Capital Bank Financial
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:

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 banks201,348  116,136  56,711 
Total cash and cash equivalents309,055  204,307  144,696 
Trading securities3,791  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 sale12,874  95,253  10,569 
Loans, net of deferred loan costs and fees7,393,318  5,840,680  5,622,147 
Less: Allowance for loan and lease losses43,065  43,984  45,034 
Loans, net7,350,253  5,796,696  5,577,113 
Other real estate owned53,482  46,007  52,776 
FDIC indemnification asset    6,725 
Receivable from FDIC     678 
Premises and equipment, net205,425  157,863  159,149 
Goodwill235,500  134,522  134,522 
Intangible assets, net33,370  12,288  15,100 
Deferred income tax asset, net150,272  80,418  105,316 
Other assets200,426  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 demand1,930,143  1,463,520  1,382,732 
Money market1,725,838  1,291,948  1,190,121 
Savings497,171  401,205  418,879 
Time deposits 2,137,312  1,668,784  1,747,318 
Total deposits7,880,628   6,033,257  5,860,210 
Federal Home Loan Bank advances545,701  575,751  460,898 
Short-term borrowings19,157  15,428  12,410 
Long-term borrowings116,456  87,445  85,777 
Accrued expenses and other liabilities76,668  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 capital1,368,459  1,078,746  1,076,415 
Retained earnings247,758  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' equity1,292,047  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 spread3.53% 3.43% 3.48% 3.50% 3.57%
Net interest margin3.67% 3.58% 3.62% 3.64% 3.70%
Return on average assets0.53% 0.97% 0.93% 0.53% 0.82%
Return on average shareholders' equity4.05% 7.24% 6.87% 3.96% 5.99%
Efficiency ratio78.02% 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 deposits94.57% 98.46% 96.56% 95.66% 96.68%
Yield on interest-earning assets4.13 % 4.05% 4.09% 4.11% 4.14%
Cost of interest-bearing liabilities0.61% 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 > 90 days past due and still accruing$63,668  $48,477  $56,108  $56,041  $59,194 
Nonperforming loans to loans receivable1.01% 1.02% 1.13% 1.15% 1.21%
Nonperforming assets to total assets1.30% 1.37% 1.44% 1.51% 1.63%
Covered loans to total gross loans% % % % 1.30%
ALLL to nonperforming assets33.45% 41.29% 40.98% 39.97% 37.13%
ALLL to total gross loans0.58% 0.75% 0.78% 0.80% 0.80%
Annualized net charge-offs/average loans0.17% 0.10% 0.11% 0.08% 0.17%
Asset and Credit Quality Ratios-New Loans         
Nonperforming new loans to total new loans receivable0.18% 0.19% 0.12% 0.11% 0.11%
New loans ALLL to total gross new loans0.41% 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 loans0.93% 2.15% 2.04% 1.93% 1.83%
Capital Ratios (Company)         
Total average shareholders' equity to total average assets13.15% 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 land327,622  222,794   212,315  194,971  196,795 
Multifamily commercial real estate117,515  76,296  74,328  75,737  80,708 
1-4 family residential construction and land140,030  111,954  100,306  96,703  93,242 
Total commercial real estate1,716,050  1,331,565  1,278,779  1,218,177  1,237,137 
Owner occupied commercial real estate1,321,405  1,072,586  1,075,306  1,095,460  1,104,972 
Commercial and industrial1,468,874   1,458,523  1,448,698  1,375,233  1,309,704 
Lease financing  525  877  1,088  1,256 
Total commercial2,790,279  2,531,634  2,524,881  2,471,781  2,415,932 
1-4 family residential1,714,702  1,168,468   1,039,309  1,015,071  1,017,791 
Home equity loans507,759  364,117   364,169  368,510  375,276 
Indirect auto loans226,717  254,736  285,618  317,863  351,817 
Other consumer loans222,255  94,277  85,964  84,108  84,661 
Total consumer2,671,433  1,881,598  1,775,060  1,785,552  1,829,545 
Other228,430  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 demand1,930,143  1,463,520  1,456,558  1,402,342  1,382,732 
Money market1,651,023  1,166,918  1,105,460  1,162,546  1,040,086 
Savings497,171  401,205  403,106  420,073  418,879 
Total core deposits5,668,501  4,239,443  4,137,605  4,175,792  3,962,857 
Wholesale money market74,815  125,030  50,015  100,035  150,035 
Time deposits2,137,312  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 expense677  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 expense513  397  399  285  405 
Loan workout expense327  206  71  244  650 
Salaries and employee benefits510  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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