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Oct 16, 2014

Capital Bank Financial Corp. Reports Third Quarter Net Income of $13.2 Million or $0.27 per Diluted Share, up 23% Year Over Year

  • Record new loans of $445 million, up 53% year over year and 35% year to date;
  • Loan portfolio grew sequentially at a 9% annualized rate;
  • Nonperforming loans declined sequentially at a 75% annualized rate; and
  • Legacy credit expenses down 55% year over year.

CORAL GABLES, Fla., Oct. 16, 2014 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported third quarter 2014 net income of $13.2 million, or $0.27 per diluted share, and core net income of $13.5 million, or $0.27 per diluted share. Net income rose 16% year over year and net income per diluted share rose 23%. Core net income rose 6% year over year and core net income per diluted share rose 13%. ROA and Core ROA increased to 0.80% and 0.81%, respectively.

Core adjustments for the third quarter of 2014 included $0.3 million of contingent value right ("CVR") expense, $0.2 million gains on investment securities, and $0.1 million of non-cash equity compensation associated with original founder awards.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "Thanks to the consistent effort of talented teammates across the organization, the Company produced another quarter of record new loans in what is typically our slowest quarter and, as a result, we enjoyed another quarter of steady growth in our loan portfolio."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "In addition to our focus on revenue growth, the Company remains committed to the disciplined management of operating expenses, continued resolution of legacy special assets, prudent underwriting of new loans, and conservative asset liability management. We remain strongly capitalized and are eager to grow customer relationships throughout the Southeast."

Loan Portfolio and Composition

During the third quarter, the loan portfolio increased by $101.6 million to $4.8 billion, a 9% annualized growth rate. New loans of $445.1 million were offset by resolutions totaling $78.6 million, including transfers to OREO of $12.6 million, and principal repayments of $264.9 million.

The relative composition of the Company's loan portfolio at the end of the third and second quarters of 2014 and fourth quarter of 2013 was as follows:

  Sep 30, Jun 30, Dec 31,
  2014 2014 2013
Commercial real estate 25% 25% 27%
C&I 41% 42% 41%
Consumer 32% 31% 30%
Other 2% 2% 2%
Total 100% 100% 100%

Deposits, Composition and Yields

During the third quarter, total deposits remained consistent at $5.2 billion. The cost of deposits remained flat at 0.34% from the second quarter of 2014 and declined four basis points from the third quarter of 2013. The year over year decline was mainly due to continued shrinkage in high-cost legacy time deposits. The cost of core deposits remained flat at 0.14% sequentially and year over year.

Net Interest Income and Net Interest Margin

Net interest income increased $0.6 million sequentially to $61.4 million and declined $4.0 million year over year from $65.4 million. The sequential increase was due to increased loan balances and investment securities yields. The year over year decline was mainly due to the lower yield on new loans as compared to the yields of our legacy portfolio. The net interest margin for the third quarter of 2014 was 4.14%, a decline of 12 basis points sequentially and 31 basis points year over year. The sequential and year over year decline mainly reflects the lower yield on new loans as compared to the yields of our legacy portfolio. The average yield on new loans during the quarter was 3.59%, up sequentially from 3.50%.

Non-Interest Income

Non-interest income declined $1.9 million sequentially to $10.0 million and declined $5.3 million year over year from $15.3 million. The sequential decline was mainly driven by lower credit loss expectations in our legacy loan portfolios, which resulted in an increase of $1.8 million in FDIC indemnification asset amortization, partially offset by a $0.3 million increase in investment advisory fees and $0.3 million in gains on sales of investment securities. The year over year decline was mainly driven by lower credit loss expectations, which resulted in an increase of $3.4 million in FDIC indemnification asset amortization, and the absence of a $1.5 million gain recorded in the prior year on two small investment company partnership interests and a $0.9 million insurance recovery. Partially offsetting the decline was an increase of $0.4 million in investment advisory and trust fees due to increased assets under management and advisory commissions.

Provision for Loan Losses and Credit Quality

The net reversal of provision for loan losses of $1.3 million recorded for the third quarter of 2014 includes a $2.9 million provision for new and acquired non-impaired loans and $4.2 million in reversals of impairments due to improvements in cash flow estimates for certain acquired impaired loan pools.  The improvement in cash flow estimates mainly resulted from higher than anticipated payoffs. Net charge-offs for the third quarter of 2014 were $1.6 million.

At September 30, 2014, the allowance for loan losses was $52.3 million, of which $30.2 million related to acquired impaired loans and $22.1 million related to new and acquired non-impaired loans. The allowance for loan losses represents 1.08% of our total $4.8 billion loan portfolio. 

During the third quarter, non-performing loans declined sequentially by $39.8 million, or 19%, to $172.3 million, a 75% annualized rate.  Acquired impaired loans greater than 90 days past due and still accruing, declined sequentially by $39.1 million, or 19%, to $161.7 million. Nonaccrual loans declined sequentially to 0.32% of total non-purchased credit impaired loans from 0.37%.

New and acquired non-impaired loans now represent 69% of our total loan portfolio as compared to 59% at December 31, 2013.

Non-Interest Expense

Non-interest expense remained consistent at $51.4 million from the second quarter of 2014 and declined $7.9 million from $59.3 million year over year.  Excluding the impact of the higher gains on sales of OREO recorded during the second quarter, non-interest expense declined sequentially mainly as a result of lower salaries and employee benefits, stock-based compensation expense and professional fees. The year over year decline was largely driven by lower legacy credit expenses reflecting the continued resolution of special assets and a decline in stock-based compensation expense and professional fees.

Income Tax Expense

Income tax expense was $8.1 million for the third quarter of 2014, an effective income tax rate of 37.8% as compared to income tax expense of $9.0 million for the third quarter of 2013, an effective income tax rate of 44.0%. The higher prior year third quarter effective rate is mainly due to the impact of a $1.6 million charge as a result of changes in certain statutory rates that were enacted into law.

Financial Position

Total assets increased by $66.3 million to $6.7 billion as of September 30, 2014 from $6.6 billion as of June 30, 2014. During the quarter, the Company's loan portfolio increased by $101.6 million to $4.8 billion, a 9% annualized growth rate.  While sequential deposits remained flat at $5.2 billion, FHLB borrowings increased by $65.0 million.  During the quarter, the Company repurchased approximately 820,000 shares of common stock at an average price of $23.78 per share.  Tangible book value per share was $19.00 as of September 30, 2014, an increase of $0.15 and $0.67 over June 30, 2014 and September 30, 2013, respectively.

The Company's national bank subsidiary, Capital Bank N.A., has preliminary Tier 1, Tier 1 Risk-Based and Total Risk-Based capital ratios of 13.4%, 17.1% and 18.2%, respectively, as of September 30, 2014, under currently applicable regulations. 

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 (719) 325-2448, and the confirmation pass code is 6357936. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through October 24, 2014, by dialing (719) 457-0820 and entering pass code 6357936. 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 each of core net income, core efficiency ratio, and core ROA is useful for both investors and management to understand the effects of certain non-interest items and provides an alternative view of the Company's performance over time and in comparison to the Company's competitors.  Neither core net income, core efficiency ratio, nor core ROA should 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.

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 analyzes 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 national 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 N.A., a national banking association with $6.7 billion in total assets as of September 30, 2014, and 162 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank, N.A., 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
  Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
  2014 2014 2014 2013 2013
Interest and dividend income  $ 67,643  $ 66,846  $ 68,543  $ 71,981  $ 72,480
Interest expense 6,218 6,015 6,090 6,258 7,094
Net Interest Income 61,425 60,831 62,453 65,723 65,386
Provision (reversal) for loan losses (1,332) 1,404 (24) 3,265 984
Net interest income after provision (reversal) for loan losses 62,757 59,427 62,477 62,458 64,402
Non-Interest Income          
Service charges on deposit accounts 5,565 5,672 5,436 5,858 6,034
Debit card income 3,017 3,103 2,844 2,864 2,854
Fees on mortgage loans originated and sold 1,195 1,123 759 1,082 1,477
Investment advisory and trust fees 1,183 910 1,261 1,075 740
FDIC indemnification asset expense (3,881) (2,064) (2,165) (1,877) (502)
Legal settlements and insurance recoveries 1,000 900
Investment securities gains (losses), net 317 (28) 174 164 (247)
Other-than-temporary impairment loss on investments:          
Gross impairment loss (54)
Less: Impairment recognized in other comprehensive income
Net impairment loss recognized in earnings (54)
Other income 2,561 3,171 3,060 3,105 4,078
Total non-interest income 9,957 11,887 11,369 13,271 15,280
Non-Interest Expense          
Salaries and employee benefits 22,590 23,449 23,498 23,969 22,668
Stock-based compensation expense 443 1,020 728 1,127 1,371
Net occupancy and equipment expense 8,475 8,723 8,599 8,457 8,866
Computer services 3,332 3,389 3,253 3,093 3,231
Software expense 1,932 1,940 1,868 1,990 1,874
Telecommunication expense 1,406 1,628 1,608 1,532 1,534
OREO valuation expense 2,752 3,022 3,573 3,190 6,045
(Gains) losses on sales of OREO (223) (3,192) (721) (278) 188
Foreclosed asset related expense 845 991 1,459 1,046 1,265
Loan workout expense 911 1,117 1,177 1,682 2,063
Professional fees 1,532 2,038 2,004 2,409 2,426
Gains on extinguishment of debt (430)
Contingent value right expense (income) 278 327 767 298 (776)
Regulatory assessments 1,637 1,648 1,629 1,647 1,710
Other expense 5,508 5,173 5,782 6,089 7,228
Total non-interest expense 51,418 51,273 55,224 56,251 59,263
Income before income taxes 21,296 20,041 18,622 19,478 20,419
Income tax expense 8,053 7,616 7,208 7,272 8,975
Net income  $ 13,243  $ 12,425  $ 11,414  $ 12,206  $ 11,444
           
Earnings per share:          
Basic  $ 0.28  $ 0.25  $ 0.23  $ 0.24  $ 0.22
Diluted  $ 0.27  $ 0.25  $ 0.22  $ 0.23  $ 0.22
           
Weighted average shares outstanding:          
Basic 47,912 49,090 50,518 50,962 51,804
Diluted 49,069 50,261 51,932 52,227 52,755
           
           
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
       
  Sep 30, Jun 30, Dec 31,
  2014 2014 2013
Assets      
Cash and due from banks  $ 92,704  $ 109,963  $ 118,937
Interest-bearing deposits in other banks 66,706 31,070 45,504
Total cash and cash equivalents 159,410 141,033 164,441
Trading securities 2,312 6,515 6,348
Investment securities available-for-sale at fair value (amortized cost $582,623, $591,668 and $688,717, respectively) 580,732 594,745 685,441
Investment securities held-to-maturity at amortized cost (fair value $457,712, $480,971 and $459,693, respectively) 454,809 475,167 465,098
Loans held for sale 6,439 9,926 8,012
Loans, net of deferred loan costs and fees 4,817,332 4,712,249 4,544,017
Less: Allowance for loan losses 52,334 55,307 56,851
Loans, net 4,764,998 4,656,942 4,487,166
Other real estate owned 90,277 96,283 129,396
FDIC indemnification asset 21,025 25,529 33,610
Receivable from FDIC 3,491 4,578 7,624
Premises and equipment, net 174,941 177,568 179,855
Goodwill 134,522 134,522 131,987
Intangible assets, net 19,865 20,876 23,365
Deferred income tax asset, net 139,388 148,432 166,762
Other assets 138,090 131,890 128,456
Total Assets  $ 6,690,299  $ 6,624,006  $ 6,617,561
Liabilities and Shareholders' Equity      
Liabilities      
Deposits:      
Non-interest bearing demand  $ 1,006,556  $ 1,000,049  $ 923,993
Negotiable order of withdrawal 1,309,839 1,319,667 1,321,903
Money market 914,226 953,446 961,526
Savings 514,729 528,567 530,144
Time deposits 1,430,106 1,359,727 1,447,497
Total deposits 5,175,456 5,161,456 5,185,063
Federal Home Loan Bank advances 226,138 161,185 96,278
Short-term borrowings 23,823 32,814 24,850
Long-term borrowings 139,396 139,116 138,561
Accrued expenses and other liabilities 60,547 55,877 60,021
Total liabilities 5,625,360 5,550,448 5,504,773
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, 36,662 issued and 30,114 outstanding, 36,653 issued and 30,925 outstanding and 36,212 issued and 33,051 outstanding, respectively. 367 367 362
Common stock-Class B $0.01 par value: 200,000 shares authorized, 19,017 issued and 18,217 outstanding, 19,025 issued and 18,225 outstanding and 19,647 issued and 19,047 outstanding, respectively. 190 190 196
Additional paid in capital 1,081,177 1,080,735 1,082,235
Retained earnings 144,567 131,324 107,485
Accumulated other comprehensive loss (6,018) (3,212) (7,528)
Treasury stock, at cost, 7,348, and 6,528 and 3,761 shares, respectively (155,344) (135,846) (69,962)
Total shareholders' equity 1,064,939 1,073,558 1,112,788
Total Liabilities and Shareholders' Equity  $ 6,690,299  $ 6,624,006  $ 6,617,561
       
       
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
           
  Three Months Ended
  Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
  2014 2014 2014 2013 2013
Performance Ratios          
Interest rate spread 4.01% 4.12% 4.28% 4.39% 4.32%
Net interest margin 4.14% 4.26% 4.41% 4.52% 4.45%
Return on average assets 0.80% 0.76% 0.70% 0.74% 0.69%
Return on average shareholders' equity 4.95% 4.58% 4.09% 4.39% 4.12%
Efficiency ratio 72.03% 70.51% 74.81% 71.21% 73.47%
Average interest-earning assets to average interest-bearing liabilities 131.43% 131.23% 129.81% 129.70% 127.15%
Average loans receivable to average deposits 92.32% 89.10% 88.18% 85.88% 84.58%
Yield on interest-earning assets 4.56% 4.67% 4.83% 4.95% 4.93%
Cost on interest-bearing liabilities 0.55% 0.55% 0.56% 0.56% 0.61%
Asset and Credit Quality Ratios-Total Loans          
Non-accrual loans  $ 10,590  $ 11,368  $ 10,107  $ 11,810  $ 13,824
Acquired impaired loans &#62 90 days past due and still accruing  $ 161,670  $ 200,755  $ 226,941  $ 253,817  $ 261,470
Nonperforming loans to loans receivable 3.57% 4.49% 5.21% 5.84% 6.15%
Nonperforming assets to total assets 3.93% 4.66% 5.47% 5.98% 6.14%
Covered loans to total gross loans 4.58% 5.09% 5.71% 6.27% 7.03%
ALLL to nonperforming assets 19.92% 17.93% 15.52% 14.38% 13.91%
ALLL to total gross loans 1.08% 1.17% 1.22% 1.25% 1.26%
Annualized net charge-offs/average loans 0.14% 0.15% 0.11% 0.08% 0.04%
Asset and Credit Quality Ratios-New Loans          
Nonperforming new loans to total new loans receivable 0.22% 0.21% 0.24% 0.34% 0.45%
New loans ALLL to total gross new loans 0.72% 0.74% 0.80% 0.80% 0.82%
Asset and Credit Quality Ratios-Acquired Loans          
Nonperforming acquired loans to total acquired loans receivable 9.11% 10.25% 10.67% 11.16% 10.61%
Covered acquired loans to total gross acquired loans 11.84% 11.95% 11.98% 12.34% 12.53%
Acquired loans ALLL to total gross acquired loans 1.67% 1.76% 1.68% 1.69% 1.61%
Capital Ratios (Company)          
Total average shareholders' equity to total average assets 16.14% 16.64% 17.01% 16.85% 16.64%
Tangible common equity ratio (1) 13.93% 14.19% 14.82% 14.82% 14.76%
Tier 1 leverage ratio (2) 14.40% 14.61% 14.94% 14.95% 14.47%
Tier 1 risk-based capital ratio (2) 18.40% 18.57% 19.68% 19.74% 19.72%
Total risk-based capital ratio (2) 19.52% 19.77% 20.92% 21.00% 21.00%
Capital Ratios (Bank)          
Tangible common equity ratio (1) 14.31% 15.11% 14.99% 14.62% 14.43%
Tier 1 leverage ratio (2) 13.37% 14.10% 13.70% 13.40% 12.80%
Tier 1 risk-based capital ratio (2) 17.08% 18.00% 18.10% 17.70% 17.40%
Total risk-based capital ratio (2) 18.20% 19.20% 19.30% 18.90% 18.70%
           
(1) See "Reconciliation of Non-GAAP Measures"
(2)September 30, 2014 regulatory capital ratios are preliminary
           
           
CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
       
  Sep 30, Jun 30, Dec 31,
  2014 2014 2013
Loans      
Non-owner occupied commercial real estate  $ 797,197  $ 793,733  $ 775,733
Other commercial construction and land 243,563 243,671 300,494
Multifamily commercial real estate 71,119 62,793 67,688
1-4 family residential construction and land 76,442 80,160 71,351
Total commercial real estate 1,188,321 1,180,357 1,215,266
Owner occupied commercial real estate 1,026,853 1,040,533 1,058,148
Commercial and industrial loans 959,641 932,800 803,736
Lease financing 2,175 2,346 2,676
Total commercial 1,988,669 1,975,679 1,864,560
1-4 family residential 913,219 863,897 804,322
Home equity loans 373,604 380,767 386,366
Other consumer loans 242,451 213,639 170,526
Total consumer 1,529,274 1,458,303 1,361,214
Other 117,507 107,836 110,989
Total loans  $ 4,823,771  $ 4,722,175  $ 4,552,029
       
Deposits      
Non-interest bearing demand  $ 1,006,556  $ 1,000,049  $ 923,993
Negotiable order of withdrawal 1,309,839 1,319,667 1,321,903
Money market 914,226 953,446 961,526
Savings 514,729 528,567 530,144
Total core deposits 3,745,350 3,801,729 3,737,566
Time deposits 1,430,106 1,359,727 1,447,497
Total deposits  $ 5,175,456  $ 5,161,456  $ 5,185,063
       
       
CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
           
  Three Months Ended
  Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
  2014 2014 2014 2013 2013
Provision (reversal) on legacy loans $ (4,205) $ (940) $ (2,488) $ (1,220) $ (72)
FDIC indemnification asset expense 3,881 2,064 2,165 1,877 502
OREO valuation expense 2,752 3,022 3,573 3,190 6,045
(Gains) losses on sale of OREO (223) (3,192) (721) (278) 188
Foreclosed asset related expense 845 991 1,459 1,046 1,265
Loan workout expense 911 1,117 1,177 1,682 2,063
Salaries and employee benefits 1,100 1,300 1,300 1,300 1,300
Total legacy credit expenses  $ 5,061  $ 4,362  $ 6,465  $ 7,597  $ 11,291
           
           
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
             
  Three Months Ended Three Months Ended
  September 30, 2014 June 30, 2014
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,762,260  $ 62,095 5.17%  $ 4,593,337  $ 61,826 5.40%
Investment securities (1) 1,064,710 5,160 1.92% 1,060,611 4,648 1.76%
Interest-bearing deposits in other banks 38,857 19 0.19% 62,172 37 0.24%
Other earning assets (2) 45,774 604 5.24% 40,346 578 5.75%
Total interest earning assets 5,911,601  $ 67,878 4.56% 5,756,466  $ 67,089 4.67%
Non-interest earning assets 725,578     763,185    
Total assets  $ 6,637,179      $ 6,519,651    
Interest bearing liabilities            
Time deposits  $ 1,372,696  $ 2,983 0.86%  $ 1,358,478  $ 2,878 0.85%
Money market 935,223 552 0.23% 931,867 523 0.23%
Negotiable order of withdrawal 1,313,693 537 0.16% 1,330,856 556 0.17%
Savings 525,854 289 0.22% 531,414 286 0.22%
Total interest bearing deposits 4,147,466 4,361 0.42% 4,152,615 4,243 0.41%
Short-term borrowings and FHLB advances 214,122 125 0.23% 98,002 50 0.20%
Long-term borrowings 136,353 1,732 5.04% 135,831 1,719 5.08%
Total interest bearing liabilities 4,497,941  $ 6,218 0.55% 4,386,448  $ 6,012 0.55%
Non-interest bearing demand 1,010,817     1,002,757    
Other liabilities 57,430     45,281    
Shareholders' equity 1,070,991     1,085,165    
Total liabilities and shareholders' equity  $ 6,637,179      $ 6,519,651    
Net interest income and spread    $ 61,660 4.01%    $ 61,077 4.12%
Net interest margin     4.14%     4.26%
             
(1) Presented on a fully tax equivalent basis
(2)Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks
             
             
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
             
  Three Months Ended Three Months Ended
  September 30, 2014 September 30, 2013
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,762,260  $ 62,095 5.17%  $ 4,514,747  $ 67,524 5.93%
Investment securities (1) 1,064,710 5,160 1.92% 1,230,771 4,639 1.50%
Interest-bearing deposits in other banks 38,857 19 0.19% 61,995 37 0.24%
Other earning assets (2) 45,774 604 5.24% 40,195 533 5.26%
Total interest earning assets 5,911,601  $ 67,878 4.56% 5,847,708  $ 72,733 4.93%
Non-interest earning assets 725,578     832,959    
Total assets  $ 6,637,179      $ 6,680,667    
Interest bearing liabilities            
Time deposits  $ 1,372,696  $ 2,983 0.86%  $ 1,660,373  $ 3,792 0.91%
Money market 935,223 552 0.23% 977,698 544 0.22%
Negotiable order of withdrawal 1,313,693 537 0.16% 1,260,477 521 0.16%
Savings 525,854 289 0.22% 524,728 276 0.21%
Total interest bearing deposits 4,147,466 4,361 0.42% 4,423,276 5,133 0.46%
Short-term borrowings and FHLB advances 214,122 125 0.23% 34,820 7 0.08%
Long-term borrowings 136,353 1,732 5.04% 140,938 1,953 5.50%
Total interest bearing liabilities 4,497,941  $ 6,218 0.55% 4,599,034  $ 7,093 0.61%
Non-interest bearing demand 1,010,817     914,260    
Other liabilities 57,430     55,823    
Shareholders' equity 1,070,991     1,111,550    
Total liabilities and shareholders' equity  $ 6,637,179      $ 6,680,667    
Net interest income and spread    $ 61,660 4.01%    $ 65,640 4.32%
Net interest margin     4.14%     4.45%
             
(1) Presented on a fully tax equivalent basis
(2)Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks
             
             
CAPITAL BANK FINANCIAL CORP.
YEAR TO DATE AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
             
  Nine Months Ended Nine Months Ended
  September 30, 2014 September 30, 2013
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,633,424  $ 187,325 5.41%  $ 4,597,730  $ 207,842 6.04%
Investment securities (1) 1,088,570 14,608 1.79% 1,177,377 12,714 1.44%
Interest-bearing deposits in other banks 49,487 81 0.22% 269,121 510 0.25%
Other earning assets (2) 43,091 1,763 5.47% 38,451 1,485 5.16%
Total interest earning assets 5,814,572  $ 203,777 4.69% 6,082,679  $ 222,551 4.89%
Non-interest earning assets 758,525     859,025    
Total assets  $ 6,573,097      $ 6,941,704    
Interest bearing liabilities            
Time deposits  $ 1,381,485  $ 8,834 0.85%  $ 1,832,242  $ 13,429 0.98%
Money market 938,560 1,602 0.23% 1,048,559 1,748 0.22%
Negotiable order of withdrawal 1,319,416 1,631 0.17% 1,266,451 1,575 0.17%
Savings 530,005 857 0.22% 511,890 789 0.21%
Total interest bearing deposits 4,169,466 12,924 0.41% 4,659,142 17,541 0.50%
Short-term borrowings and FHLB advances 139,063 246 0.24% 38,924 36 0.12%
Long-term borrowings 135,837 5,154 5.07% 151,354 6,346 5.61%
Total interest bearing liabilities 4,444,366  $ 18,324 0.55% 4,849,420  $ 23,923 0.66%
Non-interest bearing demand 985,445     902,337    
Other liabilities 53,082     50,639    
Shareholders' equity 1,090,204     1,139,308    
Total liabilities and shareholders' equity  $ 6,573,097      $ 6,941,704    
Net interest income and spread    $ 185,453 4.14%    $ 198,628 4.23%
Net interest margin     4.26%     4.37%
             
(1) Presented on a fully tax equivalent basis
(2)Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks
             
             
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)
             
CORE NET INCOME Three Months Ended
  September 30, 2014 June 30, 2014 September 30, 2013
Net Income  $ 13,243  $ 13,243  $ 12,425  $ 12,425  $ 11,444  $ 11,444
  Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments            
Non-interest income            
Security (gains) losses* (317) (194) 28 17 54 33
Non-interest expense            
Stock-based compensation expense* 242 148 531 324 1,147 700
Contingent value right expense (income) 278 278 327 327 (776) (776)
Conversion and severance expense* 7 4
Gain on extinguishment of debt* (430) (262)
Tax adjustment 1,545 1,545
Legal settlement 11 11
Taxes            
Tax effect of adjustments* 29 N/A (218) N/A (302) N/A
Core Net Income  $ 13,475  $ 13,475  $ 13,093  $ 13,093  $ 12,699  $ 12,699
Average Assets $6,637,179   $6,519,651   $6,680,667  
ROA** 0.80%   0.76%   0.69%  
Core ROA*** 0.81%   0.80%   0.76%  
             
* Tax effected at an income tax rate of 39%
** 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
  Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
  2014 2014 2014 2013 2013
Net interest income  $ 61,425  $ 60,831  $ 62,453  $ 65,723  $ 65,386
Reported non-interest income 9,957 11,887 11,369 13,271 15,280
Less: Securities gains (losses) 317 (28) 174 164 (54)
Core non-interest income  $ 9,640  $ 11,915  $ 11,195  $ 13,107  $ 15,334
           
Reported non-interest expense  $ 51,418  $ 51,273  $ 55,224  $ 56,251  $ 59,263
Less: Stock-based compensation expense 242 531 533 942 1,147
Contingent value right expense (income) 278 327 767 299 (776)
Conversion and severance expense 7
Gain on extinguishment of debt         (430)
Legal settlement 11
Core non-interest expense  $ 50,898  $ 50,415  $ 53,924  $ 55,010  $ 59,304
Efficiency Ratio* 72.03% 70.51% 74.81% 71.21% 73.47%
Core Efficiency Ratio** 71.62% 69.30% 73.22% 69.78% 73.47%
           
* 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
  Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
  2014 2014 2014 2013 2013
Total shareholders' equity  $ 1,064,939  $ 1,073,558  $ 1,103,756  $ 1,112,788  $ 1,107,825
Less: goodwill, core deposits intangibles, net of taxes (146,671) (147,290) (148,045) (146,258) (147,061)
Tangible book value  $ 918,268  $ 926,268  $ 955,711  $ 966,530  $ 960,764
Common shares outstanding 48,331 49,150 51,129 52,098 52,419
Tangible book value per share***  $ 19.00  $ 18.85  $ 18.69  $ 18.55  $ 18.33
           
*** 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
  Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
  2014 2014 2014 2013 2013
Total shareholders' equity  $ 1,064,939  $ 1,073,558  $ 1,103,756  $ 1,112,788  $ 1,107,825
Less: goodwill, core deposits intangibles (154,387) (155,398) (156,633) (155,351) (156,667)
Tangible common equity  $ 910,552  $ 918,160  $ 947,123  $ 957,437  $ 951,158
Total assets 6,690,299 6,624,006 6,548,624 6,617,561 6,601,311
Less: goodwill, core deposits intangibles (154,387) (155,398) (156,633) (155,351) (156,667)
Tangible assets  $ 6,535,912  $ 6,468,608  $ 6,391,991  $ 6,462,210  $ 6,444,644
Tangible common equity ratio 13.93% 14.19% 14.82% 14.82% 14.76%
           
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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