CenterState Bank Corp - FORM 8-K - EX-99.2 - INVESTOR PRESENTATION MATERIALS - July 30, 2013

Attached files

file filename
8-K - FORM 8-K - CenterState Bank Corpd574328d8k.htm
EX-2.1 - AGREEMENT AND PLAN OF MERGER - CenterState Bank Corpd574328dex21.htm
EX-99.1 - PRESS RELEASE - CenterState Bank Corpd574328dex991.htm
KBW 2013
Community Bank
Conference
July 30, 2013
Exhibit 99.2

This presentation contains forward-looking statements, as defined by Federal
Securities
Laws,
relating
to
present
or
future
trends
or
factors
affecting
the
operations, markets and products of CenterState Banks, Inc. (CSFL). These
statements
are
provided
to
assist
in
the
understanding
of
future
financial
performance. Any such statements are based on current expectations and involve
a
number
of
risks
and
uncertainties.
For
a
discussion
of
factors
that
may
cause
such forward-looking statements to differ materially from actual results, please
refer to CSFL’s most recent Form 10-Q and Form 10-K filed with the Securities
Exchange Commission.
CSFL
undertakes
no
obligation
to
release
revisions
to
these
forward-looking
statements or reflect events or circumstances after the date of this presentation.
Forward Looking Statement
2
2

Company Overview

Correspondent Banking Market
Data as of  6/30/13
•
Headquartered in Davenport, FL
$2.4 billion in assets
$1.4 billion in loans
$2.0 billion in deposits
•
Company formed:  June 2000
1 Subsidiary Bank
Corporate Overview
4

Ocala National Bank
Olde Cypress Community Bank
Independent National Bank of Ocala
Community National Bank of Bartow
Central Florida State Bank
First Guaranty Bank & Trust Co.
Federal Trust Acquisition from                    
The Hartford Insurance Company
TD Bank divesture in Putnam
Opportunistic through the Crisis
Non –
FDIC Acquisitions
FDIC Acquisitions
New Fee-Based Business Lines
Strategic Expansion & Management Lift-Outs
Correspondent Banking Division
Prepaid Card Division
Wealth Management Division
Trust Department
Vero Beach
Okeechobee
Jacksonville
5

18
CSFL Advantages
CSFL is one of only five
major exchange traded
banks headquartered in FL
with assets between $1
billion and $10 billion
Proven experience through
8 successful acquisitions in
the past 3 years
Disproportionate number of
sellers versus very few
buyers
The number of small,
distressed Florida
institutions remains high
CSFL –
Best Positioned Florida Consolidator
Source:  SNL Financial
Data as of MRQ available
6

2
Quarter
Financial
Summary
nd

Source:
Florida
Realtors
Monthly
Market
Detail
(May
31,
2013)
–
Single
Family
Homes
2009
2010
2011
2012
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
D
J
F
M
A
M
2009
2010
2011
2012
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
$180K
$170K
$160K
$150K
$140K
$130K
$120K
$110K
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
Florida Real Estate –
Single Family Homes

9
Non-Covered Loan Growth
Loan Production by Quarter
•
Current Qtr annualized 14.7%
•
YTD annualized 6.9%
•
Avg yld funded loans 4.13%
•
41% CRE
•
31% Resi
•
10% C&I
•
18% all other
•
Loan pipeline:
Current:         $150M
End of 1Q13:  $175M
End of 4Q12:  $110M
Current Quarter Production Statistics

10
2    Quarter Summary of Financial Results
2Q 2013
1Q 2013
EPS
$0.09
$0.15
•
Higher loan loss provision
$1,374 vs. ($360)
•
Higher IA amortization
•
Lower bond sales
•
Loan growth
•
Resilient NIM
•
4.59% vs. 4.64%
(4.38%) vs. (4.27%)
•
Covered loan performance
•
Potential future ALLL release
•
Valuable core deposit franchise
•
Credit metrics continue to improve
Current Qtr take-aways
nd

Acquisition of
Gulfstream
Bancshares, Inc.
July 30, 2013

Strategic
Rationale
•
Strong double-digit % EPS accretion
•
Accelerates profitability metrics
•
Earn back of TBV dilution within 3.5 to 4 years
•
>20% IRR
Attractive
Financial
Returns
•
CSFL
is
an
experienced
Florida
acquirer
–
9th
deal
since
2009
•
Thorough
due
diligence
(80%
of
the
loan
portfolio
and
100%
of
the
OREO)
•
Gulfstream team to remain intact with employment agreements
•
Strong pro forma capital ratios post closing
Low Risk
Profile
Transaction Rationale
12
Gulfstream is one of Florida’s highest performing banks
Complements our growing presence along Florida’s Treasure Coast
A business bank with lending specialties to medical groups and
operating companies

(1)
Based on CSFL 20 day closing VWAP of $9.38 ended July 26, 2013
(2)
Based on 1.722 million Gulfstream common shares outstanding
(3)
Includes economic value of option roll of $3.0 million
Transaction Terms
Transaction:
CenterState Banks acquisition of Gulfstream Bancshares
Consideration Mix:
65% stock / 35% cash
Consideration Per Share:
3.012 shares of CSFL stock and $14.65 cash
Implied Deal Value Per Share
(1)
:
$42.90
with price protection
Aggregate Deal Value
(1)(2)(3)
:
$76.8 million
Gulfstream Pro Forma Ownership
(1)
:
15.5%
Preferred Equity:
$7.5 million of SBLF redeemed at par value at close
Capital Raise:
No additional capital required to complete transaction
Board Seats:
Two Gulfstream Board members will join the Board of
CenterState Banks, Inc. and its bank subsidiary
Management
Top 5 employees have signed non-compete agreements
Required Approvals:
Customary regulatory approval and approval of
Gulfstream shareholders
Expected closing:
Early Q1 2014
13

14
Logical Extension of Existing Treasure Coast Presence
(1) Financial data as of 6-30-13

Gulfstream Bank Highlights
Founded –
1999
Total Assets –
$572 million
Gross Loans –
$368 million
Total Deposits –
$486 million
Earnings
Predictable core earnings
12 year average efficiency ratio of 52%
ROAA of 0.73% in 2012
Branches –
4
Headquarters in Stuart, FL
Branches in Port St. Lucie, Jupiter & Delray Beach
Employees –
81
Stable leadership that has worked together locally beginning at Barnett Banks
Top 5 market leaders have 20 to 36 years each of in-market banking experience
Top 5 market leaders have signed non-compete agreements
Niche Business Banking Focus
Professional Practices
Operating Companies
Home Owners Associations
Affluent Investors
Data as of June 30, 2013
Source: Management and SNL
15

Pro Forma Loan Composition
CSFL Loan Composition
Gulfstream Loan Composition
Pro Forma Loan Composition
(1)
(1)
Excludes purchase accounting adjustments
Data as of June 30, 2013
Source:
CSFL
Earnings
Release
dated
July
22,
2013
and
Gulfstream
management
MRQ CSFL Yield on Non-
Covered Loans: 4.86%
MRQ Gulfstream Yield on
Loans: 5.09%
33% of loans to medical and
other professional practices
16

Pro Forma Deposit Composition
CSFL Deposit Composition
Gulfstream Deposit Composition
Pro Forma Deposit Composition
(1)
(1)
Excludes purchase accounting adjustments
Data as of June 30, 2013
Source:
CSFL
Earnings
Release
dated
July
22,
2013
and
Gulfstream
management
17
MRQ CSFL Cost of Total
Deposits: 0.27%
MRQ Gulfstream Cost of
Deposits: 0.37%
27% of deposits are from
Associations
36% of deposited items are
deposited by Remote Deposit
Capture

Extraordinary Florida Markets
Palm
Beach
County
and
Martin
County
rank
7*and
9*,
respectively, in household wealth among Florida counties.
Fitch Ratings described Palm Beach County as one of the
nation's wealthiest counties, with per capita personal
income levels nearly 50% higher than state and national
averages.
With a population growth of 45%, St. Lucie County was the
fifth fastest growing county in Florida from 2000 to 2011.
Palm Beach International Airport (PBIA), centrally located
in West Palm Beach and easily accessible from I-95, is one
of the largest medium-hub airports in the United States. On
average, about 6 million people a year pass through PBIA.
The Port of Palm Beach is the fourth-busiest container port
of Florida’s 14 deepwater ports, and is the 18th-busiest
container port in the United States. In fiscal year 2010, the
port moved over 213,000 20-foot container units.
High Quality Employment Base
Sample of Top Employers in
Gulfstream Markets:
High Quality Employment Base
Sample of Top Employers in
Gulfstream Markets:
18
th
th

Financial Impact (1)(2)(3)
COST SAVINGS OF 22%, $2.6 MILLION
75% realized in 2014
100% realized in 2015
ONE-TIME MERGER RELATED EXPENSES
$5.3 million (After-tax)
NO REVENUE SYNERGIES MODELED
CDI -
1.00%, amortized over 10 years 150% DDB
SBLF REDEEMED AT PAR AT CLOSING
GROSS CREDIT MARK 5%, $18.6 MILLION
STRONG DOUBLE-DIGIT EPS ACCRETION
2014
Core
EPS
accretion
%
-
High
teens
2015
and
thereafter
EPS
accretion
%
-
Low
teens
TBV DILUTION % -
mid-single digits at close
TBV EARNBACK -
3.5 to 4 years
IRR
>20%
TCE ratio -
8.7%
Leverage ratio -
9.5%
Total risk-based ratio -
16.4%
Price to 2013 Estimated Earnings -
16x
Price to TBV Per Share
-
143%
19
(1)
Based on CSFL 20 day closing VWAP of $9.38 ended July 26, 2013
(2)
Based on 1.722 million Gulfstream common shares outstanding
(3)
Includes economic value of option roll of $3.0 million
Modeling Assumptions
Valuation Multiples
Pro Forma Capital Ratios at Close

Due Diligence Summary
CenterState’s diligence team has completed
due diligence assignments on 27 banks
since 2008. All acquired banks are
outperforming their initial marks.
460 loan files were reviewed representing
80% of the portfolio balance and 100% of
nonperforming loans balance
100%
of OREO was physically inspected
NPA’s*/Total Assets –
1.5%
GROSS CREDIT MARK 5%, $18.6M
3.7X coverage of NPL’s excluding restructured loans
1.1X coverage of NPL’s including restructured loans
$3.7M of OREO
Carried at 83% of current appraisal
Carried at 47% of UPB
*NPAs excluding restructured loans as of June 30, 2013
20
Diligence Highlights
Credit Marks

Attractive Position in Desirable Markets
(1)
Market consists of deposits in counties in which either CenterState or Gulfstream have an office;
excludes banks with total assets greater than $10 billion; FDIC branch data as of June 30, 2012
(2)
Top-tier
consolidated
regulatory
data
as
of
March
31,
2013;
excludes
banks
with
total
assets
greater than $10 billion and Miami-Dade County-based banks
(3)
Includes acquisition of Great Florida Bank
Source: SNL Financial LC
Dominant
Position
in
Our
Markets
(1)
#2 Deposit Market Share in Florida
(Excluding Miami-Dade Headquartered Banks)(2)
21
Number
Total
of FL
Deposits
Rank
Company
City
Offices
($MMs)
1
Bond Street Holdings, Inc.
(3)
Weston
67
3,276
2
CSFL -
Gulfstream Pro Forma
Davenport
59
2,478
2
USAmeriBancorp, Inc.
Clearwater
12
2,177
3
Capital City Bank Group, Inc.
Tallahassee
57
2,119
4
CenterState Banks, Inc.
Davenport
55
2,014
5
Seacoast Banking Corp. of FL
Stuart
34
1,762
6
Villages Bancorporation, Inc.
The Villages
10
1,335
7
1st United Bancorp, Inc.
Boca Raton
26
1,300
8
Tampa Bay Banking Company
Tampa
10
1,121
9
Crews Banking Corporation
Wauchula
17
1,056
10
CNLBancshares, Inc.
Orlando
16
1,017
29
Gulfstream Bancshares, Inc.
Stuart
4
465
Florida Community Bank Total
570
49,176
Number
Total
of FL
Deposits
Rank
Company
City
Offices
($MMs)
1
CSFL -
Gulfstream Pro Forma
Davenport
59
2,508
1
CenterState Banks, Inc.
Davenport
55
2,057
2
Villages Bancorporation, Inc.
The Villages
29
1,252
3
Tampa Bay Banking Company
Tampa
10
1,039
4
Old Florida Bancshares Inc.
Orlando
20
974
5
Seacoast Banking Corp. of FL
Stuart
9
749
6
USAmeriBancorp Inc.
Clearwater
14
606
7
Jacksonville Bancorp Inc.
Jacksonville
13
522
8
CNLBancshares, Inc.
Orlando
6
510
9
Bond Street Holdings, Inc.
(3)
Weston
6
507
10
TrustCo Bank Corp NY
Glenville, NY
12
488
16
Gulfstream Bancshares Inc.
Stuart
4
451
CSFL -
Gulfstream Market Total
518
22,452

Concluding Thoughts
Complements our existing Treasure Coast franchise and
provides entry into Palm Beach County with growth potential
Strategically and financially attractive combination with
significant EPS accretion and accelerated profitability metrics
Integration experience and existing local team in the market
assures low execution risk
Creates a $3 Billion asset Florida-based community bank with
significant scarcity value
22

Investor Contacts
Ernie Pinner
Chairman & Chief Executive Officer
John Corbett
Executive Vice President /
Bank -
President & Chief Executive Officer
Jim Antal
Senior Vice President & Chief Financial Officer
Steve Young
Treasurer /
Bank -
Chief Operating Officer
Holding
Company
Headquarters
in
Davenport,
FL
–
(863)
419-7775
Bank
Headquarters
in
Winter
Haven,
FL
–
(863)
294-6383
23

Appendix

Net Income
1. Pre-tax pre-provision  income  (“PTPP”) is a non-GAAP measure that is defined as income (loss) before income tax excluding
provision for loan losses, gain on sale of available for sale securities, income from FDIC loan pool impairment, OREO indemnification
income
from
FDIC,
other
credit
related
costs
including
losses
on
repossessed
real
estate
and
other
assets,
other
foreclosure
related
expenses., and non-recurring items.
Profitability Metrics –
6 Years
25
Pre-Tax Pre-Provision Income¹

26
Profitability Metrics –
5 Quarters
1. Pre-tax pre-provision  income  (“PTPP”) is a non-GAAP measure that is defined as income (loss) before income tax excluding
provision for loan losses, gain on sale of available for sale securities, income from FDIC loan pool impairment, OREO indemnification
income
from
FDIC,
other
credit
related
costs
including
losses
on
repossessed
real
estate
and
other
assets,
other
foreclosure
related
expenses., and non-recurring items.
Pre-Tax Pre-Provision Income¹
& Net Income
26

27
27
Net Interest Margin FTE
*  Excluding accelerated accretion related to ASC 310-10 loans and other adjustments

10
Efficiency Ratio
Operating Efficiencies
*
Efficiency
Ratio
is
defined
as
follows:
[non-interest
expense
–
intangible
amortization
–
credit
related
expenses
–
merger
related
expenses
–
other
nonrecurring
expense]
/
[net
interest
income
(fully
tax
equivalent)
+
non-interest
income
–
gain
on
sale
of
AFS
securities
–
FDIC
indemnification
revenue
–
nonrecurring
income]
**Efficiency
Ratio,
excluding
Correspondent
Banking
is
defined
as
follows:
[non-interest
expense
–
Correspondent
Banking
non-
interest
expense
–
intangible
amortization
–
credit
related
expenses
–
merger
related
expenses
–
other
nonrecurring
expense]
/
[net
interest
income
(fully
tax
equivalent)
–
Correspondent
Banking
net
interest
income
+
non-interest
income
–
Correspondent
Banking
non-interest
income
–
gain
on
sale
of
AFS
securities
–
FDIC
indemnification
revenue
–
nonrecurring
income]
28

Total Loans by Type
Total Loans Detail
Loan Type
No. of 
Loans
Balance
Avg Loan
Balance
Residential Real
Estate
4,191
$ 438 MM
$104,500
CRE-Owner
Occupied
733
$ 266 MM
$362,900
CRE-Non Owner
Occupied
511
$ 239 MM
$467,700
Construction,
A&D, & Land
447
$ 61 MM
$136,500
Commercial &
Industrial
1,242
$ 124 MM
$99,800
Consumer & All
Other
2,863
$ 51 MM
$17,800
Total
9,987
$ 1,179 MM
$118,100
Total
Loan
Portfolio
as
of
June
30,
2013
29
Excluding FDIC covered assets

Non-Covered Loans
30
Non-Covered Loans -
Average Yields, FTE
Non-Covered Loans –
Average Balances
New Loan Production
New Loan Production –
Average Yields
^     Adjusted for non-accrual loan upgrades
^^   Adjusted for accelerated accretion related to noncovered ASC 310-10 loans

Covered Loans –
Average Yields*
Covered Loans –
Average Balances*
Covered Loans
31
*   Adjusted for measurement period adjustment.
** Excluding accelerated accretion related to ASC 310-10 loans

32
32
FDIC
Indemnification
Asset
as
of
June
30,
2013
$30M
FDIC
Reimbursement
Write-Off
$38M
Collect from Borrower
(or sale of OREO)
$59M
Expected reimbursements from FDIC for 80% of expected losses
$30M
Previously expected reimbursements for previously expected losses no longer expected
$89M
Total indemnification assets
Written off over the lesser of the remaining expected life of the related loan pool(s) or the
remaining term of the related loss share agreement(s).

33
Indemnification Asset (“IA”) amortization and its relationship
with FDIC covered loan interest income accretion
33
Interest Income and Amortization Expense
Yields on Covered Loans and Indemnification Asset
8 Quarter Average =
4.70%

Credit Trends Improving
34
NPAs / Loans & OREO (%)
NPA Inflows Slowing Down
Source: SNL Financial
Nonperforming assets include  loans 90 days or more past due, nonaccrual loans, and OREO/ORA; and exclude FDIC covered assets
Southeastern peers include ABCB, PNFP, RNST, SCBT, UBSH and UCBI.
Florida peers include all banks headquartered in Florida with total assets between $500 million and $5 billion.

35
35
ALLL –
Non-Covered Loans
FAS 5 Component
Total ALLL –
Non-Covered Loans
Loan Balance
ALLL
Loans (Fas 5)
$1,140,066
$21,200
1.86%
Impaired Loans (Fas 114)
38,693
600
1.55%
Total Non-Covered Loans
$1,178,759
$21,800
1.85%
ALLL as a % of NPLs=
88%

Total  Deposits by Type
Total Deposits Detail
23
Total
Deposit
Portfolio
as
of
June
30,
2013
Deposit Type
No. of 
Deposits
Balance
Avg Deposit
Balance
Demand
Deposits
36,817
$ 556 MM
$15,100
Now Accounts
49,732
$ 457 MM
$9,200
Savings
Deposits
17,965
$ 241 MM
$13,400
Money Market
3,178
$ 313 MM
$98,500
Certificates of
Deposits
12,093
$ 410 MM
$33,900
Total
119,785
$ 1,977 MM
$16,500
36

Total Risk-Based, Tier 1 Leverage & Tangible Common Equity Ratios
Two successful capital raises in 2009 and 2010 totaling $114 million
First publicly traded bank in Florida to successfully complete a capital raise during financial crisis in 2009
Over
50
“Blue
Chip”
active
institutional
investors
–
Average
daily
volume
(3m)
approximates
74,000
shares
Institutions committed to capitalize additional FDIC accretive transactions
Capital
37

Favorable Valuation Compared with Recent Transactions
Bank and thrift M&A transactions with disclosed Price / TBV per share greater than 100% and deal
values between $50 million and $500 million announced since January 1, 2011; excludes targets
with NPAs / Assets > 4.00%
Source: SNL Financial LC
Price to Tangible Book Value –
M&A Transactions Announced Since January 1, 2011
38

CenterState Bank Corp Reports