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Jan 26, 2017

Capital Bank Financial Corp. Reports 4Q GAAP and Core EPS of $0.24 and $0.44

CHARLOTTE, N.C., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported fourth quarter net income of $12.4 million, which declined 17% year-over-year due to non-core costs largely associated with the acquisition of CommunityOne. GAAP net income equated to $0.24 per diluted share. Core net income rose 22% to $22.3 million, or $0.44 per diluted share. Core adjustments for the fourth quarter included $18.5 million of acquisition and integration expenses, a $1.9 million gain on the sale of securities, a $1.4 million charge related to a legal settlement, and a tax adjustment of $1.4 million .

Highlights of the quarter include:

  • Closing the CommunityOne acquisition on October 26, 2016;
  • Achieving CommunityOne cost savings of 35%, to date, versus our original 39% final target; 
  • Managing the Balance Sheet through year-end with $9.9 billion in assets;
  • Rolling out a new payments platform, including new debit card, credit card and merchant service offerings;
  • Reporting a GAAP efficiency ratio of 78.0% and reduced core efficiency ratio of 58.2%; and
  • Declaring a quarterly dividend of $0.12 per common share.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "Capital Bank ended 2016 with very strong results, thanks to the productivity of our teammates, the trust extended us by our clients, and the confidence of our investors.  We believe the bank is very well positioned for 2017 in all of our geographies, and we're especially pleased to have our new teammates from CommunityOne now contributing to the bank's growth and profitability."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "We closed the CommunityOne merger with financial metrics that are slightly better than the original estimates, and we're on track for a smooth systems conversion next month. We are extremely well positioned for consistent improvements in efficiency and profitability throughout 2017."

Loan Portfolio and Composition

During the fourth quarter, the loan portfolio increased by $1.5 billion to $7.4 billion due to the acquisition of CommunityOne. New loans of $445.2 million were offset by $100 million in low yielding loan sales associated with our balance sheet optimization strategy, as well as payoffs totaling $333.6 million and special asset resolutions of $39.1 million.  

The relative composition of the Company's loan portfolio at the end of the fourth quarter of 2015 and third and fourth quarters of 2016 was as follows:

    Dec 31,
 2016
  Sep 30,
 2016
  Dec 31,
2015
Commercial real estate   23 %   22 %   22 %
C&I   38 %   43 %   43 %
Consumer   36 %   32 %   32 %
Other   3 %   3 %   3 %
Total   100 %   100 %   100 %

Deposits Composition and Cost of Funds

During the fourth quarter, total deposits increased by $1.8 billion to $7.9 billion due to the acquisition of CommunityOne. The cost of deposits decreased two basis points to 0.39%, and the cost of core deposits was flat at 0.19%. The contractual cost of total deposits, which excludes purchase accounting, was flat sequentially at 0.41%.

Net Interest Income and Net Interest Margin

Net interest income increased $15.2 million to $77.8 million from $62.6 million for the third quarter of 2016 and increased $15.7 million from $62.1 million for the fourth quarter of 2015. The increase was due to the acquisition of CommunityOne and organic loan growth. The net interest margin for the fourth quarter of 2016 was 3.67%, an increase of nine basis points sequentially and a decrease of three basis points year-over-year. The quarterly increase in net interest margin was primarily due to a recovery of interest income on previous non-performing loans, the deleveraging of lower yielding loans and the pay-down of high cost brokered deposits.

Non-Interest Income

Non-interest income increased $4.6 million to $17.0 million from $12.4 million for the third quarter of 2016 and $6.4 million from $10.6 million for the fourth quarter of 2015. The sequential increase was mainly due to the acquisition of CommunityOne and an increase of $1.8 million in investment securities gains. The year-over-year increase was mainly due to the acquisition of CommunityOne, an increase of $1.8 million in investment securities gains and the absence of $1.5 million of FDIC indemnification asset expense recorded in the prior year.

Provision for Loan Losses and Credit Quality

The provision of $2.0 million recorded for the fourth quarter of 2016 included a $2.6 million provision for new and acquired non-impaired loans, offset by a $0.6 million provision reversal due to changes in cash flow estimates for certain acquired impaired loan pools. The changes in cash flow estimates mainly resulted from improvements in the Company's expectations of future cash flows due to higher than anticipated payoffs and resolutions. Net charge-offs for the fourth quarter of 2016 were $2.9 million.

At December 31, 2016, the allowance for loan losses was $43.1 million, of which $23.0 million related to acquired impaired loans and $20.1 million related to new and acquired non-impaired loans. The allowance for loan losses represents 0.58% of the Company's total $7.4 billion loan portfolio.

Non-Interest Expense

Non-interest expense increased $26.5 million to $74.0 million from $47.5 million for the third quarter of 2016 and increased $26.2 million from $47.8 million for the fourth quarter of 2015. The sequential increase was mainly due to an $18.1 million increase of conversion and merger related expenses related to the CommunityOne acquisition and additional CommunityOne expenses related to the acquisition. The year-over-year increase was mainly due to a $17.8 million increase of conversion and merger related expenses as described above and additional CommunityOne expenses related to the acquisition. Partially offsetting the increase was the absence of $4.2 million in contract termination.

Income Tax Expense

Income tax expense was $6.4 million for the fourth quarter of 2016, an effective income tax rate of 34.1%, as compared to income tax expense of $8.4 million for the third quarter, an effective income tax rate of 31.2%. Income tax expense was $8.8 million for the fourth quarter of 2015, an effective income tax rate of 37.0%. The sequential increase in the effective rate is due to a favorable tax adjustment reported during the third quarter for discrete items.  The year-over-year decrease in the effective tax rate is due to a favorable tax adjustment for discrete tax items reported during the fourth quarter of 2016.

Financial Position

Total assets increased by $2.1 billion to $9.9 billion as of December 31, 2016, from $7.8 billion as of September 30, 2016. During the quarter, the Company's loan portfolio increased by $1.5 billion to $7.4 billion. Deposits increased by $1.8 billion to $7.9 billion and FHLB borrowings decreased by $30.1 million. Tangible book value per share was $20.01 as of December 31, 2016, a decrease of $0.52 and an increase of $0.48 over September 30, 2016 and December 31, 2015, respectively. During the fourth quarter, the Company repurchased 0.4 million shares of common stock for $13.7 million at an average price of $34.79 per share. The Company has $88 million remaining under the current board authorized stock repurchase program.

The Company's bank subsidiary, Capital Bank Corporation, has preliminary Tier 1 Leverage, Tier 1 Common, Tier 1 Risk-Based and Total Risk-Based capital ratios of 11.2%, 12.7%, 12.4% and 13.0%, respectively, as of December 31, 2016, under currently applicable regulations.

The Company declared a cash dividend of $0.12 per share, payable on February 22, 2017, to shareholders of record as of February 8, 2017.

Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. The number to call for this interactive teleconference is (913) 312-1496, and the confirmation pass code is 4273196. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through February 3, 2017, by dialing (719) 457-0820 and entering pass code 4273196. The live broadcast of the conference call will be available online at the Company's web site at www.capitalbank-us.com, by following the link to Investor Relations. An on-line replay of the call will be available at the same site for 90 days.

Forward-Looking Statements

Information in this press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends" and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption "Risk Factors" in the annual report on Form 10-K and other periodic reports filed by us with the Securities and Exchange Commission. Any or all of our forward-looking statements in this press release may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward looking statements including, but not limited to: (1) changes in general economic and financial market conditions; (2) changes in the regulatory environment; (3) economic conditions generally and in the financial services industry; (4) changes in the economy affecting real estate values; (5) our ability to achieve loan and deposit growth; (6) the completion of future acquisitions or business combinations and our ability to integrate any acquired businesses into our business model; (7) projected population and income growth in our targeted market areas; (8) competitive pressures in our markets and industry; (9) our ability to attract and retain key personnel; (10) changes in accounting policies or judgments and (11) volatility and direction of market interest rates and a weakening of the economy which could materially impact credit quality trends and the ability to generate loans. All forward-looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements, which should be read in conjunction with the other cautionary statements that are included elsewhere in this press release. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

Core net income, core efficiency ratio, core return-on-assets ("core ROA"), tangible book value and tangible book value per share are each non-GAAP measures used in this report. A reconciliation to the most directly comparable GAAP financial measures - net income in the case of core net income and core ROA, total non-interest income and total non-interest expense in the case of core efficiency ratio, and total shareholders' equity in the case of tangible book value and tangible book value per share - appears in tabular form at the end of this release. The Company believes core net income, the core efficiency ratio and core ROA are useful for both investors and management to understand the effects of certain non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value and tangible book value per share are useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.

The Company uses these non-GAAP measures for various purposes, including measuring performance for incentive compensation and as a basis for strategic planning and forecasting.

These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

About Capital Bank Financial Corp.

Capital Bank Financial Corp. is a bank holding company, formed in 2009 to create a premier regional banking franchise in the southeastern United States. CBF is the parent of Capital Bank Corporation, a State of North Carolina chartered financial institution with $9.9 billion in total assets as of December 31, 2016, and 196 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank Financial Corporation, please visit www.capitalbank-us.com.

 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
 
    Three Months Ended
    Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
  Dec 31,
 2015
Interest and dividend income   $ 87,746     $ 70,929     $ 69,579     $ 69,472     $ 69,553  
Interest expense   9,927     8,302     8,064     8,105     7,475  
Net Interest Income   77,819     62,627     61,515     61,367     62,078  
Provision for loan and lease losses   1,980     586     1,172     1,375     1,089  
Net interest income after provision for loan and lease losses   75,839     62,041     60,343     59,992     60,989  
Non-Interest Income                    
Service charges on deposit accounts   5,949     4,777     4,486     4,811     4,911  
Debit card income   4,211     3,389     3,235     3,086     3,029  
Fees on mortgage loans originated and sold   1,402     1,334     1,140     971     875  
Investment advisory and trust fees   591     290     455     497     597  
FDIC indemnification asset expense                   (1,526 )
Termination of loss share agreements               (9,178 )    
Investment securities gains   1,894     71     117     40     54  
Other income   2,969     2,509     2,489     2,339     2,657  
Total non-interest income   17,016     12,370     11,922     2,566     10,597  
Non-Interest Expense                    
Salaries and employee benefits   26,134     20,935     20,139     22,162     20,219  
Stock-based compensation expense   531     790     467     317      
Net occupancy and equipment expense   8,374     7,340     7,355     7,703     7,385  
Computer services   4,364     3,153     3,274     3,575     3,479  
Software expense   2,391     1,948     2,000     2,036     2,061  
Telecommunication expense   2,147     1,790     1,558     1,532     1,168  
OREO valuation expense   677     742     1,119     467     341  
Net gains on sales of OREO   (150 )   (159 )   (413 )   (679 )   (801 )
Foreclosed asset related expense   513     397     399     285     405  
Loan workout expense   327     206     71     244     650  
Conversion and merger related expense   18,525     394     1,236     1,687     704  
Professional fees   1,761     1,642     1,353     1,612     1,529  
Restructuring charges, net   4     (113 )   5     142     4,248  
Legal settlement expense   1,361     1,500              
Regulatory assessments   1,092     841     1,259     1,275     1,486  
Other expense   5,943     6,124     4,714     4,580     4,882  
Total non-interest expense   73,994     47,530     44,536     46,938     47,756  
Income before income taxes   18,861     26,881     27,729     15,620     23,830  
Income tax expense   6,427     8,393     10,327     5,780     8,809  
Net income   $ 12,434     $ 18,488     $ 17,402     $ 9,840     $ 15,021  
Earnings per share:                    
Basic   $ 0.25     $ 0.43     $ 0.40     $ 0.23     $ 0.35  
Diluted   $ 0.24     $ 0.42     $ 0.40     $ 0.22     $ 0.34  
                     
Weighted average shares outstanding:                    
Basic   49,334     43,028     43,011     43,063     43,499  
Diluted   50,387     43,909     43,879     43,904     44,550  

 

 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
 
  Dec 31,
 2016
  Sep 30,
 2016
  Dec 31,
 2015
Assets          
Cash and due from banks $ 107,707     $ 88,171     $ 87,985  
Interest-bearing deposits in other banks 201,348     116,136     56,711  
Total cash and cash equivalents 309,055     204,307     144,696  
Trading securities 3,791     3,701     3,013  
Investment securities available-for-sale at fair value (amortized cost $927,266,
  $639,687 and $640,455, respectively)
912,250     652,945     637,329  
Investment securities held-to-maturity at amortized cost (fair value $460,911,
  $474,834 and $475,134, respectively)
463,959     466,063     472,505  
Loans held for sale 12,874     95,253     10,569  
Loans, net of deferred loan costs and fees 7,393,318     5,840,680     5,622,147  
Less: Allowance for loan and lease losses 43,065     43,984     45,034  
Loans, net 7,350,253     5,796,696     5,577,113  
Other real estate owned 53,482     46,007     52,776  
FDIC indemnification asset         6,725  
Receivable from FDIC         678  
Premises and equipment, net 205,425     157,863     159,149  
Goodwill 235,500     134,522     134,522  
Intangible assets, net 33,370     12,288     15,100  
Deferred income tax asset, net 150,272     80,418     105,316  
Other assets 200,426     142,395     129,988  
Total Assets $ 9,930,657     $ 7,792,458     $ 7,449,479  
Liabilities and Shareholders' Equity          
Liabilities          
Deposits:          
Non-interest bearing demand $ 1,590,164     $ 1,207,800     $ 1,121,160  
Interest bearing demand 1,930,143     1,463,520     1,382,732  
Money market 1,725,838     1,291,948     1,190,121  
Savings 497,171     401,205     418,879  
Time deposits 2,137,312     1,668,784     1,747,318  
Total deposits 7,880,628     6,033,257     5,860,210  
Federal Home Loan Bank advances 545,701     575,751     460,898  
Short-term borrowings 19,157     15,428     12,410  
Long-term borrowings 116,456     87,445     85,777  
Accrued expenses and other liabilities 76,668     50,736     43,919  
Total liabilities $ 8,638,610     $ 6,762,617     $ 6,463,214  
Shareholders' equity          
Preferred stock $0.01 par value: 50,000 shares authorized, 0 shares issued          
Common stock-Class A $0.01 par value: 200,000 shares authorized, 46,178
  issued and 34,911 outstanding, 37,253 issued and 26,381 outstanding and 37,012 issued and 26,589 outstanding, respectively.
462     373     370  
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,627
  issued and 16,854 outstanding, 18,627 issued and 16,854 outstanding and 18,327 issued and 16,554 outstanding, respectively.  
186     186     183  
Additional paid in capital 1,368,459     1,078,746     1,076,415  
Retained earnings 247,758     241,554     208,742  
Accumulated other comprehensive loss (gain) (12,434 )   7,621     (5,196 )
Treasury stock, at cost, 13,040, 12,645 and 12,196 shares, respectively (312,384 )   (298,639 )   (294,249 )
Total shareholders' equity 1,292,047     1,029,841     986,265  
Total Liabilities and Shareholders' Equity $ 9,930,657     $ 7,792,458     $ 7,449,479  

 

 
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
2016
  Mar 31,
2016
  Dec 31,
2015
Performance Ratios                  
Interest rate spread 3.53 %   3.43 %   3.48 %   3.50 %   3.57 %
Net interest margin 3.67 %   3.58 %   3.62 %   3.64 %   3.70 %
Return on average assets 0.53 %   0.97 %   0.93 %   0.53 %   0.82 %
Return on average shareholders' equity 4.05 %   7.24 %   6.87 %   3.96 %   5.99 %
Efficiency ratio 78.02 %   63.38 %   60.65 %   73.42 %   65.71 %
Average interest-earning assets to average
  interest-bearing liabilities
130.22 %   131.43 %   131.21 %   129.54 %   129.55 %
Average loans receivable to average deposits 94.57 %   98.46 %   96.56 %   95.66 %   96.68 %
Yield on interest-earning assets 4.13 %   4.05 %   4.09 %   4.11 %   4.14 %
Cost of interest-bearing liabilities 0.61 %   0.62 %   0.62 %   0.62 %   0.57 %
Asset and Credit Quality Ratios-Total Loans                  
Non-accrual loans $ 11,449     $ 11,873     $ 9,016     $ 8,526     $ 8,945  
Acquired impaired loans &#62 90 days past due and still accruing $ 63,668     $ 48,477     $ 56,108     $ 56,041     $ 59,194  
Nonperforming loans to loans receivable 1.01 %   1.02 %   1.13 %   1.15 %   1.21 %
Nonperforming assets to total assets 1.30 %   1.37 %   1.44 %   1.51 %   1.63 %
Covered loans to total gross loans %   %   %   %   1.30 %
ALLL to nonperforming assets 33.45 %   41.29 %   40.98 %   39.97 %   37.13 %
ALLL to total gross loans 0.58 %   0.75 %   0.78 %   0.80 %   0.80 %
Annualized net charge-offs/average loans 0.17 %   0.10 %   0.11 %   0.08 %   0.17 %
Asset and Credit Quality Ratios-New Loans                  
Nonperforming new loans to total new loans receivable 0.18 %   0.19 %   0.12 %   0.11 %   0.11 %
New loans ALLL to total gross new loans 0.41 %   0.43 %   0.46 %   0.47 %   0.47 %
Asset and Credit Quality Ratios-Acquired Loans                  
Nonperforming acquired loans to total acquired loans receivable   2.66 %   4.65 %   5.08 %   4.67 %   4.69 %
Covered acquired loans to total gross acquired loans %   %   %   %   5.43 %
Acquired loans ALLL to total gross acquired loans 0.93 %   2.15 %   2.04 %   1.93 %   1.83 %
Capital Ratios (Company)                  
Total average shareholders' equity to total average assets 13.15 %   13.46 %   13.55 %   13.35 %   13.67 %
Tangible common equity ratio (1) 10.59 %   11.55 %   11.62 %   11.57 %   11.46 %
Tier 1 leverage ratio (2) 12.21 %   12.89 %   12.64 %   12.49 %   12.67 %
Tier 1 risk-based capital ratio (2) 12.40 %   13.27 %   13.38 %   13.38 %   14.73 %
Tier 1 common capital ratio (2) 13.49 %   14.44 %   14.57 %   14.58 %   13.63 %
Total risk-based capital ratio (2) 14.02 %   15.12 %   15.29 %   15.32 %   15.47 %
Capital Ratios (Bank)                  
Tangible common equity ratio (1) 11.07 %   10.74 %   10.71 %   11.45 %   11.20 %
Tier 1 leverage ratio (2) 11.22 %   10.53 %   10.42 %   11.10 %   11.09 %
Tier 1 common capital ratio (2) 12.41 %   11.98 %   11.97 %   12.95 %   12.89 %
Tier 1 risk-based capital ratio (2) 12.41 %   11.98 %   11.97 %   12.95 %   12.89 %
Total risk-based capital ratio (2) 12.95 %   12.70 %   12.72 %   13.72 %   13.68 %

(1) See "Reconciliation of Non-GAAP Measures"
(2) December 31, 2016 regulatory capital ratios are preliminary. The Company became subject to Basel III capital rules on January 1, 2015.

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
 
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
  Dec 31,
2015
Loans                  
Non-owner occupied commercial real estate   $ 1,130,883     $ 920,521     $ 891,830     $ 850,766     $ 866,392  
Other commercial construction and land 327,622     222,794     212,315     194,971     196,795  
Multifamily commercial real estate 117,515     76,296     74,328     75,737     80,708  
1-4 family residential construction and land 140,030     111,954     100,306     96,703     93,242  
Total commercial real estate 1,716,050     1,331,565     1,278,779     1,218,177     1,237,137  
Owner occupied commercial real estate 1,321,405     1,072,586     1,075,306     1,095,460     1,104,972  
Commercial and industrial 1,468,874     1,458,523     1,448,698     1,375,233     1,309,704  
Lease financing     525     877     1,088     1,256  
Total commercial 2,790,279     2,531,634     2,524,881     2,471,781     2,415,932  
1-4 family residential 1,714,702     1,168,468     1,039,309     1,015,071     1,017,791  
Home equity loans 507,759     364,117     364,169     368,510     375,276  
Indirect auto loans 226,717     254,736     285,618     317,863     351,817  
Other consumer loans 222,255     94,277     85,964     84,108     84,661  
Total consumer 2,671,433     1,881,598     1,775,060     1,785,552     1,829,545  
Other 228,430     191,136     166,185     159,447     150,102  
Total loans $ 7,406,192     $ 5,935,933     $ 5,744,905     $ 5,634,957     $ 5,632,716  
                   
Deposits                  
Non-interest bearing demand $ 1,590,164     $ 1,207,800     $ 1,172,481     $ 1,190,831     $ 1,121,160  
Interest bearing demand 1,930,143     1,463,520     1,456,558     1,402,342     1,382,732  
Money market 1,651,023     1,166,918     1,105,460     1,162,546     1,040,086  
Savings 497,171     401,205     403,106     420,073     418,879  
Total core deposits 5,668,501     4,239,443     4,137,605     4,175,792     3,962,857  
Wholesale money market 74,815     125,030     50,015     100,035     150,035  
Time deposits 2,137,312     1,668,784     1,619,507     1,663,906     1,747,318  
Total deposits $ 7,880,628     $ 6,033,257     $ 5,807,127     $ 5,939,733     $ 5,860,210  

 

 
CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
  Dec 31,
 2016
  Sep 30,
2016
  Jun 30,
2016
  Mar 31,
2016
  Dec. 31,
2015
Provision (reversal) on legacy loans $ (638 )   $ 48     $ (778 )   $ 9     $ (1,161 )
FDIC indemnification asset expense                 1,526  
OREO valuation expense 677     742     1,119     467     341  
Termination of loss share agreements               9,178      
Net gains on sales of OREO (150 )   (159 )   (413 )   (679 )   (801 )
Foreclosed asset related expense 513     397     399     285     405  
Loan workout expense 327     206     71     244     650  
Salaries and employee benefits 510     511     519     522     549  
Total legacy credit expenses $ 1,239     $ 1,745     $ 917     $ 10,026     $ 1,509  

 

 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
    Three Months Ended
 December 31, 2016
  Three Months Ended
 September 30, 2016
    Average
Balances
  Interest   Yield / Rate   Average
Balances
  Interest   Yield / Rate
Interest earning assets                        
Loans (1)   $ 6,977,690     $ 79,690     4.54 %   $ 5,786,171     $ 64,055     4.40 %
Investment securities (1)   1,347,554     8,065     2.38 %   1,133,031     6,924     2.43 %
Interest-bearing deposits in other banks   143,446     166     0.46 %   60,373     69     0.45 %
Other earning assets (2)   30,904     382     4.92 %   29,788     337     4.50 %
Total interest earning assets   8,499,594     $ 88,303     4.13 %   7,009,363     $ 71,385     4.05 %
Non-interest earning assets   829,740             583,413          
Total assets   $ 9,329,334             $ 7,592,776          
Interest bearing liabilities                        
Time deposits   $ 2,049,066     $ 4,526     0.88 %   $ 1,613,502     $ 3,992     0.98 %
Money market   1,601,167     1,498     0.37 %   1,225,743     1,132     0.37 %
Interest bearing demand   1,748,269     935     0.21 %   1,444,305     752     0.21 %
Savings   471,466     219     0.18 %   404,187     205     0.20 %
Total interest bearing deposits   5,869,968     7,178     0.49 %   4,687,737     6,081     0.52 %
Short-term borrowings and FHLB advances   548,667     662     0.48 %   558,313     635     0.45 %
Long-term borrowings   108,276     2,087     7.67 %   87,095     1,586     7.24 %
Total interest bearing liabilities   6,526,911     $ 9,927     0.61 %   5,333,145     $ 8,302     0.62 %
Non-interest bearing demand   1,508,496             1,188,771          
Other liabilities   66,710             48,997          
Shareholders' equity   1,227,217             1,021,863          
Total liabilities and shareholders' equity   $ 9,329,334             $ 7,592,776          
Net interest income and spread       $ 78,376     3.53 %       $ 63,083     3.43 %
Net interest margin           3.67 %           3.58 %

 

    Three Months Ended
 December 31, 2016
  Three Months Ended
 December 31, 2015
    Average
Balances
  Interest   Yield / Rate   Average
Balances
  Interest   Yield / Rate
Interest earning assets                        
Loans (1)   $ 6,977,690     $ 79,690     4.54 %   $ 5,496,222     $ 63,035     4.55 %
Investment securities (1)   1,347,554     8,065     2.38 %   1,119,848     6,355     2.25 %
Interest-bearing deposits in other banks   143,446     166     0.46 %   40,177     23     0.23 %
Other earning assets (2)   30,904     382     4.92 %   42,473     553     5.17 %
Total interest earning assets   8,499,594     $ 88,303     4.13 %   6,698,720     $ 69,966     4.14 %
Non-interest earning assets   829,740             633,796          
Total assets   $ 9,329,334             $ 7,332,516          
Interest bearing liabilities                        
Time deposits   $ 2,049,066     $ 4,526     0.88 %   $ 1,774,732     $ 4,124     0.92 %
Money market   1,601,167     1,498     0.37 %   1,081,968     780     0.29 %
Interest bearing demand   1,748,269     935     0.21 %   1,286,737     529     0.16 %
Savings   471,466     219     0.18 %   426,686     236     0.22 %
Total interest bearing deposits   5,869,968     7,178     0.49 %   4,570,123     5,669     0.49 %
Short-term borrowings and FHLB advances   548,667     662     0.48 %   515,302     365     0.28 %
Long-term borrowings   108,276     2,087     7.67 %   85,438     1,441     6.69 %
Total interest bearing liabilities   6,526,911     $ 9,927     0.61 %   5,170,863     $ 7,475     0.57 %
Non-interest bearing demand   1,508,496             1,114,932          
Other liabilities   66,710             44,479          
Shareholders' equity   1,227,217             1,002,242          
Total liabilities and shareholders' equity   $ 9,329,334             $ 7,332,516          
Net interest income and spread       $ 78,376     3.53 %       $ 62,491     3.57 %
Net interest margin           3.67 %           3.70 %

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Home Loan Bank stocks

 
CAPITAL BANK FINANCIAL CORP.
FULL YEAR AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
    Year Ended
 December 31, 2016
  Year Ended
 December 31, 2015
    Average
Balances
  Interest   Yield / Rate   Average
Balances
  Interest   Yield / Rate
Interest earning assets                        
Loans (1)   $ 6,009,297     $ 269,752     4.49 %   $ 5,222,014     $ 247,912     4.75 %
Investment securities (1)   1,184,034     28,084     2.37 %   1,065,699     22,679     2.13 %
Interest-bearing deposits in other banks   85,542     393     0.46 %   47,664     112     0.23 %
Other earning assets (2)   28,143     1,363     4.84 %   48,976     2,646     5.40 %
Total interest earning assets   7,307,016     $ 299,592     4.10 %   6,384,353     $ 273,349     4.28 %
Non-interest earning assets   659,923             657,146          
Total assets   $ 7,966,939             $ 7,041,499          
Interest bearing liabilities                        
Time deposits   $ 1,743,543     $ 16,655     0.96 %   $ 1,574,100     $ 14,481     0.92 %
Money market   1,315,234     4,725     0.36 %   979,650     2,591     0.26 %
Interest bearing demand   1,504,305     3,085     0.21 %   1,338,766     2,239     0.17 %
Savings   426,745     860     0.20 %   464,840     1,002     0.22 %
Total interest bearing deposits   4,989,827     25,325     0.51 %   4,357,356     20,313     0.47 %
Short-term borrowings and FHLB advances   513,650     2,342     0.46 %   381,786     960     0.25 %
Long-term borrowings   92,243     6,731     7.30 %   108,987     6,225     5.71 %
Total interest bearing liabilities   5,595,720     $ 34,398     0.61 %   4,848,129     $ 27,498     0.57 %
Non-interest bearing demand   1,256,284             1,105,553          
Other liabilities   50,152             44,787          
Shareholders' equity   1,064,783             1,043,030          
Total liabilities and shareholders' equity   $ 7,966,939             $ 7,041,499          
Net interest income and spread       $ 265,194     3.49 %       $ 245,851     3.71 %
Net interest margin           3.63 %           3.85 %

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Home Loan Bank stocks

 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)
 
CORE NET INCOME   Three Months Ended
    December 31, 2016   September 30, 2016   December 31, 2015
Net Income   $ 12,434     $ 12,434     $ 18,488     $ 18,488     $ 15,021     $ 15,021  
    Pre-Tax   After-Tax   Pre-Tax   After-Tax   Pre-Tax   After-Tax
Adjustments                        
Non-interest income                        
Security gains*   (1,894 )   (1,170 )   (71 )   (44 )   (54 )   (33 )
Non-interest expense                        
Legal settlement *   1,361     841     1,500     927          
Tax adjustment   (1,350 )   (1,350 )   (1,067 )   (1,067 )        
Severance expense *   7     4                  
Restructuring expense *   4     3     (113 )   (70 )   32     20  
Conversion costs and merger tax deductible *   18,245     11,270     331     205     33     20  
Legal non-deductible   280     280     61     61     673     673  
Contract Termination*                   4,215     2,594  
Tax effect of adjustments*   (6,775 )   N/A     (629 )   N/A     (1,625 )   N/A  
Core Net Income   $ 22,312     $ 22,312     $ 18,500     $ 18,500     $ 18,295     $ 18,295  
                         
Diluted shares   $ 50,387         $ 43,909         $ 44,550      
Core Net Income per share   $ 0.44         $ 0.42         $ 0.41      
                         
Average Assets   $ 9,329,334         $ 7,592,776         $ 7,332,516      
ROA**   0.53 %       0.97 %       0.82 %    
Core ROA***   0.96 %       0.97 %       1.00 %    

* Tax effected at an income tax rate of 38%
** ROA: Annualized net income / Average assets
*** Core ROA: Annualized core net income / Average assets

 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars in thousands)
(Unaudited)
 
CORE EFFICIENCY RATIO   Three Months Ended
    Dec 31
 2016
  Sep 30
 2016
  Jun 30
 2016
  Mar 31
 2016
  Dec 31
 2015
Net interest income   $ 77,819     $ 62,627     $ 61,515     $ 61,367     $ 62,078  
Reported non-interest income   17,016     12,370     11,922     2,566     10,597  
Indemnification asset termination               (9,178 )    
Less: Securities gains (losses)   1,894     71     117     40     54  
Core non-interest income   $ 15,122     $ 12,299     $ 11,805     $ 11,704     $ 10,543  
                     
Reported non-interest expense   $ 73,994     $ 47,530     $ 44,536     $ 46,938     $ 47,756  
Less: Stock-based compensation expense                    
Severance expense   7             75      
Restructuring expense   4     (113 )   5     142     33  
Loss on extinguishment of debt                    
Conversion costs and merger tax deductible   18,245     331     881     1,107     31  
Legal settlement   1,361     1,500              
Legal non-deductible   280     61     355     580     673  
Contract termination                   4,215  
Core non-interest expense   $ 54,097     $ 45,751     $ 43,295     $ 45,034     $ 42,804  
                     
Efficiency ratio*   78.02 %   63.38 %   60.65 %   73.42 %   65.71 %
Core efficiency ratio**   58.21 %   61.06 %   59.05 %   61.63 %   58.94 %

  * Efficiency Ratio: Non-interest expense / (Non-interest income + Net interest income)
** Core Efficiency Ratio: Core non-interest expense / (Core non-interest income + Net interest income)

 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars and shares in thousands, except per share data)
(Unaudited)
 
TANGIBLE BOOK VALUE   Three Months Ended
    Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
  Dec 31,
 2015
Total shareholders' equity   $ 1,292,047     $ 1,029,841     $ 1,016,498     $ 996,993     $ 986,265  
Less: goodwill, core deposits intangibles, net of taxes   (256,176 )   (142,141 )   (142,725 )   (143,304 )   (143,863 )
Tangible book value*   $ 1,035,871     $ 887,700     $ 873,773     $ 853,689     $ 842,402  
Common shares outstanding   51,765     43,235     43,219     43,189     43,143  
Tangible book value per share   $ 20.01     $ 20.53     $ 20.22     $ 19.77     $ 19.53  

* Tangible book value is equal to book value less goodwill and core deposit intangibles, net of related deferred tax liabilities.

TANGIBLE COMMON EQUITY RATIO   Three Months Ended
    Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
  Dec 31,
 2015
Total shareholders' equity   $ 1,292,047     $ 1,029,841     $ 1,016,498     $ 996,993     $ 986,265  
Less: goodwill, core deposits intangibles     (268,870 )   (146,810 )   (147,753 )   (148,688 )   (149,622 )
Tangible common equity   $ 1,023,177     $ 883,031     $ 868,745     $ 848,305     $ 836,643  
Total assets   $ 9,930,657     $ 7,792,458     $ 7,621,225     $ 7,479,798     $ 7,449,479  
Less: goodwill, core deposits intangibles   (268,870 )   (146,810 )   (147,753 )   (148,688 )   (149,622 )
Tangible assets   $ 9,661,787     $ 7,645,648     $ 7,473,472     $ 7,331,110     $ 7,299,857  
Tangible common equity ratio   10.59 %   11.55 %   11.62 %   11.57 %   11.46 %
                               
CONTACT:

Kenneth A. Posner

Chief of Strategic Planning and Investor Relations

Phone: (212) 399-4020

E-mail: Kposner@cbfcorp.com

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Source: Capital Bank Financial Corp.

 

 

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