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CSFL CenterState Bank

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission file number 000-32017

 

CENTERSTATE BANK CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

 

Florida

 

59-3606741

(State or Other Jurisdiction
of Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

1101 First Street South, Suite 202

Winter Haven, Florida 33880

(Address of Principal Executive Offices)

(863) 293-4710

(Issuer’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Small reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock

CSFL

NASDAQ

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

Common stock, par value $.01 per share

 

 

 

124,132,401 shares

 

(class)

 

Outstanding at April 29, 2020

 

 

 

 

 


 

CENTERSTATE BANK CORPORATION AND SUBSIDIARIES

INDEX

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

 

 

 

Condensed consolidated balance sheets (unaudited) at March 31, 2020 and December 31, 2019

 

3

 

Condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2020 and 2019 (unaudited)

 

4

 

Condensed consolidated statements of changes in equity for the three months ended March 31, 2020 and 2019 (unaudited)

 

6

 

Condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 (unaudited)

 

7

 

Notes to condensed consolidated financial statements (unaudited)

 

9

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

48

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

67

 

Item 4. Controls and Procedures

 

67

 

PART II. OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

 

68

 

Item 1A. Risk Factors

 

68

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

69

 

Item 3. Defaults Upon Senior Securities

 

69

 

Item 4. [Removed and Reserved]

 

69

 

Item 5. Other Information

 

69

 

Item 6. Exhibits

 

70

 

SIGNATURES

 

71

 

CERTIFICATIONS

 

 

 

 

 

 

2


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands of dollars, except per share data)

 

 

March 31, 2020

 

December 31, 2019

ASSETS

 

 

 

 

Cash and due from banks

 

$135,338

 

$185,255

Deposits in other financial institutions (restricted cash)

 

550,101

 

140,913

Federal funds sold and FRB deposits

 

461,252

 

163,890

     Cash and cash equivalents

 

1,146,691

 

490,058

Trading securities, at fair value

 

8,432

 

4,987

Available for sale debt securities, at fair value

 

2,138,442

 

1,886,724

Held to maturity debt securities, net of allowance for credit losses of $10 at

 

 

 

 

     March 31, 2020 (fair value of $205,458 and $208,852 at March 31, 2020

 

 

 

 

     and December 31, 2019, respectively)

 

195,948

 

202,903

Loans held for sale (see Note 6)

 

188,316

 

142,801

Loans, excluding Purchased Credit Deteriorated ("PCD") loans

 

11,876,909

 

11,848,475

PCD loans

 

150,322

 

135,468

Allowance for credit losses

 

(158,733)

 

(40,655)

     Net Loans

 

11,868,498

 

11,943,288

Bank premises and equipment, net

 

296,471

 

296,706

Right-of-use operating lease assets

 

33,062

 

32,163

Accrued interest receivable

 

43,382

 

40,945

FHLB, FRB and other stock, at cost

 

100,463

 

100,305

Goodwill

 

1,204,417

 

1,204,417

Core deposit intangible, net

 

87,295

 

91,157

Other intangible assets, net

 

4,131

 

4,507

Bank owned life insurance

 

331,713

 

330,155

Other repossessed real estate owned

 

9,942

 

5,092

Deferred income tax asset, net

 

37,687

 

28,786

Bank property held for sale

 

21,347

 

23,781

Interest rate swap derivatives, at fair value

 

831,891

 

273,068

Prepaid expense and other assets

 

48,164

 

40,182

TOTAL ASSETS

 

$18,596,292

 

$17,142,025

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Deposits:

 

 

 

 

     Demand - non-interest bearing

 

$4,164,091

 

$3,929,183

     Demand - interest bearing

 

2,650,252

 

2,613,933

     Savings and money market accounts

 

4,413,773

 

4,336,721

     Time deposits

 

2,893,383

 

2,256,555

Total deposits

 

14,121,499

 

13,136,392

 

 

 

 

 

Securities sold under agreement to repurchase

 

81,736

 

93,141

Federal funds purchased

 

255,433

 

379,193

Other borrowed funds

 

211,000

 

161,000

Corporate and subordinated debentures

 

71,356

 

71,343

Accrued interest payable

 

4,334

 

3,998

Interest rate swap derivatives, at fair value

 

842,451

 

275,033

Operating lease liabilities

 

35,168

 

34,485

Reserve for unfunded commitments

 

7,110

 

Payables and accrued expenses

 

95,953

 

90,722

     Total liabilities

 

15,726,040

 

14,245,307

 

 

 

 

 

Equity:

 

 

 

 

Common stock, $.01 par value: 200,000,000 shares authorized; 124,131,401

 

 

 

 

     and 125,173,597 shares issued and outstanding at March 31, 2020 and

 

 

 

 

     December 31, 2019, respectively

 

1,241

 

1,252

Additional paid-in capital

 

2,376,637

 

2,407,385

Retained earnings

 

435,984

 

465,680

Accumulated other comprehensive income

 

56,390

 

22,401

     Total equity

 

2,870,252

 

2,896,718

TOTAL LIABILITIES AND EQUITY

 

$18,596,292

 

$17,142,025

See notes to the accompanying condensed financial statements


 

3


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three months ended March 31,

 

 

2020

 

2019

Interest income:

 

 

 

 

Loans

 

$160,675

 

$116,285

Investment securities:

 

 

 

 

     Taxable

 

12,534

 

12,286

     Tax-exempt

 

1,737

 

1,716

Federal funds sold and other

 

1,813

 

1,995

 

 

176,759

 

132,282

Interest expense:

 

 

 

 

Deposits

 

19,836

 

13,323

Securities sold under agreement to repurchase

 

252

 

236

Federal funds purchased and other borrowings

 

2,321

 

3,978

Corporate and subordinated debentures

 

997

 

570

 

 

23,406

 

18,107

 

 

 

 

 

Net interest income

 

153,353

 

114,175

Provision for credit losses

 

44,914

 

1,053

Net interest income after credit loss provision

 

108,439

 

113,122

 

 

 

 

 

Non-interest income:

 

 

 

 

Correspondent banking capital markets revenue

 

26,424

 

7,972

Other correspondent banking related revenue

 

1,384

 

1,028

Mortgage banking revenue

 

10,973

 

4,193

Small business administration loans revenue

 

1,403

 

688

Service charges on deposit accounts

 

7,522

 

6,678

Debit, prepaid, ATM and merchant card related fees

 

3,667

 

5,018

Wealth management related revenue

 

831

 

607

Bank owned life insurance income

 

1,927

 

1,626

Net gain on sale of available for sale debt securities

 

 

17

Other non-interest income

 

1,659

 

1,473

Total other income

 

55,790

 

29,300

See notes to the accompanying condensed consolidated financial statements

 

 

4


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)

(in thousands of dollars, except per share data)

 

 

Three months ended March 31,

 

 

2020

 

2019

Non-interest expense:

 

 

 

 

Salaries, wages and employee benefits

 

$77,077

 

$48,393

Occupancy expense

 

7,346

 

5,602

Depreciation of premises and equipment

 

4,045

 

2,850

Supplies, stationary and printing

 

861

 

748

Marketing expenses

 

2,158

 

2,020

Data processing expense

 

5,617

 

3,656

Legal, audit and other professional fees

 

2,682

 

1,442

Amortization of intangibles

 

4,535

 

2,814

Credit loss expense for unfunded commitments

 

1,027

 

Postage and delivery

 

1,160

 

925

ATM and debit card and merchant card related expenses

 

1,598

 

1,453

Bank regulatory expenses

 

1,807

 

1,616

Loss on sale of repossessed real estate (“OREO”)

 

1

 

47

Valuation write down of OREO

 

95

 

108

(Gain) loss on repossessed assets other than real estate

 

(8)

 

13

Foreclosure related expenses

 

856

 

561

Merger related expenses

 

3,051

 

6,365

Impairment on bank property held for sale

 

31

 

107

Other expenses

 

8,833

 

5,753

Total other expenses

 

122,772

 

84,473

 

 

 

 

 

Income before provision for income taxes

 

41,457

 

57,949

Provision for income taxes

 

6,025

 

13,306

Net income

 

$35,432

 

$44,643

 

 

 

 

 

Net income

 

$35,432

 

$44,643

Other comprehensive income, net of tax

 

 

 

 

Unrealized available for sale debt securities holding gain,

 

 

 

 

   net of taxes of $13,268 and $7,322, respectively

 

39,729

 

21,571

Unrealized interest rate swap holding loss, net of

 

 

 

 

   taxes of ($1,917) and $0, respectively

 

(5,740)

 

Less: reclassified adjustments for gain included in net income,

 

 

 

 

net income tax expense of $0 and $4, respectively

 

 

(13)

 

 

 

 

 

Net change in accumulated other comprehensive income

 

$33,989

 

$21,558

 

 

 

 

 

Total comprehensive income

 

$69,421

 

$66,201

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic

 

$0.28

 

$0.47

Diluted

 

$0.28

 

$0.46

Common shares used in the calculation of earnings per share:

 

 

 

 

Basic (1)

 

124,798,732

 

95,740,856

Diluted (1)

 

125,341,227

 

96,500,740

(1)Excludes participating shares

See notes to the accompanying condensed consolidated financial statements

 

 

 

 

5


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the three months ended March 31, 2020 and 2019 (unaudited)

(in thousands of dollars, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

Number of

 

 

 

Additional

 

 

 

other

 

 

 

 

common

 

Common

 

paid in

 

Retained

 

comprehensive

 

Total

 

 

shares

 

stock

 

capital

 

earnings

 

income (loss)

 

equity

Balances at January 1, 2019

 

95,679,596

 

$957

 

$1,699,031

 

$293,777

 

$(22,421)

 

$1,971,344

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

44,643

 

 

 

44,643

Unrealized holding gain on

 

 

 

 

 

 

 

 

 

 

 

 

   available for sale securities, net of

 

 

 

 

 

 

 

 

 

 

 

 

deferred income tax of $7,318

 

 

 

 

 

 

 

 

 

21,558

 

21,558

Cumulative adjustment pursuant to adoption

 

 

 

 

 

 

 

 

 

 

 

 

   of ASU 842 (Note 11)

 

 

 

 

 

 

 

(1,464)

 

 

 

(1,464)

Dividends paid - common ($0.11 per share)

 

 

 

 

 

 

 

(10,547)

 

 

 

(10,547)

Stock grants issued

 

132,918

 

1

 

(1)

 

 

 

 

 

Stock based compensation expense

 

 

 

 

 

1,218

 

 

 

 

 

1,218

Stock options exercised

 

116,764

 

1

 

1,198

 

 

 

 

 

1,199

Stock repurchase

 

(15,971)

 

 

(399)

 

 

 

 

 

(399)

Balances at March 31, 2019

 

95,913,307

 

959

 

1,701,047

 

326,409

 

(863)

 

2,027,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2020

 

125,173,597

 

$1,252

 

$2,407,385

 

$465,680

 

$22,401

 

$2,896,718

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

35,432

 

 

 

35,432

Unrealized holding gain on

 

 

 

 

 

 

 

 

 

 

 

 

   available for sale securities, net of

 

 

 

 

 

 

 

 

 

 

 

 

deferred income tax of $13,268

 

 

 

 

 

 

 

 

 

39,729

 

39,729

Unrealized holding loss on

 

 

 

 

 

 

 

 

 

 

 

 

   interest rate swaps, net of

 

 

 

 

 

 

 

 

 

 

 

 

deferred income tax of $1,917

 

 

 

 

 

 

 

 

 

(5,740)

 

(5,740)

Cumulative adjustment pursuant to adoption

 

 

 

 

 

 

 

 

 

 

 

 

   of ASU 326 (Note 12)

 

 

 

 

 

 

 

(47,751)

 

 

 

(47,751)

Dividends paid - common ($0.14 per share)

 

 

 

 

 

 

 

(17,377)

 

 

 

(17,377)

Stock grants issued

 

258,616

 

3

 

(3)

 

 

 

 

 

Stock based compensation expense

 

 

 

 

 

1,796

 

 

 

 

 

1,796

Stock options exercised

 

179,174

 

1

 

1,358

 

 

 

 

 

1,359

Stock repurchase

 

(1,479,986)

 

(15)

 

(33,899)

 

 

 

 

 

(33,914)

Balances at March 31, 2020

 

124,131,401

 

$1,241

 

$2,376,637

 

$435,984

 

$56,390

 

$2,870,252

See notes to the accompanying condensed consolidated financial statements

 

 

6


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three months ended March 31,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

   Net income

 

$35,432

 

$44,643

   Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

      Provision for credit losses

 

44,914

 

1,053

      Credit loss on unfunded commitments

 

1,027

 

      Depreciation of premises and equipment

 

4,045

 

2,850

      Accretion of purchase accounting adjustments

 

(12,575)

 

(12,982)

      Net amortization of investment securities

 

2,273

 

2,421

      Net deferred loan origination fees

 

435

 

344

Gain on sale of securities available for sale debt securities

 

 

(17)

      Trading securities revenue

 

(153)

 

(25)

      Purchases of trading securities

 

(54,723)

 

(51,691)

      Proceeds from sale of trading securities

 

51,431

 

53,453

      Repossessed real estate owned valuation write down

 

95

 

108

      Loss on sale of repossessed real estate owned

 

1

 

47

      (Gain) loss on repossessed assets other than real estate

 

(8)

 

13

      Gain on sale of residential loans held for sale

 

(10,781)

 

(3,976)

      Residential loans originated and held for sale

 

(423,622)

 

(134,752)

      Proceeds from sale of residential loans held for sale

 

391,242

 

129,657

      Net change in fair value of residential loans held for sale

 

(2,354)

 

(4)

      Gain on disposal of and or sale of fixed assets

 

(6)

 

(1)

      Gain on disposal of bank property held for sale

 

(236)

 

(618)

      Impairment on bank property held for sale

 

31

 

107

      Gain on sale of small business administration loans

 

(1,403)

 

(688)

      Small business administration loans originated for sale

 

(12,255)

 

(7,482)

      Proceeds from sale of small business administration loans

 

13,658

 

8,170

      Deferred income taxes

 

(4,306)

 

6,114

      Tax deduction in excess of book deduction for stock awards

 

(1,391)

 

(376)

      Stock based compensation expense

 

1,796

 

1,218

      Bank owned life insurance income

 

(1,927)

 

(1,626)

      Net cash from changes in:

 

 

 

 

         Net changes in accrued interest receivable, prepaid expenses, and other assets

 

10,211

 

11,461

         Net change in accrued interest payable, accrued expense, and other liabilities

 

(12,867)

 

(5,019)

            Net cash provided by operating activities

 

$17,984

 

$42,402

See notes to the accompanying condensed consolidated financial statements

 

 

 

7


CenterState Bank Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands of dollars, except per share data)

(continued)

 

 

 

Three months ended March 31,

 

 

2020

 

2019

Cash flows from investing activities:

 

 

 

 

Available for sale debt securities:

 

 

 

 

   Purchases of investment securities

 

$(229,404)

 

$(1,037)

   Purchases of mortgage-backed securities

 

(50,138)

 

(66,624)

   Proceeds from pay-downs of mortgage-backed securities

 

78,830

 

53,579

   Proceeds from sales of investment securities

 

 

2,309

   Proceeds from sales of mortgage-backed securities

 

 

64,177

Proceeds from maturities of investment securities

 

 

295

Held to maturity debt securities:

 

 

 

 

   Proceeds from called investment securities

 

3,110

 

   Proceeds from pay-downs of mortgage-backed securities

 

3,551

 

2,317

Purchases of FHLB, FRB and other stock

 

(20,344)

 

(4,717)

   Proceeds from sales of FHLB, FRB and other stock

 

20,188

 

10,826

   Net (increase) decrease in loans

 

(16,919)

 

1,956

   Purchases of premises and equipment, net

 

(3,813)

 

(3,931)

   Proceeds from sale of repossessed real estate

 

438

 

430

   Proceeds from sale of fixed assets

 

9

 

1

   Proceeds from sale of bank property held for sale

 

2,639

 

6,365

            Net cash (used in) provided by investing activities

 

$(211,853)

 

$65,946

Cash flows from financing activities:

 

 

 

 

   Net increase in deposits

 

985,602

 

269,954

   Net (decrease) increase in securities sold under agreement to repurchase

 

(11,405)

 

1,259

   Net (decrease) increase in federal funds purchased

 

(123,760)

 

8,657

   Net increase (decrease) in other borrowings

 

50,000

 

(150,000)

   Net decrease in payable to shareholders for acquisitions

 

(3)

 

(1)

   Stock options exercised

 

1,359

 

1,199

   Stock repurchased

 

(33,914)

 

(399)

   Dividends paid

 

(17,377)

 

(10,547)

            Net cash provided by financing activities

 

$850,502

 

$120,122

 

 

 

 

 

            Net increase in cash and cash equivalents

 

656,633

 

228,470

Cash and cash equivalents, beginning of period

 

490,058

 

367,333

Cash and cash equivalents, end of period

 

$1,146,691

 

$595,803

 

 

 

 

 

Supplemental Information

 

 

 

 

Transfer of loans to other real estate owned

 

$5,384

 

$3,657

New right-of-use operating lease assets

 

4,749

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

    Interest

 

$23,889

 

$17,689

    Income taxes

 

 

See notes to the accompanying condensed consolidated financial statements

 

 

 

8


 

CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

 

NOTE 1: Nature of operations and basis of presentation

The consolidated financial statements include the accounts of CenterState Bank Corporation (the “Parent Company,” “Company” or “CSFL”), and its wholly owned subsidiary bank, CenterState Bank, N.A. (“CenterState” or the “Bank”), and non-bank subsidiaries, R4ALL, Inc., and CSFL Insurance Corp. The Company operates as one of the largest community bank franchises headquartered in the state of Florida. 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, headquartered in Winter Haven, Florida, also operates a correspondent banking and capital markets division, of which the majority of its bond salesmen, traders and operational personnel are primarily housed in facilities located in Birmingham, Alabama and Atlanta, Georgia. This division’s primary revenue generating activities are related to its capital markets division, which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities; and its correspondent banking division, which includes spread income earned on correspondent bank deposits (i.e. federal funds purchased) and correspondent bank checking account deposits and fees from safe-keeping activities, bond accounting services for correspondents, asset/liability consulting related activities, international wires, and other clearing and corporate checking account services. The customer base includes small to medium size financial institutions primarily located in the Southeastern United States, although clients are located across the United States.  The Bank also owns CBI Holding Company, LLC (“CBI”), which in turn owns Corporate Billing, LLC (“Corporate Billing”), a transaction-based finance company headquartered in Decatur, Alabama that provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers nationwide.

R4ALL, Inc. manages troubled loans purchased from the Bank to their eventual disposition. CSFL Insurance Corp. is a captive insurance subsidiary pursuant to Section 831(b) of the U.S. Tax Code.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These statements should be read in conjunction with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019. In the Company’s opinion, all adjustments, consisting primarily of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods have been made. The results of operations of the three-month ended March 31, 2020 are not necessarily indicative of the results expected for the full year.

Some items in the prior period financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or common stockholders’ equity.

 

9


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

NOTE 2: Common stock outstanding and earnings per share data

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. There were 0 anti-dilutive stock options for the three-month periods ending March 31, 2020 and 2019. The following table presents the factors used in the earnings per share computations for the periods indicated.

 

 

 

Three months ended March 31,

 

 

2020

 

2019

Basic

 

 

 

 

Net income available to common shareholders

 

$35,432

 

$44,643

Less: Earnings allocated to participating securities

 

(8)

 

(23)

Net income allocated to common shareholders

 

$35,424

 

$44,620

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

     including participating securities

 

124,831,232

 

95,790,456

Less: Participating securities (1)

 

(32,500)

 

(49,600)

Average shares

 

124,798,732

 

95,740,856

Basic earnings per common share

 

$0.28

 

$0.47

 

 

 

 

 

Diluted

 

 

 

 

Net income available to common shareholders

 

$35,424

 

$44,620

Weighted average common shares outstanding for

 

 

 

 

    basic earnings per common share

 

124,798,732

 

95,740,856

Add: Dilutive effects of stock based compensation awards

 

542,495

 

759,884

Average shares and dilutive potential common shares

 

125,341,227

 

96,500,740

Diluted earnings per common share

 

$0.28

 

$0.46

 

(1)

Participating securities are restricted stock awards whereby the stock certificates have been issued, are included in outstanding shares, receive dividends and can be voted, but have not vested.  

 

NOTE 3: Fair value

Generally accepted accounting principles establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of available for sale debt securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). U.S. Treasury securities are valued using quoted market prices.  Valuation adjustments are not applied (Level 1).  The fair values of corporate debt securities are calculated using market indicators such as broker quotes (Level 2).

The fair values of trading securities are determined as follows: (1) for those securities that have traded prior to the date of the consolidated balance sheet but have not settled (date of sale) until after such date, the sales price is used as the fair value; and, (2) for those securities which have not traded as of the date of the consolidated balance sheet, the fair value was determined by broker price indications of similar or same securities.  

 

10


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The Company accounts for mortgage loans held for sale under the fair value option with changes in fair value recognized in current period earnings. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans (Level 2).  In conjunction with the fair value election on loans held for sale, Mortgage banking uses derivative forward sales contracts and Interest Rate Lock Commitments (“IRLCs”) on residential mortgage loans.  Fair values of these mortgage derivatives are estimated based on changes in market prices for mortgage forward trades and mortgage interest rates (Level 2) and estimated pull through percentages from the date the interest on the loan is locked (Level 3).  The fair values of IRLCs are derived by a valuation model using various unobservable inputs, such as an estimate of the fair value of the servicing rights expected to be recorded upon sale of the loans, estimated costs to originate the loans, and the pull through rate.  At March 31, 2020, the estimated gain on sale before the pull through rate ranged from (1.45%) to 9.34% with an average of 3.19%.  The costs to originate ranged from 0.70% to 0.89% with an average of 0.82%.  The pull through rates ranged from 47.00% to 100.00% with an average of 85.19%.  At December 31, 2019, the estimated gain on sale before the pull through rate ranged from (2.41%) to 8.21% with an average of 2.54%.  The costs to originate ranged from 0.70% to 0.89% with an average of 0.82%.  The pull through rates ranged from 58.00% to 100.00% with an average of 89.00%.  

The Company has the rights to service a portfolio of Fannie Mae and other government guaranteed loans sold on a servicing retained basis. Mortgage servicing assets are measured at fair value when the loan is sold and subsequently measured at fair value on a recurring basis utilizing Level 2 inputs. Management uses a model operated and maintained by a third party to calculate the present value of future cash flows using the third party's market-based assumptions. The future cash flows for each asset are based on the asset's unique characteristics and the third party's market-based assumptions for prepayment speeds, default and voluntary prepayments. Adjustments to fair value are recorded as a component of Mortgage Banking Revenue in the Condensed Consolidated Statements of Income and Comprehensive Income.

The fair value of interest rate swap derivatives is based on valuation models using observable market data as of the measurement date (Level 2). The derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

The fair value of impaired loans with specific valuation allowance for credit losses and other real estate owned is based on recent real estate appraisals. For residential real estate impaired loans and other real estate owned, appraised values are based on the comparative sales approach. For commercial and commercial real estate impaired loans, and other real estate owned, appraisers may use either a single valuation approach or a combination of approaches such as comparative sales, cost or the income approach. A significant unobservable input in the income approach is the estimated income capitalization rate for a given piece of collateral. At March 31, 2020, the range of capitalization rates utilized to determine the fair value of the underlying collateral ranged from 5% to 13%. Adjustments to appraisals may be made by the appraiser to reflect local market conditions or other economic factors and may result in changes in the fair value of a given asset over time. As such, the fair value of impaired loans, other real estate owned and bank property held for sale are considered a Level 3 in the fair value hierarchy.

 

 

11


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Assets and liabilities measured at fair value on a recurring basis are summarized below.

 

 

 

 

 

Fair value measurements using

 

 

 

 

Quoted prices

 

Significant

 

 

 

 

 

 

in active

 

other

 

Significant

 

 

 

 

markets for

 

observable

 

unobservable

 

 

Carrying

 

identical assets

 

inputs

 

inputs

 

 

value

 

(Level 1)

 

(Level 2)

 

(Level 3)

at March 31,2020

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Trading securities

 

$8,432

 

$                    —

 

$8,432

 

$                    —

Available for sale debt securities

 

 

 

 

 

 

 

 

Corporate debt securities

 

5,757

 

 

5,757

 

   Obligations of U.S. government sponsored entities and agencies

 

147,959

 

 

147,959

 

   Mortgage-backed securities

 

1,787,846

 

 

1,787,846

 

U.S. treasuries

 

99,997

 

 

99,997

 

   Municipal securities

 

96,883

 

 

96,883

 

Loans held for sale

 

188,316

 

 

188,316

 

Mortgage servicing assets

 

1,038

 

 

1,038

 

Mortgage banking derivatives

 

6,436

 

 

57

 

6,379

Interest rate swap derivatives

 

831,891

 

 

831,891

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgage banking derivatives

 

6,126

 

 

6,032

 

94

Interest rate swap derivatives

 

842,451

 

 

842,451

 

 

 

 

 

 

 

 

 

 

at December 31,2019

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Trading securities

 

$4,987

 

$                    —

 

$4,987

 

$                    —

Available for sale debt securities

 

 

 

 

 

 

 

 

   Corporate debt securities

 

5,657

 

 

5,657

 

   Obligations of U.S. government sponsored entities and agencies

 

19,930

 

 

19,930

 

   Mortgage-backed securities

 

1,767,242

 

 

1,767,242

 

   Municipal securities

 

93,895

 

 

93,895

 

Loans held for sale

 

142,801

 

 

142,801

 

Mortgage servicing assets

 

1,332

 

 

1,332

 

Mortgage banking derivatives

 

1,761

 

 

14

 

1,747

Interest rate swap derivatives

 

273,068

 

 

273,068

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Mortgage banking derivatives

 

305

 

 

288

 

17

Interest rate swap derivatives

 

275,033

 

 

275,033

 

 

 

 

12


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Assets and liabilities measured at fair value on a non-recurring basis are summarized below.

 

 

 

 

 

Fair value measurements using

 

 

 

 

Quoted prices

 

Significant

 

 

 

 

 

 

in active

 

other

 

Significant

 

 

 

 

markets for

 

observable

 

unobservable

 

 

Carrying

 

identical assets

 

inputs

 

inputs

 

 

value

 

(Level 1)

 

(Level 2)

 

(Level 3)

at March 31,2020

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Impaired loans, non-PCD

 

 

 

 

 

 

 

 

   Residential real estate

 

$1,916

 

$                    —

 

$                    —

 

$1,916

   Commercial real estate

 

12,748

 

 

 

12,748

   Land, land development and construction

 

725

 

 

 

725

   Commercial

 

4,944

 

 

 

4,944

   Consumer

 

47

 

 

 

47

Impaired loans, PCD

 

 

 

 

 

 

 

 

   Commercial real estate

 

9,694

 

 

 

9,694

   Commercial

 

766

 

 

 

766

Other real estate owned

 

 

 

 

 

 

 

 

   Residential real estate

 

363

 

 

 

363

   Commercial real estate

 

2,129

 

 

 

2,129

   Land, land development and construction

 

289

 

 

 

289

Bank property held for sale

 

2,834

 

 

 

2,834

 

 

 

 

 

 

 

 

 

at December 31,2019

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Impaired loans

 

 

 

 

 

 

 

 

   Residential real estate

 

$2,213

 

$                    —

 

$                    —

 

$2,213

   Commercial real estate

 

8,177

 

 

 

8,177

   Land, land development and construction

 

847

 

 

 

847

   Commercial

 

5,564

 

 

 

5,564

   Consumer

 

47

 

 

 

47

Other real estate owned

 

 

 

 

 

 

 

 

   Residential real estate

 

 

 

 

   Commercial real estate

 

2,129

 

 

 

2,129

   Land, land development and construction

 

340

 

 

 

340

Bank property held for sale

 

4,160

 

 

 

4,160

 

Non-PCD impaired loans measured at fair value had a recorded investment of $22,169, with a valuation allowance of $1,789 at March 31, 2020, and a recorded investment of $18,556, with a valuation allowance of $1,708 at December 31, 2019. The Company recorded a provision for credit loss expense of $911 and $1,124 on non-PCD impaired loans carried at fair value during the three-month periods ending March 31, 2020 and 2019, respectively. Beginning in 2020, the Company began accounting for PCD loans under ASC Topic 326 and as a result several loans previously evaluated on a pool level basis were individually evaluated for impairment during the current period.  PCD impaired loans measured at fair value had a recorded investment of $22,776, with a valuation allowance of $12,316 at March 31, 2020.  The Company recorded a provision for credit loss expense of $2,870 on PCD impaired loans carried at fair value during the three-month periods ending March 31, 2020.  

Other real estate owned had a decline in fair value of $95 and $108 during the three-month periods ending March 31, 2020 and 2019, respectively. Changes in fair value were recorded directly to current earnings through non-interest expense.

Bank property held for sale represents certain branch office buildings which the Company has closed and consolidated with other existing branches. The real estate was transferred out of the Bank Premises and Equipment category into Bank Property Held for Sale at the lower of amortized cost or fair value less estimated costs to sell. The fair values were based upon appraisals. The Company recognized an impairment charge of $31 and $107 during the three-month periods ending March 31, 2020 and 2019, respectively, related to bank properties held for sale.


 

13


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Fair Value of Financial Instruments:

The methods and assumptions, not previously presented, used to estimate fair value are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

FHLB, FRB and Other Stock: It is not practical to determine the fair value of FHLB, FRB and other stock due to restrictions placed on their transferability.

Investment securities held to maturity:  The fair values of securities held to maturity are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Loans, net: For performing loans, the fair value is determined based on a discounted cash flow analysis (income approach).  The discounted cash flow was based on contractual maturity of the loan and market indications of rates, prepayment speeds, defaults and credit risk resulting in Level 3 classification.  For non-performing loans, the fair value is determined based on the estimated values of the underlying collateral or individual analysis of receipts (asset approach) resulting in Level 3 classification. Tables below present additional information on assumptions ranges and methods used for the Level 3 fair value measurements for loans.

 

 

 

Quantitative information about Level 3 fair value measurements

 

 

Fair value

 

Valuation

 

Unobservable

 

Range

 

 

at March 31, 2020

 

technique

 

inputs

 

(weighted average rate)

Loan, net

 

$12,008,094

 

Discounted cash flow

 

Probability of default (PD)

 

0.51% - 100.00% (1.43%)

 

 

 

 

 

 

Loss given default (LGD)

 

0% - 100.00% (17.95%)

 

 

 

 

 

 

Prepayment rate

 

0.00% - 34.47% (20.76%)

 

 

 

 

 

 

Discount rate

 

3.03% - 8.28% (4.5%)

 

 

 

 

 

 

 

 

 

 

 

Quantitative information about Level 3 fair value measurements

 

 

Fair value

 

Valuation

 

Unobservable

 

Range

 

 

at December 31, 2019

 

technique

 

inputs

 

(average) (1)

Loan, net

 

$11,925,693

 

Discounted cash flow

 

Probability of default (PD)

 

1.04% - 2.79% (1.83%)

 

 

 

 

 

 

Loss given default (LGD)

 

6.44% - 46.26% (22.02%)

 

 

 

 

 

 

Prepayment rate

 

10.00% - 34.47% (19.19%)

 

 

 

 

 

 

Discount rate

 

1.48% - 2.39% (1.62%)

 

(1)

Average rates are median rates.

Accrued Interest Receivable: The carrying amount of accrued interest receivable approximates fair value and is classified as Level 2 for accrued interest receivable related to investment securities and Level 3 for accrued interest receivable related to loans.

Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Short-term Borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

Corporate and Subordinated Debentures: The fair values of the Company’s corporate and subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

Accrued Interest Payable: The carrying amount of accrued interest payable approximates fair value resulting in a Level 2 classification.

Off-balance Sheet Instruments: The fair value of off-balance-sheet items is not considered material.

 

14


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The following table presents the carry amounts and estimated fair values of the Company’s financial instruments:

 

 

 

 

Fair value measurements

 

 

 

 

Carrying amount

 

Level 1

 

Level 2

 

Level 3

 

Total

at March 31,2020

 

 

 

 

 

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$1,146,691

 

$1,146,691

 

$                    —

 

$                    —

 

$1,146,691

Trading securities

 

8,432

 

 

8,432

 

 

8,432

Available for sale debt securities

 

2,138,442

 

 

2,138,442

 

 

2,138,442

Held to maturity debt securities

 

195,948

 

 

205,458

 

 

205,458

Loans held for sale, at fair value

 

188,316

 

 

188,316

 

 

188,316

Loans, net

 

11,868,498

 

 

 

12,008,094

 

12,008,094

Mortgage servicing assets

 

1,038

 

 

1,038

 

 

1,038

Mortgage banking derivatives

 

6,436

 

 

57

 

6,379

 

6,436

Interest rate swap derivatives

 

831,891

 

 

831,891

 

 

831,891

Accrued interest receivable

 

43,382

 

 

7,594

 

35,788

 

43,382

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

Deposits - without stated maturities

 

$11,228,116

 

$11,228,116

 

$                    —

 

$                    —

 

$11,228,116

Deposits - with stated maturities

 

2,893,383

 

 

2,918,615

 

 

2,918,615

Securities sold under agreement to repurchase

 

81,736

 

 

81,736

 

 

81,736

Federal funds purchased and other borrowings

 

466,433

 

 

466,433

 

 

466,433

Corporate and subordinated debentures

 

71,356

 

 

 

66,669

 

66,669

Mortgage banking derivatives

 

6,126

 

 

6,032

 

94

 

6,126

Interest rate swap derivatives

 

842,451

 

 

842,451

 

 

842,451

Accrued interest payable

 

4,334

 

 

4,334

 

 

4,334

 

 

 

 

 

Fair value measurements

 

 

 

 

Carrying amount

 

Level 1

 

Level 2

 

Level 3

 

Total

at December 31,2019

 

 

 

 

 

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$490,058

 

$490,058

 

$                    —

 

$                    —

 

$490,058

Trading securities

 

4,987

 

 

4,987

 

 

4,987

Available for sale debt securities

 

1,886,724

 

 

1,886,724

 

 

1,886,724

Held to maturity debt securities

 

202,903

 

 

208,852

 

 

208,852

Loans held for sale, at fair value

 

142,801

 

 

142,801

 

 

142,801

Loans, net

 

11,943,288

 

 

 

11,925,693

 

11,925,693

Mortgage servicing assets

 

1,332

 

 

1,332

 

 

1,332

Mortgage banking derivatives

 

1,761

 

 

14

 

1,747

 

1,761

Interest rate swap derivatives

 

273,068

 

 

273,068

 

 

273,068

Accrued interest receivable

 

40,945

 

 

7,547

 

33,398

 

40,945

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

Deposits - without stated maturities

 

$10,879,837

 

$10,879,837

 

$                    —

 

$                    —

 

$10,879,837

Deposits - with stated maturities

 

2,256,555

 

 

2,271,497

 

 

2,271,497

Securities sold under agreement to repurchase

 

93,141

 

 

93,141

 

 

93,141

Federal funds purchased and other borrowings

 

540,193

 

 

540,193

 

 

540,193

Corporate and subordinated debentures

 

71,343

 

 

 

66,964

 

66,964

Mortgage banking derivatives

 

305

 

 

288

 

17

 

305

Interest rate swap derivatives

 

275,033

 

 

275,033

 

 

275,033

Accrued interest payable

 

3,998

 

 

3,998

 

 

3,998

 

 

 

15


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

NOTE 4: Reportable segments

The Company’s reportable segments represent the distinct product lines the Company offers and are viewed separately for strategic planning purposes by management. The table below is a reconciliation of the reportable segment revenues, expenses, and profit to the Company’s consolidated total for the three-month periods ending March 31, 2020 and 2019.  

 

 

 

Three-month period ending March 31, 2020

 

 

 

 

Correspondent

 

Corporate

 

 

 

 

 

 

Commercial

 

banking and

 

overhead

 

 

 

 

 

 

and retail

 

capital markets

 

and

 

Elimination

 

 

 

 

banking

 

division

 

administration

 

entries

 

Total

Interest income

 

$173,702

 

$3,057

 

$                    —

 

$                    —

 

$176,759

Interest expense

 

(20,434)

 

(1,664)

 

(1,308)

 

 

(23,406)

Net interest income (expense)

 

153,268

 

1,393

 

(1,308)

 

 

153,353

Provision for credit losses

 

(45,156)

 

242

 

 

 

(44,914)

Non-interest income

 

27,981

 

27,809

 

 

 

55,790

Non-interest expense

 

(108,373)

 

(12,503)

 

(1,896)

 

 

(122,772)

Net income (loss) before taxes

 

27,720

 

16,941

 

(3,204)

 

 

41,457

Income tax (provision) benefit

 

(3,487)

 

(4,241)

 

1,703

 

 

(6,025)

Net income (loss)

 

24,233

 

12,700

 

(1,501)

 

 

35,432

Total assets

 

$17,954,442

 

$641,599

 

$3,005,931

 

$(3,005,680)

 

$18,596,292

 

 

Three-month period ending March 31, 2019

 

 

 

 

Correspondent

 

Corporate

 

 

 

 

 

 

Commercial

 

banking and

 

overhead

 

 

 

 

 

 

and retail

 

capital markets

 

and

 

Elimination

 

 

 

 

banking

 

division

 

administration

 

entries

 

Total

Interest income

 

$127,832

 

$4,450

 

$                    —

 

$                    —

 

$132,282

Interest expense

 

(14,851)

 

(2,549)

 

(707)

 

 

(18,107)

Net interest income (expense)

 

112,981

 

1,901

 

(707)

 

 

114,175

Provision for credit losses

 

(1,015)

 

(38)

 

 

 

(1,053)

Non-interest income

 

20,300

 

9,000

 

 

 

29,300

Non-interest expense

 

(77,581)

 

(5,713)

 

(1,179)

 

 

(84,473)

Net income (loss) before taxes

 

54,685

 

5,150

 

(1,886)

 

 

57,949

Income tax (provision) benefit

 

(12,690)

 

(1,305)

 

689

 

 

(13,306)

Net income (loss)

 

$41,995

 

$3,845

 

$(1,197)

 

$                    —

 

$44,643

Total assets

 

$11,939,930

 

$647,046

 

$2,073,703

 

$(2,073,042)

 

$12,587,637

 

Commercial and retail banking: The Company’s primary business is commercial and retail banking. Currently, the Company operates primarily through the Bank providing traditional retail, commercial, mortgage, wealth management and SBA services throughout its Florida, Georgia and Alabama branch network and customer relationships in neighboring states.  This segment also includes the results of CBI, our transaction-based finance company that provides factoring, invoicing, collection and accounts receivable management services to transportation companies and automotive parts and service providers throughout the United States and Canada.

Correspondent banking and capital markets division:  Operating as a division of our subsidiary bank, its primary revenue generating activities are related to the capital markets division which includes commissions earned on fixed income security sales, fees from hedging services, loan brokerage fees and consulting fees for services related to these activities. Income generated related to the correspondent banking services includes spread income earned on correspondent bank deposits (i.e. federal funds purchased) and fees generated from safe-keeping activities, bond accounting services, asset/liability consulting services, international wires, clearing and corporate checking account services and other correspondent banking related services. The fees derived from the correspondent banking services are less volatile than those generated through the capital markets group. The customer base includes small to medium size financial institutions primarily located in Southeastern United States.

Corporate overhead and administration:  Corporate overhead and administration is comprised primarily of compensation and benefits for certain members of management, interest on parent company debt, office occupancy and depreciation of parent company facilities, merger related costs and other expenses.

 

16


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

NOTE 5: Investment securities

Available for Sale Debt Securities

All of the mortgage-backed securities (“MBS”) listed below are residential Fannie Mae, Freddie Mac and Ginnie Mae MBSs. The amortized cost, fair value and allowance for credit losses of available for sale debt securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

 

 

 

March 31, 2020

 

 

 

 

Gross

 

Gross

 

Allowance

 

 

 

 

Amortized

 

unrealized

 

unrealized

 

for credit

 

Fair

 

 

cost

 

gains

 

losses

 

losses

 

value

Corporate debt securities

 

$5,504

 

$253

 

$                    —

 

$                    —

 

$5,757

Obligations of U.S. government sponsored entities and agencies

 

147,339

 

620

 

 

 

147,959

Mortgage-backed securities

 

1,711,738

 

76,108

 

 

 

1,787,846

U.S. treasuries

 

100,001

 

 

4

 

 

99,997

Municipal securities

 

90,162

 

6,721

 

 

 

96,883

Total available for sale debt securities

 

$2,054,744

 

$83,702

 

$4

 

$                    —

 

$2,138,442

 

 

 

December 31, 2019

 

 

 

 

Gross

 

Gross

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

Cost

 

Gains

 

Losses

 

Value

Corporate debt securities

 

$5,504

 

$153

 

$                    —

 

$5,657

Obligations of U.S. government sponsored entities and agencies

 

20,000

 

 

70

 

19,930

Mortgage-backed securities

 

1,742,221

 

26,403

 

1,382

 

1,767,242

Municipal securities

 

88,301

 

5,594

 

 

93,895

Total available for sale debt securities

 

$1,856,026

 

$32,150

 

$1,452

 

$1,886,724

 

The cost of securities sold is determined using the specific identification method. NaN available for sale debt securities were sold during the three-month ended March 31, 2020.  Sales of available for sale debt securities for the three-month ended March 31, 2019 were as follows:

                  

For the three months ended:

 

March 31, 2020

 

March 31, 2019

Proceeds

 

$                    —

 

$66,486

Gross gains

 

 

646

Gross losses

 

 

629

The tax provision related to these net realized gain at March 31, 2019 was $4.

The fair value of available for sale debt securities at March 31, 2020 by contractual maturity were as follows. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

 

 

 

Fair

 

Amortized

Investment securities available for sale:

 

Value

 

Cost

   Due one year or less

 

$102,204

 

$102,191

   Due after one year through five years

 

131,668

 

131,295

   Due after five years through ten years

 

45,763

 

44,017

   Due after ten years through thirty years

 

70,961

 

65,503

   Mortgage-backed securities

 

1,787,846

 

1,711,738

Total available for sale debt securities

 

$2,138,442

 

$2,054,744

 

Available for sale debt securities pledged at March 31, 2020 and December 31, 2019 had a carrying amount (estimated fair value) of $1,403,169 and $1,195,664, respectively. These securities were pledged primarily to increase borrowing capacity at the FHLB, secure public deposits and repurchase agreements. In addition, the amounts at March 31, 2020 and December 31, 2019 include $605,100 and $361,127 of securities pledged to the third party dealers and clearinghouse exchanges for the Company’s cash flow hedge interest rate swaps, respectively.

At March 31, 2020 and December 31, 2019, there were 0 holdings of securities of any one issuer, other than mortgage-backed securities issued by U.S. Government sponsored entities, in an amount greater than 10% of stockholders’ equity.

 

17


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The following tables show the Company’s available for sale debt investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2020 and December 31, 2019.

 

 

 

March 31, 2020

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

value

 

losses

 

value

 

losses

 

value

 

losses

Mortgage-backed securities

 

$100

 

$                 —

 

$                    —

 

$                 —

 

$100

 

$                 —

U.S. treasuries

 

99,997

 

4

 

 

 

99,997

 

4

Total temporarily impaired available for sale debt securities

 

$100,097

 

$4

 

$                    —

 

$                 —

 

$100,097

 

$4

 

 

 

December 31, 2019

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Obligations of U.S. government sponsored entities and agencies

 

$19,930

 

$70

 

$                 —

 

$                 —

 

$19,930

 

$70

Mortgage-backed securities

 

125,249

 

388

 

117,903

 

994

 

243,152

 

1,382

Total temporarily impaired available for sale debt securities

 

$145,179

 

$458

 

$117,903

 

$994

 

$263,082

 

$1,452

 

Mortgage-backed securities: At March 31, 2020, 100% of the mortgage-backed securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae, Freddie Mac, and Ginnie Mae, institutions which the government has affirmed its commitment to support. As of March 31, 2020, none of our mortgage-backed securities were in a loss position.

U.S. treasuries: U.S. treasuries have almost no credit risk since they are backed by the full faith and credit of the U.S. government.  Because the decline in fair value is attributable to changes in interest rates and inflation, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2020.

Held to Maturity Debt Securities

Mortgage-Backed Securities: Most of the held to maturity securities investment portfolio is invested in U.S. Government Agency MBS.  Given that the principal and interest payments on these securities are guaranteed by a U.S. Government Agency, there is minimal risk.  Default from mortgage-backed securities would be present in macroeconomic events such as a recession which would result in insufficient cash flow to the servicer to continue regular payments.  

Municipal Securities: Defaults on municipal bonds are not common, but they are not without risk.  Risks stem from the potential for financial mismanagement of the municipal entity or a significant deterioration in the tax or revenue base of the municipal entity.  

The following reflects the amortized cost, fair value and allowance for credit losses and the related gross unrecognized gains and losses of held to maturity securities as of March 31, 2020 and December 31, 2019.

  

 

 

March 31, 2020

 

 

 

 

Gross

 

Gross

 

 

 

Allowance

 

 

Amortized

 

unrecognized

 

unrecognized

 

Fair

 

for credit

 

 

cost

 

gains

 

losses

 

value

 

losses

Mortgage-backed securities

 

$67,841

 

$2,317

 

$                    —

 

$70,158

 

$                    —

Municipal securities

 

128,117

 

7,183

 

 

135,300

 

(10)

Total held to maturity debt securities

 

$195,958

 

$9,500

 

$                    —

 

$205,458

 

$(10)

 

 

 

 

December 31, 2019

 

 

 

 

Gross

 

Gross

 

 

 

 

Amortized

 

unrecognized

 

unrecognized

 

Fair

 

 

cost

 

gains

 

losses

 

value

Mortgage-backed securities

 

$71,560

 

$456

 

$29

 

$71,987

Municipal securities

 

131,343

 

5,522

 

 

136,865

Total held to maturity debt securities

 

$202,903

 

$5,978

 

$29

 

$208,852

 

 

18


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Held to maturity securities pledged at March 31, 2020 and December 31, 2019 had a carrying amount of $130,281 and $100,582 respectively. These securities were pledged primarily to secure public deposits and repurchase agreements.

At March 31, 2020, there were 0 holdings of held to maturity securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The fair value and amortized cost of held to maturity securities at March 31, 2020 by contractual maturity were as follows. Mortgage-backed securities are not due at a single maturity date and are shown separately.

                  

 

 

Fair

 

Amortized

Held to maturity debt securities

 

value

 

cost

Due after five years through ten years

 

$2,193

 

$2,138

Due after ten years through thirty years

 

133,107

 

125,979

Mortgage-backed securities

 

70,158

 

67,841

Total held to maturity debt securities

 

$205,458

 

$195,958

 

As of March 31, 2020, there were no held to maturity debt securities in an unrecognized loss position.  The following table shows the Company’s held to maturity debt investments’ gross unrecognized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrecognized loss position, at December 31, 2019.


 

 

December 31, 2019

 

 

Less than 12 months

 

12 months or more

 

Total

 

 

Fair

 

Unrecognized

 

Fair

 

Unrecognized

 

Fair

 

Unrecognized

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Mortgage-backed securities

 

$                 —

 

$                 —

 

$8,445

 

$29

 

$8,445

 

$29

Total temporarily impaired held to maturity debt securities

 

$                 —

 

$                 —

 

$8,445

 

$29

 

$8,445

 

$29

The following table shows a roll-forward for the three-month ended March 31, 2020 for the of the allowance for credit losses on held to maturity debt investments:

 

 

 

Municipal

Held to maturity debt securities

 

 

securities

Allowance for credit losses:

 

 

 

Beginning balance, January 1, 2020

 

 

$                 —

Impact of adopting ASC 326

 

 

10

Provision for credit loss expense

 

 

Allowance on purchased financial assets with credit deterioration

 

 

Securities charged off

 

 

Recoveries

 

 

Total ending allowance balance

 

 

$10

The Company adopted CECL effective January 1, 2020 and recorded allowance for credit losses of $10 for held to maturity debt securities.  The Company did not record any provision for credit loss on held to maturity debt securities for the three-month ended March 31, 2020.

Credit Quality Indicators:

Pursuant to ASC 326, the Company must also determine if the decline in fair value of investment securities, relative to its amortized cost, is due to credit-related factors. With respect to U.S. Government agency securities, the Bank has determined that a decline in fair value is not due to credit-related factors.  In addition, no held to maturity debt securities were past due or on non-accrual as of March 31, 2020.  The Company monitors the credit quality of debt securities held to maturity through the use of credit rating and other factors specific to an individual security in assessing whether or not the decline in fair value of municipal and corporate securities, relative to their amortized cost, is due to credit-related factors.  The Company uses the following triggers to prompt further investigation of securities when the fair value is less than amortized costs: the security has been downgraded and fallen below an A credit rating, and the security’s unrealized loss exceeds 20% of its book value.  The Company monitors credit ratings quarterly and annually performs an internal credit review of its municipal securities.


 

19


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The following table summarizes the amortized costs of held to maturity debt securities at March 31, 2020, aggregated by credit quality indicator:

 

 

Mortgage-backed

 

Municipal

 

 

 

securities

 

securities

 

At March 31, 2020

 

 

 

 

 

AAA/AA/A

 

$                    —

 

$126,737

 

Not rated (1)

 

67,841

 

1,380

 

Total

 

$67,841

 

$128,117

 

 

(1)

All unrated mortgage-backed securities are FNMA and GNMA. The federal backing of these securities result in negligible credit risk.

 

NOTE 6:  Loans Held for Sale

 

The Company accounts for loans held for sale under the fair value option with changes in fair value recognized in current period earnings.  At the date of funding of the loan, the funded amount of the loan, the relative derivative asset or liability of the associated interest rate lock commitment, less direct costs, becomes the initial recorded investment in the loan held for sale.  Such amount approximates the fair value of the loan.  Net gains from changes in estimated fair value of mortgage loans held for sale were $2,354 and $4 for the three-month periods ending March 31, 2020 and 2019, respectively. The total unpaid principal balance of loans held for sale was $185,962 and $141,627 at March 31, 2020 and December 31, 2019, respectively. NaN loans held for sale at March 31, 2020 or at December 31, 2019 were past due or on nonaccrual.  

The table below summarizes the activity in mortgage loans held for sale during the three-month period ending March 31, 2020 and 2019.

 

 

 

Three-month periods ended

 

 

March 31, 2020

 

March 31, 2019

Beginning balance

 

$142,801

 

$40,399

Loans originated

 

423,622

 

134,752

Proceeds from sales

 

(391,242)

 

(129,657)

Net change in fair value

 

2,354

 

4

Net realized gain on sales

 

10,781

 

3,976

Ending balance

 

$188,316

 

$49,474

 

As loans are closed, they are typically sold at prices specified in the forward contracts.  Gains or losses may arise if the yields of the loans delivered vary from those specified in the forward contracts.  Derivative mortgage loan commitments, or interest rate locks, are also utilized and relate to the origination of a mortgage that will be held for sale upon funding.  The Company uses these derivative financial instruments on its loans held for sale to manage interest rate risk and not for speculative purposes. The table below summarizes the main components of Mortgage Banking Revenue during the three-month period ending March 31, 2020 and 2019. The Mortgage Banking Revenue amounts are reported in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income.

 

 

 

Three-month periods ended

 

 

March 31, 2020

 

March 31, 2019

Servicing fees and commissions

 

$83

 

$93

Gain on sale of loans held for sale

 

10,781

 

3,976

Unrealized gain on loans held for sale

 

2,354

 

4

(Loss) gain on mortgage derivatives

 

(1,147)

 

557

Loss on mortgage hedge

 

(1,098)

 

(404)

Loss on mortgage servicing assets

 

 

(33)

Mortgage banking revenue

 

$10,973

 

$4,193

 


 

 

20


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The table below summarizes the notional amounts for interest rate lock commitments, best efforts forward trades and MBS forward trades pertaining to loans held for sale at March 31, 2020 and 2019.

 

 

Notional at

 

March 31, 2020

 

March 31, 2019

Interest rate lock commitments

$389,387

 

$85,802

Best efforts forward trades

152,788

 

92,115

MBS forward trades

345,500

 

57,000

Total derivative instruments

$887,675

 

$234,917

 

Mortgage banking derivatives used in the ordinary course of business consist of forward sales contracts and interest rate lock commitments on residential mortgage loans.  Forward sales contracts represent future commitments to deliver loans at a specified price and by a specified date and are used to manage interest rate risk on loan commitments and mortgage loans held for sale.  Rate lock commitments represent commitments to fund loans at a specific rate and by a specified expiration date.  These derivatives involve underlying items, such as interest rates, and are designed to mitigate risk. Notional amounts are amounts on which calculations and payments are based, but which do not represent credit exposure, as credit exposure is limited to the amounts required to be received or paid.

NOTE 7: Loans

The following table sets forth information concerning the loan portfolio by collateral types as of the dates indicated.

 

 

 

March 31, 2020

 

December 31, 2019

Loans excluding PCD loans

 

 

 

 

Real estate loans

 

 

 

 

   Residential

 

$2,537,240

 

$2,512,544

   Commercial

 

6,391,975

 

6,325,108

   Land, development and construction

 

929,014

 

999,923

Total real estate

 

9,858,229

 

9,837,575

Commercial, industrial & factored receivables

 

1,778,526

 

1,759,074

Consumer and other loans

 

235,200

 

247,307

Loans before unearned fees and deferred cost

 

11,871,955

 

11,843,956

Net unearned fees and costs

 

4,954

 

4,519

Total loans excluding PCD loans

 

11,876,909

 

11,848,475

PCD loans (note 1)

 

 

 

 

Real estate loans

 

 

 

 

   Residential

 

42,779

 

45,795

   Commercial

 

92,281

 

81,576

   Land, development and construction

 

5,447

 

4,655

Total real estate

 

140,507

 

132,026

Commercial and industrial

 

9,756

 

3,342

Consumer and other loans

 

59

 

100

Total PCD loans

 

150,322

 

135,468

Total loans

 

12,027,231

 

11,983,943

Allowance for credit losses for loans that are not PCD loans

 

(140,803)

 

(40,429)

Allowance for credit losses for PCD loans

 

(17,930)

 

(226)

Total loans, net of allowance for credit losses

 

$11,868,498

 

$11,943,288

 

 

note 1:

Purchased credit deteriorated (“PCD”) loans are being accounted for pursuant to ASC Topic 326 effective January 1, 2020.  

 


 

 

21


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The table below set forth the activity in the allowance for credit losses for the periods presented.

 

 

 

Allowance for credit losses for loans that are not PCD loans

 

Allowance for credit losses on PCD loans

 

Total

Three-month ended March 31, 2020

 

 

 

 

 

 

Balance at beginning of period, prior to adoption of ASC 326

 

$40,429

 

$226

 

$40,655

Impact of adopting ASC 326

 

57,604

 

17,004

 

74,608

Loans charged-off

 

(2,350)

 

(1,257)

 

(3,607)

Recoveries of loans previously charged-off

 

1,201

 

962

 

2,163

   Net charge-offs

 

(1,149)

 

(295)

 

(1,444)

Provision for credit losses

 

43,919

 

995

 

44,914

Balance at end of period

 

$140,803

 

$17,930

 

$158,733

 

 

 

 

 

 

 

Three-month ended March 31, 2019

 

 

 

 

 

 

Balance at beginning of period

 

$39,579

 

$191

 

$39,770

Loans charged-off

 

(1,447)

 

 

(1,447)

Recoveries of loans previously charged-off

 

676

 

 

676

   Net charge-offs

 

(771)

 

 

(771)

Provision for credit losses

 

1,053

 

 

1,053

Balance at end of period

 

$39,861

 

$191

 

$40,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  


 

22


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods presented.

 

 

 

Real Estate Loans

 

 

 

 

 

 

 

 

Residential

 

Commercial

 

Land, develop., constr.

 

Comm., industrial & factored receivables

 

Consumer & other

 

Total

Allowance for credit losses for loans that are not PCD loans:

 

 

 

 

 

 

 

 

 

 

Three-month ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, prior to adoption of ASC 326

 

$4,257

 

$18,552

 

$2,319

 

$11,282

 

$4,019

 

$40,429

Impact of adopting ASC 326

 

11,412

 

35,596

 

6,932

 

2,995

 

669

 

57,604

Charge-offs

 

(294)

 

 

(24)

 

(1,117)

 

(915)

 

(2,350)

Recoveries

 

181

 

305

 

25

 

556

 

134

 

1,201

Provision for credit losses

 

4,675

 

37,073

 

4,929

 

(2,727)

 

(31)

 

43,919

Balance at end of period

 

$20,231

 

$91,526

 

$14,181

 

$10,989

 

$3,876

 

$140,803

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-month ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of the period

 

$5,518

 

$22,978

 

$1,781

 

$6,414

 

$2,888

 

$39,579

Charge-offs

 

(201)

 

 

(31)

 

(664)

 

(551)

 

(1,447)

Recoveries

 

142

 

152

 

83

 

155

 

144

 

676

Provision for loan losses

 

(11)

 

(883)

 

387

 

1,025

 

535

 

1,053

Balance at end of period

 

$5,448

 

$22,247

 

$2,220

 

$6,930

 

$3,016

 

$39,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Loans

 

 

 

 

 

 

 

 

Residential

 

Commercial

 

Land, develop., constr.

 

Comm., industrial & factored receivables

 

Consumer & other

 

Total

Allowance for credit losses for loans that are PCD loans:

 

 

 

 

 

 

 

 

 

 

Three-month ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, prior to adoption of ASC 326

 

$                    —

 

$                    —

 

$177

 

$                    —

 

$49

 

$226

Impact of adopting ASC 326

 

3,021

 

11,966

 

79

 

1,924

 

14

 

17,004

Charge-offs

 

(156)

 

(1,021)

 

 

(80)

 

 

(1,257)

Recoveries

 

141

 

244

 

293

 

283

 

1

 

962

Provision for credit losses

 

(154)

 

914

 

(291)

 

533

 

(7)

 

995

Balance at end of period

 

$2,852

 

$12,103

 

$258

 

$2,660

 

$57

 

$17,930

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-month ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of the period

 

$                    —

 

$                    —

 

$177

 

$                    —

 

$14

 

$191

Charge-offs

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

Provision for loan losses

 

 

 

 

 

 

Balance at end of period

 

$                    —

 

$                    —

 

$177

 

$                    —

 

$14

 

$191

 

 

 

 


 

23


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The following tables present the balance in the allowance for credit losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31, 2019. Upon adoption of ASC Topic 326 effective January 1, 2020, the Company began to evaluate PCD loans that met the criteria for individual impairment analysis on a loan level basis.  Previously, the Company accounted for PCD (formerly PCI) loans on a pool level basis pursuant to ASC 310-30 and were therefore collectively evaluated for period end December 31, 2019.  Accrued interest receivable and unearned loan fees and costs are not included in the recorded investment because they are not material.

 

 

 

Real Estate Loans

 

 

 

 

 

 

 

 

Residential

 

Commercial

 

Land, develop., constr.

 

Comm., industrial & factored receivables

 

Consumer & other

 

Total

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to:

 

 

 

 

 

 

 

 

 

 

Non-PCD loans

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$322

 

$280

 

$4

 

$1,314

 

$                    —

 

$1,920

Collectively evaluated for impairment

 

19,909

 

91,246

 

14,177

 

9,675

 

3,876

 

138,883

Total ending allowance balance, non-PCD

 

$20,231

 

$91,526

 

$14,181

 

$10,989

 

$3,876

 

$140,803

PCD loans

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$                    —

 

$9,917

 

$                    —

 

$2,398

 

$                    —

 

$12,315

Collectively evaluated for impairment

 

2,852

 

2,186

 

258

 

262

 

57

 

5,615

Total ending allowance balance, PCD

 

$2,852

 

$12,103

 

$258

 

$2,660

 

$57

 

$17,930

Total ending allowance balance

 

$23,083

 

$103,629

 

$14,439

 

$13,649

 

$3,933

 

$158,733

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Non-PCD loans

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$4,659

 

$18,145

 

$781

 

$7,276

 

$134

 

$30,995

Collectively evaluated for impairment

 

2,532,581

 

6,373,830

 

928,233

 

1,771,250

 

235,066

 

11,840,960

Total non-PCD loans

 

$2,537,240

 

$6,391,975

 

$929,014

 

$1,778,526

 

$235,200

 

$11,871,955

PCD loans

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$                    —

 

$19,611

 

$                    —

 

$3,165

 

$                    —

 

$22,776

Collectively evaluated for impairment

 

42,779

 

72,670

 

5,447

 

6,591

 

59

 

127,546

Total PCD loans

 

$42,779

 

$92,281

 

$5,447

 

$9,756

 

$59

 

$150,322

Total ending loan balances

 

$2,580,019

 

$6,484,256

 

$934,461

 

$1,788,282

 

$235,259

 

$12,022,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Loans

 

 

 

 

 

 

 

 

Residential

 

Commercial

 

Land, develop., constr.

 

Comm., industrial & factored receivables

 

Consumer & other

 

Total

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$588

 

$375

 

$                    —

 

$914

 

$1

 

$1,878

Collectively evaluated for impairment

 

3,669

 

18,177

 

2,319

 

10,368

 

4,018

 

38,551

      Purchased credit impaired

 

 

 

177

 

 

49

 

226

Total ending allowance balance

 

$4,257

 

$18,552

 

$2,496

 

$11,282

 

$4,068

 

$40,655

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$6,475

 

$11,445

 

$865

 

$7,232

 

$123

 

$26,140

Collectively evaluated for impairment

 

2,506,069

 

6,313,663

 

999,058

 

1,751,842

 

247,184

 

11,817,816

      Purchased credit impaired

 

45,795

 

81,576

 

4,655

 

3,342

 

100

 

135,468

Total ending loan balances

 

$2,558,339

 

$6,406,684

 

$1,004,578

 

$1,762,416

 

$247,407

 

$11,979,424

 

 

 

 

 

 


 

24


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

The table below summarizes impaired loan data for the periods presented.

 

 

 

March 31, 2020

 

December 31, 2019

Performing TDRs (these are not included in nonperforming loans ("NPLs"))

 

$7,215

 

$8,012

Nonperforming TDRs (these are included in NPLs)

 

4,648

 

4,512

Total TDRs (these are included in impaired loans)

 

11,863

 

12,524

Impaired loans that are not TDRs

 

19,132

 

13,616

Total impaired loans, excluding PCD loans

 

$30,995

 

$26,140

Impaired PCD loans

 

22,776

 

Total impaired loans

 

$53,771

 

$26,140

 

Troubled Debt Restructurings:    

  In certain situations, it is common to restructure or modify the terms of troubled loans (i.e. troubled debt restructure or “TDRs”). In those circumstances, it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in a distressed sale. When the terms of a loan have been modified, usually the monthly payment and/or interest rate is reduced for generally twelve to twenty-four months. The Company has not forgiven any material principal amounts on any loan modifications to date.

TDRs as of March 31, 2020 and December 31, 2019 quantified by loan type classified separately as accrual (performing loans) and non-accrual (non-performing loans) are presented in the tables below.

  

 

 

Accruing

 

Non-accrual

 

Total

As of March 31, 2020

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

    Residential

 

$4,660

 

$813

 

$5,473

    Commercial

 

1,290

 

 

1,290

    Land, development, construction

 

46

 

470

 

516

Total real estate loans

 

5,996

 

1,283

 

7,279

Commercial and industrial

 

1,085

 

3,365

 

4,450

Consumer and other

 

134

 

 

134

        Total TDRs

 

$7,215

 

$4,648

 

$11,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing

 

Non-Accrual

 

Total

As of December 31, 2019

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

    Residential

 

$4,862

 

$1,147

 

$6,009

    Commercial

 

1,706

 

 

1,706

    Land, development, construction

 

175

 

 

175

Total real estate loans

 

6,743

 

1,147

 

7,890

Commercial and industrial

 

1,146

 

3,365

 

4,511

Consumer and other

 

123

 

 

123

        Total TDRs

 

$8,012

 

$4,512

 

$12,524

 

The Company’s policy is to return non-accrual TDR loans to accrual status when all the principal and interest amounts contractually due, pursuant to its modified terms, are brought current and future payments are reasonably assured. Our policy also considers the payment history of the borrower, but is not dependent upon a specific number of payments. The Company recorded a provision for credit loss expense of $22 and partial charge offs of $21 on the TDR loans described above during the three-month period ending March 31, 2020.  The Company recorded a provision for credit loss expense of $31 and partial charge-offs of $8 on TDR loans during the three-month period ending March 31, 2019.

Loans are modified to minimize credit losses when we believe the modification will improve the borrower’s financial condition and ability to repay the loan. We typically do not forgive principal. We generally either reduce interest rates or decrease monthly payments for a temporary period of time and those reductions of cash flows are capitalized into the loan balance. We may also extend maturities, convert balloon loans to longer-term amortizing loans, or vice versa, or change interest rates between variable and fixed rate. Each borrower and situation is unique and we try to accommodate the borrower and minimize the Company’s potential losses. Approximately 61% of our TDRs are current pursuant to their modified terms, and $4,648, or approximately 39% of our total TDRs are not performing pursuant to their modified terms. There does not appear to be any significant difference in success rates with one type of concession versus another.

 

25


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Loans modified as TDRs during the three-month period ending March 31, 2020 were $482. Loans modified as TDRs during the three-month period ending March 31, 2019 were $713. The Company recorded $14 of credit loss provision for loans modified during the three-month period ending March 31, 2020. NaN credit loss provision was recorded during the three-month period ending March 31, 2019.

The following table presents loans by class modified and for which there was a payment default within twelve months following the modification during the periods ending March 31, 2020 and 2019.

 

 

Period ending

 

Period ending

 

March 31, 2020

 

March 31, 2019

 

 

Number

 

Recorded

 

Number

 

Recorded

 

 

of loans

 

investment

 

of loans

 

investment

Residential

 

1

 

$169

 

 

$                        —

Commercial real estate

 

1

 

267

 

 

Land, development, construction

 

 

 

 

Commercial and industrial

 

1

 

61

 

1

 

122

Consumer and other

 

 

 

 

Total

 

3

 

$497

 

1

 

$122

 

The Company recorded $1 provision for credit loss expense related to TDRs and $1 partial charge offs on TDR loans subsequently defaulted during the for three-month period ending March 31, 2020. The Company recorded 0 provision for loan loss expense of and 0 partial charge offs on TDR loans that subsequently defaulted as described above during the three-month period ending March 31, 2019.

The following tables present non-PCD loans individually evaluated for impairment by class of loans as March 31, 2020 and December 31, 2019. The recorded investment is less than the unpaid principal balance due to partial charge-offs.

  

 

 

Unpaid principal balance

 

Recorded investment

 

Allowance for credit losses allocated

As of March 31, 2020

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

Residential real estate

 

$2,822

 

$2,669

 

$                      —

Commercial real estate

 

16,470

 

15,003

 

Land, development, construction

 

755

 

725

 

Commercial and industrial

 

3,737

 

3,424

 

Consumer, other

 

110

 

109

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

Residential real estate

 

2,126

 

1,990

 

322

Commercial real estate

 

3,175

 

3,142

 

280

Land, development, construction

 

56

 

56

 

4

Commercial and industrial

 

3,922

 

3,852

 

1,314

Consumer, other

 

30

 

25

 

        Total

 

$33,203

 

$30,995

 

$1,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

Recorded investment

 

Allowance for loan losses allocated

As of December 31, 2019

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

Residential real estate

 

$2,894

 

$2,744

 

$                      —

Commercial real estate

 

11,031

 

10,015

 

Land, development, construction

 

886

 

865

 

Commercial and industrial

 

5,522

 

4,820

 

Consumer, other

 

99

 

98

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

Residential real estate

 

3,920

 

3,731

 

588

Commercial real estate

 

1,438

 

1,430

 

375

 

26


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Land, development, construction

 

 

 

Commercial and industrial

 

2,486

 

2,412

 

914

Consumer, other

 

31

 

25

 

1

        Total

 

$28,307

 

$26,140

 

$1,878

 

 

 

Average of impaired loans

 

Interest income recognized during impairment

 

Cash basis interest income recognized

Three-month ended March 31, 2020

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

Residential

 

$5,567

 

$37

 

$                      —

Commercial

 

14,795

 

31

 

Land, development, construction

 

823

 

2

 

Total real estate loans

 

21,185

 

70

 

 

 

 

 

 

 

 

Commercial and industrial

 

7,254

 

18

 

Consumer and other loans

 

129

 

2

 

       Total

 

$28,568

 

$90

 

$                      —

 

 

 

 

 

 

 

 

 

Average of impaired loans

 

Interest income recognized during impairment

 

Cash basis interest income recognized

Three-month ended March 31, 2019

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

Residential

 

$5,945

 

$62

 

$                      —

Commercial

 

7,787

 

25

 

Land, development, construction

 

117

 

1

 

Total real estate loans

 

13,849

 

88

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,600

 

12

 

Consumer and other loans

 

140

 

2

 

       Total

 

$16,589

 

$102

 

$                      —

 

 

 

 

 

 

 

The following tables present PCD loans, accounted for pursuant to ASC Topic 326, individually evaluated for impairment by class of loans as of March 31, 2020. The recorded investment is less than the unpaid principal balance due to partial charge-offs and non-credit discounts.  In addition, the interest income recognized during impairment excludes interest accretion recognized during the current reporting period.

 

 

Unpaid principal balance

 

Recorded investment

 

Allowance for credit losses allocated

As of March 31, 2020, PCD loans

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

Residential real estate

 

$                        —

 

$                        —

 

$                        —

Commercial real estate

 

 

 

Land, development, construction

 

 

 

Commercial and industrial

 

 

 

Consumer, other

 

 

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

Residential real estate

 

 

 

Commercial real estate

 

35,999

 

19,611

 

9,917

Land, development, construction

 

 

 

Commercial and industrial

 

4,745

 

3,165

 

2,398

Consumer, other

 

 

 

        Total

 

$40,744

 

$22,776

 

$12,315

 

 

27


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

 

 

Average of impaired loans

 

Interest income recognized during impairment

 

Cash basis interest income recognized

Three-month ended March 31, 2020, PCD loans

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

Residential

 

$                        —

 

$                        —

 

$                        —

Commercial

 

20,128

 

125

 

Land, development, construction

 

 

 

Total real estate loans

 

20,128

 

125

 

 

 

 

 

 

 

 

Commercial and industrial

 

3,593

 

23

 

Consumer and other loans

 

 

 

       Total

 

$23,721

 

$148

 

$                        —

 

Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.  All loans greater than 90 days past due are placed on non-accrual status, excluding factored receivables.  For CBI’s factored receivables, which are commercial trade credits rather than promissory notes, the Company’s practice, in most cases, is to charge-off unpaid recourse receivables when they become 90 days past due from the invoice due date and the non-recourse receivables when they become 120 days past due from the statement billing date.  Effective January 1, 2020 with the adoption of ASC Topic 326, the Company began including non-accrual PCD loans in its nonperforming loans.  As such the nonperforming loans as of March 31, 2020 include PCD loans accounted for pursuant to ASC 326 as these loans are individually evaluated.  The nonperforming loans do not include PCD (formerly PCI) loans as of December 31, 2019, as the PCD loans prior to adopting ASC Topic 326 were evaluated on a pool level basis.

 

Nonperforming loans were as follows:

 

March 31, 2020

 

December 31, 2019

Non-accrual loans, non-PCD

 

$45,305

 

$36,916

Non-accrual loans, PCD

 

33,893

 

Loans past due over 90 days and still accruing interest

 

535

 

1,692

Total nonperforming loans

 

$79,733

 

$38,608

 

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of March 31, 2020 and December 31, 2019.  Effective January 1, 2020 with the adoption of ASC Topic 326, the Company began including non-accrual PCD loans in its nonperforming loans.  As such the nonperforming loans as of March 31, 2020 below include PCD loans accounted for pursuant to ASC 326 but does not include PCD (formerly PCI) loans in non-performing loans as of December 31, 2019.  

 

 

Non-accrual with no allocated allowance for credit losses

 

Non-accrual with allocated allowance for credit losses

 

Loans past due over 90 days still accruing

As of March 31, 2020

 

 

 

 

 

 

Non-PCD loans:

 

 

 

 

 

 

Residential real estate

 

$11,537

 

$926

 

$                      —

Commercial real estate

 

18,386

 

2,264

 

Land, development, construction

 

2,107

 

470

 

Comm., industrial & factored receivables

 

5,713

 

2,869

 

535

Consumer, other

 

1,033

 

 

        Total

 

$38,776

 

$6,529

 

$535

  

 

 

Non-accrual with no allocated allowance for credit losses

 

Non-accrual with allocated allowance for credit losses

 

Loans past due over 90 days still accruing

As of March 31, 2020

 

 

 

 

 

 

PCD loans:

 

 

 

 

 

 

Residential real estate

 

$                       8,847

 

$—

 

$                        —

Commercial real estate

 

10,722

 

9,609

 

Land, development, construction

 

1,334

 

 

Comm., industrial & factored receivables

 

1,396

 

1,969

 

Consumer, other

 

16

 

 

        Total

 

$                        22,315

 

$11,578

 

$                        —

 

 

28


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

 

 

Non-accrual

 

Loans past due over 90 days still accruing

As of December 31, 2019

 

 

 

 

Non-PCD loans:

 

 

 

 

Residential real estate

 

$13,455

 

$                      —

Commercial real estate

 

12,141

 

Land, development, construction

 

2,516

 

Commercial and industrial

 

7,884

 

1,692

Consumer, other

 

920

 

        Total

 

$36,916

 

$1,692

 Collateral dependent loans:

Collateral dependent loans are impaired loans where repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment.  They are written down to the lower of cost or collateral value less estimated selling costs.  As of March 31, 2020, there were $19,611 of collateral-dependent loans which are secured by real-estate.

 

The following table presents the aging of the recorded investment in past due non-PCD loans as of March 31, 2020 and December 31, 2019:  

 

 

Accruing Loans

 

 

As of March 31, 2020

 

Total

 

30 - 59 days past due

 

60 - 89 days past due

 

Greater than 90 days past due

 

Total past due

 

Loans not past due

 

Nonaccrual loans

Residential real estate

 

$2,537,240

 

$17,555

 

$910

 

$               —

 

$18,465

 

$2,506,312

 

$12,463

Commercial real estate

 

6,391,975

 

10,802

 

7,147

 

 

17,949

 

6,353,376

 

20,650

Land, development, construction

 

929,014

 

4,757

 

74

 

 

4,831

 

921,606

 

2,577

Comm., industrial & factored receivables

 

1,778,526

 

15,859

 

2,043

 

535

 

18,437

 

1,751,507

 

8,582

Consumer

 

235,200

 

1,870

 

377

 

 

2,247

 

231,920

 

1,033

 

 

$11,871,955

 

$50,843

 

$10,551

 

$535

 

$61,929

 

$11,764,721

 

$45,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing Loans

 

 

As of December 31, 2019

 

Total

 

30 - 59 days past due

 

60 - 89 days past due

 

Greater than 90 days past due

 

Total past due

 

Loans not past due

 

Nonaccrual loans

Residential real estate

 

$2,512,544

 

$7,601

 

$5,928

 

$               —

 

$13,529

 

$2,485,560

 

$13,455

Commercial real estate

 

6,325,108

 

7,554

 

2,577

 

 

10,131

 

6,302,836

 

12,141

Land, development, construction

 

999,923

 

1,343

 

2,349

 

 

3,692

 

993,715

 

2,516

Comm., industrial & factored receivables

 

1,759,074

 

14,924

 

12,465

 

1,692

 

29,081

 

1,722,109

 

7,884

Consumer

 

247,307

 

1,663

 

907

 

 

2,570

 

243,817

 

920

 

 

$11,843,956

 

$33,085

 

$24,226

 

$1,692

 

$59,003

 

$11,748,037

 

$36,916

 

 

 

 

 

The following table presents the aging of the recorded investment in past due PCD loans as of March 31, 2020:

 

 

Accruing Loans

 

 

As of March 31, 2020

 

Total

 

30 - 59 days past due

 

60 - 89 days past due

 

Greater than 90 days past due

 

Total past due

 

Loans not past due

 

Nonaccrual loans

Residential real estate

 

$42,779

 

$782

 

$                 —

 

$           —

 

$782

 

$33,150

 

$8,847

Commercial real estate

 

92,281

 

870

 

 

 

870

 

71,080

 

20,331

Land, development, construction

 

5,447

 

12

 

35

 

 

47

 

4,066

 

1,334

Comm., industrial & factored receivables

 

9,756

 

1,049

 

168

 

 

1,217

 

5,174

 

3,365

Consumer

 

59

 

3

 

 

 

3

 

40

 

16

 

 

$150,322

 

$2,716

 

$203

 

$           —

 

$2,919

 

$113,510

 

$33,893

 

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as; current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on at least an annual basis.  The Company uses the following definitions for risk ratings:

 

29


CenterState Bank Corporation and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands of dollars, except per share data)

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Effective January 1, 2020, the Company began accounting for PCD loans pursuant to ASC Topic 326.  Previously, PCD (formerly PCI) loans were accounted for pursuant to ASC Topic 310-30.  Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

Loan Category

 

2020

 

2019

 

2018

 

2017

 

2016

 

Prior

 

Revolving loans amortized cost

 

Total

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential Non-PCD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$96,916

 

$331,772

 

$340,612

 

$235,228

 

$191,581

 

$626,533

 

$659,493

 

$2,482,135

Special mention

 

 

 

272

 

1,258

 

3,182

 

21,568

 

3,414

 

29,694

Substandard

 

 

19

 

1,893

 

1,642

 

1,200

 

16,183

 

4,474

 

25,411

Total residential loans

 

$96,916

 

$331,791

 

$342,777

 

$238,128

 

$195,963

 

$664,284

 

$667,381

 

$2,537,240

Commercial Non-PCD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$231,694

 

$1,068,021

 

$1,013,588

 

$908,262

 

$827,344

 

$2,162,917

 

$               —

 

$6,211,826

Special mention

 

555

 

6,378

 

3,801

 

16,580

 

13,985

 

79,175

 

 

120,474

Substandard

 

 

439

 

1,111

 

9,406

 

10,942

 

37,777

 

 

59,675

Total commercial loans

 

$232,249

 

$1,074,838

 

$1,018,500

 

$934,248

 

$852,271

 

$2,279,869

 

$               —

 

$6,391,975

Land, Dev., Construction Non-PCD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$55,460

 

$414,429

 

$218,397

 

$84,358

 

$51,453

 

$93,530

 

$               —

 

$917,627

Special mention

 

 

184

 

626

 

584

 

 

6,042

 

 

7,436

Substandard

 

 

348

 

274

 

154

 

919

 

2,256

 

 

3,951

Total land, dev., construction loans

 

$55,460

 

$414,961

 

$219,297

 

$85,096

 

$52,372

 

$101,828

 

$               —

 

$929,014

Commercial & Industrial Non-PCD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$113,652

 

$334,843

 

$382,869

 

$287,342

 

$161,970

 

$449,985

 

$               —

 

$1,730,661

Special mention

 

 

 

75

 

3,026

 

2,264

 

25,662

 

 

31,027

Substandard

 

98

 

995

 

5,212

 

5,480

 

3,020

 

2,033

 

 

16,838

Total commercial & industrial loans

 

$113,750

 

$335,838

 

$388,156

 

$295,848

 

$167,254

 

$477,680

 

$               —

 

$1,778,526

Consumer & Other Non-PCD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$20,977

 

$65,488

 

$42,744

 

$25,046

 

$29,300

 

$23,642

 

$26,498

 

$233,695

Special mention

 

 

 

 

5

 

33

 

108

 

 

146

Substandard

 

 

141