As filed with the Securities and Exchange Commission on May 19, 2005.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
fair
value
U.S. Treasury securities
Obligations of U.S. government agencies
Mortgage backed securities
Municipal securities
Federal Home Loan Bank stock
Federal Reserve Bank stock
Other equity investment
CenterState Banks of Florida, Inc.
(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 Number) |
1101 First Street South, Suite 202, Winter Haven, Florida 33880 (863) 291-3900
(Address, including zip code and telephone number, including area code, of registrants principal executive offices)
Ernest S. Pinner
Chairman, President and Chief Executive Officer
CenterState Banks of Florida, Inc.
1101 First Street South, Suite 202, Winter Haven, Florida 33880
(Name, address, including zip code and telephone number, including area code, of agent for service)
Copy to:
John P. Greeley, Esquire Smith Mackinnon, PA 255 South Orange Avenue Suite 800 Orlando, Florida 32801 (407) 843-7300 Facsimile (407) 843-2448 |
Randolph A. Moore NT FACE="Times New Roman" SIZE="2"> |
| 100 | ||||||||||
$ | 95,326 | $ | 208 | $ | (177 | ) | $ | 95,357 | |||||
F-22
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
The amortized cost and estimated fair value of investment securities available for sale at December 31, 2004, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized cost |
Estimated fair value | |||||
Investment securities available for sale |
||||||
Due in one year or less |
$ | 78,678 | $ | 78,406 | ||
Due after one year through five years |
109,042 | Alston & Bird LLP One Atlantic Center 1201 W. Peachtree St. Atlanta, GA 30309 (404) 881-7000 Facsimile: (404) 881-7777 |
Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨
CALCULATION OF REGISTRATION FEE
Title of shares to be registered |
Amount to be registered |
Proposed maximum offering price per share(1) |
Proposed maximum aggregate offering price(1) |
Amount of registration fee | ||||
Common Shares, $.01 par value |
1,150,000 shares(2) | $37.65 | 108,128 | |||||
Due after five years through fifteen years |
3,094 | 3,044 | ||||||
Due after fifteen years through thirty years |
635 | 635 | ||||||
Federal Home Loan Bank stock |
413 | 413 | ||||||
Federal Reserve Bank stock |
674 | 674 | ||||||
Other equity investment |
100 | 100 | ||||||
$ | 192,636 | $ | 191,400 | |||||
At December 31, 2004, the Company had $35,827 (estimated fair value) in investment securities pledged to the Treasurer of the State of Florida as collateral on public fund deposits and for other purposes required or permitted by law. Repurchase agreements are secured by U.S. Treasury securities and Government Agency securities with fair values of $41,188 and $27,939 at December 31, 2004 and 2003, respectively.
Proceeds from sales of investment securities available for sale were $229, $999 and $5,049 for the years ending December 31, 2004, 2003 and 2002, respectively. Gross realized (losses) gains on sales of investment securities available for sale during 2004, 2003 and 2002 were $0, ($1) and $21, respectively.
The following tables show the Companys 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 December 31, 2004 and 2003.
December 31, 2004 | ||||||||||||||||||
less than 12 months |
12 months or more |
Total | ||||||||||||||||
$43,297,500 | $5,097 |
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933. |
(2) | Includes an aggregate of 150,000 shares to cover overallotments, if any, pursuant to the overallotment option granted to the Underwriters. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not seeking an offer to buy the securities in any state or jurisdiction where the offer or sale is not permitted.
Subject to completion, dated May 19, 2005
PRELIMINARY PROSPECTUS
1,000,000 Shares
Common Stock
We are offering 1,000,000 shares of our common stock, par value $0.01 per share. The public offering price is $ per share.
Our common stock is currently quoted and traded on The Nasdaq National Market under the symbol CSFL. The last reported sale price of our common stock on The Nasdaq National Market on May 18, 2005 was $37.65 per share.
Investing in our common stock involves risks. See Risk Factors beginning on page 9 to read about factors you should consider before you make your investment decision.
Per Share |
Total | |||||
Public offering price |
$ | $ | ||||
Underwriting discount |
$ | $ | ||||
Proceeds to us, before expenses |
$ | $ |
fair value
unrealized
losses
unrealized
losses
unrealized
losses
U.S. Treasury securities
Obligations of U.S. government agencies
Mortgage backed securities
Total temporarily impaired securities
These securities are not savings accounts, deposit accounts or other obligations of our banking subsidiaries and are not insured or guaranteed by the Federal Deposit Insurance Corporations Bank Insurance Fund, Savings Association Insurance Fund, or any other government agency.
We have granted the underwriters an option to purchase up to 150,000 additional shares of common stock to cover over-allotments, if any. The underwriters can exercise this option at any time within 30 days after the offering.
The underwriters expect to deliver the shares to purchasers on or about , 2005.
Keefe, Bruyette & Woods | SunTrust Robinson Humphrey |
The date of this prospectus is , 2005
Page | ||||||||||||||||||
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15 | ||||||||||||||||||
16 | ||||||||||||||||||
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Managements Discussion and Analysis of Financial Condition and Results of Operation |
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48 | ||||||||||||||||||
54 | ||||||||||||||||||
Beneficial Ownership of Management and Principal Shareholders |
55 | |||||||||||||||||
57 | ||||||||||||||||||
60 | ||||||||||||||||||
$ | 963 | $ | 21,059 | $ | 282 | $ | 171,885 | $ | 1,245 | |||||||||
December 31, 2003 | ||||||||||||||||||
less than 12 months |
12 months or more |
Total | ||||||||||||||||
fair value |
unrealized losses |
fair value |
unrealized losses |
fair value |
unrealized losses | |||||||||||||
U.S. Treasury securities |
$ | 13,505 | $ | 7 | $ | | $ | | $ | 13,505 | $ | 7 | ||||||
Obligations of U.S. government agencies |
1,975 | 25 | | | 60 | |||||||||||||
60 | ||||||||||||||||||
60 | ||||||||||||||||||
F-1 |
ABOUT THIS PROSPECTUS
You should rely only on the information contained in this document or incorporated by reference in this prospectus. See Documents Incorporated by Reference. We have not authorized anyone to provide you with different information. This document may only be used where it is legal to sell these securities. The information contained in this document is current only as of its date, regardless of the time of delivery of this prospectus or of any sales of shares of our common stock.
In this prospectus we rely on and refer to information and statistics regarding the banking industry and the Florida market. We obtained this market data from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.
As used in this prospectus, the terms we, us, our, CenterState, and Company mean CenterState Banks of Florida, Inc. and its subsidiaries on a consolidated basis (unless the context indicates another meaning); the term the Banks means our four subsidiary banks: First National Bank of Osceola County, CenterState Bank West Florida, N.A., First National Bank of Polk County, and CenterState Bank of Florida (unless the context indicates another meaning).
This summary highlights specific information contained elsewhere or incorporated by reference in this prospectus. This summary is not complete and does not contain all of the information you should consider before investing in our common stock and is qualified in its entirety by the more detailed information included or incorporated by reference in this prospectus. To understand this offering fully, you should carefully read this entire prospectus, including the Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations sections and the documents incorporated by reference.
Our Company
We are a bank holding company headquartered in Winter Haven, Florida. We operate 25 banking offices through our four wholly owned banking subsidiaries located in the Central Florida marketplace, as indicated on the map on the inside front cover of this prospectus. Through our subsidiary banks, we offer a range of lending services, including real estate, consumer and commercial loans to both individuals and small to medium-sized businesses located in our markets. We complement our lending operations with an array of retail deposit products. We offer quality relationship banking services to customers whose banking needs are not large enough to attract significant attention from our super-regional and national competitors. We believe our focus on customer relationships allows us to compete effectively within our markets and will provide us with a competitive advantage as we expand both within our existing markets and into new markets.
We were organized as a bank holding company in September 1999 and, in June 2000, closed three separate merger transactions resulting in First National Bank of Osceola County, CenterState Bank West Florida, N.A., (formerly known as Community National Bank of Pasco County) and First National Bank of Polk County becoming separate wholly owned subsidiaries of CenterState. In December 2002, we acquired CenterState Bank of Florida, which became our fourth wholly owned subsidiary bank. Substantially all of our current management team has been in place since 1999. From December 31, 2000 to December 31, 2004, we have achieved strong growth through the acquisitions of our subsidiary banks and our de novo branching strategy. Specifically, we have:
| increased our total consolidated assets from approximately $310.7 million to approximately $753.8 million; |
| increased our total consolidated deposits from approximately $280.2 million to approximately $659.6 million; |
VALIGN="bottom"> | 1,975 | 25 | ||||||||||||||||
Mortgage backed securities |
15,679 | 145 | | | 15,679 | 145 | ||||||||||||
Total temporarily impaired securities |
$ | 31,159 | $ | 177 | $ | | $ | | $ | 31,159 | $ | 177 | ||||||
F-23
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
U.S. Treasury securities and Obligations of U.S. Government agencies: The unrealized losses on investments in U.S. Treasury securities and Obligations of U.S Government agencies were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.
Mortg
| expanded our branch network from 15 locations to 25 locations; and |
| successfully integrated the acquisitions of all of our banking subsidiaries. |
We have been able to achieve this significant growth without sacrificing credit quality. Our ratio of non-performing assets to total assets was 0.27% and 0.17% for the years ended December 31, 2003 and 2004, respectively. Our ratio of net charge-offs to average loans was 0.12% and 0.07% for the years ended December 31, 2003 and 2004, respectively.
At March 31, 2005, we had total consolidated assets of approximately $789.8 million, total consolidated deposits of approximately $680.5 million, total consolidated net loans of approximately $455.7 million and total consolidated shareholders equity of approximately $58.2 million. Additional information about us is included in this prospectus and in documents incorporated by reference in this prospectus. See Business, Where You Can Find More Information and Documents Incorporated by Reference.
1
Market Areas and Growth Strategy
We currently conduct business through 25 branches in our market areas of Citrus, Hernando, Orange, Osceola, Pasco, Polk and Sumter Counties, Florida. Our markets are located in Central Florida and are comprised of residential communities exhibiting strong growth characteristics within our seven county footprint. The strength of the Central Florida economy depends significantly upon agriculture, tourism, real estate, construction and Central Floridas attractiveness as a retirement area. The seven counties in which we operate had a population of approximately 2.5 million as of December 31, 2004 and are some of the fastest growing counties in Florida based on population growth. According to 2004 data from the U.S. Census Bureau, the projected population growth in our markets from 2004 to 2009 is expected to be 12.75% versus 9.33% for the state of Florida and a U.S. average of 5.25%. Based upon FDIC data as of June 30, 2004, our Banks total deposits ranked 8th among financial institutions in our market areas, representing approximately 2.0% of the total deposits in our market.
We have a decentralized, community banking strategy that emphasizes responsive and personalized service to our customers. Due to the consolidation of small and medium-sized financial institutions in our markets, we believe there is a significant opportunity for a community-focused bank to provide a full range of financial services to small and middle-market commercial and retail customers. In addition, consolidation of the Florida banking market has dislocated experienced and talented management and lending personnel. As a result, we believe we have a substantial opportunity to attract experienced management, loan officers and banking customers both within our current markets and other markets in which we might expand in Central Florida.
We intend to achieve our primary goal of maximizing long term returns to stockholders by focusing on the following objectives:
| Emphasize Relationship Banking. We believe customers still want to do business with a person and they want to feel they are important to us. To accomplish this objective, we emphasize to our employees the importance of delivering exemplary customer service and seeking opportunities to build further relationships with our customers. Our goal is to compete by relying on the strength of our customer service and relationship banking approach. Additionally, our ability to respond rapidly to customers needs helps us solidify relationships and build customer loyalty. |
| Maintain Local Decision Making. Our subsidiary banks each operate autonomously under our corporate umbrella. As a result, each bank has its own board of directors and management comprised of persons known in the local community in which each bank operates, strengthening our ability to foster local relationships with individuals and businesses. We plan to maintain our local presence and decision making processes as we expand and grow in our existing markets and additional markets throughout Central Florida. |
|
(3) Loans
Major categories of loans included in the loan portfolio as of December 31, 2004 and 2003 are:
2
Table of Contents
Recent Developments
First Quarter Results
On April 25, 2005, we reported our results of operations for the quarter ending March 31, 2005. As reported, our net income for the first quarter of 2005 was $1,262,000 compared to $1,753,000 for the same period in 2004. Diluted earnings per share for the first quarter of 2005 were $0.30 compared to $0.51 for the first quarter of 2004. Included in last years quarterly earnings was a $1,844,000 ($1,150,000 after tax) gain from the sale of two of our branches. Excluding the gain on sale of the branches, last years quarterly earnings would be $603,000 with diluted earnings per share equal to $0.18. The quarterly per share comparison reflects a 22.7% increase in average diluted shares outstanding to 4,216,408 primarily as a result of the 675,627 shares sold in our shareholders rights offering that closed in June 2004.
Our total revenue, defined as net interest income and non-interest income, was $7,614,000 for the first quarter of 2005 compared to the $7,983,000 for the first quarter of 2004. Included in total revenue for the first quarter of 2004 was the $1,844,000 gain from the sale of the two branches discussed above. Total revenue for the first quarter of 2004 reduced by the gain on sale of those branches equals $6,139,000, which, when compared to total revenue in the first quarter of 2005, results in a quarter to quarter increase of $1,475,000, or 24.0%. Our net interest income rose 27.9% to $6,273,000, reflecting a 25.1% increase in average earning assets over the first quarter of 2004 and an 8 basis point increase in the net interest margin to 3.58% over the same period. Non-interest income for the first quarter of 2005 was $1,341,000 compared to the $3,078,000 reported for the first quarter of 2004. Non-interest income for the first quarter of 2004 less the gain on sale of branches of $1,844,000 equals $1,234,000, which, when compared to the first quarter of 2005, results in a quarter to quarter increase of $107,000, or 8.7%.
Our total assets at quarter end of approximately $789.8 million were up 25.3% from approximately $630.2 million at March n origination fees, net |
536 | 527 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans |
441,005 | 413,898 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Allowance for loan losses |
5,685 | 4,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total net loans |
$ | 435,320 | $ | 409,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of information regarding nonaccrual loans, impaired loans and other real estate owned at December 31, 2004 and 2003:
December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 |
2003 | |||||||||||||||||||||||||||||||||||||||
Nonaccrual loans |
$ | 890 | $ | 1,078 | ||||||||||||||||||||||||||||||||||||
Recorded investment in impaired loans |
$ | 1,053 | $ | 368 | ||||||||||||||||||||||||||||||||||||
Allowance for loan losses related to impaired loans |
$ | 406 | $ |
3
Table of ContentsDuring the first quarter, we recognized $29,000 in net charge-offs, representing 0.03% of average loans on an annualized basis. Our first quarter 2005 provision expense for loan losses totaled $285,000. Quarter-end nonperforming assets were 0.18% of our total assets. The allowance for loan losses covered nonperforming assets by 416%.
Corporate Information
Our headquarters are located at 1101 First Street South, Suite 202, Winter Haven, Florida 33880, and our telephone number is (863) 293-2600.
4
Table of ContentsTHE OFFERING
Risk factors
Prior to making an investment decision, a prospective purchaser should consider all of the information set forth in this prospectus and should evaluate the statements set forth in Risk Factors beginning on Page 9.
5
Table of Contents132 | ||||||||||||||||||||||||||||||||||||
Other real estate owned |
$ | 384 | $ | 282 | ||||||||||||||||||||||||||||||||||||
F-24
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
Interest income not recognized on nonaccrual loans |
Interest Income recognized on impaired loans |
Average recorded investment in impaired loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For years ended December 31: |
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2004 |
$ | 40 | $ | 48 | $ | 1,103 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2003 |
$ | 10 | $ | 22 | $ | 333 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2002 Selected Consolidated Financial Data
You should read the following selected consolidated financial data with our consolidated financial statements and notes, and Managements Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this prospectus. The information for the years ended December 31, 2000 through 2004 is derived in part from, and should be read together with, our audited consolidated financial statements and notes thereto incorporated by reference into this prospectus. The information for the three months ended March 31, 2005 and 2004 is unaudited. However, in the opinion of our management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the results of operations for the unaudited periods have been made. The selected operating data for the three months ended March 31, 2005 are not necessarily indicative of the results that might be expected for the year.
Certain principal stockholders, directors and officers and their related interests were indebted to the Company as summarized below at December 31, 2004, 2003 and 2002:
All such loans were made in the ordinary course of business. At December 31, 2004, 2003 and 2002, certain principal stockholders, directors and officers of the Company and their related interests had $5,272, $3,864 and $3,839, respectively, available in lines of credit.
Changes in the allowance for loan losses for the years ended December 31, 2004, 2003 and 2002, are as follows:
F-25
Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
(4) Bank Premises and Equipment
A summary of bank premises and equipment as of December 31, 2004 and 2003, is as follows:
(5) Deposits
A detail of deposits at December 31, 2004 and 2003 is as follows:
The following table presents the amount of certificate accounts at December 31, 2004, maturing during the periods reflected below:
F-26
Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
A summary of interest expense on deposits for the years ended December 31, 2004, 2003 and 2002, is as follows:
The Company had deposits from certain principle shareholders, directors and officers and their related interests of approximately $10,274, and $14,207 at December 31, 2004 and 2003, respectively.
(6) Securities sold under agreements to repurchase
The Companys subsidiary banks enter into borrowing arrangements with their retail business customers by agreements to repurchase (repurchase agreements) under which the banks pledge investment securities owned and under its control as collateral against the one-day borrowing arrangement.
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3,373,316 | 3,750,158 | 3,364,824 | 2,823,213 | 2,817,240 | 2,811,651 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted weighted average shares outstanding |
4,216,408 | 3,436,736 | 3,828,154 | 3,428,819 | 2,878,770 | 2,839,914 | 2,826,704 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE SHEET DATA: |
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Assets |
$ | 789,813 | $ | 630,162 | $ | 753,779 | $ | 608,896 | $ | 494,800 | At December 31, 2004 and 2003, the Company had $24,627 and $17,465 in repurchase agreements with weighted average interest rates of 1.56% and 0.28%, respectively. Repurchase agreements are secured by U.S. Treasury securities and Government Agency securities with fair values of $41,188 and $27,939 at December 31, 2004 and 2003, respectively.
Repurchase agreements averaged $26,110, $15,562 and $4,185 for the years ended December 31, 2004, 2003 and 2002, respectively. The maximum amount outstanding at any month-end for the corresponding periods was $35,167, $24,366 and $11,486, respectively. Total interest expense paid on repurchase agreements for the years ending December 31, 2004, 2003 and 2002, was $193, $73 and $40, respectively.
(7) Note Payable
During the quarter ended June 30, 2003, the Company entered into an unsecured borrowing facility with a larger regional bank. The facility is a two year $2,400 line of credit with a floating interest rate of LIBOR +1.75%. The facility was paid off during September 2003 using funds from the corporate debenture issued on September 22, 2003 described below.
(8) Corporate debenture
The Company formed CenterState Banks of Florida Statutory Trust I (the Trust) for the purpose of issuing trust preferred securities. On September 22, 2003, the Company issued a floating rate corporate debenture in the amount of $10 million. The Trust used the proceeds from the issuance of a trust preferred security to acquire the corporate debenture of the Company. The trust preferred security essentially mirrors the corporate debenture, carrying a cumulative preferred dividend at a variable rate equal to the interest rate on the corporate debentue (three month LIBOR plus 305 basis points). The rate is subject to change on a quarterly basis. The rate in effect
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
during the quarter ended December 31, 2004 was 5.025%. The corporate debenture and the trust preferred security each have 30-year lives. The trust preferred security and the corporate debenture are callable by the Company or the Trust, at their respective option after five years, and sooner in specific events, subject to prior approval by the Federal Reserve Board, if then required. Related loan origination costs of $188 were capitalized and are being amortized to interest expense over a five year period. The Company has treated the trust preferred security as Tier 1 capital up to the maximum amount allowed, and the remainder as Tier 2 capital for federal regulatory purposes.
The Company used a portion of the $10,000 of capital received to pay down a $2,150 short-term borrowing facility. The Company intends to use the remainder to capitalize the future growth of its subsidiary banks.
(9) Income Taxes
The provision for income taxes at December 31, 2004, 2003 and 2002, consists of the following:
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2004 and 2003, are presented below:
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Table of Contents
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.
A reconciliation between the actual tax expense and the expected tax expense (computed by applying the U.S. federal corporate rate of 34 percent to earnings before income taxes) is as follows:
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
(10) Rent
The following is a schedule of future minimum annual rentals under the noncancellable operating leases of the Companys facilities:
Rent expense for the years ended December 31, 2004, 2003 and 2002, was $335, $304 and $195, respectively, and is included in occupancy expense in the accompanying consolidated statements of operations.
(11) Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:
Cash and cash equivalents The carrying amount of cash and cash equivalents approximates fair value due to short-term maturity and market interest rates earned.
Investments The Companys investment securities available for sale represents investments in U.S. Treasury securities, U.S. Government agency securities, mortgage backed securities, and municipal securities. The Companys equity investments at year end represents stock investments in the Federal Reserve Bank, Federal Home Loan Bank and other equity. The stocks are not publicly traded and the carrying amount was used to estimate the fair value. The fair value of the U.S. Treasury securities, U.S. Government agency securities, mortgage backed securities and municipal securities was estimated based on quoted market prices.
Loans For variable rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for commercial real estate, commercial and consumer loans other than variable rate loans are estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values of impaired loans are estimated using discounted cash flow analysis or underlying collateral values, where applicable.
Deposits The fair values disclosed for non-interest bearing demand deposits are, by definition, equal to the amount payable on demand (that is their carrying amounts). The carrying amounts of variable rate, money market accounts and fixed term certificates of deposit (CDs) approximate their fair value at the reporting date due to the fact they reprice frequently. Fair values for fixed rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Repurchase agreements The carrying amount of the repurchase agreements approximate their fair value due to the short-term nature of the agreement and the market interest rates charged.
Corporate debenture Because it reprices quarterly and has no significant change in credit risk, fair value is based on carrying value.
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
The following tables present the carrying amounts and estimated fair values of the Companys financial instruments.
(12) Regulatory Capital
The Company and the Banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets. Management believes, as of December 31, 2004, that the Company meets all capital adequacy requirements to which it is subject.
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES |
1.29 | % | 1.30 | % | 1.29 | % | 1.17 | % | 1.22 | % | 1.26 | % | 1.30 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses to non-performing assets |
416 | % | 391 | % | 436 | % | 296 | % | 274 | % | 467 | % | 256 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-performing assets to total assets |
0.18 | % | 0.21 | % | 0.17 | % | 0.27 | % | 0.30 | % | 0.19 | % | 0.34 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER DATA: |
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Banking locations(5) |
25 | 23 | 25 | Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
As of December 31, 2004, the most recent notification from the Office of Comptroller of the Currency and the FDIC categorized the Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institutions category.
A summary of actual, required, and capital levels necessary to be considered well-capitalized for the Company as of December 31, 2004 and 2003, are presented in the table below.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Certain financial information included in our discussion of recent developments, summary consolidated financial data and selected consolidated financial data is determined by methods other than in accordance with GAAP. These non-GAAP financial measures are tangible book value per share, tangible equity to tangible assets, return on average tangible equity, return on average tangible assets, average tangible equity to average tangible assets, and earning assets. Our management uses these non-GAAP measures in its analysis of our performance.
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These disclosures should not be viewed as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures which may be presented by other companies. The following reconciliation table provides a more detailed analysis of these non-GAAP performance measures.
(13) Dividends
The Company declared and paid cash dividends of $933, $740 and $565 during the years ended December 31, 2004, 2003 and 2002, respectively. Banking regulations limit the amount of dividends that may be paid by the subsidiary banks to the Company without prior approval of the Banks regulatory agency. At December 31, 2004 dividends from the subsidiary banks available to be paid to the Company, without prior approval of the Banks regulatory agency, was $6,419, subject to the Banks meeting or exceeding regulatory capital requirements.
(14) Stock Option Plans
The Company has authorized 365,000 common shares for employees of the Company under an incentive stock option and non-statutory stock option plan (the 1999 Plan). Options are granted at fair market value of the underlying stock at date of grant. Each option expires ten years from the date of grant. Options become 25% vested immediately as of the grant date and will continue to vest at a rate of 25% on each anniversary date thereafter. At December 31, 2004, there were 87,480 shares available for future grants. In addition to the 1999 Plan, the Company has assumed and converted the stock option plans of the four subsidiary Banks consistent with the terms and conditions of their respective merger agreements. These options are all vested and exercisable. At December 31, 2004, they represented exercisable options on 74,063 shares of the Companys common stock.
In 2004, the Companys shareholders authorized an Employee Stock Purchase Plan (ESPP). The number of shares of common stock for which options may be granted under the ESPP is 200,000, which amount shall be increased on December 31 of each calendar year for an amount equal to 6% of the increase in the outstanding shares of common stock from January 1 of each calendar year (from February 27, 2004 for the 2004 calendar year). During July 2004, the Company granted options on 30,607 shares of common stock pursuant to the ESPP. The options vest at the date of grant. The exercise price is $20.31 per share and the options expire on June 30, 2005.
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Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
A summary of the status of the Companys stock option plans at December 31, 2004, 2003 and 2002, and changes during the years ended on those dates is presented below:
Under the fair value method, stock option expense is measured on the date of grant using the Black-Scholes option pricing model with market assumptions. Option pricing models require the use of highly subjective assumptions, including expected stock price volatility, which when changed can materially affect fair value estimates. Accordingly, the model does not necessarily provide a reliable single measure of the fair value of the Companys stock options. The Company used the following variables: ten year U.S. government treasury rates for the risk free rate at the date of grant; dividend yield was calculated by dividing the dividend paid during the year of grant by the fair value of the underlying stock as of the grant date; expected volatility was calculated as of the grant date, ranging from approximately 20.3 through 31.5; and an expected life of 10 years.
The following table summarizes information about stock options outstanding at December 31, 2004:
$ |
13.54 | 163,394 | $ | 13.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$16.35 $24.53 |
59,000 | 101 months | $ | 19.48 | 29,375 | $ | 19.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$24.54 $31.00 |
110,000 | 119 months | $ | 31.00 | 27,500 | $ | 31.00 |
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CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
(15) Employee Benefit Plan
Substantially all of the subsidiary banks employees are covered under the Companys 401(k) compensation and incentive plan. Employees are eligible to participate in the plan after completing six months of continuous employment. The Company contributes an amount equal to a certain percentage of the employees contributions based on the discretion of the Board of Directors. In addition, the Company may also make additional contributions to the plan each year, subject to profitability and other factors, and based solely on the discretion of the Board of Directors. For the years ended December 31, 2004, 2003 and 2002, the Companys contributions to the plan were $470, $378 and $261, respectively, which are included in salary and benefits on the statement of operations.
(16) Parent Company Only Financial Statements
Condensed financial statements of CenterState Banks of Florida, Inc. (parent company only) follow:
Condensed Balance Sheet
December 31, 2004 and 2003
2004 |
2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks |
$ | 10,602 | $ | 4,545 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Table of Contents
An investment in our common stock involves risks. You should carefully consider the risks described below in conjunction with the other information in this prospectus and information incorporated by reference in this prospectus, including our consolidated financial statements and related notes, before investing in our common stock. If any of the following risks or other risks which have not been identified or which we may believe are immaterial or unlikely, actually occur, our business, financial condition and results of operations could be harmed. This could cause the price of our stock to decline, and you may lose part or all of your investment. This prospectus contains forward-looking statements that involve risks and uncertainties, including statements about our future plans, objectives, intentions and expectations. Many factors, including those described below, could cause actual results to differ materially from those discussed in forward-looking statements.
Risks Related to Our Business
Our business strategy includes the continuation of significant growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively
We intend to continue pursuing a significant growth strategy for our business. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in significant growth stages of development. We cannot assure you we will be able to expand our market presence in our existing markets or successfully enter new markets or that any such expansion will not adversely affect our results of operations. Failure to manage our growth effectively could have a material adverse effect on our business, future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement our business strategy. Also, if our growth occurs more slowly than anticipated or declines, our operating results could be materially adversely affected.
Our ability to successfully grow will depend on a variety of factors including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth. While we believe we have the management resources and internal systems in place to successfully manage our future growth, there can be no assurance growth opportunities will be available or growth will be successfully managed.
Our business is subject to the success of the local economies where we operate
Our success significantly depends upon the growth in population, income levels, deposits and housing starts in our primary and secondary markets. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may not succeed. Adverse economic conditions in our specific market area could reduce our growth rate, affect the ability of our customers to repay their loans to us and generally affect our financial condition and results of operations. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. Moreover, we cannot give any assurance we will benefit from any market growth or favorable economic conditions in our primary market areas if they do occur.
Any adverse market or economic conditions in the State of Florida may disproportionately increase the risk our borrowers are unable to make their loan payments. In addition, the market value of the real estate securing loans as collateral could be adversely affected by unfavorable changes in market and economic conditions. As of March 31, 2005, approximately 75% of our loans held for investment were secured by real estate. Of this amount, approximately 54% were commercial real estate loans, 38% were residential real estate loans and 8% were construction and development loans. Any sustained period of increased payment delinquencies, foreclosures or losses caused by adverse market or economic conditions in the State of Florida could adversely affect the value of our assets, our revenues, results of operations and financial condition.
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Table of ContentsWe may face risks with respect to future expansion
We may acquire other financial institutions or parts of those institutions in the future and we engage in de novo branch expansion. We may also consider and enter into new lines of business or offer new products or services. We also may receive future inquiries and have discussions with potential acquirors of us. Acquisitions and mergers involve a number of risks, including:
We may incur substantial costs to expand, and we can give no assurance such expansion will result in the levels of profits we seek. There can be no assurance integration efforts for any future mergers or acquisitions will be successful. Also, we may issue equity securities, including common stock and securities convertible into shares of our common stock in connection with future acquisitions, which could cause ownership and economic dilution to our current shareholders and to investors purchasing common stock in this offering. There is no assurance that, following any future mergers or acquisition, our integration efforts will be successful or our company, after giving effect to the acquisition, will achieve profits comparable to or better than our historical experience.
If the value of real estate in our core Florida market were to decline materially, a significant portion of our loan portfolio could become under-collateralized, which could have a material adverse effect on us
With most of our loans concentrated in Central Florida, a decline in local economic conditions could adversely affect the values of our real estate collateral. Consequently, a decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are geographically diverse.
In addition to the financial strength and cash flow characteristics of the borrower in each case, the Banks often secure loans with real estate collateral. At March 31, 2005, approximately 75% of the Banks loans have real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.
An inadequate allowance for loan losses would reduce our earnings
The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the value and marketability of the collateral for the loan. Management maintains an
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Common stock |
41 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital |
39,545 | 26,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retained earnings |
18,849 | 15,409 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income |
(771 | ) | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total shareholders equity |
57,664 | 41,963 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 68,033 | $ | 52,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-34
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
Condensed Statements of Operations
Years ended December 31, 2004, 2003 and 2002
top:0px;margin-bottom:0px"> | ||||||||||||
2004 |
2003 |
2002 |
||||||||||
Other income |
$ | 8 | $ | | $ | 8 | ||||||
Interest expense |
496 | 144 | | |||||||||
Operating expenses |
1,174 | 725 | 631 | |||||||||
Loss before equity in net earnings of subsidiaries |
(1,662 | ) | (869 | ) | (623 | ) | ||||||
Equity in net earnings of subsidiaries (net of income tax expense of $3,187, $1,865 and $1,635 at December 31, 2004, 2003 and 2002, respectively) |
5,415 | 3,171 | 2,763 | |||||||||
We compete with these institutions both in attracting deposits and in making loans. In addition, we have to attract our customer base from other existing financial institutions and from new residents. Many of our competitors are well-established, larger financial institutions. While we believe we can and do successfully compete with these other financial institutions in our primary markets, we may face a competitive disadvantage as a result of our smaller size, lack of geographic diversification and inability to spread our marketing costs across a broader market. Although we compete by concentrating our marketing efforts in our primary markets with local advertisements, personal contacts, and greater flexibility and responsiveness in working with local customers, we can give no assurance this strategy will be successful.
We are subject to extensive regulation that could limit or restrict our activities
We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies. Our compliance with these regulations is costly and restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capitalization guidelines established by our regulators, which require us to maintain adequate capital to support our growth.
The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.
The Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the Securities and Exchange Commission and Nasdaq that are now applicable to us, have increased the scope, complexity and cost of corporate governance, reporting and disclosure practices. As a result, we may experience greater compliance costs.
Our directors and executive officers own a significant portion of our common stock
Our directors and executive officers, as a group, beneficially owned approximately 22% of our outstanding common stock as of March 31, 2005. As a result of their ownership, the directors and executive officers will have the ability, by voting their shares in concert, to significantly influence the outcome of all matters submitted to our shareholders for approval, including the election of directors.
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Table of ContentsWe are dependent upon the services of our management team
Our future success and profitability is substantially dependent upon the management and banking abilities of our senior executives. We believe that our future results will also depend in part upon our attracting and retaining highly skilled and qualified management and sales and marketing personnel. Competition for such personnel is intense, and we cannot assure you that we will be successful in retaining such personnel. We also cannot guarantee that members of our executive management team will remain with us. Changes in key personnel and their responsibilities may be disruptive to our business and could have a material adverse effect on our business, financial condition and results of operations.
Our profitability could be adversely affected if we are unable to promptly deploy the capital raised in the offering
We may not be able to immediately deploy all of the capital raised in the offering. Investing the offering proceeds in securities until we are able to deploy the proceeds will provide lower margins than we generally earn on loans, potentially adversely affecting shareholder returns, including earnings per share, return on assets and return on equity.
Risks Related to An Investment in Our Common Stock
Future capital needs could result in dilution of your investment
Our board of directors may determine from time to time there is a need to obtain additional capital through the issuance of additional shares of our common stock or other securities. These issuances would dilute the ownership interests of the investors in the offering in us and may dilute the per share book value of our common stock. New investors may also have rights, preferences and privileges senior to our current shareholders which may adversely impact our current shareholders.
The trading volume in our common stock has been low and the sale of substantial amounts of our common stock in the public market could depress the price 000000"> |
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Net income before income tax benefit |
3,753 | 2,302 | 2,140 | |||||||||
Income tax benefit |
(620 | ) | (324 | ) | (229 | ) | ||||||
Net income |
$ | 4,373 | $ | 2,626 | $ | 2,369 | ||||||
Condensed Statements of Cash Flows
Years ended December 31, 2004, 2003 and 2002
2004 |
2003 |
2002 |
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Cash flows from operating activities: |
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Our common stock is thinly traded. The average daily trading volume of our shares on The Nasdaq National Market during 2004 was approximately 1,100 shares. Thinly traded stock can be more volatile than stock trading in an active public market. We cannot predict the extent to which an active public market for our common stock will develop or be sustained after this offering. In recent years, the stock market has experienced a high level of price and volume volatility, and market prices for the stock of many companies have experienced wide price fluctuations that have not necessarily been related to their operating performance. Therefore, our shareholders may not be able to sell their shares at the volumes, prices, or times that they desire.
We cannot predict the effect, if any, that future sales of our common stock in the market, or availability of shares of our common stock for sale in the market, will have on the market price of our common stock. We therefore can give no assurance sales of substantial amounts of our common stock in the market, or the potential for large amounts of sales in the market, would not cause the price of our common stock to decline or impair our ability to raise capital through sales of our common stock. Upon completion of this offering, we expect to have approximately 5,075,184 shares of common stock outstanding (or 5,225,184 shares of common stock outstanding if the underwriters exercise their overallotment option in full).
The market price of our common stock may decline after the stock offering
The price per share at which we sell the common stock may be more or less than the market price of our common stock on the date the stock offering is consummated. If the actual purchase price is less than the market price for the shares of common stock, some purchasers in the stock offering may be inclined to immediately sell shares of common stock to attempt to realize a profit. Any such sales, depending on the volume and timing could
13
Table of Contentscause the market price of our common stock to decline. Additionally, because stock prices generally fluctuate over time, there is no assurance purchasers of common stock in the offering will be able to sell shares after the offering at a price equal to or greater than the actual purchase price. Purchasers should consider these possibilities in determining whether to purchase shares of common stock and the timing of any sale of shares of common stock.
We have broad discretion in using the net proceeds of this offering. Our failure to effectively use these proceeds could adversely affect our ability to earn profits
We intend to use the net proceeds of this offering to provide additional capital to our subsidiaries to support asset growth, for bank or branch acquisitions and for other general corporate purposes. We have not allocated specific amounts of the net proceeds to specific purposes, and will have significant flexibility in determining our applications of the net proceeds. Our failure to apply these funds effectively could reduce our ability to earn profits.
Our ability to pay dividends is limited and we may be unable to pay future dividends
Our ability to pay dividends is limited by regulatory restrictions and the need to maintain sufficient consolidated capital. The ability of our four bank subsidiaries to pay dividends to us is limited by their obligations to maintain sufficient capital and by other general restrictions on their dividends that are applicable to national banks and state banks that are regulated by the FDIC. If we do not satisfy these regulatory requirements, we will be unable to pay dividends on our common stock.
Holders of our junior subordinated debentures have rights that are senior to those of our common stockholders
We have supported our continued growth through the issuance of trust preferred securities from a special purpose trust and accompanying junior subordinated debentures. At March 31, 2005, we had outstanding trust preferred securities and accompanying junior subordinated debentures totaling $10 million. Payments of the principal and interest on the trust preferred securities of this special purpose trust are conditionally guaranteed by us. Further, the accompanying junior subordinated debentures we issued to the special purpose trust are senior to our shares of common stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock.
14
Table of ContentsCAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Some discussions in this prospectus and in the documents incorporated by reference herein may contain forward-looking statemVALIGN="top"> Net income |
$ | 4,373 | $ | 2,626 | $ | 2,369 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax deduction in excess of book deduction on options exercised |
33 | | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: |
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Equity in net earnings of subsidiaries |
(5,415 | ) | (3,171 | ) | (2,763 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in payables and accrued expenses |
244 | (194 | ) | 145 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Increase) decrease in other assets |
(299 | ) | (240 | ) | 39 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flows used in operating activities |
(1,064 | ) | (979 |
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Table of Contents
We estimate the net proceeds from the sale of 1,000,000 shares of our common stock in this offering will be approximately $35.1 million, or approximately $40.4 million if the underwriters over-allotment option is exercised in full. In each case, this assumes a public offering price of $37.65 per share (based on the closing price on May 18, 2005) and deduction of underwriting discounts and commissions and estimated offering expenses. We intend to contribute substantially all of the net proceeds we receive from this offering to the Banks to provide them with capital to support our loan and deposit growth, and to use any remaining proceeds for general corporate purposes. The Banks intend to use the capital for general corporate purposes, primarily to support their future growth. While we have no present agreements or definitive plans relating to any acquisitons, we remain open to expanding our market share through this strategy and thus could use a portion of the net proceeds to pursue an acquisition if we believe an appropriate opportunity arises.
The foregoing represents our anticipated use of the net proceeds of this offering based upon the current status of our business operations, our current plans and current economic conditions. A change in the use of proceeds or timing of such use will be at our discretion.
Until utilization of the net proceeds, we will invest them temporarily in liquid short term securities. The precise amount and timing of our use of the net proceeds will depend upon market conditions and the availability of other funds, among other factors. From time to time, we may engage in additional capital financings as we determine to be appropriate based upon our needs and prevailing market conditions. These additional capital financings may include the sale of securities other than or in addition to common stock.
16
Table of Contents
The following table sets forth our capitalization at March 31, 2005. Our capitalization is presented on a historical basis and on a pro-forma basis to give effect to the sale of 1,000,000 shares of common stock offered in this offering, less the underwriting discount and commissions and estimated expenses, at an assumed offering price of $37.65 per share (based on the closing price on May 18, 2005), and assuming the underwriters over-allotment option is not exercised. This table should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in this prospectus.
17
Table of ContentsPRICE RANGE OF OUR COMMON STOCK AND DIVIDEND INFORMATION
Our common stock trades on The Nasdaq National Market under the symbol CSFL. The table below sets forth for the periods indicated, the high and low sales prices of our common stock as reported by The Nasdaq National Market and the dividends declared per share on our common stock. The trading in our common stock has been limited and occurred at varying prices and may not have created an active market for our common stock. Thus, the prices at which trades occurred may not be representative of the actual value of our common stock. On a number of days during this period, there were no trades at all.
F-35
Table of ContentsCENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued (amounts are in thousands of dollars, except per share data) December 31, 2004 and 2003
Condensed Statements of Cash Flows continued
On May 18, 2005, the last reported sale price of our common stock on The Nasdaq Nati SIZE="1"> |
174 | 129 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on investment securities available for sale, net |
$ | (791 | ) | $ | (302 | ) | $ | (198 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for net assets of bank subsidiaries |
$ | | $ | | $ | 10,544 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of CSB purchase price adjustment |
$ | | $ | 362 | $ | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(17) Credit Commitments
The Company has oonal Market was $37.65 per share. At March 31, 2005, there were 4,075,184 shares of our common stock outstanding, held by approximately 1,300 holders of record.
Dividends are paid at the discretion of our board of directors. We have paid regular quarterly cash dividends on our common stock, and our board of directors presently intends to continue the payment of regular quarterly cash dividends, but the amount and frequency of cash dividends, if any, will be determined by our board of directors after consideration of our earnings, capital requirements and our financial condition and will depend on cash dividends paid to us by the Banks. As a result, our ability to pay future dividends will depend upon the earnings of the Banks, their financial condition and their need for funds.
Moreover, there are a number of federal and state banking policies and regulations that restrict our Banks ability to pay dividends. In particular, because each Bank is a depository institution and its deposits are insured by the FDIC, it may not pay dividends or distribute capital assets if it is in default on any assessment due to the FDIC. Also, the Banks are subject to regulations which impose certain minimum capital requirements that affect the amount of cash available for distribution to us. Lastly, under Federal Reserve policy, we are required to maintain adequate regulatory capital, are expected to serve as a source of financial strength to the Banks and to commit resources to support the Banks. In addition, federal and state agencies have the authority to prevent us from paying a dividend to our shareholders. These policies and regulations may have the effect of reducing or eliminating the amount of dividends that we can declare and pay to our shareholders in the future.
18
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion reviews our results of operations and assesses our financial condition. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from the consolidated financial statements included or incorporated by reference in this prospectus. References should be made to those statements and the selected financial data presented elsewhere or incorporated by reference in this prospectus for an understanding of the following discussion and analysis. Historical results of operations and any trends which may appear are not necessarily indicative of the results to be expected in future years. Our discussion and analysis for the three month periods ended March 31, 2005 and 2004 is based on unaudited financial statements for such periods.
Executive Summary
As a bank holding company, our results of operations are almost entirely dependent on the results of operations of our subsidiary banks. The following table sets forth our subsidiary banks and selected data related to each bank:
Bank |
Number of locations |
Market area Counties |
Total assets at March 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
First National Bank of Osceola County |
6 | Osceola, Orange | $ | 241,002,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
CenterState Bank West Florida, N.A. |
7 | Pasco, Citrus, Hernando, Sumter | $ | 224,287,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
First National Bank of Polk County |
6 | Polk | $ | 177,020,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, | ||||||
2004 |
2003 | |||||
Standby letters of credit |
$ | 2,573 | $ | 1,617 | ||
Available lines of credit |
78,548 | 59,188 | ||||
Unfunded loan commitments fixed |
15,351 | 6,226 | ||||
Unfunded loan commitments variable |
12,821 | 9,556 |
Because many commitments expire without being funded in whole or part, the contract amounts are not estimates of future cash flows.
Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. The credit risk amounts are equal to the contractual amounts, assuming that the amounts are fully advanced and that the collateral or other security is of no value.
The Companys policy is to require customers to provide collateral prior to the disbursement of approved loans. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, real estate and income providing commercial properties.
Standby letters of credit are contractual commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.
Outstanding commitments are deemed to approximate fair value due to the variable nature of the interest rates involved and the short-term nature of the commitments.
F-36
CENTERSTATE BANKS OF FLORIDA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(amounts are in thousands of dollars, except per share data)
December 31, 2004 and 2003
(18) Concentrations of Credit Risk
Most of the Companys business activity is with customers located within Osceola, Orange, Pasco, Hernando, Citrus and Polk Counties of the State of Florida and portions of adjacent counties. The majority of commercial and mortgage loans are granted to customers residing in these areas. Generally, commercial loans are secure
CenterState Bank of Florida
Like most community banks, we derive the majority of our income from interest received on our loans and investments. Our primary source of funds for making these loans and investments is our interest-bearing and non-interest-bearing deposits and other borrowings. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as interest-bearing deposits and borrowings. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities, which is called our net interest spread.
There are risks inherent in all loans, so we maintain an allowance for loan losses to absorb probable losses on existing loans that may become uncollectible. We maintain this allowance by charging a provision for loan losses against our operating earnings for each period. We have included a discussion of this process, as well as several tables describing our allowance for loan losses.
In addition to earning interest on our loans and investments, we earn income through fees and other charges to our clients, including non-sufficient funds fees, service charges on deposit accounts, commissions from broker activities, and commissions from the sale of mutual funds and annuities. We have also included a discussion of the various components of this non-interest income, as well as of our non-interest expense.
During 2001, we formed C.S. Processing, Inc. (CSP) to process checks and render statements (i.e. item processing center) for the Banks. During 2004, we sold 20% of CSP to CenterState Bank Mid Florida, an unrelated financial institution headquartered in Lake County, Florida, for $120,000. The remaining 80% of CSP is owned equally by the Banks. Our investment in CSP, through our subsidiary banks, was $480,000 at March 31, 2005.
During the first quarter of 2004, we sold our two Lake County, Florida branches to CenterState Bank Mid Florida. Although we do not have any ownership investment in CenterState Bank Mid Florida, our Chairman and CEO is also the Chairman of this bank. In addition, the President of CenterState Bank West Florida is a director of CenterState Bank Mid Florida. The sale of the branches included $21.5 million of loans, $23.0 million of deposits, real estate and all the fixed assets. We realized a $1.8 million pre-tax gain on the sale during the first quarter of 2004.
19
We opened two new branches during 2004, one in Lake Wales, Florida (Polk County) and one in Kissimmee, Florida (Osceola County). As of March 31, 2005, we had a total of 25 banking locations in seven counties throughout Central Florida, and approximately 259 full-time equivalent employees.
During June of 2004, we raised additional capital through a shareholder rights offering. The entire offering of 675,627 shares was sold at the offering price of $18.99 per share. The capital raised totaled $12,698,000, net of expenses. We used these funds to increase the capital in each of our subsidiary banks. Our objective is to maintain a capital level at each subsidiary bank that exceeds the requirement to be considered well capitalized. On a consolidated basis, our goal is to maintain a tier 1 capital to average asset ratio of at least 7%, and a targeted GAAP capital (stated capital) to asset ratio of 7.5%. We have been growing our balance sheet faster than our earnings thereby placing downward pressure on our capital ratios. Without the additional capital raised through our shareholder rights offering, our balance sheet growth (specifically our loan and deposit growth) would have been limited by our targeted capital levels.
The Company acquired a 49% interest in a newly formed joint venture, CenterState Home Loans, LLC, during the fourth quarter of 2004 for $34,300. The entity, located in Orlando, Florida, commenced business on December 1, 2004 and brokers single family home mortgages for a fee. We do not assume any interest rate risk, market risk or credit risk on loans brokered by CenterState Home Loans. We carry our investment in CenterState Homes on the equity method.
The following discussion and analysis also identifies significant factors that have affected our financial position and operating results during the periods included in the financial statements accompanying or incorporated by reference in this prospectus. We encourage you to read this discussion and analysis in conjunction with our financial statements and the other statistical information included and incorporated by reference in this prospectus.
Critical Accounting Policies
Our accounting policies are integral to understanding the results reported. Accounting policies are described in detail in Note 1 of the notes to the consolidated financial statements. The critical accounting policies require managements judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established detailed policies and control procedures that ad by real estate, and mortgage loans are secured by either first or second mortgages on residential or commercial property. As of December 31, 2004, substantially all of the Companys loan portfolio was secured. Although the Company has a diversified loan portfolio, a substantial portion of its debtors ability to honor their contracts is dependent upon the economy of Osceola, Orange, Pasco, Hernando, Citrus and Polk Counties and portions of adjacent counties. The Company does not have significant exposure to any individual customer or counterparty.
(19) Basic and Diluted Earnings Per Share
Basic and diluted earnings per share are calculated as follows:
2004 |
2003 |
2002 | |||||||
Numerator for basic and diluted earnings per share: |
|||||||||
Net income |
$ | 4,373 | $ | 2,626 | $ | 2,369 | |||
Denominator: |
|||||||||
Denominator for basic earnings per share weighted-average shares |
3,750,158 | 3,364,824 | 2,823,213 | ||||||
Effect of dilutive securities: |
|||||||||
Employee stock options |
77,996 | 63,995 | 55,557 | ||||||
Allowance for Loan Losses
The allowance for loan losses represents managements estimate of losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. The allowance for loan losses is determined based on managements assessment of several factors: reviews and evaluation of individual loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry concentrations, historical loan loss experiences and the level of classified and nonperforming loans.
Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the condition of the various markets in which collateral may be sold may all affect the required level of the allowance for loan losses and the associated provision for loan losses.
A standardized loan grading system is utilized at each of the Banks. The grading system is integral to our risk assessment function related to lending. Loan officers of each Bank assign a loan grade to their newly originated loans in accordance with the standard loan grades. Throughout the lending relationship, the loan
20
Table of Contentsofficer is responsible for periodic reviews, and if warranted he/she will downgrade or upgrade a particular loan based on specific events and/or analyses. Loans graded 5 or higher are placed on a watch list each month end and reported to that particular Banks board of directors. The Companys loan review officer, who is independent of the lending function and is not an employee of any of the Banks, periodically reviews each Banks loan portfolio and lending relationships. The Companys loan review officer may disagree with a particular Banks grade on a particular loan and subsequently downgrade or upgrade such loan(s) based on his risk analysis.
Loans are considered impaired if, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, except that collateral-dependent loans are generally measured for impairment based on the fair value of the collateral. In measuring the fair value of the collateral, management uses assumptions and methodologies consistent with those that would be utilized by unrelated third parties. The Company considers loans graded 7 or higher to be impaired.
Goodwill
Effective July 1, 2001, we adopted SFAS No. 141, Business Combinations, which requires the use of the purchase method of accounting. We acquired CenterState Bank of Florida, in Winter Haven, Florida, on December 31, 2002. Consequently, we were required to record the assets acquired, including identified intangible assets, and liabilities assumed at their fair value, which involves estimates based on third party valuations, such as appraisals, internal valuations based on discounted cash flow analyses or other valuation techniques. The determination of the useful lives of intangible assets is subjective as is the appropriate amortization period for such intangible assets. In addition, purchase acquisitions typically result in recording goodwill, which is subject to ongoing periodic impairment tests based on the fair value of net assets acquired compared to the carrying value of goodwill. In November 2004, the required impairment testing of goodwill was performed and no impairment existed as of the valuation date, as the fair value of our net assets exceeded their carrying value. If for any future period we determine there has been impairment in the carrying value of our goodwill balances, we will record a charge to our earnings, which could have a material adverse effect on our net income.
Stock Based Compensation
We use Accounting Principle Board Opinion No. 25 and related interpretations to account for stock based compensation costs. As such, we estimate the value of options we grant using the fair value method and the Black-Scholes option pricing model, and disclose this information in the notes to our consolidated financial statements. We do not recognize the estimated values as expense in our consolidated financial statements. Effective with our fiscal year beginning January 1, 2006, we will be required to recognize the estimated values of our stock option grants in our consolidated financial statements using the fair value method.
Under the fair value method, stock option expense is measured on the date of grant using the Black-Scholes option pricing model with market assumptions. Option pricing models require the use of highly subjective assumptions, including expected stock price volatility, which when changed can materially affect fair value estimates. Accordingly, the model does not necessarily provide a reliable single measure of the fair value of our stock options. SFAS No. 123R, Accounting for Stock-Based Compensation, requires all public companies to record compensation cost for stock options provided to employees in return for employee service. The cost is measured at the fair value of the options wh SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"> |
|||||||||
Denominator for diluted earnings per share adjusted weighted-average shares |
3,828,154 | 3,428,819 | 2,878,770 | ||||||
Basic earnings per share |
$ | 1.17 | $ | 0.78 | $ | 0.84 | |||
Diluted earnings per share |
$ | 1.14 | $ | 0.77 | $ | 0.82 |
(20) Investment in CenterState Home Loans, LLC
The Company acquired a 49% interest in a newly formed joint venture, CenterState Home Loans, LLC, during 2004 for $34. The entity, located in Orlando, Florida, brokers single family home mortgages for a fee. The Company does not assume any interest rate risk, market risk or credit risk. The entity commenced business on December 1, 2004. The investment is carried on the equity method and included in other assets on the Companys consolidated balance sheet. Income earned from the joint venture is included in other service charges and fees in the Companys consolidated statement of operations. Summary combined unaudited financial information for the investee company as of and for the period ending December 31, 2004 follows:
2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash |
$ | 92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders equity |
$ | 92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Neten granted, and this cost is expensed over the employee service period, which is the vesting period of the options. This will apply to awards granted or modified after the first fiscal year beginning after June 15, 2005. Compensation cost will also be recorded for prior option grants that vest after the date of adoption. The effect on results of operations will depend on the level of future option grants and the calculation of the fair value of the options granted at such future date, as well as the vesting periods provided.
21
Table of ContentsDeferred Tax Assets
We use an estimate of future earnings to support the position that the benefit of our deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and net income will be reduced. Deferred tax assets are described further in the notes to the consolidated financial statements.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2005 AND 2004
Overview
Net income for the three months ended March 31, 2005 was $1,262,000 or $0.31 per share basic and $0.30 per share diluted, compared to net income of $1,753,000 or $0.52 per share basic and $0.51 per share diluted for the same period in 2004. Included in net income for the first quarter of 2004 was a $1,844,000 ($1,150,000 after tax) gain on sale from our sale of two branches. Excluding the gain on sale of branches, our net income for the first quarter of 2004 was $603,000 or $0.18 per share basic and diluted. A reconciliation between net income and net income excluding the branch sales is presented below.
F-37
Table of Contents
1,000,000 Shares
Common Stock
PROSPECTUS
Keefe, Bruyette & Woods
SunTrust Robinson Humphrey
, 2005
Table of ContentsPART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
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Earnings per share basic |
$ | 0.31 | $ | 0.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of branches, net of tax of $0.21 per share |
| (0.34 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro-forma earnings per share basic |
$ | 0.31 | $ | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share diluted |
$ | 0.31 | $ | 0.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of branches, net of tax of $0.20 per share |
| (0.33 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro-forma earnings per share diluted |
$ | 0.31 | $ | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Interest Income/Margin
Net interest income increased $1,368,000 or 28% to $6,273,000 during the three month period ended March 31, 2005 compared to net interest income of $4,905,000 for the same period in 2004. The $1,368,000 increase was the result of a $1,993,000 increase in interest income less a $625,000 increase in interest expense.
Interest earning assets averaged $701,041,000 during the three month period ended March 31, 2005 as compared to $560,594,000 for the same period in 2004, an increase of $140,447,000, or 25%. (The growth in the investment securities portfolio was the greatest contributor to this interest earning asset growth. The substantial increase i0px">
Item 15. Indemnification of Directors and Officers
Section 607.0850, Florida Statutes, grants a corporation the power to indemnify its directors, officers, employees, and agents for various expenses incurred resulting from various actions taken by its directors, officers, employees, or agents on behalf of the corporation. In general, if an individual acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe the action was unlawful, then the corporation has the power to indemnify said individual who was or is a party to any proceeding (including, in the absence of an adjudication of liability (unless the court otherwise determines), any proceeding by or in the right of the corporation) against liability expenses, including counsel fees, incurred in connection with such proceeding, including any appeal thereof (and, as to actions by or in the right of the corporation, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof). To the extent that a director, officer, employee, or agent has been successful on the merits or otherwise in defense of any proceeding, he shall be indemnified against expenses actually and reasonably incurred by him in connection therewith. The term Aproceeding@ includes any threatened, pending, or completed action, suit, or other type of proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.
Any indemnification in connection with the foregoing, unless pursuant to a determination by a court, shall be made by the corporation upon a determination that indemnification is proper in the circumstances because the individual has met the applicable standard of conduct. The determination shall be made (i) by the board of directors by a majority vote of a quorum consisting of directors who are not parties to such proceeding; (ii) by majority vote of a committee duly designated by the board of directors consisting solely of two or more directors not at the time parties to the proceeding; (iii) by independent legal counsel selected by the board of directors or such committee; or (iv) by the shareholders by a majority vote of a quorum consisting of shareholders who are not parties to such proceeding. Evaluation of the reasonableness of expenses and authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible. However, if the determination of permissibility is made by independent legal counsel, then the directors or the committee shall evaluate the reasonableness of expenses and may authorize indemnification. Expenses incurred by an officer or director in defending a civil or criminal proceeding may be paid by the corporation in advance of the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if he is ultimately found not to be entitled to indemnification by the corporation. Expenses incurred by other employees and agents may be paid in advance upon such terms or conditions that the board of directors deems appropriate.
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Section 607.0850 also provides that the indemnification and advancement of expenses provided pursuant to that Section are not exclusive, and a corporation may make any other or further indemnification or advancement of expenses of any of its directors, officers, employees, or agents, under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. However, indemnification or advancement of expenses may not be made if a judgment or other final adjudication established that the individuals actions, or omissions to act, were material to the cause of action so adjudicated and constitute (i) a violation of the criminal law (unless the individual had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful); (ii) a transaction from which the individual derived an improper personal benefit; (iii) in the case of a director, a circumstance under which the liability provisions of Section 607.0834 are applicable; or (iv) willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor in a proceeding by or in the right of a shareholder. Indemnification and advancement of expenses shall continue as, unless otherwise provided when authorized or ratified, to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person, unless otherwise provided when authorized or ratified.
Section 607.0850 further provides that unless the corporations articles of incorporation provide otherwise, then notwithstanding the failure of a corporation to provide indemnification, and despite any contrary determination of the board or of the shareholders in the specific case, a director, officer, employee, or agent of the corporation who is or was a party to a proceeding may apply for indemnification or advancement of expenses, or both, to the court conducting the proceeding, to the circuit court, or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice that it considers necessary, may order indemnification and advancement of expenses, including expenses incurred in seeking court-ordered indemnification or advancement of expenses, if it determines that (i) the individual is entitled to mandatory indemnification under Section 607.0850 (in which case the court shall also order the corporation to pay the director reasonable expenses incurred in obtaining court-ordered indemnification or advancement of expenses); (ii) the individual is entitled to indemnification or advancement of expenses, or both, by virtue of the exercise by the corporation of its power under Section 607.0850; or (iii) the individual is fairly and reasonably entitled to indemnification or advancement of expenses, or both, in view of all the relevant circumstances, regardless of whether the person met the standard of conduct set forth in Section 607.0850. Further, a corporation is granted the power to purchase and maintain indemnification insurance.
Article VI of the Companyn investment securities year-over-year is attributable to the significantly larger growth in deposits versus loan growth during the same period.) The yield on average interest earning assets increased 0.18% to 4.96% during the three month period ended March 31, 2005, compared to 4.78% for the same period in 2004. The combined net effects of the $140,447,000 increase in average interest earning assets and the 0.18% increase in yield on average interest earning assets resulted in the $1,993,000 increase in interest income between the two periods.
Interest bearing liabilities averaged $529,862,000 during the three month period ended March 31, 2005 as compared to $451,935,000 for the same period in 2004, an increase of $77,927,000, or 17%. The cost of average
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interest bearing liabilities increased 0.24% to 1.82% during the three month period ended March 31, 2005 from 1.58% for the same period in 2004. The combined net effects of the $77,927,000 increase in average interest bearing liabilities and the 0.24% increase in cost on average interest bearing liabilities resulted in the $625,000 increase in interest expense between the two periods.
The table below summarizes the analysis of changes in interest income and interest expense for the three month periods ended March 31, 2005 and 2004 (in thousands of dollars).
Three months ended March 31, |
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2005 |
2004 |
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Average Balance |
Interest Inc / Exp |
Average Rate/Yield |
Average Balance |
Interest Inc / Exp |
Average Rate/Yield |
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Loans(1) (2) (3) |
$ | 450,505 | $ | 7,135 | 6.34 | % | $ | 405,365 | $ | 6,023 | 5.94 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities(4) |
250,536 | 1,551 |
Pursuant to the Underwriting Agreement, the Company and the Underwriters have agreed to indemnify each other under certain circumstances and conditions against and from certain liabilities, including liabilities under the Securities Act of 1933, as amended. Reference is made to Article VI of the Underwriting Agreement filed as Exhibit 1.1 hereto.
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Table of ContentsItem 16. Exhibits
Item 17. Undertakings
The undersigned Registrant hereby undertakes that, for purpose> |
2.48 | % | 155,229 | 670 | 1.73 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total earning assets |
701,041 | 8,686 | 4.96 | % | 560,594 | 6,693 | 4.78 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
(5,795 | ) | (4,994 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All other assets |
67,511 | 60,594 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
s of determining any liability under the Securities Act of 1933, each filing of the Registrants annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and, where applicable, each filing of an employee benefit plans annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(1) | For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as a part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
(2) | For the purpose of determining any liability under the Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed in its behalf by the undersigned, thereunto duly authorized, in Winter Haven, Florida, on May 19, 2005.
CENTERSTATE BANKS OF FLORIDA, INC. |
/s/ ERNEST S. PINNER |
Ernest S. Pinner |
Chairman of the Board |
President and Chief Executive Officer |
/s/ JAMES J. ANTAL |
James J. Antal |
Senior Vice President and Chief Financial Officer |
(Principal financial officer and principal accounting officer) |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ernest S. Pinner and James J. Antal, for himself and
Total assets
Deposits(5)
Borrowings(6)
Corporate debenture(7)
In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on May 19, 2005.
Signature |
Title | |
/S/ ERNEST S. PINNER Ernest S. Pinner |
Chairman of the Board President and Chief Executive Officer | |
/S/ JAMES H. WHITE James H. White |
Director | |
/S/ JAMES H. BINGHAM James H. Bingham |
Director | |
/S/ TERRY W. DONLEY Terry W. Donley |
Director | |
/S/ BRYAN W. JUDGE Bryan W. Judge |
Director | |
/S/ LAWRENCE W. MAXWELL Lawrence W. Maxwell |
Director |
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Signature |
Title | |||||||||||||||||||
/S/ GEORGE TIERSO NUNEZ II George Tierso Nunez II |
Director | |||||||||||||||||||
% | 10,000 | 116 | 4.64 | % | ||||||||||||||||
Total interest bearing liabilities |
529,862 | 2,413 | 1.82 | % | 451,935 | 1,788 | 1.58 | % | ||||||||||||
Demand deposits |
172,696 | 119,437 | ||||||||||||||||||
Other liabilities |
1,984 | 1,641 | ||||||||||||||||||
Minority shareholder interest |
120 |   HEIGHT="16"> | ||||||||||||||||||
/S/ THOMAS E. OAKLEY Thomas E. Oakley |
Director | |||||||||||||||||||
/S/ J. THOMAS ROCKER J. Thomas Rocker |
Director |
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INDEX TO EXHIBITS
Exhibit Number |
Description of Exhibit | |
1.1 | Form of Underwriting Agreement | |
5.1 | Form of Legal Opinion of Smith Mackinnon, PA with respect to the legality of the Common Stock to be issued | |
23.1 | Consent of KPMG LLP |