit intangible (16,060) (22,508) (58,463) (89,929) (93,355) (89,175) Average other intangibles (773) (925) (1,504) (4,222) (4,644) (4,275) Average tangible equity (non-GAAP) $414,046 $582,301 $929,733 $1,462,581 $1,577,190 $1,584,777 Return on average tangible equity (non-GAAP) 10.72% 10.06% 17.68% 16.25% 18.77% 9.87% |
38 CenterState Non-GAAP Reconciliation (cont.) Source: Company documents (1) Annualized for quarter ended data (2) Tax benefit adjustment on net operating loss carryback available under the CARES Act Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Return on average tangible equity (non-GAAP) 10.72% 10.06% 17.68% 16.25% 18.77% 9.87% Effect to adjust for gain on sale of deposits, net of tax -- -- (0.05%) -- -- -- Effect to adjust for merger-related expenses, net of tax 1.77% 1.52% 2.86% 2.04% 0.03% 0.59% Effect to adjust for gain on sale of trust department, net of tax -- (0.14%) -- -- -- -- Effect to adjust for termination of FDIC loss share agreements, net of tax 2.78% -- -- -- -- -- Effect to adjust for early extinguishment of debt, net of tax (0.05%) -- -- -- -- -- Effect to adjust for deferred tax asset write down -- 3.19% -- 0.07% 0.25% -- Effect to adjust for tax benefit adjustments (2) -- -- -- -- -- (0.58%) Adjusted return on average tangible equity (non-GAAP) 15.22% 14.63% 20.49% 18.36% 19.05% 9.88% Noninterest income (GAAP) $64,369 $65,175 $105,127 $166,060 $50,329 $55,790 Gain on early extinguishment of debt (308) -- -- -- -- -- Gain on sale of deposits -- -- (611) -- -- -- Gain on sale of trust department -- (1,224) -- -- -- -- Adjusted non-interest income (non-GAAP) $64,061 $63,951 $104,516 $166,060 $50,329 $55,790 Net interest income before provision (GAAP) $179,325 $235,543 $413,082 $585,728 $157,925 $153,353 Total tax equivalent adjustment 3,459 5,716 2,521 2,063 564 685 Adjusted net interest income (non-GAAP) $182,784 $241,259 $415,603 $587,791 $158,489 $154,038 Noninterest expense (GAAP) $174,481 $186,485 $312,467 $446,907 $113,409 $122,772 Amortization of intangibles (3,074) (4,066) (10,018) (16,030) (4,552) (4,535) Termination of FDIC loss share agreements (17,560) -- -- -- -- -- Merger and acquisition related expenses (11,444) (13,046) (34,912) (39,257) (159) (3,051) Adjusted noninterest expense (non-GAAP) $142,403 $169,373 $267,537 $391,620 $108,698 $115,186 Efficiency ratio (tax equivalent) (non-GAAP) 70.6% 60.9% 60.0% 59.3% 54.3% 58.5% Adjusted efficiency ratio, tax equivalent (non-GAAP) 57.7% 55.5% 51.4% 51.9% 52.1% 54.9% Efficiency ratio (tax equivalent) (non-GAAP) (1) Adjusted return on average tangible equity (non-GAAP) |
39 Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Tangible common equity (non-GAAP) Total common stockholders' equity (GAAP) $552,457 $904,750 $1,971,344 $2,896,718 $2,896,718 $2,870,252 Goodwill (106,028) (257,683) (802,880) (1,204,417) (1,204,417) (1,204,417) Core deposit intangible (15,510) (24,063) (66,225) (91,157) (91,157) (87,295) Other intangibles (784) (551) (2,953) (4,507) (4,507) (4,131) Common tangible equity (non-GAAP) $430,135 $622,453 $1,099,286 $1,596,637 $1,596,637 $1,574,409 Total assets (GAAP) $5,078,559 $7,123,975 $12,337,588 $17,142,025 $17,142,025 $18,596,292 Goodwill (106,028) (257,683) (802,880) (1,204,417) (1,204,417) (1,204,417) Core deposit intangible (15,510) (24,063) (66,225) (91,157) (91,157) (87,295) Other intangibles (784) (551) (2,953) (4,507) (4,507) (4,131) Total tangible assets (non-GAAP) $4,956,237 $6,841,678 $11,465,530 $15,841,944 $15,841,944 $17,300,449 Common tangible equity to tangible assets (non-GAAP) 8.7% 9.1% 9.6% 10.1% 10.1% 9.1% Net interest margin - FTE (non-GAAP) (1) Net interest margin (GAAP) 4.12% 4.18% 4.36% 4.29% 4.24% 4.15% Effect for tax equivalent adjustments 0.08% 0.10% 0.03% 0.02% 0.01% 0.02% Net interest margin - tax equivalent (non-GAAP) 4.20% 4.28% 4.39% 4.31% 4.25% 4.17% Adjusted pre-tax pre-provision income (non-GAAP) (1) Net income (GAAP) $42,341 $55,795 $156,435 $225,396 $71,132 $35,432 Income tax provision 21,910 53,480 41,024 67,698 20,665 6,025 Provision for credit losses 4,962 4,958 8,283 10,585 3,048 44,914 Credit loss for unfunded commitments -- -- -- -- -- 1,027 Gross loss (gain) on sale of securities available for sale (13) 7 22 (25) 13 -- Gross merger-related expenses 11,444 13,046 34,912 39,257 159 3,051 Adjusted pre-tax pre-provision income (non-GAAP) $80,644 $127,286 $240,676 $342,911 $95,017 $90,449 Adjusted pre-tax pre-provision return on average assets (non-GAAP) 1.66% 2.01% 2.20% 2.15% 2.18% 2.09% CenterState Non-GAAP Reconciliation (cont.) Source: Company documents (1) Annualized for quarter ended data |
40 Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Pre-tax adjusted income (non-GAAP) Net income (GAAP) $42,341 $55,795 $156,435 $225,396 $71,132 $35,432 Income tax provision 21,910 53,480 41,024 67,698 20,665 6,025 Gross loss (gain) on sale of securities available for sale (13) 7 22 (25) 13 -- Gross gain on sale of deposits -- -- (611) -- -- -- Gross gain on early extinguishment of debt (308) -- -- -- -- -- Gross gain on sale of trust department -- (1,224) -- -- -- -- Termination of FDIC loss share agreement 17,560 -- -- -- -- -- Gross merger-related expenses 11,444 13,046 34,912 39,257 159 3,051 Pre-tax adjusted income (non-GAAP) $92,934 $121,104 $231,782 $332,326 $91,969 $44,508 CenterState Non-GAAP Reconciliation (cont.) Source: Company documents |
41 South State Non-GAAP Reconciliation Source: Company documents (1) Annualized for quarter ended data Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Adjusted earnings (non-GAAP) Net income (GAAP) $101,282 $87,554 $178,871 $186,483 $49,091 $24,110 Securities (gains) losses, net of tax (81) (946) 520 (2,173) (20) -- Other than temporary impairment (OTTI), net of tax -- 501 -- -- -- -- Early termination of FDIC LSA, net of tax 2,938 -- -- -- -- -- Provision for income taxes - deferred tax asset revaluation -- 26,558 (990) -- -- -- Merger and conversion related expense, net of tax 5,960 31,469 23,692 3,701 1,252 3,510 Pension plan termination expense, net of tax -- -- -- 7,641 -- -- FHLB prepayment fee, net of tax -- -- -- 107 -- -- Net adjusted earnings available to common shareholders (non-GAAP) $110,099 $145,136 $202,093 $195,759 $50,323 $27,620 Adjusted return on average assets (non-GAAP) (1) Return on average assets (GAAP) 1.16% 0.77% 1.23% 1.21% 1.23% 0.60% Effect to adjust for securities losses (gains), net of tax (0.00%) (0.01%) 0.00% (0.01%) -- -- Effect to adjust for other-than-temporary impairment (OTTI), net of tax -- 0.01% -- -- -- -- Effect to adjust for FDIC LSA early termination 0.03% -- -- -- -- -- Effect to adjust for provision for income taxes - deferred tax asset revaluation -- 0.23% (0.01%) -- -- -- Effect to adjust for merger and conversion related expense, net of tax 0.07% 0.28% 0.17% 0.02% 0.03% 0.09% Effect to adjust for pension plan termination expense, net of tax -- -- -- 0.05% -- -- Effect to adjust for FHLB prepayment fee, net of tax -- -- -- 0.00% -- -- Adjusted return on average assets (non-GAAP) 1.26% 1.28% 1.39% 1.27% 1.26% 0.69% Return on average tangible equity (non-GAAP) (1) Return on average common equity (GAAP) 9.17% 5.26% 7.63% 7.89% 8.26% 4.15% Effect to adjust for intangible assets 5.55% 4.37% 7.30% 7.22% 7.53% 4.20% Return on average tangible equity (non-GAAP) 14.72% 9.63% 14.93% 15.11% 15.79% 8.35% Adjusted return on average tangible equity (non-GAAP) (1) Return on average common equity (GAAP) 9.17% 5.26% 7.63% 7.89% 8.26% 4.15% Effect to adjust for securities (gains) losses, net of tax (0.01%) (0.06%) 0.02% (0.09%) -- -- Effect to adjust for other-than-temporary impairment (OTTI), net of tax -- 0.03% -- -- -- -- Effect to adjust for FDIC LSA early termination 0.27% -- -- -- -- -- Effect to adjust for provision for income taxes - deferred tax asset revaluation -- 2.13% (0.06%) -- -- -- Effect to adjust for merger and conversion related expense, net of tax 0.54% 1.89% 1.01% 0.16% 0.21% 0.60% Effect to adjust for pension plan termination expense, net of tax -- -- -- 0.32% -- -- Effect to adjust for intangible assets 5.97% 6.24% 8.16% 7.54% 7.70% 4.70% Adjusted return on average tangible equity (non-GAAP) 15.94% 15.49% 16.76% 15.82% 16.17% 9.45% |
42 Year ended December 31, Quarter Ended, ($ in thousands, except per share data) 2016 2017 2018 2019 Q4 2019 Q1 2020 Adjusted efficiency ratio (non-GAAP) Efficiency ratio (non-GAAP) 63.4% 66.5% 63.6% 62.5% 61.6% 62.1% Effect to adjust for FDIC LSA early termination (0.6%) -- -- -- -- -- Effect to adjust for FHLB prepayment fee -- -- -- (0.0%) -- -- Effect to adjust for pension plan termination expense, net of tax -- -- -- (1.5%) -- -- Effect to adjust for merger and branch consolidation related expenses (0.7%) (8.0%) (4.5%) (0.7%) (0.9%) (2.4%) Adjusted efficiency ratio (non-GAAP) 62.1% 58.5% 59.1% 60.3% 60.7% 59.7% Tangible equity to tangible assets (non-GAAP) Equity to assets (GAAP) 12.75% 15.96% 16.12% 14.90% 14.90% 13.95% Effect to adjust for intangible assets (3.87%) (6.73%) (6.56%) (6.02%) (6.02%) (5.80%) Tangible equity to tangible assets (non-GAAP) 8.9% 9.2% 9.6% 8.9% 8.9% 8.2% Net interest margin - FTE (non-GAAP) (1) Net interest margin (GAAP) 4.18% 4.10% 4.07% 3.76% 3.63% 3.67% Effect for tax equivalent adjustments 0.04% 0.05% 0.02% 0.01% 0.01% 0.01% Net interest margin - tax equivalent (non-GAAP) 4.22% 4.15% 4.09% 3.77% 3.64% 3.68% Adjusted pre-tax pre-provision income (non-GAAP) (1) Net income (GAAP) $101,282 $87,554 $178,871 $186,483 $49,091 $24,110 Income tax provision 52,760 81,251 45,384 43,942 9,487 4,255 Provision for credit losses 6,819 11,890 13,783 12,777 3,557 36,533 Gross loss (gain) on sale of securities available for sale (122) (668) 655 (2,711) (24) -- Gross merger-related expenses 8,081 44,503 29,868 4,552 1,494 4,129 Adjusted pre-tax pre-provision income (non-GAAP) $168,820 $224,530 $268,561 $245,043 $63,605 $69,027 Adjusted pre-tax pre-provision return on average assets (non-GAAP) 1.94% 1.98% 1.85% 1.59% 1.59% 1.73% South State Non-GAAP Reconciliation (cont.) Source: Company documents (1) Annualized for quarter ended data |