Capital Bank Financial
Jan 28, 2016

Capital Bank Financial Corp. Reports 4Q GAAP and Core EPS of $0.34 and $0.41

CHARLOTTE, N.C., Jan. 28, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported fourth quarter net income of $15.0 million, or $0.34 per diluted share. Core adjustments for the fourth quarter included a pre-tax charge of $4.2 million related to the previously announced contract termination of debit card processing, initially estimated at approximately $5.0 million, and $0.7 million of non-tax deductible merger related expenses. Core net income for the fourth quarter was $18.3 million, or $0.41 per diluted share. Core net income rose 31% year-over-year and core net income per diluted share rose 41%. ROA decreased to 0.82% and Core ROA increased to 1.00%.


Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "We enjoyed excellent results in Q4, and throughout 2015, thanks to the hard work of our outstanding teammates and the trust and confidence of our customers."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "We feel good about hitting our financial targets for the quarter and the year, but we feel even better about how we are positioned for future growth. Our strong Balance Sheet, excellent credit and expense discipline, and the rollout of our new payments platform will all contribute to making 2016 a record year for Capital Bank."

Loan Portfolio and Composition

During the fourth quarter, the loan portfolio increased by $227.8 million to $5.6 billion, a 17% annualized growth rate and up 13% year-over-year. New loans of $486.9 million included $29.0 million in portfolio purchases of high-quality residential mortgages and were offset by resolutions totaling $33.8 million and principal repayments of $225.3 million.

The relative composition of the Company's loan portfolio at the end of the fourth quarter of 2014 and third and fourth quarters of 2015 was as follows:

  Dec 31,
 2015
 Sep 30,
 2015
 Dec 31,
2014
Commercial real estate 22% 22% 23%
C&I 43% 42% 42%
Consumer 32% 33% 32%
Other 3% 3% 3%
Total 100% 100% 100%


Deposits Composition and Cost of Funds

During the fourth quarter, total deposits increased by $294.6 million to $5.9 billion, or up 12% year-over-year. The sequential increase was mainly a result of the Company's continued focus on growing low-cost core deposits, which were up $248.0 million, and an increase in low-cost brokered money market accounts of $72.0 million that were used to replace maturing borrowings; partially offset by some contraction in time deposit balances. Sequentially and year-over-year, the cost of core deposits remained flat at 0.15%. Core deposits include all checking, savings and money market accounts, excluding brokered, and now represent 68% of total deposits. Sequentially and year-over-year, the cost of total deposits increased by one basis point and six basis points, respectively, to 0.40%. The contractual cost of deposits, which excludes purchase accounting, was flat sequentially and increased one basis point year-over-year to 0.40%.

Net Interest Income and Net Interest Margin

Net interest income increased $0.4 million to $62.1 million from $61.6 million for the third quarter of 2015 and increased $0.7 million year-over-year from $61.4 million. The net interest margin for the fourth quarter of 2015 was 3.70%, a decline of 12 basis points sequentially and 35 basis points year-over-year. As expected, the decline in net interest margin continues to reflect higher earning asset balances, offset by the lower earning asset yields. The implementation of interest rate swaps during the year resulted in $0.8 million in additional interest income during the fourth quarter and had a five basis point impact on the net interest margin. New and acquired non-impaired loans represent $4.6 billion or 81% of the Company's total loan portfolio, up from 79% and 73% at September 30, 2015 and December 31, 2014, respectively. New loans outstanding represent $4.3 billion with an average yield of 3.56%, compared to $1.1 billion of acquired impaired loans outstanding with a weighted average yield of 8.43%.

Non-Interest Income

Non-interest income declined $0.8 million to $10.6 million from $11.4 million for the third quarter of 2015 and was flat compared to the fourth quarter of 2014. The sequential decrease was mainly driven by a decline in service charge fee income and lower investment advisory fee income. FDIC indemnification amortization expense included $1 million attributable to recoveries on legacy loans that were previously covered by loss-sharing contracts.

Provision for Loan Losses and Credit Quality

The provision of $1.1 million recorded for the fourth quarter of 2015 included a $2.3 million provision for new and acquired non-impaired loans, offset by $1.2 million 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 resulting from higher than anticipated payoffs and resolutions. Net charge-offs for the fourth quarter of 2015 were $2.3 million.

At December 31, 2015, the allowance for loan losses was $45.0 million, of which $24.5 million related to acquired impaired loans and $20.5 million related to new and acquired non-impaired loans. The allowance for loan losses represents 0.80% of the Company's total $5.6 billion loan portfolio.

During the fourth quarter, non-performing loans declined sequentially by $13.5 million, or 17%, to $68.1 million. Nonaccrual loans declined sequentially to $8.9 million, or to 0.21% of total non-purchased credit impaired loans, from 0.24%. Acquired impaired loans greater than 90 days past due and still accruing declined sequentially by $2.0 million, or 12%, to $14.5 million. 

Non-Interest Expense

Non-interest expense declined $0.6 million to $47.8 million from $48.3 million for the third quarter of 2015 and declined $3.2 million from $50.9 million for the fourth quarter of 2014. The sequential decline was mainly due to a reduction in employee compensation expense, lower legacy credit expenses reflecting the continued resolution of special assets, and lower professional fees. Partially offsetting the decline were $4.2 million in restructuring charges related to the termination of a legacy debit card processing contract and execution of a long-term agreement with MasterCard as part of the Company's cost savings initiatives, and $0.7 million of merger related costs primarily associated with legal and consulting services. The year-over-year decline was mainly due to a decline in employee compensation and lower legacy credit expenses as discussed above, a reduction in stock-based compensation expense associated with original founder awards, and the reduction in occupancy costs as a result of the Company's continued focus on consolidating facilities.

Income Tax Expense

Income tax expense was $8.8 million for the fourth quarter of 2015, an effective income tax rate of 37.0%, as compared to income tax expense of $8.6 million for the third quarter of 2015, an effective income tax rate of 35.9%. Income tax expense was $7.8 million for the fourth quarter of 2014, an effective income tax rate of 36.1%. The sequential and year-over-year increase in the effective tax rate is mainly due to lower tax-exempt interest income during the fourth quarter of 2015.

Financial Position

Total assets increased by $188.3 million to $7.4 billion as of December 31, 2015, from $7.3 billion as of September 30, 2015. During the quarter, the Company's loan portfolio increased by $227.8 million to $5.6 billion, a 17% annualized rate. Deposits increased by $294.6 million to $5.9 billion and FHLB borrowings decreased by $60.0 million. Tangible book value per share was $19.53 as of December 31, 2015, a decrease of $0.22 and an increase of $0.25 over September 30, 2015 and December 31, 2014, respectively. During the fourth quarter, the Company repurchased 1.2 million shares of common stock for $36.4 million at an average price of $31.47 per share. 

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 11.1%, 12.9%, 12.9% and 13.7%, respectively, as of December 31, 2015, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on February 22, 2016, to shareholders of record as of February 8, 2016.

The Company has $5.8 million remaining under the current stock repurchase authorization and the Board of Directors has authorized a new $100 million repurchase program.

Conference Call

The Company will host a conference call today at 2:00 p.m. Eastern Time. The number to call for this interactive teleconference is (719) 325-2354, and the confirmation pass code is 3809442. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through February 5, 2016, by dialing (719) 457-0820 and entering pass code 3809442. 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 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 $7.4 billion in total assets as of December 31, 2015, and 153 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,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
Interest and dividend income $69,553  $68,718  $67,311  $66,046  $67,750 
Interest expense 7,475  7,081  6,626  6,317  6,399 
Net Interest Income 62,078  61,637  60,685  59,729  61,351 
Provision (reversal) for loan and lease losses 1,089  799  1,299  (841) (637)
Net interest income after provision (reversal) for loan and lease losses 60,989  60,838  59,386  60,570  61,988 
Non-Interest Income          
Service charges on deposit accounts 4,911  5,472  5,189  4,705  5,390 
Debit card income 3,029  3,113  3,176  2,964  3,013 
Fees on mortgage loans originated and sold 875  990  1,278  1,147  1,053 
Investment advisory and trust fees 597  860  1,125  1,006  1,170 
FDIC indemnification asset expense (1,526) (1,418) (2,499) (2,439) (3,421)
Investment securities gains (losses), net 54  (43) 231  90  513 
Other-than-temporary impairment loss on investments:          
Gross impairment loss     (288)    
Other income 2,657  2,444  2,151  2,447  2,876 
Total non-interest income 10,597  11,418  10,363  9,920  10,594 
Non-Interest Expense          
Salaries and employee benefits 20,219  22,620  21,881  23,881  23,871 
Stock-based compensation expense   309  108  284  451 
Net occupancy and equipment expense 7,385  7,621  7,754  8,129  8,020 
Computer services 3,479  3,471  3,343  3,397  3,413 
Software expense 2,061  2,198  2,082  2,142  2,074 
Telecommunication expense 1,168  1,515  1,367  1,380  1,347 
OREO valuation expense 341  2,075  1,710  1,390  1,554 
Net gains on sales of OREO (801) (351) (957) (7) (419)
Foreclosed asset related expense 405  872  600  674  619 
Loan workout expense 650  194  795  623  1,352 
Conversion and merger related expense 704         
Professional fees 1,529  1,958  1,723  1,734  2,116 
Losses on extinguishment of debt     1,438     
Restructuring charges, net 4,248  23  178  2,341   
Contingent value right expense     4  116  334 
Regulatory assessments 1,486  1,423  1,831  1,695  1,705 
Other expense 4,882  4,418  5,645  4,868  4,495 
Total non-interest expense 47,756  48,346  49,502  52,647  50,932 
Income before income taxes 23,830  23,910  20,247  17,843  21,650 
Income tax expense 8,809  8,589  7,257  6,454  7,814 
Net income $15,021  $15,321  $12,990  $11,389  $13,836 
           
Earnings per share:          
Basic $0.35  $0.34  $0.28  $0.25  $0.29 
Diluted $0.34  $0.33  $0.28  $0.24  $0.29 
           
Weighted average shares outstanding:          
Basic 43,499  45,359  45,913  46,294  46,964 
Diluted 44,550  46,534  47,220  47,632  48,243 





CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
      
 Dec 31,
 2015
 Sep 30,
 2015
 Dec 31,
 2014
Assets     
Cash and due from banks$87,985  $80,642  $106,193 
Interest-bearing deposits in other banks56,711  53,947  81,942 
Total cash and cash equivalents144,696  134,589  188,135 
Trading securities3,013  2,893  2,410 
Investment securities available-for-sale at fair value (amortized cost $640,455,     
$640,447 and $544,488, respectively)637,329  647,423  555,893 
Investment securities held-to-maturity at amortized cost (fair value $475,134,     
$475,428 and $443,379, respectively)472,505  467,544  436,962 
Loans held for sale10,569  8,515  5,516 
Loans, net of deferred loan costs and fees5,622,147  5,396,429  4,994,703 
Less: Allowance for loan and lease losses45,034  46,278  50,211 
Loans, net5,577,113  5,350,151  4,944,492 
Other real estate owned52,776  54,691  77,626 
FDIC indemnification asset6,725  9,789  16,762 
Receivable from FDIC678  1,052  3,661 
Premises and equipment, net159,149  161,342  173,176 
Goodwill134,522  134,522  134,522 
Intangible assets, net15,100  16,045  18,897 
Deferred income tax asset, net105,316  104,950  129,624 
Other assets129,988  167,690  143,734 
Total Assets$7,449,479  $7,261,196  $6,831,410 
Liabilities and Shareholders' Equity     
Liabilities     
Deposits:     
Non-interest bearing demand$1,121,160  $1,099,252  $1,054,128 
Negotiable order of withdrawal1,382,732  1,251,365  1,383,990 
Money market1,190,121  1,005,406  898,254 
Savings418,879  436,385  500,028 
Time deposits1,747,318  1,773,170  1,418,700 
Total deposits5,860,210  5,565,578  5,255,100 
Federal Home Loan Bank advances460,898  520,947  296,091 
Short-term borrowings12,410  16,708  23,407 
Long-term borrowings85,777  85,230  139,681 
Accrued expenses and other liabilities43,919  50,091  53,557 
Total liabilities$6,463,214  $6,238,554  $5,767,836 
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, 37,012     
issued and 26,589 outstanding, 37,178 issued and 27,912 outstanding and
36,936 issued and 30,150 outstanding, respectively.
370  372  370 
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,327     
issued and 16,554 outstanding, 18,327 issued and 16,554 outstanding and
18,743 issued and 17,443 outstanding, respectively.
183  183  187 
Additional paid in capital1,076,415  1,079,229  1,081,628 
Retained earnings208,742  198,103  158,403 
Accumulated other comprehensive loss(5,196) 2,578  (3,824)
Treasury stock, at cost, 12,196, 11,039 and 8,086 shares, respectively(294,249) (257,823) (173,190)
Total shareholders' equity986,265  1,022,642  1,063,574 
Total Liabilities and Shareholders' Equity$7,449,479  $7,261,196  $6,831,410 





CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
  
 Three Months Ended
 Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
2015
 Mar 31,
2015
 Dec 31,
2014
Performance Ratios         
Interest rate spread3.57% 3.68% 3.79% 3.83% 3.92%
Net interest margin3.70% 3.82% 3.94% 3.96% 4.05%
Return on average assets0.82% 0.86% 0.75% 0.66% 0.82%
Return on average shareholders' equity5.99% 5.85% 4.90% 4.29% 5.21%
Efficiency ratio65.71% 66.18% 69.67% 75.59% 70.79%
Average interest-earning assets to average interest-bearing liabilities129.55% 132.10% 133.39% 131.94% 131.89%
Average loans receivable to average deposits96.68% 96.01% 94.12% 95.47% 93.94%
Yield on interest-earning assets4.14% 4.26% 4.36% 4.38% 4.47%
Cost of interest-bearing liabilities0.57% 0.58% 0.57% 0.55% 0.55%
Asset and Credit Quality Ratios-Total Loans         
Non-accrual loans$8,945  $9,647  $9,807  $11,482  $9,484 
Acquired impaired loans > 90 days past due and still accruing$59,194  $72,023  $83,515  $115,865  $121,137 
Nonperforming loans to loans receivable1.21% 1.51% 1.79% 2.51% 2.61%
Nonperforming assets to total assets1.63% 1.88% 2.23% 2.85% 3.05%
Covered loans to total gross loans1.30% 1.45% 3.39% 3.71% 3.95%
ALLL to nonperforming assets37.13% 33.88% 30.56% 24.22% 24.09%
ALLL to total gross loans0.80% 0.86% 0.92% 0.95% 1.00%
Annualized net charge-offs/average loans0.17% 0.20% 0.12% 0.09% 0.12%
Asset and Credit Quality Ratios-New Loans         
Nonperforming new loans to total new loans receivable0.11% 0.17% 0.19% 0.22% 0.16%
New loans ALLL to total gross new loans0.47% 0.51% 0.59% 0.61% 0.63%
Asset and Credit Quality Ratios-Acquired Loans         
Nonperforming acquired loans to total acquired loans receivable4.69% 5.21% 5.58% 7.30% 7.28%
Covered acquired loans to total gross acquired loans5.43% 5.45% 11.38% 11.47% 11.47%
Acquired loans ALLL to total gross acquired loans1.83% 1.80% 1.71% 1.67% 1.71%
Capital Ratios (Company)         
Total average shareholders' equity to total average assets13.67% 14.79% 15.41% 15.48% 15.72%
Tangible common equity ratio (1)11.46% 12.26% 13.15% 13.22% 13.63%
Tier 1 leverage ratio (2)12.67% 13.60% 14.66% 14.42% 14.28%
Tier 1 risk-based capital ratio (2)14.73% 14.44% 16.07% 16.42% N/A
Tier 1 common capital ratio (2)13.63% 15.60% 17.33% 17.70% 18.00%
Total risk-based capital ratio (2)15.47% 16.38% 18.18% 18.66% 19.05%
Capital Ratios (Bank)         
Tangible common equity ratio (1)11.20% 11.36% 11.35% 11.32% 14.29%
Tier 1 leverage ratio (2)11.09% 11.19% 11.15% 10.89% 13.52%
Tier 1 common capital ratio (2)12.89% 12.85% 13.18% 13.34% N/A
Tier 1 risk-based capital ratio (2)12.89% 12.85% 13.18% 13.34% 17.04%
Total risk-based capital ratio (2)13.68% 13.69% 14.10% 14.30% 18.09%


(1) See "Reconciliation of Non-GAAP Measures"
(2) December 31, 2015 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,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
2014
Loans         
Non-owner occupied commercial real estate$866,392  $847,225  $834,351  $823,763  $798,556 
Other commercial construction and land196,795  192,283  182,283  180,166  200,755 
Multifamily commercial real estate80,708  82,762  76,754  88,980  89,132 
1-4 family residential construction and land93,242  87,193  78,572  66,547  68,658 
Total commercial real estate1,237,137  1,209,463  1,171,960  1,159,456  1,157,101 
Owner occupied commercial real estate1,104,972  1,065,875  1,030,111  1,038,493  1,046,736 
Commercial and industrial1,309,704  1,219,101  1,181,451  1,125,708  1,073,791 
Lease financing1,256  1,488  1,661  1,834  2,005 
Total commercial2,415,932  2,286,464  2,213,223  2,166,035  2,122,532 
1-4 family residential1,017,791  985,982  959,224  928,832  925,698 
Home equity loans375,276  373,993  375,271  379,946  378,475 
Other consumer loans436,478  401,324  341,590  296,753  272,453 
Total consumer1,829,545  1,761,299  1,676,085  1,605,531  1,576,626 
Other150,102  147,718  145,146  146,987  143,960 
Total loans$5,632,716  $5,404,944  $5,206,414  $5,078,009  $5,000,219 
          
Deposits         
Non-interest bearing demand$1,121,160  $1,099,252  $1,132,085  $1,114,423  $1,054,128 
Negotiable order of withdrawal1,382,732  1,251,365  1,367,123  1,405,390  1,383,990 
Money market1,040,086  927,391  991,520  924,228  898,254 
Savings418,879  436,385  479,885  491,394  500,028 
Total core deposits3,962,857  3,714,393  3,970,613  3,935,435  3,836,400 
Wholesale money market150,035  78,015       
Time deposits1,747,318  1,773,170  1,521,810  1,428,121  1,418,700 
Total deposits$5,860,210  $5,565,578  $5,492,423  $5,363,556  $5,255,100 






CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
  
 Three Months Ended
 Dec 31,
 2015
 Sep 30,
2015
 Jun 30,
2015
 Mar 31,
2015
 Dec. 31,
2014
Reversal of provision on legacy loans$(1,161) $492  $(523) $(1,926) $(1,411)
FDIC indemnification asset expense1,526  1,418  2,499  2,439  3,421 
OREO valuation expense341  2,075  1,710  1,390  1,554 
Net gains on sales of OREO(801) (351) (957) (7) (419)
Foreclosed asset related expense405  872  600  674  619 
Loan workout expense650  194  795  623  1,352 
Salaries and employee benefits549  797  796  832  993 
Total legacy credit expenses$1,509  $5,497  $4,920  $4,025  $6,109 






CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
     
  Three Months Ended
 December 31, 2015
 Three Months Ended
 September 30, 2015
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1) $5,496,222  $63,035  4.55% $5,261,793  $62,461  4.71%
Investment securities (1) 1,119,848  6,355  2.25% 1,088,818  5,885  2.14%
Interest-bearing deposits in other banks 40,177  23  0.23% 36,596  19  0.21%
Other earning assets (2) 42,473  553  5.17% 54,960  760  5.49%
Total interest earning assets 6,698,720  $69,966  4.14% 6,442,167  $69,125  4.26%
Non-interest earning assets 633,796      645,715     
Total assets $7,332,516      $7,087,882     
Interest bearing liabilities            
Time deposits $1,774,732  $4,124  0.92% $1,642,745  $3,957  0.96%
Money market 1,081,968  780  0.29% 977,273  658  0.27%
Negotiable order of withdrawal 1,286,737  529  0.16% 1,291,439  540  0.17%
Savings 426,686  236  0.22% 452,058  241  0.21%
Total interest bearing deposits 4,570,123  5,669  0.49% 4,363,515  5,396  0.49%
Short-term borrowings and FHLB advances 515,302  365  0.28% 428,249  272  0.25%
Long-term borrowings 85,438  1,441  6.69% 84,922  1,413  6.60%
Total interest bearing liabilities 5,170,863  $7,475  0.57% 4,876,686  $7,081  0.58%
Non-interest bearing demand 1,114,932      1,116,757     
Other liabilities 44,479      46,117     
Shareholders' equity 1,002,242      1,048,322     
Total liabilities and shareholders' equity $7,332,516      $7,087,882     
Net interest income and spread   $62,491  3.57%   $62,044  3.68%
Net interest margin     3.70%     3.82%


(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
 December 31, 2015
 Three Months Ended
 December 31, 2014
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1) $5,496,222  $63,035  4.55% $4,929,599  $62,053  4.99%
Investment securities (1) 1,119,848  6,355  2.25% 1,025,016  5,386  2.08%
Interest-bearing deposits in other banks 40,177  23  0.23% 43,532  24  0.22%
Other earning assets (2) 42,473  553  5.17% 47,601  659  5.49%
Total interest earning assets 6,698,720  $69,966  4.14% 6,045,748  $68,122  4.47%
Non-interest earning assets 633,796      703,376     
Total assets $7,332,516      $6,749,124     
Interest bearing liabilities            
Time deposits $1,774,732  $4,124  0.92% $1,434,775  $3,108  0.86%
Money market 1,081,968  780  0.29% 905,225  550  0.24%
Negotiable order of withdrawal 1,286,737  529  0.16% 1,351,295  591  0.17%
Savings 426,686  236  0.22% 508,979  279  0.22%
Total interest bearing deposits 4,570,123  5,669  0.49% 4,200,274  4,528  0.43%
Short-term borrowings and FHLB advances 515,302  365  0.28% 246,675  139  0.22%
Long-term borrowings 85,438  1,441  6.69% 136,876  1,732  5.02%
Total interest bearing liabilities 5,170,863  $7,475  0.57% 4,583,825  $6,399  0.55%
Non-interest bearing demand 1,114,932      1,047,135     
Other liabilities 44,479      56,883     
Shareholders' equity 1,002,242      1,061,281     
Total liabilities and shareholders' equity $7,332,516      $6,749,124     
Net interest income and spread   $62,491  3.57%   $61,723  3.92%
Net interest margin     3.70%     4.05%


(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
 December 31, 2015
 Year Ended
 December 31, 2014
  Average
Balances
 Interest Yield/
Rate
 Average
Balances
 Interest Yield/
Rate
Interest earning assets            
Loans (1) $5,222,014  $247,912  4.75% $4,708,076  $249,718  5.30%
Investment securities (1) 1,065,699  22,679  2.13% 1,072,551  19,997  1.86%
Interest-bearing deposits in other banks 47,664  112  0.23% 47,986  105  0.22%
Other earning assets (2) 48,976  2,646  5.40% 44,227  2,423  5.48%
Total interest earning assets 6,384,353  $273,349  4.28% 5,872,840  $272,243  4.64%
Non-interest earning assets 657,146      744,625     
Total assets $7,041,499      $6,617,465     
Interest bearing liabilities            
Time deposits $1,574,100  $14,481  0.92% $1,394,916  $11,943  0.86%
Money market 979,650  2,591  0.26% 930,158  2,151  0.23%
Negotiable order of withdrawal 1,338,766  2,239  0.17% 1,327,452  2,222  0.17%
Savings 464,840  1,002  0.22% 524,705  1,135  0.22%
Total interest bearing deposits 4,357,356  20,313  0.47% 4,177,231  17,451  0.42%
Short-term borrowings and FHLB advances 381,786  960  0.25% 166,187  385  0.23%
Long-term borrowings 108,987  6,225  5.71% 136,099  6,886  5.06%
Total interest bearing liabilities 4,848,129  $27,498  0.57% 4,479,517  $24,722  0.55%
Non-interest bearing demand 1,105,553      1,000,994     
Other liabilities 44,787      54,041     
Shareholders' equity 1,043,030      1,082,913     
Total liabilities and shareholders' equity $7,041,499      $6,617,465     
Net interest income and spread   $245,851  3.71%   $247,521  4.09%
Net interest margin     3.85%     4.21%


(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, 2015 September 30, 2015 December 31, 2014
Net Income $15,021  $15,021  $15,321  $15,321  $13,836  $13,836 
  Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments            
Non-interest income            
Security gains* (54) (33) 43  26  (513) (313)
Non-interest expense            
Stock-based compensation expense*         239  146 
Contingent value right expense         334  334 
Severance expense     63  39     
Restructuring expense 32  20  23  14     
Conversion costs and merger tax deductible 33  20         
Legal merger non deductible 673  673         
Contract Termination 4,215  2,594         
Tax effect of adjustments* (1,625)  N/A  (50)  N/A  107   N/A 
Core Net Income $18,295  $18,295  $15,400  $15,400  $14,003  $14,003 
             
Diluted shares $44,550    $46,534    $48,243   
Core Net Income per share $0.41    $0.33    $0.29   
             
Less: FDIC indemnification asset expense (non-single family) $430    $964       
Average Assets $7,332,516    $7,087,882    $6,749,124   
ROA** 0.82%   0.86%   0.82%  
Core ROA*** 1.00%   0.87%   0.83%  
             
ROA** (excluding FDIC indemnification asset expense) 0.84%   0.92%      
Core ROA** (excluding FDIC indemnification asset expense) 1.02%   0.92%      


* Tax effected at an income tax rate of 37.0%
** 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
 2015
 Sep 30
 2015
 Jun 30
 2015
 Mar 31
 2015
 Dec 31
 2014
Net interest income $62,078  $61,637  $60,685  $59,729  $61,351 
Reported non-interest income 10,597  11,418  10,363  9,920  10,594 
Less: Securities gains (losses) 54  (43) (57) 90  513 
Core non-interest income $10,543  $11,461  $10,420  $9,830  $10,081 
           
Reported non-interest expense $47,756  $48,346  $49,502  $52,647  $50,932 
Less: Stock-based compensation expense       95  239 
Contingent value right expense     4  116  334 
Severance expense   63  14  111   
Restructuring expense   23  178  2,341   
Loss on extinguishment of debt     1,438     
Conversion Costs and merger 33         
Contract termination 4,215         
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits) 704         
Core non-interest expense $42,804  $48,260  $47,868  $49,984  $50,359 
           
Less: FDIC indemnification asset expense
  (non-single family)
 $683  $1,506  $2,253     
           
Efficiency ratio* 65.71% 66.18% 69.67% 75.59% 70.79%
Core efficiency ratio** 58.94% 66.02% 67.32% 71.86% 70.50%
           
Efficiency ratio*
  (excluding FDIC indemnification expense)
 65.10% 64.84% 67.53%    
Core efficiency ratio** 
  (excluding FDIC indemnification expense)
 58.39% 64.69% 65.25%    

 
* 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,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
Total shareholders' equity $986,265  $1,022,642  $1,059,346  $1,054,349  $1,063,574 
Less: goodwill, core deposits intangibles, net of taxes (143,863) (144,447) (145,035) (145,622) (146,168)
Tangible book value* $842,402  $878,195  $914,311  $908,727  $917,406 
Common shares outstanding 43,143  44,466  46,440  46,632  47,593 
Tangible book value per share $19.53  $19.75  $19.69  $19.49  $19.28 


* 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,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
Total shareholders' equity $986,265  $1,022,642  $1,059,346  $1,054,349  $1,063,574 
Less: goodwill, core deposits intangibles (149,622) (150,567) (151,517) (152,465) (153,419)
Tangible common equity $836,643  $872,075  $907,829  $901,884  $910,155 
Total assets $7,449,479  $7,261,196  $7,054,501  $6,976,736  $6,831,410 
Less: goodwill, core deposits intangibles (149,622) (150,567) (151,517) (152,465) (153,419)
Tangible assets $7,299,857  $7,110,629  $6,902,984  $6,824,271  $6,677,991 
Tangible common equity ratio 11.46% 12.26% 13.15% 13.22% 13.63%

 

CONTACT:
Kenneth A. Posner
Chief of Strategic Planning and Investor Relations
Phone: (212) 399-4020
E-mail: Kposner@cbfcorp.com