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Section 1: DEFM14A (DEFM14A)

DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement

 

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

 

Definitive Proxy Statement

 

 

 

Definitive Additional Materials

 

 

 

Soliciting Material under §240.14a-12

SUNSHINE BANCORP, INC.

(Name of Registrant as Specified in its Charter)

 

        

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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LOGO    LOGO
CENTERSTATE BANK CORPORATION    SUNSHINE BANCORP, INC.

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Sunshine Bancorp, Inc.:

On August 12, 2017, Sunshine Bancorp, Inc., or “Sunshine”, and CenterState Bank Corporation, or “CenterState”, entered into an Agreement and Plan of Merger, which we refer to as the “merger agreement,” that provides for the merger of Sunshine with and into CenterState, with CenterState as the surviving company, which transaction we refer to as the “merger.” Immediately after the merger, Sunshine Bank, a federal stock savings bank and wholly owned subsidiary of Sunshine, will merge with and into CenterState Bank, N.A., a national banking association and wholly owned subsidiary of CenterState, with CenterState Bank as the surviving bank, which we refer to as the “bank merger.” Before the merger can be completed, Sunshine stockholders must approve the merger agreement and the transactions provided for therein, which we refer to collectively as the “merger proposal.”

In the merger, each share of Sunshine common stock will be converted into the right to receive 0.89 shares of CenterState common stock, which we refer to as the “merger consideration”. Based on the $23.93 closing price of CenterState common stock on the NASDAQ Stock Market, or “NASDAQ”, on August 11, 2017, the last trading day before public announcement of the merger, the 0.89 exchange ratio represented $21.30 in value for each share of Sunshine common stock, and approximately $176.8 million in aggregate value. Based on the closing stock price of CenterState common stock on NASDAQ on October 9, 2017, the latest practicable date before the date of this proxy statement/prospectus, the merger consideration represented approximately $23.93 in value for each share of Sunshine common stock and approximately $199.8 million in aggregate value. The CenterState common stock is traded on NASDAQ under the symbol “CSFL.” The Sunshine common stock is traded on NASDAQ under the symbol “SBCP.” The market prices for both CenterState common stock and Sunshine common stock will fluctuate before the merger. We urge you to obtain current market prices for both CenterState common stock and Sunshine common stock. Based on the 0.89 exchange ratio and the number of shares of Sunshine common stock outstanding, including restricted stock awards, and shares reserved for issuance under various stock options as of September 15, 2017, the maximum number of shares of CenterState common stock issuable in the merger is 7,778,349.

Sunshine may terminate the merger agreement if the average closing price of CenterState common stock over a specified period prior to completion of the merger decreases below certain specified thresholds unless CenterState elects to increase the merger consideration through the payment of additional cash and/or by increasing the exchange ratio as discussed in further detail on pages 13 and 99 of this proxy statement/prospectus.

Sunshine will hold a special meeting of its stockholders to approve the merger proposal. The special meeting of stockholders is scheduled to be held on November 17, 2017 at Sunshine Bank located at 102 West Baker Street, Plant City, Florida 33563 at 9:00 a.m., local time. No vote of CenterState shareholders is required to complete the merger. This document, which serves as Sunshine’s proxy statement for the special meeting of its stockholders and as a prospectus for the shares of CenterState common stock to be issued in the merger to Sunshine stockholders, gives you detailed information about the special meeting and the merger. The merger cannot be completed unless all closing conditions have been met, including receipt of required regulatory approvals and approval of the merger proposal by the stockholders of Sunshine. Sunshine is asking its stockholders to consider and vote on the merger proposal at a special meeting of stockholders and also on a proposal to adjourn the special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes to approve the merger proposal at the time of the special meeting, which we refer to as the “adjournment proposal.” Approval of the merger proposal requires the affirmative vote of the holders of the majority of the outstanding shares of Sunshine common stock.

Whether or not you plan to attend the special meeting, please take the time to vote by following the voting instructions included in the enclosed proxy card. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote FOR the merger proposal and FOR the adjournment proposal. Not voting your shares as instructed in the enclosed proxy card, or not instructing your broker how to vote shares held by you in “street name” will have the same effect as a vote against the merger proposal, but will have no effect on the adjournment proposal.

The Sunshine board of directors unanimously recommends that Sunshine stockholders vote “FOR” approval of the merger proposal and “FOR” the approval of the adjournment proposal.

 

 

You should read carefully this entire proxy statement/prospectus, including the appendices hereto and the documents incorporated by reference herein, because it contains important information about the merger and the related transactions. In particular, you should read carefully the information set forth under “Risk Factors” beginning on page 35, which discusses the risks relating to the proposed merger.

On behalf of the Sunshine board of directors, thank you for your prompt attention to this important matter.

Sincerely,

LOGO

Andrew S. Samuel

President and Chief Executive Officer

Sunshine Bancorp, Inc.

The shares of CenterState common stock to be issued in the merger are not savings or deposit accounts or other obligations of any bank or nonbank subsidiary of CenterState or Sunshine, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated October 13, 2017, and is being first mailed to Sunshine stockholders on or about October 17, 2017.


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LOGO

SUNSHINE BANCORP, INC.

102 WEST BAKER STREET

PLANT CITY, FLORIDA 33563

(813) 752-6193

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON NOVEMBER 17, 2017

TO THE STOCKHOLDERS OF SUNSHINE BANCORP, INC.:

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Sunshine Bancorp, Inc. (“Sunshine”) will be held at Sunshine Bank located at 102 West Baker Street, Plant City, Florida 33563 on November 17, 2017, at 9:00 a.m., local time, to consider and vote on:

 

  1.

Approve Agreement and Plan of Merger. A proposal to approve the Agreement and Plan of Merger, dated August 12, 2017 (the “merger agreement”), by and between Sunshine and CenterState Bank Corporation (“CenterState”), pursuant to which Sunshine will merge with and into CenterState with CenterState as the surviving company, subject to the terms and conditions contained in the merger agreement, including the transactions provided for in the merger agreement (referred to collectively as the “merger proposal”), as more fully described in the attached proxy statement/prospectus. A copy of the merger agreement is attached in Appendix A to this document; and

 

  2.

Adjourn or postpone the Special Meeting. A proposal to approve one or more adjournments or postponements of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger proposal (referred to as the “adjournment proposal”).

We have fixed the close of business on October 9, 2017 as the record date for the special meeting. Only Sunshine stockholders of record on that date are entitled to notice of, and to vote at, the special meeting. Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Sunshine common stock.

The Sunshine board of directors has unanimously approved the merger agreement and has determined that the merger, as set forth in the merger agreement and the terms and conditions set forth in the merger agreement, are in the best interests of, Sunshine and its stockholders. The Sunshine board of directors unanimously recommends that Sunshine stockholders vote “FOR” approval of the merger proposal and “FOR” the adjournment proposal, if necessary.

Your vote is very important. We cannot complete the proposed merger unless Sunshine stockholders approve the merger proposal.

The attached proxy statement/prospectus provides a detailed description of the special meeting, the merger agreement, the adjournment proposal, the documents related to the merger, and other related matters. We urge you to read carefully the proxy statement/prospectus, including the appendices and any documents incorporated by reference.

You are cordially invited to attend the special meeting in person. Regardless of whether you plan to attend the special meeting, please vote, sign, date and return the enclosed proxy card in the self-addressed envelope as soon as possible. No additional postage is required if mailed within the United States. Alternatively, you may vote through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions. If you choose to attend the special meeting, then you may vote your shares in person, even if you have previously signed and returned your proxy card or voted via the Internet or by telephone. If you hold your Sunshine shares through a bank, broker or other nominee (commonly referred to as held in “street name”), then you must direct your bank, broker or other nominee to vote in accordance with the instructions you have received from them. You may revoke your proxy at any time prior to the special meeting as specified in the accompanying proxy statement/prospectus.

By Order of the Board of Directors

 

LOGO

Andrew S. Samuel

President and Chief Executive Officer

October 17, 2017


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YOUR VOTE IS VERY IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE VOTE BY USING THE INTERNET, BY TELEPHONE, OR BY COMPLETING, DATING, AND SIGNING THE ENCLOSED FORM OF PROXY AND RETURNING IT IN THE ENCLOSED RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL MEETING. THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF SUNSHINE COMMON STOCK IS REQUIRED FOR APPROVAL OF THE MERGER PROPOSAL.


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WHERE YOU CAN FIND MORE INFORMATION

Both CenterState and Sunshine are subject to the information requirements of the Securities Exchange Act of 1934, as amended, which means that they are both required to file certain reports, proxy statements and other business and financial information with the Securities and Exchange Commission (the “SEC”). You may read and copy any materials that CenterState or Sunshine file with the SEC at its Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at (800) SEC-0330) for further information on the Public Reference Room. In addition, CenterState and Sunshine file reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at http://www.sec.gov containing this information. You will also be able to obtain these documents, free of charge, from CenterState by accessing CenterState’s website at www.centerstatebanks.com, and from Sunshine by accessing Sunshine’s website at www.mysunshinebank.com. Except as specifically incorporated by reference into this proxy statement/prospectus, information on those websites or filed with the SEC is not a part of this proxy statement/prospectus. Copies of these documents can also be obtained, free of charge, by directing a written request to:

 

CenterState Bank Corporation

1101 First Street South

Winter Haven, Florida 33880

Attn: Corporate Secretary

  

Sunshine Bancorp, Inc.

102 West Baker Street

Plant City, Florida 33563

Attn: Corporate Secretary

CenterState has filed a Registration Statement on Form S-4 to register with the SEC up to 7,778,349 shares of CenterState common stock to be issued pursuant to the merger. This proxy statement/prospectus is a part of that Registration Statement on Form S-4. As permitted by SEC rules, this proxy statement/prospectus does not contain all of the information included in the Registration Statement on Form S-4 or in the exhibits or schedules to the Registration Statement on Form S-4. You may read and copy the Registration Statement on Form S-4, including any amendments, schedules and exhibits, at the SEC’s Public Reference Room at the address set forth above. The Registration Statement on Form S-4, including any amendments, schedules and exhibits, is also available, free of charge, by accessing the websites of the SEC or CenterState or upon written request to CenterState or Sunshine at the addresses set forth above.

Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the Registration Statement on Form S-4. This proxy statement/prospectus incorporates important business and financial information about CenterState and Sunshine that is not included in or delivered with this document, including incorporating by reference documents that CenterState and Sunshine have previously filed with the SEC. These documents contain important information about CenterState and Sunshine and their financial condition. See “Documents Incorporated by Reference.” These documents are available free of charge upon written request to CenterState and Sunshine at the addresses listed above.

To obtain timely delivery of these documents, you must request them no later than November 10, 2017 in order to receive them before the special meeting of stockholders.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. CenterState supplied all information contained in, or incorporated by reference into, this proxy statement/prospectus relating to CenterState, and Sunshine supplied all information contained in or incorporated by reference into this proxy statement/prospectus relating to Sunshine.

You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to provide you with information that is different from what is contained in this proxy statement/prospectus. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than the date of this proxy statement/prospectus, and neither


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the mailing of this proxy statement/prospectus to Sunshine stockholders nor the issuance of CenterState common stock in the merger shall create any implication to the contrary.

No person has been authorized to give any information or make any representation about the merger or Sunshine or CenterState that differs from, or adds to, the information in this proxy statement/prospectus or in documents that are publicly filed with the Securities and Exchange Commission. Therefore, if anyone does give you different or additional information, you should not rely on it.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     1  

SUMMARY

     6  

Risk Factors

     6  

Information Regarding CenterState and Sunshine

     6  

Pending Acquisition of HCBF Holding Company, Inc.

     6  

Sunshine Special Meeting

     7  

The Merger

     7  

Merger Consideration

     8  

Equivalent Sunshine Per Share Value

     8  

Closing and Effective Time of the Merger

     8  

Surrender of Stock Certificates

     9  

Recommendation of the Sunshine Board of Directors

     9  

Opinion of Hovde Group, LLC, Financial Advisor of Sunshine

     9  

Material U.S. Federal Income Tax Consequences of the Merger

     9  

Interests of Sunshine Directors and Executive Officers in the Merger

     10  

Treatment of Sunshine Equity Compensation

     10  

Conditions to Completion of the Merger

     11  

Regulatory Approvals Required for the Merger

     11  

Third Party Proposals

     12  

Termination

     12  

Termination Fee and Expenses

     13  

Accounting Treatment

     13  

Dissenters’ Rights

     13  

NASDAQ Listing

     13  

Resale of CenterState Common Stock

     13  

Market Prices and Dividend Information

     14  

Comparative Rights of CenterState Shareholders and Sunshine Stockholders

     15  

Litigation Relating to the Merger

     15  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CENTERSTATE

     16  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SUNSHINE

     18  

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

     20  

RISK FACTORS

     35  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     43  

HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     45  

COMPARATIVE PER SHARE MARKET PRICES AND DIVIDEND INFORMATION

     47  

INFORMATION ABOUT THE SUNSHINE SPECIAL MEETING

     48  

Time, Date, and Place

     48  

Matters to be Considered at the Meeting

     48  

Recommendation of the Sunshine Board of Directors

     48  

Record Date and Quorum

     48  

Required Vote

     49  

Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers

     49  

How to Vote—Stockholders of Record

     49  

How to Vote—Shares Held in “Street Name”

     50  

How to Vote—Shares held by the ESOP and the 401(k) Plan

     50  

Revocation of Proxies

     50  

Solicitation of Proxies

     50  

 

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Attending the Meeting

     51  

Adjournments and Postponements

     51  

Questions and Additional Information

     51  

THE COMPANIES

     52  

CenterState

     52  

Pending Acquisition of HCBF Holding Company, Inc.

     52  

Sunshine

     53  

THE MERGER

     54  

Background of the Merger

     54  

Recommendation of Sunshine’s Board of Directors and Reasons for the Merger

     61  

Opinion of Sunshine’s Financial Advisor

     65  

Certain Financial Projections Provided by Sunshine

     72  

CenterState’s Reasons for the Merger

     74  

Interests of Sunshine Directors and Executive Officers in the Merger

     75  

Accounting Treatment

     82  

Regulatory Approvals

     82  

Board of Directors and Management of CenterState Following the Merger

     83  

THE MERGER AGREEMENT

     85  

The Merger

     85  

Closing and Effective Time of the Merger

     85  

Merger Consideration

     85  

Procedures for Converting Shares of Sunshine Common Stock into Merger Consideration

     86  

Surrender of Sunshine Stock Certificates/Book Entry Shares

     87  

Equity Compensation

     88  

Conduct of Business Pending the Merger

     88  

Regulatory Matters

     92  

Nasdaq Listing

     92  

Employee Matters

     93  

Indemnification and Directors’ and Officers’ Insurance

     94  

Third Party Proposals

     94  

Representations and Warranties

     97  

Conditions to Completion of the Merger

     98  

Termination

     99  

Termination Fee

     100  

Effect of Termination

     100  

Amendment; Waiver

     100  

Expenses

     100  

Non-Competition and Non-Disclosure Agreements

     100  

Claims Letters with Directors

     101  

Litigation Relating to the Merger

     101  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     102  

COMPARISON OF SHAREHOLDER RIGHTS

     106  

LEGAL MATTERS

     113  

EXPERTS

     113  

FUTURE STOCKHOLDER PROPOSALS

     114  

OTHER MATTERS

     115  

DOCUMENTS INCORPORATED BY REFERENCE

     116  

 

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Appendix A —  

Agreement and Plan of Merger dated August 12, 2017, by and between Sunshine Bancorp, Inc. and CenterState Bank Corporation (formerly known as CenterState Banks, Inc.)

Appendix B —  

Opinion of Hovde Group, LLC

Appendix C —  

HCBF Holding Company, Inc. Audited Consolidated Financial Statements and Accompanying Notes as of and for the year ended December 31, 2016

Appendix D —  

HCBF Holding Company, Inc. Unaudited Consolidated Financial Statements and Accompanying Notes as of and for the six months ended June 30, 2017

Appendix E —  

Jefferson Bankshares, Inc. Audited Consolidated Financial Statements and Accompanying Notes as of and for the year ended December 31, 2016

Appendix F —  

Jefferson Bankshares, Inc. Unaudited Consolidated Financial Statements and Accompanying Notes as of and for the six months ended June 30, 2017

Appendix G —  

Certain Unaudited Pro Forma Financial Information as to HCBF Holding Company, Inc. and Jefferson Bankshares, Inc. Merger

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following are some answers to certain questions that you may have about the special meeting of Sunshine stockholders, which we refer to as the “special meeting”, and the proposed merger. We urge you to read carefully the remainder of this proxy statement/prospectus (including the risk factors beginning on page 35) because the information in this section does not provide all of the information that might be important to you with respect to the special meeting and the proposed merger. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement/prospectus. See “Where You Can Find More Information” and “Documents Incorporated by Reference.”

 

Q:

What am I being asked to vote on?

 

A:

You are being asked to vote to approve the Agreement and Plan of Merger, dated August 12, 2017, entered into between CenterState and Sunshine, and the transactions provided for therein, which we collectively refer to as the “merger proposal,” that provides for the merger of Sunshine with and into CenterState with CenterState as the resulting entity. Under applicable law, the affirmative vote of a majority of the outstanding shares of Sunshine common stock is required to approve the merger proposal. A copy of the merger agreement is included in this proxy statement/prospectus as Appendix A.

Sunshine stockholders also are being asked to approve a proposal, which we refer to as the “adjournment proposal,” providing for one or more adjournments of the Sunshine special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes to approve the merger proposal at the time of the special meeting.

 

Q:

Why do CenterState and Sunshine want to merge?

 

A:

We believe the combination of CenterState and Sunshine will create one of the leading and more profitable community banking franchises based in Florida, and provides us with additional branch locations and market share particularly in Central Florida. The Sunshine board of directors has determined that the merger is in the best interest of Sunshine and its stockholders, and unanimously recommends that Sunshine stockholders vote for approval of the merger proposal. For more information about the reasons for the merger, see “The Merger—Recommendation of the Sunshine Board of Directors and Reasons for the Merger” and “The Merger—CenterState’s Reasons for the Merger.”

 

Q:

What consideration will Sunshine stockholders receive in the merger?

 

A:

If the merger is completed, each issued and outstanding share of Sunshine common stock will be converted into the right to receive 0.89 shares of CenterState common stock, which we refer to as the “merger consideration.”

CenterState will not issue any fractional shares of CenterState common stock in the merger. Rather, Sunshine stockholders who would otherwise be entitled to a fractional share of CenterState common stock upon the completion of the merger will instead receive an amount in cash equal to such fractional part of a share of CenterState common stock multiplied by the average closing price per share of CenterState common stock on NASDAQ for the 10 trading day period ending on the later of (i) the date on which the last required regulatory approval is obtained without regard to any requisite waiting period, or (ii) the date on which the Sunshine stockholders approve the merger proposal. We refer to the foregoing computation of the CenterState average closing price as the “CenterState average stock price.”

 

Q:

Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the merger is completed?

 

A:

The value of the merger consideration is likely to fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value of CenterState common stock. Any fluctuation in the market price of CenterState common stock after the date of this proxy statement/prospectus will change the value of the shares of CenterState common stock that Sunshine shareholders will

 

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receive, and will therefore change the value of the merger consideration. Based on the 0.89 exchange ratio and the closing price of CenterState common stock on the Nasdaq Stock Market, or “NASDAQ”, of $23.93 on August 11, 2017, the last full trading day before the public announcement of the merger, the value of the merger consideration was $21.30 for each share of Sunshine common stock, and approximately $183.7 million in the aggregate. Based on the 0.89 exchange ratio and the closing stock price of CenterState common stock on NASDAQ on October 9, 2017, the latest practicable date before the date of this proxy statement/prospectus, the value of the merger consideration was $23.93 for each share of Sunshine common stock and approximately $199.8 million in the aggregate. The market prices of both CenterState common stock and Sunshine common stock will fluctuate before the merger is completed. We encourage you to obtain current market quotations for shares of CenterState common stock and Sunshine common stock.

 

Q:

Should I send in my stock certificates now?

 

A:

No, please do NOT return your stock certificate(s) with your proxy. You should wait until you receive the stock transmittal form that will be mailed shortly after the closing date of the merger, and then you should submit your Sunshine stock certificate(s) along with the completed stock transmittal form. The stock transmittal form will be accompanied by instructions explaining how to complete the form and deliver the form and your stock certificate(s) to the exchange agent for the merger.

 

Q:

How will the merger impact Sunshine stock option awards?

 

A:

If the merger is completed, each outstanding option to acquire shares of Sunshine common stock will automatically become vested and will be converted into an option to purchase that number of shares of CenterState common stock equal to the number of shares of Sunshine common stock to which the option holder is entitled to purchase multiplied by the merger consideration (rounded to the nearest whole share). The exercise price will equal the Sunshine exercise price divided by the merger consideration (rounded to the nearest cent). Sunshine had a total of 717,876 stock options outstanding at June 30, 2017, of which 326,374 were vested and 391,502 were unvested.

 

Q:

How will the merger impact Sunshine restricted stock awards?

 

A:

If the merger is completed, each outstanding restricted stock award granted under Sunshine’s equity-based compensation plan will fully vest and will represent the right to receive the merger consideration.

 

Q:

What will happen to Sunshine Bank following the merger?

 

A:

Immediately following the merger, Sunshine Bank will be merged with and into CenterState Bank, with CenterState Bank being the surviving subsidiary bank of CenterState.

 

Q:

Does the Sunshine board of directors support the merger?

 

A:

Yes. The Sunshine board of directors has determined that the merger agreement is in the best interest of Sunshine’s stockholders and unanimously recommends that stockholders vote for approval of the merger proposal. Additionally, Sunshine’s directors have entered into voting agreements with CenterState pursuant to which they have agreed, among other things, to vote all of the Sunshine shares they beneficially own in favor of the merger proposal. A total of 518,593 shares of Sunshine common stock, representing approximately 6.5% of the outstanding shares of Sunshine common stock entitled to vote at the special meeting, are subject to these voting agreements.

 

Q:

Do any of Sunshine’s directors or executive officers have interests in the merger that may differ from those of Sunshine’s stockholders?

 

A:

Sunshine’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Sunshine’s stockholders generally. The members of Sunshine’s board of directors were aware of and considered these interests, among other matters, in evaluating the merger proposal, and in recommending that Sunshine stockholders approve the merger proposal. For a description of these interests, please refer to the section entitled “Interests of Sunshine’s Directors and Executive Officers in the Merger” beginning on page 75 of this proxy statement/prospectus.

 

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Q:

When and where is the special meeting of Sunshine stockholders?

 

A:

The Sunshine special meeting will take place on November 17, 2017, at 9:00 a.m., local time, at Sunshine Bank, located at 102 West Baker Street, Plant City, Florida 33563.

 

Q:

Who can vote at the special meeting of Sunshine stockholders?

 

A:

You can vote at the special meeting if you own shares of Sunshine common stock at the close of business on October 9, 2017, the record date for the special meeting. As of the close of business on that date, approximately 8,026,354 shares of Sunshine common stock were outstanding.

 

Q:

What vote is required to approve the merger proposal?

 

A:

Approval of the merger proposal requires the affirmative vote of the holders of a majority of the shares of Sunshine common stock outstanding on the record date. Stockholders will have one vote for each share of Sunshine common stock they own.

 

Q:

What vote is required to approve the adjournment proposal?

 

A:

Approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Sunshine common stock represented in person or by proxy at the special meeting.

 

Q:

Are participants in the Sunshine Bank Employee Stock Ownership Plan and/or the Sunshine Bank Employee Savings Plan able to vote?

 

A:

Yes. Participants in the Sunshine Bank Employee Stock Ownership Plan (the “ESOP”) will each receive a Voting Instruction Form that reflects all of the shares that the participant may direct the trustee to vote on his or her behalf under the ESOP. Under the terms of the ESOP, the ESOP trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the shares of Sunshine common stock allocated to his or her account. The ESOP trustee will vote all unallocated shares of Sunshine common stock held by the ESOP and allocated shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. In addition, participants in the Sunshine Bank Employees Savings Plan (“401(k) Plan”) with an interest in the Sunshine Bancorp, Inc. Stock Fund (the “Stock Fund”) will receive a Voting Instruction Form that allows them to direct the 401(k) Plan trustee to vote their interest in the Stock Fund. If a participant does not direct the 401(k) Plan trustee how to vote his or her interests in the Stock Fund, the trustee will vote such interest in the same proportion as it has received timely voting instructions from other 401(k) Plan participants.

 

Q:

What do I need to do now?

 

A:

Please read this proxy statement/prospectus and decide how you wish to vote your shares and then indicate that vote on the proxy card included with this proxy statement/prospectus. Sign and return the proxy card in the enclosed prepaid return envelope marked “Proxy” as soon as possible, so that your shares may be represented and voted at the special meeting to be held on November 17, 2017. Alternatively, you may vote through the Internet or by telephone. Information and applicable deadlines for voting through the Internet or by telephone are set forth in the enclosed proxy card instructions.

 

Q:

What if I do not vote?

 

A:

If you do not vote, it will have the same effect as voting your shares against the merger proposal, however, it will have no effect on the adjournment proposal.

 

Q:

If my shares are held in “street name” by my broker, will my broker vote my shares for me?

 

A:

No. Your broker will not be able to vote your shares without instructions from you. You should instruct your broker how to vote your shares, following the directions provided by your broker.

 

Q:

Can I change or revoke my vote after I have mailed my signed proxy card?

 

A:

Yes. There are three ways in which you may revoke your proxy and change your vote. First, you may send a written notice to the Corporate Secretary of Sunshine, stating that you would like to revoke your proxy.

 

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Second, you may complete and submit a new proxy card (or you can vote again via the Internet or by telephone). Third, you may attend the special meeting and vote in person. Simply attending the special meeting, however, will not revoke your proxy.

 

Q:

When do you expect the merger to be completed?

 

A:

We expect the merger to be completed in the first quarter of 2018. We are working towards completing the merger as quickly as possible. To do so, the stockholders of Sunshine must approve the merger proposal, CenterState must obtain all regulatory approvals necessary to complete the merger, and other customary closing conditions must be satisfied. See “The Merger Agreement—Conditions to Completion of the Merger.”

 

Q:

Can I exercise dissenters’ rights in connection with the merger?

 

A:

No, under Maryland law Sunshine stockholders are not eligible to exercise dissenters’ rights in connection with the merger.

 

Q:

What will happen if the trading price of CenterState common stock changes significantly prior to completion of the Merger?

 

A:

Because the merger consideration is fixed, CenterState and Sunshine agreed to include provisions in the merger agreement by which Sunshine would have an opportunity to terminate the merger agreement if the average price of CenterState common stock over a specified period of time prior to completion of the merger decreases below certain specified thresholds, unless CenterState elects to increase the merger consideration by paying additional cash, by increasing the exchange ratio or a combination of both, as discussed in further detail on pages 13 and 99 of this proxy statement/prospectus.

 

Q:

What are the U.S. federal income tax consequences of the merger to Sunshine shareholders?

 

A:

The merger is expected to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” A condition to the obligation of each party to complete the merger is that CenterState receive a written opinion from Hacker, Johnson & Smith, P.A., tax advisor to CenterState, and Sunshine receive a written opinion from Luse Gorman, PC, legal advisor to Sunshine, each dated as of the closing date of the merger, to the effect that for U.S. federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a Sunshine stockholder generally will not recognize any gain or loss with respect to the exchange of shares of Sunshine common stock for shares of CenterState common stock in the merger. However, Sunshine stockholders generally will recognize gain or loss with respect to cash received instead of fractional shares of CenterState common stock that the Sunshine stockholders would otherwise be entitled to receive. Please carefully review the information set forth in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” starting on page 102.

The United States federal income tax consequences described above may not apply to all holders of Sunshine common stock. Your tax consequences will depend on your individual situation. Accordingly, we urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

 

Q:

Are there risks associated with the merger that I should consider in deciding how to vote?

 

A:

Yes. There are a number of risks related to the merger and the other transactions contemplated by the merger agreement that are discussed in this proxy statement/prospectus, in the appendices to and the documents incorporated by reference or referred to in this proxy statement/prospectus. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 35 and in CenterState’s and Sunshine’s respective SEC filings incorporated by reference herein and referred to in “Where You Can Find More Information” and “Documents Incorporated by Reference” beginning on page 116.

 

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Q:

CenterState is also acquiring HCBF Holding Company, Inc. (“HCBF”), the holding company of Harbor Community Bank, simultaneously with the merger. What impact will the HCBF Merger have on CenterState’s merger with Sunshine?

 

A:

CenterState entered into a merger agreement to acquire HCBF on the same date that it entered into the merger agreement with Sunshine. The completion of Sunshine’s merger is not conditioned upon or subject to the completion of CenterState’s merger with HCBF. However, since CenterState will be required to obtain the necessary regulatory approvals for two transactions rather than one, it is possible that the CenterState merger with HCBF will lengthen the amount of time that would otherwise be needed to obtain all regulatory approvals of the merger if Sunshine were the only banking institution being acquired by CenterState. See “Risk Factors—If the Sunshine merger and the HCBF Merger were to occur, the pro forma combined company would exceed $10 billion in assets, which would result in increased costs and/or reduced revenues to the resulting entity and subject the company to increased regulatory scrutiny by its primary federal regulators, with respect to its risk management and other activities.” for a discussion of the impact that the HCBF acquisition would have on CenterState’s business and operations if both the Sunshine and HCBF acquisitions are completed and CenterState’s total assets exceed $10 billion.

 

Q:

Whom should I call with questions or to obtain additional copies of this proxy statement/prospectus?

 

A:

Sunshine stockholders should contact Sunshine Investor Relations at Sunshine Bancorp, Inc., 102 West Baker Street, Plant City, Florida 33563; telephone (813) 752-6193.

 

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SUMMARY

This following summary highlights selected information from this proxy statement/prospectus. It does not contain all of the information that is important to you. Each item in this summary refers to the page where that subject is discussed in more detail. For more information about the merger, the merger agreement and the special meeting, you should carefully read the entire proxy statement/prospectus, including the appendices and the documents attached to or incorporated by reference into this document. See “Where You Can Find More Information” on how to obtain copies of those documents.

Risk Factors (see pages 35 through 42)

You should consider in particular the factors as described under “Risk Factors”.

Information Regarding CenterState and Sunshine (see pages 52 and 53)

CenterState Bank Corporation

1101 First Street South

Winter Haven, Florida 33880

(863) 293-4710

CenterState is a financial holding company incorporated under Florida law. CenterState owns all the outstanding shares of CenterState Bank. Headquartered in Winter Haven, Florida between Orlando and Tampa, CenterState offers a full range of consumer and commercial banking products and services to individuals, businesses and industries through its 78 full service banking locations in 28 counties throughout Florida and through a loan production office in Macon, Georgia. CenterState Bank also operates a correspondent banking and bond sales division, and owns R4ALL, Inc. (“R4ALL”), which acquires and disposes of troubled assets received from CenterState Bank. At June 30, 2017, CenterState had total consolidated assets of $6.8 billion, total consolidated loans of $4.6 billion, total consolidated deposits of $5.5 billion, and total consolidated shareholders’ equity of $890 million. On August 24, 2017, CenterState changed its name from CenterState Banks, Inc. to CenterState Bank Corporation. CenterState’s common stock is listed on NADSAQ and trades under the symbol “CSFL.”

Sunshine Bancorp, Inc.

102 West Baker Street

Plant City, Florida 33563

(813) 752-6193

Sunshine is a savings and loan holding company incorporated under Maryland law and is the parent company of Sunshine Bank, a federal stock savings bank. Sunshine Bank offers a variety of retail and commercial banking and related financial products and services through its 18 banking locations in Central Florida. At June 30, 2017, Sunshine had total consolidated assets of $955.9 million, total consolidated loans of $703.9 million, total consolidated deposits of $776.1 million, and total consolidated shareholders’ equity of $117 million. Sunshine’s common stock is listed on NASDAQ and trades under the symbol “SBCP.”

Pending Acquisition of HCBF Holding Company, Inc.

On August 12, 2017, CenterState also entered into an agreement to acquire HCBF, the holding company of Harbor Community Bank (the “HCBF Merger”). Pursuant to the HCBF merger agreement, HCBF will merge with and into CenterState, with CenterState as the surviving company. Immediately after the HCBF Merger, Harbor Community Bank, a Florida-chartered commercial bank and the wholly owned subsidiary of HCBF, will

 



 

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merge with and into CenterState Bank, with CenterState Bank as the surviving bank. The HCBF Merger was approved by the boards of directors of each of CenterState and HCBF and is expected to close in the first quarter of 2018. Completion of the HCBF Merger is subject to customary closing conditions, including receipt of required regulatory approvals and approval of HCBF’s and CenterState’s shareholders. Under the terms of the HCBF merger agreement, holders of HCBF common stock will receive 0.675 shares of CenterState common stock and $1.925 in cash for each share of HCBF common stock which equates to an aggregate transaction value of approximately $416,7 million as of the date of the HCBF merger agreement (comprised of approximately $374.0 million of CenterState common stock and $42.7 million of cash).

At June 30, 2017, HCBF had total consolidated assets of approximately $1.9 billion, total consolidated loans, net of allowance for loan losses, of approximately $1.1 billion, total consolidated deposits of approximately $1.6 billion, and total common shareholders’ equity of approximately $223.3 million. Effective July 28, 2017, HCBF completed its acquisition of Jefferson Bankshares, Inc., and it subsidiary, Jefferson Bank of Florida, which had approximately $317 million in consolidated assets.

For additional information on the HCBF Merger, including certain pro forma financial information, see “Unaudited Pro Forma Combined Consolidated Financial Information”.

Sunshine Special Meeting (see page 48)

The special meeting of Sunshine stockholders will be held on November 17, 2017, at 9:00 a.m., local time, at Sunshine Bank, located at 102 West Baker Street, Plant City, Florida 33563. At the special meeting, holders of Sunshine common stock will asked to:

 

   

Approve the merger proposal;

 

   

Approve the adjournment proposal.

You can vote at the special meeting if you owned Sunshine common stock as of the close of business on October 9, 2017, which is the record date for the special meeting. On that date, there were 8,026,354 shares of Sunshine common stock outstanding and entitled to vote, approximately 7.2% of which were owned and entitled to be voted by Sunshine directors and executive officers and their affiliates. As of the record date, neither CenterState nor any of its directors or executive officers owned or had the right to vote any of the outstanding shares of Sunshine common stock. You can cast one vote for each share of Sunshine common stock you owned on that date.

Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Sunshine common stock entitled to vote. Sunshine’s directors have entered into voting agreements with CenterState under which they have agreed, among other things, to vote all of the shares they beneficially own for approval of the merger proposal. A total of 518,593 shares of Sunshine common stock, representing approximately 6.5% of the outstanding shares of Sunshine common stock entitled to vote at the special meeting, are subject to these voting agreements. Approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Sunshine common stock represented in person or by proxy at the special meeting.

The Merger (see page 54)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is included as Appendix A to this proxy statement/prospectus and is incorporated by reference herein. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

In the merger, Sunshine will merge with and into CenterState, with CenterState as the surviving company. It is expected that immediately after the effective time of the merger, Sunshine Bank will merge into CenterState

 



 

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Bank, with CenterState Bank as the surviving bank. We refer to the merger of CenterState Bank and Sunshine Bank as the “bank merger.

Merger Consideration (see page 85)

If the merger is completed, Sunshine stockholders will receive 0.89 shares of CenterState common stock for each share of Sunshine common stock they hold.

No holder of Sunshine common stock will be issued fractional shares of CenterState common stock in the merger. Instead, each holder of Sunshine common stock who would otherwise have been entitled to receive a fraction of a share of CenterState common stock will receive cash, without interest, equal to such fractional part of a share of CenterState common stock multiplied by the CenterState average stock price. See “The Merger Agreement—Merger Consideration” beginning on page 85 of this proxy statement/prospectus.

The value of the shares of CenterState common stock to be issued in the merger will fluctuate between now and the closing date of the merger. The market price of CenterState common stock at closing will not be known at the time of the Sunshine special meeting and may be more or less than the current price of CenterState common stock or the price of CenterState common stock at the time of the Sunshine special meeting. You should obtain current sale prices for CenterState and Sunshine common stock. The CenterState common stock is traded on NASDAQ under the symbol “CSFL.” The Sunshine common stock is also traded on NASDAQ under the symbol “SBCP.”

Equivalent Sunshine Per Share Value

The following table presents the closing price of CenterState common stock on August 11, 2017, the last trading day before the date of the public announcement of the merger agreement, and October 9, 2017, the latest practicable date before the date of this proxy statement/prospectus. The table also presents the equivalent value of the merger consideration per share of Sunshine common stock on those dates, calculated by multiplying the closing sales price of CenterState common stock on those dates by the exchange ratio of 0.89.

 

Date

   CenterState
closing sale price
     Exchange
Ratio
     Equivalent Sunshine
per share value
 

August 11, 2017

   $ 23.93        0.89      $ 21.30  

October 9, 2017

   $ 26.89        0.89      $ 23.93  

The value of the shares of CenterState common stock to be issued in the merger will fluctuate between now and the closing date of the merger. You should obtain current sale prices for the CenterState and Sunshine common stock.

Upon completion of the merger and the HCBF Merger, former Sunshine stockholders will own approximately 9.2% of the outstanding shares of CenterState common stock. Upon completion of the merger (without completion of the HCBF Merger), former Sunshine stockholders will own approximately 11.5% of the outstanding shares of CenterState common stock.

Closing and Effective Time of the Merger (see page 85)

The closing date is expected to occur during the first quarter of 2018. The merger will become effective at such time as the articles of merger are filed with the Secretary of State of Florida and the Maryland State Department of Assessments and Taxation, or such other time as may be specified in the articles of merger.

 



 

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Surrender of Stock Certificates (see page 87)

Promptly after the effective time of the merger, the exchange agent for the merger will mail to each holder of record of Sunshine common stock a letter of transmittal and instructions for the surrender of the holder’s Sunshine stock certificate(s) for the merger consideration (including cash in lieu of any fractional CenterState shares) and any dividends or distributions to which such holder may be entitled to pursuant to the merger agreement.

Please do not send in your certificate until you receive the letter of transmittal.

Recommendation of the Sunshine Board of Directors (see page 61)

The Sunshine board of directors has approved the merger agreement and determined that the merger is in the best interests of, Sunshine and its stockholders and unanimously recommends that Sunshine stockholders vote “FOR” approval of the merger proposal and “FOR” the approval of the adjournment proposal.

For a discussion of the factors considered by the Sunshine board of directors in reaching its decision to approve the merger agreement, see “The Merger—Recommendation of Sunshine’s Board of Directors and Reasons for the Merger.”

Opinion of Hovde Group, LLC, Financial Advisor of Sunshine (see page 65 and Appendix B)

At the August 11, 2017 meeting of the Sunshine board of directors to consider the merger, Hovde Group, LLC (“Hovde”) delivered to the Sunshine board of directors a written opinion regarding the fairness of the merger consideration to be received by Sunshine stockholders from a financial point of view.

The Hovde opinion was directed to the Sunshine board of directors and relates only to the fairness of the merger consideration to be received by Sunshine stockholders, from a financial point of view. Hovde’s opinion does not address any other aspect of the merger and is not a recommendation to any Sunshine stockholder as to how such stockholder should vote at the special meeting.

The full text of Hovde’s August 11, 2017 opinion is included as Appendix B to this proxy statement/prospectus and is incorporated by reference into this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Hovde in rendering its opinion. The description of the opinion is qualified in its entirety by reference to the opinion. Sunshine stockholders are urged to read the entire opinion carefully in connection with their consideration of the merger proposal.

Material U.S. Federal Income Tax Consequences of the Merger (see page 102)

It is expected that the merger will qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is a condition to the obligation of each party to effect the merger that CenterState receive a written opinion from Hacker, Johnson & Smith, P.A., tax advisor to CenterState, and Sunshine receive a written opinion from Luse Gorman, PC, legal advisor to Sunshine, each dated as of the closing date of the merger, to the effect that for U.S. federal income tax purposes the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. As a tax-free reorganization, the holders of shares of Sunshine common stock are not expected to recognize any gain or loss for U.S. federal income tax purposes on the exchange of their shares for the merger consideration in the merger, except cash received in lieu of any fractional shares of CenterState common stock. The U.S. federal income tax consequences described above may not apply to all holders of Sunshine common stock. For further information, please refer to “Material U.S. Federal Income Tax Consequences” beginning on page 102.

 



 

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Tax matters are very complicated and the consequences of the merger to any particular Sunshine stockholder will depend on that stockholder’s particular facts and circumstances. You should consult your own tax advisor to determine the particular tax consequences of the merger to you.

Interests of Sunshine Directors and Executive Officers in the Merger (see page 75)

Some of the executive officers and directors of Sunshine have interests in the merger that are in addition to, or different from, the interests of Sunshine’s stockholders generally. These interests include the following:

 

   

All Sunshine stock options, including those held by the directors and executive officers, will vest upon the effective time of the merger and convert into options exercisable for shares of CenterState common stock;

 

   

All restricted stock awards granted prior to the effective date of the merger will vest and receive the merger consideration;

 

   

Sunshine previously entered into employment and change in control agreements with a number of its executive officers, which entitle them to certain payments and benefits upon a qualifying termination in connection with a change in control, such as the merger;

 

   

Sunshine’s supplemental executive retirement plan agreement with an executive officer provides for accelerated vesting and enhanced retirement benefits in connection with a change in control, such as the merger;

 

   

Certain rights to reimbursements with respect to excise taxes under Sections 280G and 4999 of the Internal Revenue Code for an executive officer;

 

   

Subject to the terms of the merger agreement, Sunshine may, in consultation with CenterState, accelerate the payment of certain compensatory amounts so that they are paid in 2017 for tax planning purposes with respect to Sections 280G and 4999 of the Internal Revenue Code. Such amounts may include accelerating the vesting of the Sunshine restricted stock, accelerating the payment of 2017 bonuses that would normally be payable in 2018, and accelerating the payment of change in control severance benefits due to the executive officers under their employment or change in control agreements; and

 

   

Sunshine’s directors and executive officers will be entitled to indemnification by CenterState with respect to claims arising from matters occurring at or prior to the closing of the merger and to coverage under a directors’ and officers’ liability insurance policy for six years after the merger.

These interests are discussed in more detail in the Section entitled “The Merger—Interests of Sunshine Executive Officers and Directors in the Merger.” The Sunshine board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement.

Treatment of Sunshine Equity Compensation (see page 88)

If the merger is completed, each option to acquire shares of Sunshine common stock, which is then outstanding, will become fully vested and will be converted into an option to purchase that number of shares of CenterState common stock equal to the number of shares of Sunshine common stock to which the option holder is entitled to purchase multiplied by the merger consideration (rounded to the nearest whole share). The exercise price will equal the Sunshine exercise price divided by the merger consideration (rounded to the nearest cent).

If the merger is completed, each outstanding restricted stock award granted under Sunshine’s equity-based compensation plan will fully vest and receive the merger consideration.

 



 

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Conditions to Completion of the Merger (see page 98)

The completion of the merger depends on a number of customary conditions being satisfied or, where permitted, waived, including:

 

   

the approval of the merger proposal by Sunshine stockholders;

 

   

the receipt of all regulatory approvals required to consummate the transactions contemplated by the merger agreement, without the imposition of any materially burdensome regulatory conditions or any commitments, conditions, restrictions or understandings that would prohibit or materially limit the ownership or operation by Sunshine or CenterState of all or a material portion of their business or assets, or compel CenterState to dispose of all or a material portion of the business or assets of Sunshine or of CenterState;

 

   

the approval for listing on NASDAQ of the shares of CenterState common stock to be issued in the merger;

 

   

the effectiveness of the Registration Statement on Form S-4 for the CenterState common stock to be issued in the merger and no stop order suspending its effectiveness will have been initiated or threatened by the Securities and Exchange Commission;

 

   

the receipt by CenterState and Sunshine from their respective accounting firm or tax counsel of a U.S. federal income tax opinion that the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code;

 

   

the absence of any order, injunction or other law making illegal the consummation of the merger, the bank merger or the other transactions contemplated by the merger agreement;

 

   

the accuracy of the representations and warranties in the merger agreement, subject to certain materiality or material adverse effect qualifications described in the merger agreement;

 

   

the performance in all material respects by CenterState and Sunshine of their respective obligations under the merger agreement;

 

   

the absence of any event that has resulted in a material adverse effect on the other party, and the absence of any condition, event, fact, circumstance or other occurrence that is reasonably expected to have a material adverse effect on the other party; and

 

   

(i) the approval of the Sunshine board of directors has not have been withheld, withdrawn or modified in a manner adverse to CenterState, (ii) the Sunshine board of directors must not have approved or recommended (or publicly proposed to approve or recommend) any other third party acquisition proposal, or (iii) the Sunshine board of directors must not have allowed Sunshine or Sunshine Bank to enter into a letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or agreement relating to any third party acquisition proposal.

No assurance is given as to when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Regulatory Approvals Required for the Merger (see page 82)

The merger and the bank merger are subject to various regulatory approvals, including approvals, or receipt of a waiver from approval, from the Federal Reserve and the Office of the Comptroller of the Currency (the “OCC”). CenterState has received the waiver of approval from the Federal Reserve. Notifications and/or applications requesting approvals of the merger or the bank merger (or a waiver from such approval) may also be submitted to other federal and state regulatory authorities and self-regulatory organizations. The parties have filed notices and applications to obtain the necessary regulatory approvals or waiver from approval. Although

 



 

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neither CenterState nor Sunshine knows of any reason why it cannot obtain these regulatory approvals in a timely manner, they cannot be certain when or if they will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that would (i) prohibit or materially limit the ownership or operation by Sunshine or CenterState, of all or any material portion of the business or assets of each respective entity, or (ii) compel CenterState to dispose of all or any material portion of the business or assets of Sunshine or CenterState. It is a condition to CenterState’s obligation to complete the merger that no such regulatory condition be imposed. The regulatory approvals to which the completion of the merger and bank merger are subject are described in more detail under the section entitled “The Merger—Conditions to Completion of the Merger.”

Third Party Proposals (see page 94)

Sunshine has agreed to a number of limitations with respect to soliciting, negotiating and discussing acquisition proposals involving persons other than CenterState, and to certain related matters. The merger agreement does not, however, prohibit Sunshine from considering prior to the special meeting an unsolicited bona fide acquisition proposal from a third party if certain specified conditions are met.

Termination (see page 99)

The merger agreement may be terminated by CenterState or Sunshine at any time prior to the effective time of the merger:

 

   

by mutual written consent;

 

   

if any governmental authority denies approval of the merger or the bank merger and such denial has become final;

 

   

if the Sunshine stockholders fail to approve the merger agreement;

 

   

if the merger has not been completed by May 31, 2018, unless the failure to complete the merger by such date is due to a material breach of the merger agreement by the party seeking to terminate it; or

 

   

if there is a breach by the other party of any representation, warranty, covenant or other agreement set forth in the merger agreement (subject to the materiality standard contained in the merger agreement) and such breach is not cured within 30 days following written notice to the breaching party).

In addition, the merger agreement may be terminated:

 

   

by CenterState, if, before obtaining the approval of the Sunshine stockholders of the merger agreement, (i) the Sunshine board of directors fails to recommend or makes an adverse recommendation change, breaches its obligations with respect to calling a meeting of its stockholders or makes, or causes to be made, any third party or public communication proposing or announcing an intention to withdraw or modify, in any manner adverse to CenterState, such recommendation (referred to as a “change in recommendation”), (ii) Sunshine approves or recommends or fails to publicly recommend against another acquisition proposal, (iii) Sunshine fails to publicly reconfirm the Sunshine recommendation that it stockholders approve the merger, (iv) Sunshine resolves or otherwise determines to take or announces an intention to take any of the foregoing actions, or (vi) Sunshine materially breaches any of the provisions of the merger agreement relating to third party proposals (we refer to any of the foregoing terminations to be a “Sunshine Failure to Recommend”);

 

   

by Sunshine, prior to obtaining the approval of the merger agreement by the Sunshine stockholders, in order to enter into an agreement relating to a superior proposal in accordance with the provisions of the merger agreement relating to third party proposals (which we refer to as a “Superior Proposal Termination”); and

 



 

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by Sunshine, if both of the following conditions exist:

 

  (i)

the quotient obtained by dividing the CenterState average stock price by $23.93 (which we refer to as the “CenterState Ratio”) is less than 0.85, and

 

  (ii)

the CenterState Ratio is less than the quotient obtained by dividing the average closing prices for the Nasdaq Bank Index during a specified time prior to completion of the merger (which we refer to as the “Final Index Price”) by $3,569.16, and then subtracting 0.15 from this quotient (which we refer to as the “Index Ratio”).

However, if Sunshine chooses to exercise this termination right, CenterState has the option, within five business days of receipt of notice from Sunshine, to adjust the merger consideration and prevent termination under this provision.

Termination Fee and Expenses (see page 100)

Sunshine must pay CenterState a termination fee of $7.068 million:

 

   

If the merger agreement is terminated by CenterState because the Sunshine board of directors fails to recommend or makes an adverse recommendation change or breaches its obligations with respect to calling a meeting of its stockholders, or by Sunshine as a result of a Superior Proposal Termination; or

 

   

If the merger agreement is terminated by CenterState or Sunshine because the Sunshine stockholders fail to approve the merger agreement or by CenterState due to a material breach of a representation or warranty by Sunshine and, if prior to such termination, there shall have been made known to senior management of Sunshine or has been made directly to Sunshine stockholders generally or any person shall have publicly announced (and not withdrawn) an acquisition proposal (as defined in the merger agreement) and, within 12 months of such termination, Sunshine or Sunshine Bank enters into a definitive agreement with respect to an acquisition proposal or completes an acquisition proposal (whether or not it is the same acquisition proposal referred to previously).

Accounting Treatment (see page 82)

CenterState will account for the merger under the purchase method of accounting for business combinations under United States generally accepted accounting principles.

Dissenters’ Rights

Under Maryland law, holders of Sunshine common stock do not have the right to dissent from the merger agreement and seek an appraisal in connection with the merger.

NASDAQ Listing (see page 92)

CenterState will cause the shares of CenterState common stock to be issued to the holders of Sunshine common stock in the merger to be authorized for listing on NASDAQ, subject to official notice of issuance, prior to the effective time of the merger.

Resale of CenterState Common Stock

All shares of CenterState common stock received by Sunshine stockholders in the merger will be freely tradable for purposes of the Securities Act, except for shares of CenterState common stock received by any such holder who becomes an “affiliate” of CenterState after the completion of the merger. This proxy statement/

 



 

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prospectus does not cover resales of shares of CenterState common stock received by any person upon completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

Market Prices and Dividend Information (see page 47)

CenterState common stock is traded on NASDAQ under the symbol “CSFL.” Sunshine common stock is also traded on NASDAQ under the symbol “SBCP.” The following table sets forth the reported high and low sales prices of shares of CenterState and Sunshine common stock and the quarterly cash dividends per share of CenterState and Sunshine common stock declared, in each case for the periods indicated.

 

     CenterState Common Stock      Sunshine Common Stock  
     High      Low      Dividends      High      Low      Dividends  

2017

                 

First Quarter

   $ 26.48      $ 24.07      $ 0.06      $ 21.39      $ 16.44        —    

Second Quarter

   $ 26.27      $ 23.74      $ 0.06      $ 23.73      $ 19.50        —    

Third Quarter

   $ 27.02      $ 21.77      $ 0.06      $ 23.43      $ 19.13        —    

Fourth Quarter (through October 9, 2017)

   $ 27.06      $ 26.40      $ —        $ 23.64      $ 23.01        —    

2016

                 

First Quarter

   $ 15.72      $ 12.57      $ 0.04      $ 15.20      $ 14.00        —    

Second Quarter

   $ 16.59      $ 14.49      $ 0.04      $ 14.99      $ 13.91        —    

Third Quarter

   $ 18.27      $ 15.30      $ 0.04      $ 14.83      $ 14.00        —    

Fourth Quarter

   $ 25.83      $ 17.09      $ 0.04      $ 17.85      $ 14.02        —    

2015

                 

First Quarter

   $ 12.35      $ 10.94      $ 0.01      $ 12.60      $ 11.82        —    

Second Quarter

   $ 13.98      $ 11.70      $ 0.02      $ 15.04      $ 12.15        —    

Third Quarter

   $ 15.00      $ 12.20      $ 0.02      $ 15.35      $ 13.75        —    

Fourth Quarter

   $ 16.24      $ 14.24      $ 0.02      $ 15.25      $ 13.65        —    

On August 11, 2017, the last full trading day before the public announcement of the merger agreement, the closing price of shares of CenterState common stock as reported on NASDAQ was $23.93 and the closing price of Sunshine common stock as reported on NASDAQ was $22.68. On October 9, 2017, the last practicable trading day before the date of this proxy statement/prospectus, the closing price of shares of CenterState common stock as reported on NASDAQ was $26.89 and the closing price of shares of Sunshine common stock as reported on NASDAQ was $23.59.

The holders of CenterState common stock receive dividends if and when declared by the CenterState board of directors out of funds legally available, subject to certain restrictions imposed by state and federal laws.

As of October 9, 2017, there were 60,055,817 shares of CenterState common stock outstanding and owned by approximately 1,382 registered shareholders of record. As of October 9, 2017, there were 8,026,354 shares of Sunshine common stock outstanding and owned by approximately 341 registered stockholders of record.

Sunshine stockholders are advised to obtain current market prices for CenterState common stock. The market price of CenterState common stock will fluctuate between the date of this proxy statement/prospectus and the completion of the merger. No assurance can be given concerning the market price of CenterState common stock before or after the effective date of the merger.

 



 

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Comparative Rights of CenterState Shareholders and Sunshine Stockholders (Page 106)

Sunshine stockholders, whose rights are currently governed by Sunshine’s articles of incorporation, the Sunshine’s bylaws and Maryland law, will, upon completion of the merger, become shareholders of CenterState and their rights will be governed by CenterState’s articles of incorporation, CenterState’s bylaws, and Florida law. The difference in shareholder rights are explained more fully in “Comparison of Shareholder Rights” beginning on page 106.

Litigation Relating to the Merger (page 101)

On October 9, 2017, Sunshine received notice of a putative class action lawsuit against Sunshine, its directors, and CenterState challenging the proposed transaction. The complaint alleges that the directors of Sunshine breached their fiduciary duties in connection with their approval of the merger agreement and that CenterState aided and abetted those alleged fiduciary breaches. Other potential plaintiffs may also file additional lawsuits challenging the proposed transaction. If this case is not resolved, this lawsuit could prevent or delay completion of the merger and result in substantial costs to Sunshine and CenterState, including any costs associated with the indemnification of directors and officers. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect CenterState’s business, financial condition, results of operations and cash flows.

For more information, see “The Merger Agreement—Litigation Relating to the Merger” beginning on page 101.

 



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CENTERSTATE

The following selected historical consolidated financial data as of and for the year ended December 31, 2016, 2015, 2014, 2013 and 2012 is derived from the audited consolidated financial statements of CenterState. The following selected historical consolidated financial data as of and for the six months ended June 30, 2017 and 2016 is derived from the unaudited consolidated financial statements of CenterState and has been prepared on the same basis as the selected historical consolidated financial data derived from the audited consolidated financial statements and, in the opinion of CenterState’s management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data for those dates.

The results of operations as of and for the six months ended June 30, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or any future period. You should read the following selected historical consolidated financial data in conjunction with: (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and CenterState’s audited consolidated financial statements and accompanying notes included in CenterState’s Annual Report on Form 10-K for the year ended December 31, 2016; and (ii) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and CenterState’s unaudited consolidated financial statements and accompanying notes included in CenterState’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, both of which are incorporated by reference into this proxy statement/prospectus. See “Documents Incorporated by Reference.”

(Dollars in thousands, except per share data)

 

    (unaudited)
At or for the six months
ended June 30,
    At or for the year ended December 31,  
    2017     2016     2016     2015     2014     2013     2012  

Summary of Operations:

             

Total interest income

  $ 115,847     $ 90,807     $ 188,665     $ 162,320     $ 138,227     $ 100,378     $ 94,950  

Total interest expense

    (6,509     (4,335     (9,340     (7,286     (7,356     (5,885     (8,481
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    109,338       86,472       179,325       155,034       130,871       94,493       86,469  

Provision for loan losses

    (2,894     (1,421     (4,962     (4,493     (826     76       (9,220
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

    106,444       85,051       174,363       150,541       130,045       94,569       77,249  

Non-interest income

    16,964       13,158       30,363       9,883       6,027       12,445       20,336  

Income from correspondent banking and capital markets division

    14,512       18,066       33,685       27,563       20,153       20,410       35,707  

Net gain on sale of securities available for sale

    —         —         13       4       46       1,060       2,423  

Bargain purchase gain, acquisition of institution

    —         —         —         —         —         —         453  

Gain on extinguishment of debt

    —         308       308       —         —         —         —    

Loss on termination of FDIC loss share agreements

    —         (17,560     (17,560     —         —         —         —    

Credit related expenses

    (1,531     (970     (1,781     (2,295     (5,282     (12,730     (11,206

Non-interest expense

    (91,321     (81,372     (155,140     (123,787     (130,899     (98,001     (110,432
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    45,068       16,681       64,251       61,909       20,090       17,753       14,530  

Income tax expenses

    (13,235     (5,751     (21,910     (22,571     (7,126     (5,510     (4,625
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 31,833     $ 10,930     $ 42,341     $ 39,338     $ 12,964     $ 12,243     $ 9,905  

Per Common Share Data:

             

Basic earnings (loss) per share

  $ 0.58     $ 0.23     $ 0.89     $ 0.87     $ 0.32     $ 0.41     $ 0.33  

Diluted earnings (loss) per share

  $ 0.57     $ 0.23     $ 0.88     $ 0.85     $ 0.31     $ 0.41     $ 0.33  

Common equity per common share outstanding

  $ 14.84     $ 11.21     $ 11.47     $ 10.79     $ 9.98     $ 9.08     $ 9.09  

Tangible common equity per common share outstanding(1)

  $ 10.09     $ 8.64     $ 8.93     $ 8.82     $ 7.95     $ 7.38     $ 7.36  

Dividends per common share

  $ 0.12     $ 0.08     $ 0.16     $ 0.07     $ 0.04     $ 0.04     $ 0.04  

Actual shares outstanding

    60,002,604       47,996,281       48,146,981       45,459,195       45,323,553       30,112,475       30,079,767  

Weighted average common shares outstanding

    54,490,488       46,968,000       47,409,142       45,182,224       40,852,002       30,102,777       30,073,959  

Diluted weighted average common shares outstanding

    55,396,988       47,620,315       48,191,523       45,788,632       41,235,552       30,220,127       30,141,863  

Balance Sheet Data:

             

Assets

  $ 6,767,479     $ 4,995,289     $ 5,078,559     $ 4,022,717     $ 3,776,869     $ 2,415,567     $ 2,363,240  

Total loans

    4,646,533       3,194,967       3,429,747       2,593,776       2,429,525       1,474,179       1,435,863  

Allowance for loan losses

    30,132       24,172       27,041       22,264       19,898       20,454       26,682  

Total deposits

    5,475,455       4,132,136       4,152,544       3,215,178       3,092,040       2,056,231       1,997,232  

 

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Table of Contents
    (unaudited)
At or for the six months
ended June 30,
    At or for the year ended December 31,  
    2017     2016     2016     2015     2014     2013     2012  

Short-term borrowings

    303,625       204,707       290,413       252,722       179,014       50,366       57,724  

Corporate debentures

    26,075       25,841       25,958       24,093       23,917       16,996       16,970  

Common shareholders’ equity

    890,258       537,971       552,457       490,514       452,477       273,379       273,531  

Total shareholders’ equity

    890,258       537,971       524,457       490,514       452,477       273,379       273,531  

Tangible capital

    605,347       414,688       430,135       400,774       360,337       222,339       221,300  

Goodwill

    257,683       105,492       106,028       76,739       76,739       44,924       44,924  

Core deposit intangible (CDI)

    26,217       17,023       15,510       12,164       14,417       4,958       5,944  

Other intangible assets

    1,011       768       784       837       984       1,158       1,363  

Average total assets

  $ 5,839,879     $ 4,669,057     $ 4,864,151     $ 3,928,523     $ 3,419,541     $ 2,381,620     $ 2,445,902  

Average loans

    3,952,701       2,979,737       3,140,343       2,518,572       2,160,155       1,439,069       1,451,492  

Average interest earning assets

    5,220,144       4,174,205       4,356,455       3,484,739       2,995,845       2,034,542       2,070,990  

Average deposits

    4,717,405       3,841,276       3,991,078       3,178,569       2,891,459       2,087,004       2,062,682  

Average interest bearing deposits

    3,016,332       2,446,684       2,568,605       2,038,955       1,942,299       1,425,858       1,555,755  

Average interest bearing liabilities

    3,344,746       2,696,914       2,834,392       2,278,427       2,046,061       1,502,481       1,652,460  

Average total shareholders’ equity

    728,779       513,258       531,734       471,130       391,574       273,852       269,282  

SELECTED FINANCIAL RATIOS:

             

(ratios are annualized where applicable)

             

Return on average assets

    1.10     0.47     0.87     1.00     0.38     0.51     0.40

Return on average equity

    8.81     4.28     7.96     8.35     3.31     4.47     3.68

Dividend payout

    21     35     18     8     13     10     12

Efficiency ratio(2)

    65     69     64     65     86     85     83

Net interest margin, tax equivalent basis(3)

    4.34     4.24     4.20     4.51     4.41     4.71     4.24

Net interest spread, tax equivalent basis(4)

    4.20     4.13     4.08     4.40     4.30     4.61     4.14

CAPITAL RATIOS:

             

Tier 1 leverage ratio

    10.00     8.67     9.11     10.53     10.11     10.38     9.91

Risk-based capital

             

Common equity Tier 1

    11.41     11.06     11.27     14.39     —         —         —    

Tier 1

    11.90     11.62     11.83     14.99     14.36     16.64     16.63

Total

    12.48     12.29     12.54     15.79     15.14     17.89     17.89

Tangible common equity ratio

    9.30     8.50     8.68     10.19     9.78     9.40     9.58

ASSET QUALITY RATIOS:

             

(ratios are annualized where applicable)

             

Net charge-offs to average loans(5)

    (0.01 %)      (0.04 %)      —         0.09     0.07     0.42     0.93

Allowance to period end loans(5)

    0.67     0.81     0.82     0.93     0.90     1.58     2.11

Allowance for loan losses to non-performing loans(5)

    149     96     140     106     76     73     93

Non-performing assets to total assets(5)

    0.39     0.75     0.52     0.56     0.92     1.39     1.41

OTHER DATA:

             

Banking locations

    78       66       67       57       58       55       55  

Full-time equivalent employees

    1,180       897       952       784       785       693       689  

 

(1)

Tangible common equity per common share outstanding is defined as tangible common equity divided by total common shares outstanding.

(2)

Efficiency ratio is non-interest expense (less non-recurring items) divided by the sum of the tax equivalent net interest income before the provision for loan losses plus non-interest income (less non-recurring items).

(3)

Net interest margin is net interest income divided by total average earning assets.

(4)

Net interest spread is the difference between the average yield on earning assets and the average yield on average interest bearing liabilities.

(5)

Excludes purchased credit impaired loans.

 

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Table of Contents

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SUNSHINE

The following tables set forth selected historical consolidated financial and other data of Sunshine (and prior to July 14, 2014, Sunshine Bank) at or for years ended December 31, 2016, 2015, 2014, 2013 and 2012 is derived from the audited consolidated financial statements of Sunshine. The following selected historical consolidated financial data as of and for the six months ended June 30, 2017 and 2016 is derived from the unaudited consolidated financial statements of Sunshine and has been prepared on the same basis as the selected historical consolidated financial data derived from the audited consolidated financial statements and, in the opinion of Sunshine’s management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data for those dates. The results of operations as of and for the six months ended June 30, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or any future period.

You should read the following selected historical consolidated financial data in conjunction with: (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Sunshine’s audited consolidated financial statements and accompanying notes included in Sunshine’s Annual Report on Form 10-K for the year ended December 31, 2016; and (ii) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Sunshine’s unaudited consolidated financial statements and accompanying notes included in Sunshine’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, both of which are incorporated by reference into this proxy statement/prospectus. See “Documents Incorporated by Reference.”

 

    

(unaudited)

At or for the six months

ended June 30,

    At or for the year ended December 31,  
     2017     2016     2016     2015     2014*     2013     2012  
     (Dollars in thousands, except per share data)  

SELECT FINANCIAL CONDITION DATA:

              

Total assets

   $ 955,885     $ 514,729     $ 931,435     $ 507,265     $ 229,820     $ 194,439     $ 194,047  

Cash and cash equivalents

     63,614       23,475       50,273       59,344       20,479       11,054       12,301  

Securities held to maturity

     —         —         —         —         75,473       48,436       44,701  

Securities held to Available for Sale

     106,456       66,285       109,668       65,944       —         —         —    

Loans receivable, net

     703,863       371,538       683,784       326,266       108,666       111,263       114,038  

Federal Home Loan Bank stock, at cost

     2,452       1,731       3,478       1,597       180       237       302  

Cash surrender value of bank-owned life insurance

     22,779       12,284       22,462       12,122       7,259       4,089       3,967  

Other real estate owned

     32       52       32       32       41       1,422       990  

Deposits

     776,053       395,315       729,949       399,111       163,924       164,919       164,222  

FHLB Advances

     38,000       30,000       65,000       27,500       —         —         —    

Subordinated notes

     11,000       11,000       11,000       —         —         —         —    

Other Borrowings

     7,887       1,583       6,867       1,427       —         —         —    

Stockholders’ equity

     116,508       72,242       112,101       71,394       61,626       26,552       26,411  

SELECTED OPERATING DATA:

              

Interest income

   $ 17,319     $ 8,679     $ 20,927     $ 11,846     $ 6,278     $ 6,095     $ 6,605  

Interest expense

     1,617       792       2,014       751       298       374       560  

Net interest income

     15,702       7,887       18,913       11,095       5,980       5,721       6,045  

Provision for loan losses

     —         350       350       —         2,500       —         —    

Net interest income after provision for loan losses

     15,702       7,537       18,563       11,095       3,480       5,721       6,045  

Noninterest income

     2,223       1,816       3,186       1,629       756       930       897  

Noninterest expenses

     12,551       9,041       21,615       17,276       8,287       6,405       7,001  

Income (loss) before income taxes

     5,374       312       134       (4,552     (4,051     246       (59

Income tax expense (benefit)

     1,943       85       177       (2,321     (1,590     105       (22

Net income (loss)

     3,431       227       (43     (2,231     (2,461     141       (37

Dividends on preferred shares

     —         —         —         14       —         —         —    

Net Income (loss) available for common stockholders

     3,431       227       (43     (2,245     (2,461     141       (37

Income (loss) per share

     0.44       0.05       (0.01     (0.56     N/A       N/A       N/A  

Diluted income (loss) per share

   $ 0.43     $ 0.05     $ (0.01   $ (0.56     N/A       N/A       N/A  

Weighted Average shares outstanding

     7,711,718       4,949,210       5,401,566       3,993,560       N/A       N/A       N/A  

Weighted Average diluted shares outstanding

     7,908,162       4,963,285       5,401,566       3,993,560       N/A       N/A       N/A  

PERFORMANCE RATIOS:

              

Return (loss) on average assets

     0.73     0.09     (0.01 %)      (0.63 %)      (1.11 %)      0.07     (0.02 %) 

Return (loss) on average equity

     6.02     0.63     (0.06 %)      (3.50 %)      (5.88 %)      0.53     (0.14 %) 

Interest rate spread(1)

     3.60     3.45     3.52     3.44     2.87     3.08     3.58

Net interest margin(2)

     3.76     3.57     3.66     3.53     2.94     3.15     3.63

 

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(unaudited)

At or for the six months

ended June 30,

    At or for the year ended December 31,  
     2017     2016     2016     2015     2014*     2013     2012  
     (Dollars in thousands, except per share data)  

Noninterest expense to average assets

     2.67     3.61     3.73     4.87     3.74     3.25     3.58

Efficiency ratio(3)

     70.02     93.18     97.81     135.77     123.03     96.30     100.85

Average interest-earning assets to average interest-bearing liabilities

     142.35     133.29     134.82     137.43     151.76     129.71     116.53

Average equity to average assets

     12.11     14.33     13.22     17.96     18.93     13.42     13.54

CAPITAL RATIOS(4):

              

Total capital to risk-weighted assets

     13.43     15.44     13.39     13.13     33.82     25.26     25.55

Tier 1 capital to risk-weighted assets

     12.94     14.72     12.93     12.44     32.57     24.00     24.28

Common Equity Tier 1 capital to risk-weighted assets

     12.94     14.72     12.93     12.44     N/A       N/A       N/A  

Tier 1 capital to average assets

     10.58     12.11     12.10     9.76     16.99     13.14     13.09

 

    

(unaudited)

At or for the six months

ended June 30,

    At or for the year ended December 31,  
     2017     2016     2016     2015     2014*     2013     2012  

ASSET QUALITY RATIOS:

              

Allowance for loan losses as a percentage of total loans

     0.52     0.77     0.48     0.76     1.56     1.52     1.96

Allowance for loan losses as a percentage of nonperforming loans

     519.09     227.77     1125.09     334.34     193.50     44.95     44.92

Net (recoveries) charge-offs to average outstanding loans during the year

     (0.12 %)      (0.01 %)      (0.10 %)      (0.36 %)      2.22     0.50     0.96

Nonperforming loans as a percentage of total loans

     0.10     0.34     0.04     0.23     0.81     3.37     4.34

Total nonperforming assets as a percentage of total assets

     0.08     0.26     0.03     0.15     1.20     2.70     3.12

OTHER DATA:

              

Number of offices

     18       12       18       12       5       5       5  

Number of full-time equivalent employees

     153       118       155       128       74       61       60  

 

(*)

Represents the year Sunshine Bancorp, Inc. was incorporated.

(1)

Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities.

(2)

Represents net interest income as a percentage of average interest-earning assets.

(3)

Represents noninterest expense divided by the sum of net interest income and noninterest income.

(4)

Represents Sunshine Bank capital ratios.

 

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UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma combined consolidated financial information and accompanying notes show the impact on the historical financial conditions and results of operations of CenterState, Sunshine and HCBF and have been prepared to illustrate the effects of the mergers under the acquisition method of accounting. See “The Merger—Accounting Treatment.”

The unaudited pro forma combined consolidated balance sheet as of June 30, 2017 is presented as if the Sunshine and the HCBF mergers had occurred on June 30, 2017. The unaudited pro forma combined consolidated statements of income for the year ended December 31, 2016 and for the six month period ended June 30, 2017 are presented as if both mergers had occurred on January 1, 2016. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the mergers and, with respect to the income statement only, expected to have a continuing impact on consolidated results of operations, and, as such, CenterState’s one-time merger costs for both mergers are not included. The financial condition and results of HCBF also include the effect of the acquisition of Jefferson Bankshares, Inc. (“Jefferson”), which was completed on July 28, 2017. The historical results of operations for Platinum Bank Holding Company (“Platinum”) for the period of January 1, 2017 through March 31, 2017 (the Platinum merger transaction closed on April 1, 2017) are included in the unaudited pro forma combined consolidated statement of income for the six months ended June 30, 2017. The historical results of operations for Gateway Financial Holdings of Florida, Inc. (“Gateway”) for the period of January 1, 2017 through April 30, 2017 (the Gateway merger transaction closed on May 1, 2017) are included in the unaudited pro forma combined consolidated statement of income for the six months ended June 30, 2017. The historical results of operations for Platinum and Gateway for the period of January 1, 2016 through December 31, 2016 are included in the unaudited pro forma combined consolidated statement of income for the year ended December 31, 2016. The unaudited pro forma combined statements of income for the year ended December 31, 2016 and for the six months ended June 30, 2017 assume the Platinum and Gateway mergers were completed on January 1, 2016. No pro forma adjustments for Platinum and Gateway are presented for the unaudited pro forma combined consolidated balance sheet since both transactions are already reflected in CenterState’s historical financial condition at June 30, 2017.

The unaudited pro forma combined consolidated financial statements are provided for informational purposes only. The unaudited pro forma combined consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the mergers been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma combined consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma combined consolidated financial statements should be read together with:

 

   

the accompanying notes to the unaudited pro forma combined consolidated financial statements;

 

   

CenterState’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016, included in CenterState’s Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this proxy statement/prospectus;

 

   

CenterState’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017, included in CenterState’s Quarterly Report on Form 10-Q for the six months ended June 30, 2017, which is incorporated by reference into this proxy statement/prospectus;

 

   

Sunshine’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016, included in Sunshine’s Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this proxy statement/prospectus;

 

   

Sunshine’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017, included in Sunshine’s Quarterly Report on Form 10-Q for the six months ended June 30, 2017, which is incorporated by reference into this proxy statement/prospectus;

 

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Table of Contents
   

HCBF’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016 included as Appendix C in this proxy statement/prospectus;

 

   

HCBF’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017 included as Appendix D in this proxy statement/prospectus;

 

   

Jefferson’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016 included as Appendix E in this proxy statement/prospectus; and

 

   

Jefferson’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017 included as Appendix F in this proxy statement/prospectus.

 

   

HCBF’s unaudited pro forma combined consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2017 included as Appendix G in this proxy statement/prospectus.

 

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Unaudited Pro Forma Combined Consolidated Balance Sheet

As of June 30, 2017

(in thousands)

 

    CenterState
as reported
    Sunshine
as reported
    Pro Forma
adjustments
          CenterState
Sunshine
Pro Forma
    HCBF as
reported
    Jefferson
as reported
    Pro Forma
adjustments
          HCBF
Jefferson
Pro Forma
    Pro Forma
adjustments
          CenterState
Pro Forma
Total Combined
 

Assets:

                         

Cash and cash equivalents

  $ 319,651     $ 63,614     ($ 18,458     c     $ 364,807     $ 62,986       18,056     ($ 9,181     a     $ 71,861     ($ 51,231     a,c     $ 385,437  

Time deposits with banks

    —         835           835         2,739           2,739           3,574  

Investment securities

    1,109,066       106,456           1,215,522       609,929       45,529           655,458       (1,365     d       1,869,615  

Loans held for sale

    8,959       844       (19     e       9,784       6,441             6,441       (218     e       16,007  

Loans held for investment

    4,646,533       707,533       (12,579     e,o       5,341,487       1,064,481       243,457       (2,745     e       1,305,193       (27,790     e,p       6,618,890  

Allowance for loan losses

    (30,132     (3,670     3,670       f       (30,132     (7,120     (2,265     2,265       f       (7,120     7,120       f       (30,132
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Net loans

    4,616,401       703,863           5,311,355       1,057,361       241,192           1,298,073           6,588,758  

Other Real Estate Owned (“OREO”)

    6,422       32       (8     g       6,446       8,665             8,665       (1,665     g       13,446  

Bank premises and equipment, net

    140,820       25,153       (2,300     h       163,673       50,187       4,422       (79     h       54,530       (3,461     h       214,742  

Goodwill

    257,683       20,278       83,567       l,p       361,528       12,286         11,935       l       24,221       200,492       l,p       586,241  

Other intangibles

    27,228       1,877       7,381       i,p       36,486       11,405       264       3,471       i       15,140       6,209       i,p       57,835  

Bank owned life insurance

    115,234       22,779           138,013       38,578             38,578           176,591  

Deferred income tax asset, net

    58,841       4,573       622       j,p       64,036       13,288       738       (1,081     j       12,945       5,949       j,p       82,930  

Prepaid and other assets

    107,174       5,581       6,090       c       118,845       15,267       3,602       (57     k       18,812       1,881       c       139,538  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Total Assets

  $ 6,767,479     $ 955,885         $ 7,791,330     $ 1,886,393     $ 316,542         $ 2,207,463         $ 10,134,714  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Liabilities and Stockholders’ Equity:

                         

Liabilities:

                         

Deposits

  $ 5,475,455     $ 776,053       360       m     $ 6,251,868     $ 1,561,098     $ 237,838       19       m     $ 1,798,955       968       m     $ 8,051,791  

Other borrowings

    303,625       56,887           360,512       76,446       51,045       (37     n       127,454       27       n       487,993  

Corporate debentures

    26,075       —             26,075       5,992             5,992       (199     o       31,868  

Payables and other liabilities

    72,066       6,437           78,503       19,567       1,479           21,046           99,549  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Total liabilities

    5,877,221       839,377           6,716,958       1,663,103       290,362           1,953,447           8,671,201  

Stockholders’ Equity:

                         

Common Stock

    600       80       (9     b,q       671       20       27       (25     b,q       22       128       b,q       821  

Additional paid in capital

    734,059       94,902       89,141       b,q       918,102       202,611       27,277       3,447       b,q       233,335       155,656       b,q       1,307,093  

Retained earnings (deficit)

    155,257       25,234       (25,234     c,q       155,257       23,204       (367     367       q       23,204       (23,204     c,q       155,257  

Unearned employee stock ownership plan (“ESOP”) shares

      (3,047     3,047       q                    

Accumulated other comprehensive income (loss)

    342       (661     661       q       342       (2,545     (757     757       q       (2,545     2,545       q       342  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Total stockholders’ equity

    890,258       116,508           1,074,372       223,290       26,180           254,016           1,463,513  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

Total Liabilities and Stockholders’ Equity

  $ 6,767,479     $ 955,885         $ 7,791,330     $ 1,886,393     $ 316,542         $ 2,207,463         $ 10,134,714  
 

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

       

 

 

 

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

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Unaudited Pro Forma Combined Consolidated Statement of Income

For the year ended December 31, 2016

(in thousands)

 

    CenterState
as reported
    Platinum
as reported
    Pro
Forma
adjustment
        Gateway
as reported
    Pro
Forma
adjustment
        CenterState
Pro Forma
    Sunshine
as reported
    Pro
Forma
adjustment
        CenterState
Sunshine
Pro Forma
    HCBF
as reported
    Jefferson
as reported
    Pro
Forma
adjustment
        Pro Forma
Combined
 

Interest income:

                                 

Loans

  $ 163,625     $ 22,499     $ 1,378     r     $ 23,953     $ 846     r     $ 212,301     $ 19,644     $ 3,046     r     $ 234,991     $ 54,718     $ 9,051     $ 8,797     r     $ 307,557  

Investment securities

    22,829       652           4,746           28,227       1,023           29,250       9,542       808       455     s     40,055  

Federal funds sold and other

    2,211       598           765           3,574       260           3,834       436       78           4,348  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 
    188,665       23,749           29,464           244,102       20,927           268,075       64,696       9,937           351,960  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Interest expense:

                                 

Deposits

    6,934       2,790       (980   t     3,208       (322   t     11,630       1,426       (360   t     12,696       4,441       569       (826   t     16,880  

Other borrowings

    2,406       746           422           3,574       588           4,162       1,159       182           5,503  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 
    9,340       3,536           3,630           15,204       2,014           16,858       5,600       751           22,383  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net interest income

    179,325       20,213           25,834           228,898       18,913           251,217       59,096       9,186           329,577  

Provision (credit) for loan losses

    4,962       362           (388         4,936       350           5,286       4,801       163           10,250  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net interest income after loan loss provision

    174,363       19,851           26,222           223,962       18,563           245,931       54,295       9,023           319,327  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Non interest income:

                                 

Correspondent banking capital markets revenue

    28,817                   28,817             28,817               28,817  

Other correspondent banking related revenue

    4,868                   4,868             4,868               4,868  

Service charges on deposit accounts

    13,564       410           743           14,717       1,368           16,085       2,602             18,687  

Debit, prepaid, ATM and merchant card related fees

    8,254                   8,254             8,254       2,891             11,145  

Wealth management related revenue

    3,237                   3,237             3,237               3,237  

Bank owned life insurance income

    2,534                   2,534       402           2,936       981             3,917  

Other non interest income

    3,082       420           1,885           5,387       1,208           6,595       5,756       762           13,113  

Net gain on sale of securities available for sale

    13             800           813       208           1,021       287             1,308  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Total other income

    64,369       830           3,428           68,627       3,186           71,813       12,517       762           85,092  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

 

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Unaudited Pro Forma Combined Consolidated Statement of Income (continued)

For the year ended December 31, 2016

(in thousands, except per share data)

 

    CenterState
as reported
    Platinum
as reported
    Pro
Forma
adjustment
        Gateway
as reported
    Pro
Forma
adjustment
        CenterState
Pro Forma
    Sunshine
as reported
    Pro
Forma
adjustment
        CenterState
Sunshine
Pro Forma
    HCBF
as reported
    Jefferson
as reported
    Pro
Forma
adjustment
        Pro Forma
Combined
 

Non interest expense:

                                 

Salaries, wages and employee benefits

  $ 90,881     $ 9,306         $ 11,614         $ 111,801     $ 10,752         $ 122,553     $ 28,002     $ 3,833         $ 154,388  

Occupancy expense

    16,178       1,074           2,190           19,442       2,342           21,784       8,348       1,130           31,262  

Data processing expense

    6,867       964           1,672           9,503       1,581           11,084       5,696       799           17,579  

Professional fees

    3,657       521           703           4,881       808           5,689       1,473       139           7,301  

Bank regulatory expenses

    3,420       453           436           4,309       422           4,731       1,186       112           6,029  

Amortization of intangibles

    3,074         599     u       1,264     u     4,937       162       1,227     u     6,326       2,524         678     u     9,528  

Credit related expenses

    1,781       435           (98         2,118             2,118       2,861             4,979  

Marketing expenses

    3,125       335           307           3,767       107           3,874       735       153           4,762  

Merger related expenses

    11,444         (186   v       (11   v     11,247       2,955           14,202       298             14,500  

Loss from termination of FDIC loss share agreements

    17,560                   17,560             17,560               17,560  

Other expenses

    16,494       1,145           3,228           20,867       2,486           23,353       5,325       744           29,422  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Total other expenses

    174,481       14,233           20,052           210,432       21,615           233,274       56,448       6,910           297,310  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Income before provision for income taxes

    64,251       6,448           9,598           82,157       134           84,470       10,364       2,875           107,109  

Provision for income taxes

    21,910         2,949     w,x       2,804       (33   w     27,630       177       841     w       28,648       4,109       1,067       3,626     w       37,450  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net income (loss)

  $ 42,341     $ 6,448         $ 6,794         $ 54,527     ($ 43       $ 55,822     $ 6,255     $ 1,808         $ 69,659  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Less: earnings allocated to participating securities

    163                   163             163               163  

Less: preferred stock dividend

            130       (130   y       —               —                 —    
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net income (loss) available to common shareholders

  $ 42,178     $ 6,448         $ 6,664         $ 54,364     ($ 43       $ 55,659     $ 6,255     $ 1,808         $ 69,496  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Basic earnings (loss) per common share

  $ 0.89       NA         $ 1.05         $ 0.97     ($ 0.01       $ 0.88     $ 0.31     $ 0.67         $ 0.89  

Diluted earnings (loss) per common share

  $ 0.88       NA         $ 0.99         $ 0.95     ($ 0.01       $ 0.86     $ 0.30     $ 0.65         $ 0.87  

Weighted average common shares outstanding

                                 

Basic

    47,409       NA           6,376           55,932       5,402           63,071       20,052       2,698           78,037  

Diluted

    48,192       NA           6,751           57,107       5,402           64,348       20,601       2,795           79,555  

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

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Table of Contents

Unaudited Pro Forma Combined Consolidated Statement of Income

For the six months ended June 30, 2017

(in thousands)

 

    CenterState
as reported
    Platinum
Mar. 31
    Pro
Forma
adjustment
        Gateway
Apr. 30
    Pro
Forma
adjustment
        CenterState
Pro Forma
    Sunshine
as reported
    Pro
Forma
adjustment
        CenterState
Sunshine
Pro Forma
    HCBF
as reported
    Jefferson
as reported
    Pro
Forma
adjustment
        Pro Forma
Combined
 

Interest income:

                                 

Loans

  $ 100,868     $ 5,658     ($ 430   r   $ 8,243     ($ 177   r   $ 114,162     $ 16,215     $ 1,173     r   $ 131,550     $ 27,671     $ 5,166     $ 3,422     r   $ 167,809  

Investment securities

    13,492       150           1,782           15,424       874           16,298       5,875       403       228     s     22,804  

Federal funds sold and other

    1,487       65           201           1,753       230           1,983       258       52           2,293  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 
    115,847       5,873           10,226           131,339       17,319           149,831       33,804       5,621           192,906  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Interest expense:

                                 

Deposits

    4,516       708       129     t     972       7     t     6,332       1,120           7,452       2,588       294       (10   t     10,324  

Other borrowings

    1,993       180           193           2,366       497           2,863       544       150           3,557  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 
    6,509       888           1,165           8,698       1,617           10,315       3,132       444           13,881  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net interest income

    109,338       4,985           9,061           122,641       15,702           139,516       30,672       5,177           179,025  

Provision for loan losses

    2,894             78           2,972             2,972       1,563       143           4,678  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net interest income after loan loss provision

    106,444       4,985           8,983           119,669       15,702           136,544       29,109       5,034           174,347  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Non interest income:

                                 

Correspondent banking capital markets revenue

    12,244                   12,244             12,244       1,564             13,808  

Other correspondent banking related revenue

    2,268                   2,268             2,268               2,268  

Service charges on deposit accounts

    7,397       101           338           7,836       1,008           8,844         211           9,055  

Debit, prepaid, ATM and merchant card related fees

    4,589                   4,589             4,589       1,557             6,146  

Wealth management related revenue

    1,784                   1,784             1,784               1,784  

Bank owned life insurance income

    1,335                   1,335       370           1,705       524             2,229  

Other non interest income

    1,859       3                 1,862       845           2,707       2,599             5,306  

Net gain on sale of securities available for sale

    —               568           568             568       14       237           819  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Total other income

    31,476       104           906           32,486       2,223           34,709       6,258       448           41,415  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

 

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Table of Contents

Unaudited Pro Forma Combined Consolidated Statement of Income (continued)

For the six months ended June 30, 2017

(in thousands, except per share data)

 

    CenterState
as reported
    Platinum
Mar. 31
    Pro
Forma
adjustment
        Gateway
Apr. 30
    Pro
Forma
adjustment
        CenterState
Pro Forma
    Sunshine
as reported
    Pro
Forma
adjustment
        CenterState
Sunshine
Pro Forma
    HCBF
as reported
    Jefferson
as reported
    Pro
Forma
adjustment
        Pro Forma
Combined
 

Non interest expense:

                                 

Salaries, wages and employee benefits

  $ 51,199     $ 2,327         $ 4,354         $ 57,880     $ 7,325         $ 65,205     $ 14,567     $ 2,179         $ 81,951  

Occupancy expense

    5,818       224           895           6,937       1,429           8,366       3,887       563           12,816  

Data processing expense

    4,245       239           24           4,508       1,101           5,609       2,878       455           8,942  

Professional fees

    1,820       380           212           2,412       467           2,879       981       (73         3,787  

Bank regulatory expenses

    1,618       215                 1,833       177           2,010       430       82           2,522  

Amortization of intangibles

    1,804         105     u       327     u     2,236       205       385     u     2,826       1,143       26       218     u     4,213  

Credit related expenses

    1,531       40           71           1,642             1,642       804             2,446  

Marketing expenses

    1,930       72           1           2,003       14           2,017       335       49           2,401  

Merger related expenses

    10,328       5,456       (6,326   v     4,674       (14,132   v     —               —         380             380  

Other expenses

    12,559       900           3,185           16,644       1,833           18,477       2,989     $ 302           21,768  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Total other expenses

    92,852       9,853           13,416           96,095       12,551           109,031       28,394       3,583           141,226  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Income before provision for income taxes

    45,068       (4,764         (3,527         56,060       5,374           62,222       6,973       1,899           74,536  

Provision for income taxes

    13,235         785     w,x     (1,544     5,254     w     17,730       1,943       304     w     19,977       2,541       729       1,240     w     24,487  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net income

  $ 31,833     ($ 4,764       ($ 1,983       $ 38,330     $ 3,431         $ 42,245     $ 4,432     $ 1,170         $ 50,049  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Less: earnings allocated to participating securities

    74                   74             74               74  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Net income available to common shareholders

  $ 31,759     ($ 4,764       ($ 1,983       $ 38,256     $ 3,431         $ 42,171     $ 4,432     $ 1,170         $ 49,975  
 

 

 

   

 

 

       

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

 

 

       

 

 

 

Basic earnings per common share

  $ 0.58       NA           NA         $ 0.64     $ 0.44         $ 0.63     $ 0.22     $ 0.43         $ 0.61  

Diluted earnings per common share

  $ 0.57       NA           NA         $ 0.64     $ 0.43         $ 0.62     $ 0.22     $ 0.42         $ 0.60  

Weighted average common shares outstanding

                                 

Basic

    54,490       NA           NA           59,451       7,712           66,590       20,053       2,698           81,556  

Diluted

    55,397       NA           NA           60,358       7,908           67,765       20,600       2,813           83,423  

See accompanying notes to Unaudited Pro Forma Combined Consolidated Financial Information

 

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Table of Contents

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(all amounts are in thousands, except per share data, unless otherwise indicated)

Note 1—Basis of Pro Forma Presentation

The unaudited pro forma combined balance sheet as of June 30, 2017 and the unaudited pro forma combined statements of income for the year ended December 31, 2016 and for the six months ended June 30, 2017 are based on the historical financial statements of CenterState, Sunshine and HCBF after giving effect to the completion of the mergers and the assumptions and adjustments described in the accompanying notes. Such financial statements do not reflect cost savings or operating synergies expected to result from the mergers, or the costs to achieve these cost savings or operating synergies, or any anticipated disposition of assets that may result from the integration of the operations of the three companies. The financial condition and results of operations of HCBF also include the effect of the acquisition of Jefferson, which was completed on July 28, 2017. The historical results of operations for Platinum for the period of January 1, 2017 through March 31, 2017 (the Platinum merger transaction closed on April 1, 2017) are included in the unaudited pro forma combined consolidated statement of income for the six months ended June 30, 2017. The historical results of operations for Gateway for the period of January 1, 2017 through April 30, 2017 (the Gateway merger transaction closed on May 1, 2017) are included in the unaudited pro forma combined consolidated statement of income for the six months ended June 30, 2017. The historical results of operations for Platinum and Gateway for the period of January 1, 2016 through December 31, 2016 are included in the unaudited pro forma combined consolidated statement of income for the year ended December 31, 2016. The unaudited pro forma combined statements of income for the year ended December 31, 2016 and for the six months ended June 30, 2017 assume the Platinum and Gateway mergers were completed on January 1, 2016. No pro forma adjustments for Platinum and Gateway are presented for the unaudited pro forma combined consolidated balance sheet since both transactions are already reflected in CenterState’s historical financial condition at June 30, 2017. Certain historical financial information has been reclassified to conform to the current presentation.

The transactions will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.

Under ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. Subsequent to the completion of the mergers, CenterState, Sunshine and HCBF will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company. For those assets in the combined company that will be phased out or will no longer be used, additional amortization, depreciation and possibly impairment charges will be recorded after management completes the integration plan.

The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

Note 2—Preliminary Estimated Acquisition Consideration

Under the terms of the Sunshine merger agreement, Sunshine stockholders are entitled to receive 0.89 shares of CenterState common stock for each share of Sunshine common stock.

 

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Table of Contents

Based on the number of shares of Sunshine common stock outstanding as of June 30, 2017, the preliminary estimated acquisition consideration is as follows.

 

(dollars in thousands, except per share data)

      

Number of shares of Sunshine common stock outstanding at June 30, 2017

     8,021,650  

Per share exchange ratio

     0.89  
  

 

 

 

Number of shares of CenterState common stock—as exchanged

     7,139,269  

Multiplied by CenterState common stock price per share on June 30, 2017

   $ 24.86  
  

 

 

 

Estimated fair value of CenterState common stock issued

   $ 177,482  
  

 

 

 

Preliminary estimated total consideration to be paid to Sunshine common shareholders

   $ 177,482  

Estimated fair value of Sunshine stock options converted to CenterState stock options

     6,632  
  

 

 

 

Total Preliminary Estimated Acquisition Consideration for Sunshine

   $ 184,114  
  

 

 

 

Under the terms of the HCBF merger agreement, HCBF shareholders will be entitled to receive 0.675 shares of CenterState common stock and $1.925 in cash for each share of HCBF common stock.

Based on the number of shares of HCBF common stock outstanding as of June 30, 2017, the preliminary estimated acquisition consideration is as follows.

 

(dollars in thousands, except per share data)

      

Number of shares of HCBF common stock outstanding at June 30, 2017

     20,052,830  

Number of HCBF common shares assumed issued pursuant to acquisition of Jefferson

     2,119,020  
  

 

 

 

Total HCBF common shares including shares issued pursuant to acquisition of Jefferson

     22,171,850  

Per share exchange ratio

     0.675  
  

 

 

 

Number of shares of CenterState common stock—as exchanged

     14,965,999  

Multiplied by CenterState common stock price per share on June 30, 2017

   $ 24.86  
  

 

 

 

Estimated fair value of CenterState common stock issued

   $ 372,055  
  

 

 

 

Total HCBF common shares including shares issued pursuant to acquisition of Jefferson

     22,171,850  

Multiplied by the cash consideration each HCBF share is entitled to receive

   $ 1.925  
  

 

 

 

Total Cash Consideration

   $ 42,681  
  

 

 

 

Total Stock Consideration

   $ 372,055  

Total Cash Consideration

     42,681  
  

 

 

 

Preliminary estimated total consideration to be paid to HCBF common shareholders

   $ 414,736  

Estimated fair value of HCBF stock options converted to CenterState stock options

     17,086  
  

 

 

 

Total Preliminary Estimated Acquisition Consideration for HCBF

   $ 431,822  
  

 

 

 

Note 3—Preliminary Estimated Acquisition Consideration Allocation

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of Sunshine and HCBF based on their estimated fair values as of the closing of the mergers. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed for each acquisition, if any, is allocated to goodwill.

The allocation of the estimated acquisition consideration with regard to Sunshine and HCBF is preliminary because the proposed mergers have not yet been completed. The preliminary allocation is based on estimates, assumptions, valuations, and other studies that have not progressed to a stage where there is sufficient

 

28


Table of Contents

information to make a definitive allocation. Accordingly, the acquisition consideration allocation adjustments will remain preliminary until CenterState management determines the final acquisition consideration and the fair values of the assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the mergers and will be based on the value of the CenterState common stock at the closing of the mergers. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma combined consolidated financial statements.

The total preliminary estimated acquisition consideration as shown in the tables above is allocated to Sunshine’s and HCBF’s tangible and intangible assets and liabilities as of June 30, 2017 based on their preliminary estimated fair values as follows (in thousands).

 

     Sunshine      HCBF  

Cash and cash equivalents

   $ 45,156      $ 63,311  

Interest-earning time deposits

     835        2,739  

Investment securities

     106,456        654,093  

Loans held for sale

     825        6,223  

Loans held for investment

     694,954        1,277,403  

OREO (foreclosed assets)

     24        7,000  

Bank premises and equipment

     22,853        51,069  

Bank owned life insurance

     22,779        38,578  

Deferred income tax asset, net

     5,195        18,894  

Other assets

     11,671        20,693  

Intangible assets

     9,258        21,349  

Goodwill

     103,845        224,713  

Deposits

     (776,413      (1,799,923

Other borrowings

     (56,887      (127,481

Corporate debentures

     —          (5,793

Other liabilities

     (6,437      (21,046
  

 

 

    

 

 

 

Total Preliminary Estimated Acquisition Consideration

   $ 184,114      $ 431,822  
  

 

 

    

 

 

 

Approximately $9,258 and $21,349 for Sunshine and HCBF, respectively, have been preliminarily allocated to amortizable intangible assets acquired. The amortization related to the preliminary fair value of net amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined financial statements.

Identifiable intangible assets. The preliminary fair values of intangible assets were determined based on the provisions of ASC 805, which defines fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The preliminary allocation to intangible assets is allocated to core deposit intangibles.

Goodwill. Goodwill represents the excess of the preliminary estimated acquisition consideration over the preliminary fair value of the underlying net tangible and intangible assets. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets are the experience and expertise of personnel, operations, customer base and organizational cultures that can be leveraged to enable the combined company to build an enterprise greater than the sum of its parts. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment. In the event management determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the period in which the determination is made.

 

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Table of Contents

Note 4—Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

The unaudited pro forma financial information is not necessarily indicative of what the financial position actually would have been had the mergers been completed at the date indicated. Such information includes adjustments that are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-merger periods. The unaudited pro forma financial information does not give consideration to the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the mergers.

The following unaudited pro forma adjustments result from accounting for the merger, including the determination of fair value of the assets, liabilities, and commitments that CenterState, as the acquirer, will acquire from Sunshine and HCBF. The Jefferson pro forma adjustments presented below are preliminary fair value estimates prepared by HCBF for the acquisition of Jefferson. The descriptions related to these preliminary adjustments are as follows (in thousands):

Balance Sheet—the explanations and descriptions below are referenced to the June 30, 2017 Unaudited Pro Forma Combined Consolidated Balance Sheet on page 22.

 

         Sunshine     Jefferson     HCBF  

Pro Forma Adjusting entries (Balance Sheet):

  Debit     Credit     Debit     Credit     Debit     Credit  

a

  

Cash

        $ 9,181       $ 42,681  

b

  

Common stock

    $ 71         2         150  

b

  

Additional paid in capital

      184,043         30,724         388,991  

c

  

Cash

      18,458             8,550  

c

  

Income tax benefit (included in other assets)

  $ 6,090           $ 1,881    

c

  

Retained earnings

    12,368             6,669    

d

  

Investment securities

              1,365  

e

  

Loans held for sale

      19             218  

e

  

Loans held for investment

      15,981         2,745         44,192  

f

  

Allowance for loan losses

    3,670         2,265         7,120    

g

  

Other real estate owned (“OREO”)

      8             1,665  

h

  

Property and equipment, net

      2,300         79         3,461  

i

  

Core deposit intangible (“CDI”)

    9,258         3,471         21,349    

j

  

Deferred tax asset

    902           1,081       8,960    

k

  

Other assets

          57      

l

  

Preliminary goodwill estimate

    103,845         11,935         224,713    

m

  

Deposits

      360         19         968  

n

  

Federal Home Loan Bank advances

        37           27  

o

  

Corporate debentures

            199    

p

  

Loans

    3,402             16,402    

p

  

Goodwill

      20,278             24,221  

p

  

CDI

      1,877             15,140  

p

  

Deferred tax asset

      280             3,011  

q

  

Common Stock

    80         27         22    

q

  

Additional paid in capital

    94,902         27,277         233,335    

q

  

Retained earnings

    12,866           367       16,535    

q

  

Unearned employee stock ownership plan shares

      3,047          

q

  

Accumulated other comprehensive loss

      661         757         2,545  

 

a.

Payment of the cash consideration component of total merger consideration to shareholders.

 

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b.

CenterState common shares issued to Sunshine and HCBF’s shareholders representing the stock consideration component of the total respective merger consideration. The pro forma adjustments to additional paid in capital for Sunshine and HCBF also include the estimated fair value of Sunshine and HCBF’s stock options, which convert to CenterState stock options. For the purpose of this pro-forma presentation, the value of a share of CenterState common stock was assumed to equal its closing price on June 30, 2017, the pro forma date, as reported by NASDAQ ($24.86 per share). The amount presented above for Jefferson represents the value of HCBF common shares issued to Jefferson shareholders for the stock consideration component of the total merger consideration.

c.

Represents Sunshine’s and HCBF’s estimated merger expenses, which are expected to be paid immediately prior to each merger’s closing date, the related tax benefit and the net effect on Sunshine’s and HCBF’s retained earnings. The estimated merger expenses for HCBF also include estimated buyer merger expenses of approximately $3,958 pursuant to HCBF’s acquisition of Jefferson.

d.

Adjust investment securities to estimated fair value.

e.

Adjustment to loans held for sale and loans held for investment to reflect the preliminary estimated fair value.

f.

Adjustment to allowance for loan losses to reflect the reversal of Sunshine’s, Jefferson’s and HCBF’s allowance for loan and lease losses.

g.

Adjustment to OREO to reflect the preliminary estimated fair value associated with CenterState’s estimated marketability discounts and liquidation strategy.

h.

Adjustment to branch real estate to reflect the preliminary estimated fair value.

i.

Adjustment to reflect the preliminary estimate of the core deposit intangible.

j.

Adjustment to reflect the net deferred tax asset generated by the net fair value adjustments and existing pre-merger timing differences using an assumed effective tax rate equal to 38.575% for Sunshine and HCBF and 37.63% for Jefferson.

k.

Represents the write-off of certain prepaid expenses included in other assets by HCBF pursuant to the Jefferson acquisition.

l.

Adjustment to reflect the preliminary estimated goodwill generated as a result of consideration paid in excess of the fair value of the net assets acquired.

m.

Adjustment to time deposits to reflect preliminary estimated fair value.

n.

Adjust Federal Home Loan Bank advances to estimated fair value.

o.

Adjustment to corporate debentures to reflect preliminary estimated fair value.

p.

Adjustments to reflect the reversal of existing fair value adjustments to loans and CDI and the related deferred tax asset and goodwill at Sunshine and HCBF from previous acquisitions.

q.

Reflects the reversal of stockholders’ equity after adjustments in c above.

Income Statements—the explanations and descriptions below are referenced to the Unaudited Pro Forma Combined Consolidated Statements of Income for the year ended December 31, 2016 and for the six months ended June 30, 2017 starting on page 23.

 

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Income Statements—Pro Forma Adjustments

 

          Year ended Dec. 31, 2016  

Pro Forma Adjusting entries (Income Statements) (in thousands):

   Platinum     Gateway     Sunshine     HCBF  

r

  

Preliminary estimate of loan interest accretion

    $ 1,378      $ 846      $ 3,046      $ 8,797  

s

  

Investment securities amortization of fair value adjustment at acquisition date

          $ 455  

t

  

Time Deposits amortization of fair value adjustment at acquisition date

   ($ 980   ($ 322   ($ 360   ($ 826

u

  

Remove amortization of existing CDI

       ($ 162   ($ 2,524

u

  

Amortization of new CDI

    $ 599      $ 1,264      $ 1,389      $ 3,202  

v

  

Remove merger related fees

   ($ 186   ($ 11    

w

  

Income tax expense of pro-forma adjustments

    $ 750     ($ 33    $ 841      $ 3,626  

x

  

Income tax expense for Platinum pretax income using CenterState effective tax rate

    $ 2,199        

y

  

Effect of redeeming preferred stock

     ($ 130    

 

          Six months ended June 30, 2017  

Pro Forma Adjusting entries (Income Statements) (in thousands):

   Platinum     Gateway     Sunshine     HCBF  

r

  

Remove existing interest accretion

   ($ 847   ($ 486    

r

  

Preliminary estimate of loan interest accretion

    $ 417      $ 309      $ 1,173      $ 3,422  

s

  

Investment securities amortization of fair value adjustment at acquisition date

          $ 228  

t

  

Remove existing time deposit amortization of fair value adjustment

    $ 345      $ 74      

t

  

Time Deposits amortization of fair value adjustment at acquisition date

   ($ 216   ($ 67     ($ 10

u

  

Remove amortization of existing CDI

   ($ 150   ($ 211   ($ 205   ($ 1,143

u

  

Amortization of new CDI

    $ 255      $ 538      $ 590      $ 1,361  

v

  

Remove merger related fees

   ($ 6,326   ($ 14,132    

w

  

Income tax expense of pro-forma adjustments

    $ 2,184      $ 5,254      $ 304      $ 1,240  

x

  

Income tax expense for Platinum pretax income using CenterState effective tax rate

   ($ 1,399      

 

r.

Represents the reversal of existing interest accretion recorded by CenterState for loans acquired from the Platinum and Gateway mergers and the estimate of interest income accretion related to the preliminary estimate of the fair value adjustment of the loans acquired pursuant to the Platinum, Gateway, Sunshine and HCBF mergers.

s.

Represents the estimate of investment securities amortization related to preliminary estimates of the fair value adjustments on investment securities pursuant to the HBCF Merger.

t.

Represents the reversal of existing time deposits amortization recorded by CenterState for time deposits assumed from the Platinum and Gateway mergers and estimates of time deposit amortization related to preliminary estimates of the fair value adjustments on the time deposits acquired pursuant to the Platinum, Gateway, Sunshine and HCBF mergers. The time deposits assumed from Sunshine and HCBF will be adjusted to fair value at the acquisition date. The preliminary estimates of the fair value adjustment at acquisition date from the Sunshine and HCBF mergers are expected to approximate $360 and $968, respectively. This amount will be amortized as a decrease to interest expense on a pro rata basis based on the maturities of the underlying time deposits. The amortization for Sunshine is preliminarily estimated to approximate $360 during the first year of combined operations. The amortization for HCBF is preliminarily estimated to approximate $826 and $10 during the first and second year of combined operations, respectively.

 

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u.

Represents the reversal of existing CDI amortization recorded by CenterState for deposits assumed from the Platinum and Gateway mergers, existing CDI amortization recorded by Sunshine and HCBF for their prior acquisitions, and estimates of CDI amortization related to preliminary estimates of the fair value adjustments on the time deposits acquired pursuant to the Platinum, Gateway, Sunshine and HCBF mergers. The preliminary estimates of CDI related to CenterState’s acquisition of Sunshine and HCBF are expected to approximate $9,258 and $21,349, respectively, and will be amortized over a ten-year period on an accelerated basis. The CDI amortization expense for Sunshine and HCBF is expected to be approximately $1,389 and $3,202, respectively, during the first year of combined operations. The CDI amortization expense for Sunshine and HCBF is expected to be approximately $1,180 and $2,722, respectively, during the second year of combined operations. Below is the preliminary estimated amortization schedule.

 

Year

   Sunshine      HCBF       

Year

   Sunshine      HCBF  

1

   $ 1,389      $ 3,202        6    $ 805      $ 1,857  

2

     1,180        2,722        7      806        1,858  

3

     1,003        2,314        8      806        1,858  

4

     853        1,967        9      806        1,857  

5

     805        1,857        10      805        1,857  

 

v.

Adjustment to reflect the reversal of merger related expenses incurred by CenterState for the Platinum and Gateway mergers.

w.

Adjustment to reflect the income tax provision of the pro forma adjustments using 38.575% as the incremental effective tax rate.

x.

Adjustment to reflect the income tax provision on Platinum’s pre-merger pre-tax income assuming CenterState’s effective tax rate for the periods presented.

y.

Adjustment to reflect Gateway’s redemption of the non-cumulative perpetual preferred stock, series B prior to the closing date of the merger. This was a condition of closing the transaction.

Note 5—Earnings per Common Share

Unaudited pro forma earnings per common share for the year ended December 31, 2016 and for the six months ended June 30, 2017 have been calculated using CenterState’s historic weighted average common shares outstanding plus the common shares issued to Platinum and Gateway’s shareholders in each merger and the common shares estimated to be issued to Sunshine’s and HCBF’s shareholders in each merger.

The following table sets forth the calculation of basic and diluted unaudited pro forma earnings per common share for the year ended December 31, 2016 and for the six months ended June 30, 2017 (dollars in thousands, except for per share data).

 

     Six months ended      Year ended  
     June 30, 2017      December 31, 2016  
     Basic      Diluted      Basic      Diluted  

Pro forma net income available to common shareholders

   $ 49,975      $ 49,975      $ 69,496      $ 69,496  

Weighted average common shares outstanding:

           

CenterState

     54,490        55,397        47,409        48,192  

Incremental effect of common shares issued to Platinum shareholders

     2,139        2,139        4,279        4,279  

Incremental effect of common shares issued to Gateway shareholders

     2,822        2,822        4,244        4,636  

Common shares issued to Sunshine shareholders

     7,139        7,407        7,139        7,241  

Common shares issued to HCBF shareholders

     14,966        15,658        14,966        15,207  
  

 

 

    

 

 

    

 

 

    

 

 

 

Pro forma weighted average common shares outstanding

     81,556        83,423        78,037        79,555  
  

 

 

    

 

 

    

 

 

    

 

 

 

Pro forma net income per common share

   $ 0.61      $ 0.60      $ 0.89      $ 0.87  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Note 6—Merger Related Charges

CenterState’s preliminary estimated transaction expenses, net of tax, related to the Sunshine and HCBF mergers are approximately $7,745 and $10,337, respectively. These one-time merger related expenses have not been included in the Unaudited Pro Forma Combined Consolidated Statement of Income, as the pro forma adjustments do not give consideration to non-recurring items, the impact of possible cost savings, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions that may result from the mergers. Sunshine’s and HCBF’s preliminary estimated transaction expenses, net of tax, related to the mergers are approximately $12,368 and $4,215, respectively. These preliminary estimated merger transaction expenses (CenterState, Sunshine and HCBF) are still being developed and will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment, and service contracts to determine where they may take advantage of redundancies. The preliminary estimated pro forma presentation of merger transaction costs is in the following table (in thousands).

 

     (Seller)      (Buyer)  
     Sunshine      CenterState  

Change in control and severance expenses

   $ 16,102      $ 1,203  

System termination fees and system conversion expenses

     —          7,162  

Investment bankers, accounting, auditing and legal

     2,356        1,660  

Other related expenses

     —          1,546  
  

 

 

    

 

 

 

Total non-interest expense

   $ 18,458      $ 11,571  

Tax benefit

     6,090        3,826  
  

 

 

    

 

 

 

Net expense after tax benefit

   $ 12,368      $ 7,745  
  

 

 

    

 

 

 

 

     (Seller)      (Buyer)  
     HCBF      CenterState  

Change in control and severance expenses

   $ —        $ 4,541  

System termination fees and system conversion expenses

     —          4,765  

Investment bankers, accounting, auditing and legal

     5,000        3,260  

Other related expenses

     300        2,709  
  

 

 

    

 

 

 

Total non-interest expense

   $ 5,300      $ 15,275  

Tax benefit

     1,085        4,938  
  

 

 

    

 

 

 

Net expense after tax benefit

   $ 4,215      $ 10,337  
  

 

 

    

 

 

 

 

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RISK FACTORS

In deciding how to vote, you should consider carefully all of the information included in this document and its appendices and all of the information incorporated by reference and the risk factors identified by CenterState and Sunshine with respect to their operations included in their filings with the SEC, including in each case the Annual Reports on Form 10-K for the year ended December 31, 2016. See “Where You Can Find More Information” and “Documents Incorporated by Reference.” In addition, you should consider the following risk factors.

Because the market price of the CenterState common stock may fluctuate, Sunshine stockholders cannot be sure of the market value of the merger consideration that they will receive in the merger until the closing.

Upon completion of the merger, each share of Sunshine common stock outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.89 shares of CenterState common stock. The value of the shares of CenterState common stock