Capital Bank Financial
Jan 29, 2015

Capital Bank Financial Corp. Reports Fourth Quarter Net Income of $13.8 Million or $0.29 Per Diluted Share, Up 26% Year Over Year, and Full Year Net Income of $50.9 Million or $1.02 Per Diluted Share, Up 40% From 2013

CORAL GABLES, Fla., Jan. 29, 2015 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported fourth quarter 2014 net income of $13.8 million, or $0.29 per diluted share, and core net income of $14.0 million, or $0.29 per diluted share. Net income rose 13% year over year and net income per diluted share rose 26%. Core net income rose 8% year over year and core net income per diluted share rose 16%. Efficiency and Core Efficiency ratios declined to 70.8% and 70.5%, respectively. ROA and Core ROA increased to 0.82% and 0.83%, respectively.

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

For the full year, net income was $50.9 million, or $1.02 per diluted share, and core net income was $53.0 million, or $1.06 per diluted share. Net income rose 31.1% and net income per diluted share rose 40% from the prior year. Core net income rose 15% and core net income per diluted share rose 23%.

Core adjustments for the year included $1.7 million of CVR expense, $0.6 million of gains on sales of investment securities, and $0.9 million of non-cash equity compensation associated with original founder awards.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "This was a strong quarter and a great way to close out a year of enormous progress at Capital Bank. Strong loan growth, core deposit funding, excellent credit quality, and improving profitability will help us achieve our financial targets, which is key to our vision of building a high-performing financial institution."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "In addition to record loan growth and profitability, we remain focused on expenses, which were down 10% for the full year, as we benefited from reduced legacy credit expenses and found ways to selectively reduce occupancy and other costs. We will remain vigilant in managing the cost to deliver the bank's products and services."

Loan Portfolio and Composition

During the fourth quarter, the loan portfolio increased by $176.4 million to $5.0 billion, a 15% annualized growth rate. New loans of $457.3 million were offset by resolutions totaling $54.1 million, including transfers to OREO of $4.4 million, and principal repayments of $226.8 million.

For the full year, new loans were $1.6 billion as compared to $1.3 billion, a 27% increase from the prior year, driving 10% growth in the loan portfolio in 2014.

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

  Dec 31,
 2014
Sep 30,
 2014
Dec 31,
2013
Commercial real estate 23% 25% 27%
C&I 42% 41% 41%
Consumer 32% 32% 30%
Other 3% 2% 2%
Total 100% 100% 100%

Deposits, Composition and Yields

During the fourth quarter, total deposits increased by $79.6 million to $5.3 billion. The sequential increase was mainly as a result of the Company's continued focus in growing lower cost checking accounts, which were up $121.7 million, or 5%, partially offset by some contraction in money market balances. The cost of deposits remained flat at 0.34% sequentially and year over year. The cost of core deposits remained flat at 0.15% sequentially and year over year. Core deposits include all checking, savings and money market accounts and now represent 73% of total deposits.

The cost of deposits for the full year of 2014 was 0.34%, a decline of six basis points from 2013. The improvement was mainly due to planned shrinkage in high cost time deposits. The cost of core deposits remained flat at 0.15% from 2013.

Net Interest Income and Net Interest Margin

Net interest income remained consistent at $61.4 million from the third quarter of 2014 and declined $4.4 million year over year from $65.7 million. The net interest margin for the fourth quarter of 2014 was 4.05%, a decline of nine basis points sequentially and 47 basis points year over year.  The sequential and year over year net interest margin decline was mainly due to the lower yield on new loans as compared to the yields of the Company's legacy portfolio, partially offset by an increase in investment securities yields. 

Net interest income declined $17.5 million for the full year of 2014 from $263.6 million in 2013. The net interest margin for the full year of 2014 was 4.21%, a decline of 19 basis points from 2013. The decline was mainly due to the lower yield on new loans as compared to the yields of the Company's legacy portfolio, partially offset by an increase in investment securities yields and planned shrinkage in high cost time deposits.

Non-Interest Income

Non-interest income increased $0.6 million sequentially to $10.6 million and declined $2.7 million year over year from $13.3 million. The year over year decline was mainly driven by lower credit loss expectations, which resulted in an increase of $1.5 million in FDIC indemnification asset amortization, and the absence of a $1.0 million legal settlement recorded in the prior year.

Non-interest income declined $9.2 million for the full year of 2014 from $53.0 million in 2013. The decline was mainly driven by lower credit loss expectations, which resulted in an increase of $5.9 million in FDIC indemnification asset amortization, and the absence of $1.9 million in legal settlements and insurance recoveries recorded in the prior year.

Provision for Loan Losses and Credit Quality

The net reversal of provision for loan losses of $0.6 million recorded for the fourth quarter of 2014 included a $0.8 million provision for new and acquired non-impaired loans and $1.4 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 fourth quarter of 2014 were $1.5 million.

At December 31, 2014, the allowance for loan losses was $50.2 million, of which $28.9 million related to acquired impaired loans and $21.3 million related to new and acquired non-impaired loans. The allowance for loan losses represents 1% of the Company's total $5.0 billion loan portfolio. 

During the fourth quarter, non-performing loans declined sequentially by $41.6 million, or 24%, to $130.6 million. Nonaccrual loans declined sequentially to $9.5 million, or to 0.26% of total non-purchased credit impaired loans from 0.32%. Acquired impaired loans greater than 90 days past due and still accruing declined sequentially by $40.5 million, or 25%, to $121.1 million

New and acquired non-impaired loans now represent 73% of the Company's total loan portfolio as compared to 59% at December 31, 2013.

Non-Interest Expense

Non-interest expense declined $0.5 million from $51.4 million for the third quarter of 2014 and declined $5.3 million from $56.3 million for the fourth quarter of 2013. The sequential decline was mainly due to lower legacy credit expenses reflecting the continued resolution of special assets, partially offset by increased salaries and employee benefits and professional fees. The year over year decline was mainly due to lower legacy credit expenses as discussed above, a decline in stock based compensation expense, mainly associated with original founder awards, and the reduction in occupancy costs as a result of the Company's continued focus on consolidating facilities.

Non-interest expense declined $27.4 million for the full year of 2014 from $236.2 million for 2013. The decline was mainly due to lower legacy credit expenses reflecting the continued resolution of special assets, the decline in professional fees and stock-based compensation expense, mainly associated with original founder awards, and a decline in other miscellaneous expenses. Partially offsetting the decline was an increase in salaries and employee benefits as a result of rising healthcare costs.

Income Tax Expense

Income tax expense was $7.8 million for the fourth quarter of 2014, an effective income tax rate of 36%, as compared to income tax expense of $8.1 million for the third quarter of 2014, an effective income tax rate of 38%. Income tax expense was $7.3 million for the fourth quarter of 2013, an effective income tax rate of 37%. The sequential and year over year decline in effective rate is mainly due to higher tax-exempt interest income during the fourth quarter of 2014.

Income tax expense for the full year of 2014 was $30.7 million, an effective income tax rate of 38%, as compared to income tax expense of $27.4 million for 2013, an effective income tax rate of 41%. The higher prior year effective rate is mainly due to the prior year impact of changes in certain statutory rates that were enacted into law during the third quarter of 2013.

Financial Position

Total assets increased by $141.1 million to $6.8 billion as of December 31, 2014, from $6.7 billion as of September 30, 2014. During the quarter, the Company's loan portfolio increased by $176.4 million to $5.0 billion, a 15% annualized growth rate.  Deposits increased by $79.6 million to $5.3 billion, and FHLB borrowings increased by $70.0 million. During the quarter, the Company repurchased 737,611 shares of common stock at an average price of $24.19 per share.  Tangible book value per share was $19.28 as of December 31, 2014, an increase of $0.28 and $0.73 over September 30, 2014 and December 31, 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 13.5%, 17.1% and 18.1%, respectively, as of December 31, 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) 325-2429, and the confirmation pass code is 6011897. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through February 6, 2015, by dialing (719) 457-0820 and entering pass code 6011897. 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.

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 $6.8 billion in total assets as of December 31, 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
  Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
  2014 2014 2014 2014 2013
Interest and dividend income  $ 67,750  $ 67,643  $ 66,846  $ 68,543  $ 71,981
Interest expense 6,399 6,218 6,015 6,090 6,258
Net Interest Income 61,351 61,425 60,831 62,453 65,723
Provision (reversal) for loan losses (637) (1,332) 1,404 (24) 3,265
Net interest income after provision (reversal) for loan losses 61,988 62,757 59,427 62,477 62,458
Non-Interest Income          
Service charges on deposit accounts 5,390 5,565 5,672 5,436 5,858
Debit card income 3,013 3,017 3,103 2,844 2,864
Fees on mortgage loans originated and sold 1,053 1,195 1,123 759 1,082
Investment advisory and trust fees 1,170 1,183 910 1,261 1,075
FDIC indemnification asset expense (3,421) (3,881) (2,064) (2,165) (1,877)
Legal settlement 1,000
Investment securities gains (losses), net 513 317 (28) 174 164
Other income 2,876 2,561 3,171 3,060 3,105
Total non-interest income 10,594 9,957 11,887 11,369 13,271
Non-Interest Expense          
Salaries and employee benefits 23,871 22,590 23,449 23,498 23,969
Stock-based compensation expense 451 443 1,020 728 1,127
Net occupancy and equipment expense 8,020 8,475 8,723 8,599 8,457
Computer services 3,413 3,332 3,389 3,253 3,093
Software expense 2,074 1,932 1,940 1,868 1,990
Telecommunication expense 1,347 1,406 1,628 1,608 1,532
OREO valuation expense 1,554 2,752 3,022 3,573 3,190
Net gains on sales of OREO (419) (223) (3,192) (721) (278)
Foreclosed asset related expense 619 845 991 1,459 1,046
Loan workout expense 1,352 911 1,117 1,177 1,682
Professional fees 2,116 1,532 2,038 2,004 2,409
Contingent value right expense 334 278 327 767 298
Regulatory assessments 1,705 1,637 1,648 1,629 1,647
Other expense 4,495 5,508 5,173 5,782 6,089
Total non-interest expense 50,932 51,418 51,273 55,224 56,251
Income before income taxes 21,650 21,296 20,041 18,622 19,478
Income tax expense 7,814 8,053 7,616 7,208 7,272
Net income  $ 13,836  $ 13,243  $ 12,425  $ 11,414  $ 12,206
           
Earnings per share:          
Basic  $ 0.29  $ 0.28  $ 0.25  $ 0.23  $ 0.24
Diluted  $ 0.29  $ 0.27  $ 0.25  $ 0.22  $ 0.23
           
Weighted average shares outstanding:          
Basic 46,964 47,912 49,090 50,518 50,962
Diluted 48,243 49,069 50,261 51,932 52,227
 
 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
       
  Dec 31, Sep 30, Dec 31,
  2014 2014 2013
Assets      
Cash and due from banks  $ 106,193  $ 92,704  $ 118,937
Interest-bearing deposits in other banks 81,942 66,706 45,504
Total cash and cash equivalents 188,135 159,410 164,441
Trading securities 2,410 2,312 6,348
Investment securities available-for-sale at fair value (amortized cost $554,488, $582,623 and $688,717, respectively) 555,893 580,732 685,441
Investment securities held-to-maturity at amortized cost (fair value $443,379, $457,712 and $459,693, respectively) 436,962 454,809 465,098
Loans held for sale 5,516 6,439 8,012
Loans, net of deferred loan costs and fees 4,994,703 4,817,332 4,544,017
Less: Allowance for loan losses 50,211 52,334 56,851
Loans, net 4,944,492 4,764,998 4,487,166
Other real estate owned 77,626 90,277 129,396
FDIC indemnification asset 16,762 21,025 33,610
Receivable from FDIC 3,661 3,491 7,624
Premises and equipment, net 173,176 174,941 179,855
Goodwill 134,522 134,522 131,987
Intangible assets, net 18,897 19,865 23,365
Deferred income tax asset, net 129,624 139,388 166,762
Other assets 143,734 138,090 128,456
Total Assets $ 6,831,410 $ 6,690,299 $ 6,617,561
Liabilities and Shareholders' Equity      
Liabilities      
Deposits:      
Non-interest bearing demand  $ 1,054,128  $ 1,006,556  $ 923,993
Negotiable order of withdrawal 1,383,990 1,309,839 1,321,903
Money market 898,254 914,226 961,526
Savings 500,028 514,729 530,144
Time deposits 1,418,700 1,430,106 1,447,497
Total deposits 5,255,100 5,175,456 5,185,063
Federal Home Loan Bank advances 296,091 226,138 96,278
Short-term borrowings 23,407 23,823 24,850
Long-term borrowings 139,681 139,396 138,561
Accrued expenses and other liabilities 53,557 60,547 60,021
Total liabilities 5,767,836 5,625,360 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, 36,936 issued and 30,150 outstanding, 36,662 issued and 30,114 outstanding and 36,212 issued and 33,051 outstanding, respectively. 370 367 362
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,743 issued and 17,443 outstanding, 19,017 issued and 18,217 outstanding and 19,647 issued and 19,047 outstanding, respectively. 187 190 196
Additional paid in capital 1,081,628 1,081,177 1,082,235
Retained earnings 158,403 144,567 107,485
Accumulated other comprehensive loss (3,824) (6,018) (7,528)
Treasury stock, at cost, 8,086, 7,348 and 3,761 shares, respectively (173,190) (155,344) (69,962)
Total shareholders' equity 1,063,574 1,064,939 1,112,788
Total Liabilities and Shareholders' Equity  $ 6,831,410  $ 6,690,299  $ 6,617,561
 
 
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
           
  Three Months Ended
  Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
  2014 2014 2014 2014 2013
Performance Ratios          
Interest rate spread 3.92% 4.01% 4.12% 4.28% 4.39%
Net interest margin 4.05% 4.14% 4.26% 4.41% 4.52%
Return on average assets 0.82% 0.80% 0.76% 0.70% 0.74%
Return on average shareholders' equity 5.21% 4.95% 4.58% 4.09% 4.39%
Efficiency ratio 70.79% 72.03% 70.51% 74.81% 71.21%
Average interest-earning assets to average interest-bearing liabilities 131.89% 131.43% 131.23% 129.81% 129.70%
Average loans receivable to average deposits 93.94% 92.32% 89.10% 88.18% 85.88%
Yield on interest-earning assets 4.47% 4.56% 4.67% 4.83% 4.95%
Cost of interest-bearing liabilities 0.55% 0.55% 0.55% 0.56% 0.56%
Asset and Credit Quality Ratios-Total Loans          
Non-accrual loans $9,484 $10,590 $11,368 $10,107 $11,810
Acquired impaired loans > 90 days past due and still accruing $121,137 $161,670 $200,755 $226,941 $253,817
Nonperforming loans to loans receivable 2.61% 3.57% 4.49% 5.21% 5.84%
Nonperforming assets to total assets 3.05% 3.93% 4.66% 5.47% 5.98%
Covered loans to total gross loans 3.95% 4.58% 5.09% 5.71% 6.27%
ALLL to nonperforming assets 24.09% 19.92% 17.93% 15.52% 14.38%
ALLL to total gross loans 1.00% 1.08% 1.17% 1.22% 1.25%
Annualized net charge-offs/average loans 0.12% 0.14% 0.15% 0.11% 0.08%
Asset and Credit Quality Ratios-New Loans          
Nonperforming new loans to total new loans receivable 0.16% 0.22% 0.21% 0.24% 0.34%
New loans ALLL to total gross new loans 0.63% 0.72% 0.74% 0.80% 0.80%
Asset and Credit Quality Ratios-Acquired Loans          
Nonperforming acquired loans to total acquired loans receivable 7.28% 9.11% 10.25% 10.67% 11.16%
Covered acquired loans to total gross acquired loans 11.47% 11.84% 11.95% 11.98% 12.34%
Acquired loans ALLL to total gross acquired loans 1.71% 1.67% 1.76% 1.68% 1.69%
Capital Ratios (Company)          
Total average shareholders' equity to total average assets 15.72% 16.14% 16.64% 17.01% 16.85%
Tangible common equity ratio (1) 13.63% 13.93% 14.19% 14.82% 14.82%
Tier 1 leverage ratio (2) 14.28% 14.40% 14.61% 14.94% 14.95%
Tier 1 risk-based capital ratio (2) 17.99% 18.40% 18.57% 19.68% 19.74%
Total risk-based capital ratio (2) 19.05% 19.52% 19.77% 20.92% 21.00%
Capital Ratios (Bank)          
Tangible common equity ratio (1) 14.29% 14.31% 15.11% 14.99% 14.62%
Tier 1 leverage ratio (2) 13.52% 13.37% 14.10% 13.70% 13.40%
Tier 1 risk-based capital ratio (2) 17.10% 17.08% 18.00% 18.10% 17.70%
Total risk-based capital ratio (2) 18.09% 18.20% 19.20% 19.30% 18.90%
           
(1) See "Reconciliation of Non-GAAP Measures"
(2) December 31, 2014 regulatory capital ratios are preliminary
 
 
CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
       
  Dec 31, Sep 30, Dec 31,
  2014 2014 2013
Loans      
Non-owner occupied commercial real estate  $ 798,556  $ 797,197  $ 775,733
Other commercial construction and land 200,755 243,563 300,494
Multifamily commercial real estate 89,132 71,119 67,688
1-4 family residential construction and land 68,658 76,442 71,351
Total commercial real estate 1,157,101 1,188,321 1,215,266
Owner occupied commercial real estate 1,046,736 1,026,853 1,058,148
Commercial and industrial loans 1,073,791 959,641 803,736
Lease financing 2,005 2,175 2,676
Total commercial 2,122,532 1,988,669 1,864,560
1-4 family residential 925,698 913,219 804,322
Home equity loans 378,475 373,604 386,366
Other consumer loans 272,453 242,451 170,526
Total consumer 1,576,626 1,529,274 1,361,214
Other 143,960 117,507 110,989
Total loans  $ 5,000,219  $ 4,823,771  $ 4,552,029
       
Deposits      
Non-interest bearing demand  $ 1,054,128  $ 1,006,556  $ 923,993
Negotiable order of withdrawal 1,383,990 1,309,839 1,321,903
Money market 898,254 914,226 961,526
Savings 500,028 514,729 530,144
Total core deposits 3,836,400 3,745,350 3,737,566
Time deposits 1,418,700 1,430,106 1,447,497
Total deposits  $ 5,255,100  $ 5,175,456  $ 5,185,063
 
 
CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
           
  Three Months Ended
  Dec 31, Sep 30, Jun 30, Mar 31, Dec. 31,
  2014  2014 2014 2014 2013
Reversal of provision on legacy loans  $ (1,411)  $ (4,205)  $ (940)  $ (2,488)  $ (1,220)
FDIC indemnification asset expense 3,421 3,881 2,064 2,165 1,877
OREO valuation expense 1,554 2,752 3,022 3,573 3,190
Net gains on sales of OREO (419) (223) (3,192) (721) (278)
Foreclosed asset related expense 619 845 991 1,459 1,046
Loan workout expense 1,352 911 1,117 1,177 1,682
Salaries and employee benefits 993 1,054 1,270 1,270 1,270
Total legacy credit expenses  $ 6,109  $ 5,015  $ 4,332  $ 6,435  $ 7,567
 
 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
             
  Three Months Ended Three Months Ended
   December 31, 2014  September 31, 2014
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,929,599  $ 62,053 4.99%  $ 4,762,260  $ 62,095 5.17%
Investment securities (1) 1,025,016 5,386 2.08% 1,064,710 5,160 1.92%
Interest-bearing deposits in other banks 43,532 24 0.22% 38,857 19 0.19%
Other earning assets (2) 47,601 659 5.49% 45,774 604 5.24%
Total interest earning assets 6,045,748 $ 68,122 4.47% 5,911,601 $ 67,878 4.56%
Non-interest earning assets 703,376     725,578    
Total assets  $ 6,749,124      $ 6,637,179    
Interest bearing liabilities            
Time deposits  $ 1,434,775  $ 3,108 0.86%  $ 1,372,696  $ 2,983 0.86%
Money market 905,225 550 0.24% 935,223 552 0.23%
Negotiable order of withdrawal 1,351,295 591 0.17% 1,313,693 537 0.16%
Savings 508,979 279 0.22% 525,854 289 0.22%
Total interest bearing deposits 4,200,274 4,528 0.43% 4,147,466 4,361 0.42%
Short-term borrowings and FHLB advances 246,675 139 0.22% 214,122 125 0.23%
Long-term borrowings 136,876 1,732 5.02% 136,353 1,732 5.04%
Total interest bearing liabilities 4,583,825 $ 6,399 0.55% 4,497,941 $ 6,218 0.55%
Non-interest bearing demand 1,047,135     1,010,817    
Other liabilities 56,883     57,430    
Shareholders' equity 1,061,281     1,070,991    
Total liabilities and shareholders' equity  $ 6,749,124      $ 6,637,179    
Net interest income and spread    $ 61,723 3.92%    $ 61,660 4.01%
Net interest margin     4.05%     4.14%
             
(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
   December 31, 2014 December 31, 2013
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,929,599  $ 62,053 4.99%  $ 4,505,159  $ 66,735 5.88%
Investment securities (1) 1,025,016 5,386 2.08% 1,186,466 4,943 1.65%
Interest-bearing deposits in other banks 43,532 24 0.22% 57,953 33 0.23%
Other earning assets (2) 47,601 659 5.49% 40,866 543 5.27%
Total interest earning assets 6,045,748  $ 68,122 4.47% 5,790,444  $ 72,254 4.95%
Non-interest earning assets 703,376     807,278    
Total assets  $ 6,749,124      $ 6,597,722    
Interest bearing liabilities            
Time deposits  $ 1,434,775  $ 3,108 0.86%  $ 1,513,038  $ 3,155 0.83%
Money market 905,225 550 0.24% 947,429 519 0.22%
Negotiable order of withdrawal 1,351,295 591 0.17% 1,288,723 550 0.17%
Savings 508,979 279 0.22% 531,930 286 0.21%
Total interest bearing deposits 4,200,274 4,528 0.43% 4,281,120 4,510 0.42%
Short-term borrowings and FHLB advances 246,675 139 0.22% 48,466 21 0.17%
Long-term borrowings 136,876 1,732 5.02% 134,813 1,726 5.08%
Total interest bearing liabilities 4,583,825 $ 6,399 0.55% 4,464,399 $ 6,257 0.56%
Non-interest bearing demand 1,047,135     964,823    
Other liabilities 56,883     56,624    
Shareholders' equity 1,061,281     1,111,876    
Total liabilities and shareholders' equity  $ 6,749,124      $ 6,597,722    
Net interest income and spread    $ 61,723 3.92%    $ 65,997 4.39%
Net interest margin     4.05%     4.52%
             
(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.
FULL YEAR AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
             
  Year Ended Year Ended
   December 31, 2014  December 31, 2013
  Average   Yield/ Average   Yield/
  Balances Interest Rate Balances Interest Rate
Interest earning assets            
Loans (1)  $ 4,708,076  $ 249,718 5.30%  $ 4,574,397  $ 274,577 6.00%
Investment securities (1) 1,072,551 19,997 1.86% 1,179,668 17,658 1.50%
Interest-bearing deposits in other banks 47,986 105 0.22% 215,894 543 0.25%
Other earning assets (2) 44,227 2,423 5.48% 39,060 2,027 5.19%
Total interest earning assets 5,872,840  $ 272,243 4.64% 6,009,019  $ 294,805 4.91%
Non-interest earning assets 744,625     845,982    
Total assets  $ 6,617,465      $ 6,855,001    
Interest bearing liabilities            
Time deposits  $ 1,394,916  $ 11,943 0.86%  $ 1,751,785  $ 16,585 0.95%
Money market 930,158 2,151 0.23% 1,023,069 2,268 0.22%
Negotiable order of withdrawal 1,327,452 2,222 0.17% 1,272,065 2,125 0.17%
Savings 524,705 1,135 0.22% 516,941 1,075 0.21%
Total interest bearing deposits 4,177,231 17,451 0.42% 4,563,860 22,053 0.48%
Short-term borrowings and FHLB advances 166,187 385 0.23% 41,329 57 0.14%
Long-term borrowings 136,099 6,886 5.06% 147,185 8,072 5.48%
Total interest bearing liabilities 4,479,517  $ 24,722 0.55% 4,752,374  $ 30,182 0.64%
Non-interest bearing demand 1,000,994     918,087    
Other liabilities 54,041     52,147    
Shareholders' equity 1,082,913     1,132,393    
Total liabilities and shareholders' equity  $ 6,617,465      $ 6,855,001    
Net interest income and spread    $ 247,521 4.09%    $ 264,623 4.27%
Net interest margin     4.21%     4.40%
             
(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
  December 31, 2014 September 30, 2014 December 31, 2013
Net Income  $ 13,836  $ 13,836  $ 13,243  $ 13,243  $ 12,206  $ 12,206
  Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments            
Non-interest income            
Security gains* (513) (313) (317) (194) (164) (100)
Non-interest expense            
Stock-based compensation expense* 239 146 242 148 940 575
Contingent value right expense 334 334 278 278 299 299
Tax effect of adjustments* 107 N/A 29 N/A (301) N/A
Core Net Income  $ 14,003  $ 14,003  $ 13,475  $ 13,475  $ 12,980  $ 12,980
Average Assets $ 6,749,124   $ 6,637,179   $ 6,597,722  
ROA** 0.82%   0.80%   0.74%  
Core ROA*** 0.83%   0.81%   0.79%  
             
* 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
  Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
  2014 2014 2014 2014 2013
Net interest income  $ 61,351  $ 61,425  $ 60,831  $ 62,453  $ 65,723
Reported non-interest income 10,594 9,957 11,887 11,369 13,271
Less: Securities gains (losses) 513 317 (28) 174 164
Core non-interest income  $ 10,081  $ 9,640  $ 11,915  $ 11,195  $ 13,107
           
Reported non-interest expense  $ 50,932  $ 51,418  $ 51,273  $ 55,224  $ 56,251
Less: Stock-based compensation expense 239 242 531 533 942
Contingent value right expense 334 278 327 767 299
Core non-interest expense  $ 50,359  $ 50,898  $ 50,415  $ 53,924  $ 55,010
Efficiency Ratio* 70.79% 72.03% 70.51% 74.81% 71.21%
Core Efficiency Ratio** 70.50% 71.62% 69.30% 73.22% 69.78%
           
 * 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, Sep 30, Jun 30, Mar 31, Dec 31,
  2014 2014 2014 2014 2013
Total shareholders' equity  $ 1,063,574  $ 1,064,939  $ 1,073,558  $ 1,103,756  $ 1,112,788
Less: goodwill, core deposits intangibles, net of taxes (146,168) (146,671) (147,290) (148,045) (146,258)
Tangible book value*  $ 917,406  $ 918,268  $ 926,268  $ 955,711  $ 966,530
Common shares outstanding 47,593 48,331 49,150 51,129 52,098
Tangible book value per share  $ 19.28  $ 19.00  $ 18.85  $ 18.69  $ 18.55
           
* 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, Sep 30, Jun 30, Mar 31, Dec 31,
  2014 2014 2014 2014 2013
Total shareholders' equity  $ 1,063,574  $ 1,064,939  $ 1,073,558  $ 1,103,756  $ 1,112,788
Less: goodwill, core deposits intangibles (153,419) (154,387) (155,398) (156,633) (155,351)
Tangible common equity  $ 910,155  $ 910,552  $ 918,160  $ 947,123  $ 957,437
Total assets  $ 6,831,410   $ 6,690,299   $ 6,624,006   $ 6,548,624   $ 6,617,561
Less: goodwill, core deposits intangibles (153,419) (154,387) (155,398) (156,633) (155,351)
Tangible assets  $ 6,677,991  $ 6,535,912  $ 6,468,608  $ 6,391,991  $ 6,462,210
Tangible common equity ratio 13.63% 13.93% 14.19% 14.82% 14.82%
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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