Capital Bank Financial
Jul 21, 2016

Capital Bank Financial Corp. Reports 2Q EPS of $0.40, Up 43% Year Over Year, and Core EPS of $0.42, Up 40% Year Over Year

CHARLOTTE, N.C., July 21, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported net income for the second quarter of 2016 of $17.4 million, or $0.40 per diluted share and core net income of $18.2 million, or $0.42 per diluted share. Year over year net income per diluted share and core net income per diluted share rose 43% and 40%, respectively.

Core adjustments for the second quarter of 2016 included $0.4 million of non-tax deductible merger related expenses, $0.9 million of tax deductible merger related expenses, and $0.1 million of gains on sales of investment securities.

Second quarter highlights include:

•   New loan fundings of $473 million;
•   Sequential growth in loan portfolio at an 8% annualized rate;
•   GAAP and Core efficiency ratio of 60.6% and 59.1%, respectively;
•   An increase in GAAP and Core ROA to 0.93% and 0.97%, respectively; and
•   Declaration of a $0.10 per share quarterly common stock dividend.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "Our team continues to execute well in a tough operating environment, with solid loan growth despite runoff from indirect, tight cost control, excellent credit quality, reduced deposit costs, and relative stability in the net interest margin."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "We are pleased with our second quarter results, which include continued improvement in ROA, efficiency and EPS. We are focused on generating improvements as we plan for completing the CommunityOne acquisition."

Loan Portfolio and Composition

During the second quarter, the loan portfolio was up $109.9 million at $5.7 billion. New loans of $473.3 million were offset by loan resolutions and payoffs totaling $363.4 million.

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

  Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
Commercial real estate 22% 22% 22%
C&I 44% 44% 43%
Consumer 31% 32% 32%
Other 3% 2% 3%
Total 100% 100% 100%
 

Deposits Composition and Cost of Funds

During the second quarter, total deposits decreased by $132.6 million to $5.8 billion. The sequential decrease included $129 million in brokered deposits, as a result of the Company's efforts to lower the cost of deposits. The cost of total deposits decreased one basis point to 0.41%, while the cost of core deposits increased one basis point to 0.18%. Core deposits include all checking, savings and money market accounts, excluding brokered, and now represent 71% of total deposits. The contractual cost of total deposits, which excludes purchase accounting, was flat sequentially at 0.42%.

Net Interest Income and Net Interest Margin

Net interest income increased $0.1 million to $61.5 million from $61.4 million for the first quarter of 2016 and increased $0.8 million from $60.7 million for the second quarter of 2015. The net interest margin for the second quarter of 2016 was 3.62%, a decline of two basis points sequentially and 32 basis points year over year. The sequential and year over year net interest margin decline was mostly due to the lower average yield on new loans as compared to the yields of the Company's legacy acquired loans. New and acquired non-impaired loans represent $4.8 billion with an average yield of 3.63%, compared to $0.9 billion of acquired impaired loans outstanding with an average yield of 8.48%.

Non-Interest Income

Non-interest income increased $9.4 million to $11.9 million from $2.6 million for the first quarter of 2016 and increased $1.6 million from $10.4 million for the second quarter of 2015. The sequential increase was mainly driven by the absence of the $9.2 million termination for the FDIC loss share agreements.

The year over year increase was mainly due to the absence of $2.5 million of FDIC indemnification asset expense and $0.3 million of gross impairment loss recorded in the prior year. Partially offsetting the increase was a $0.7 million decline in investment advisory income and a $0.7 million decline in service charges.

Provision for Loan and Lease Losses and Credit Quality

The provision of $1.2 million recorded for the second quarter of 2016 included a $2.0 million provision for new and acquired non-impaired loans partially offset by a provision reversal of $0.8 million on acquired impaired loans during the quarter. Net charge-offs for the second quarter of 2016 were $1.5 million, up from $1.1 million in the first quarter of 2016.

At June 30, 2016, the allowance for loan and lease losses was $44.9 million, of which $23.7 million related to acquired impaired loans and $21.2 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.78% of the Company's total $5.7 billion loan portfolio.

At June 30, 2016, non-performing loans were $65.1 million, an increase of 0.77% from March 31, 2016, and a decrease of 30.22%, from June 30, 2015, mainly as a result of resolutions and upgrades.

Non-Interest Expense

Non-interest expense declined $2.4 million to $44.5 million from $46.9 million for the first quarter of 2016 and declined $5.0 million from $49.5 million for the second quarter of 2015. The sequential decline was mainly due to a $2.0 million decrease in salaries and benefit expense resulting from seasonality decreases in tax and employee benefit expenses, a $0.6 million decrease in combined merger and restructuring expense, and a $0.4 million decrease in occupancy expense and equipment expense. Partially offsetting the decline was a $0.7 million increase in OREO write downs.

The year over year decline was mainly due to a $1.7 million decrease in salaries and benefit expense resulting from cost saving initiatives, the absence of $1.4 million loss on extinguishment of debt in the prior year, and a decrease of $0.4 million in occupancy and equipment due to the consolidation of facilities.

Income Tax Expense

Income tax expense was $10.3 million for the second quarter of 2016, an effective rate of 37%, compared to $5.8 million and 37% for the first quarter of 2016. Income tax expense was $7.3 million and 36% for the second quarter of 2015.

Financial Position

Total assets increased by $141.4 million to $7.6 billion as of June 30, 2016, from $7.5 billion as of March 31, 2016. During the quarter, the Company's loan portfolio increased $109.9 million to $5.7 billion. Total deposits decreased by $132.6 million to $5.8 billion, and core deposits decreased by $38.2 million, or a 4% annualized rate. FHLB borrowings increased $250.0 million. Book value per share was $23.52 as of June 30, 2016, an increase of $0.44 and $0.71 over March 31, 2016 and June 30, 2015, respectively.  Tangible book value per share was $20.22 as of June 30, 2016, an increase of $0.45 and $0.53 over March 31, 2016 and June 30, 2015, respectively. During the second quarter, the Company did not repurchase shares of common stock. The Company has $101 million remaining under the current board authorized stock repurchase program.

The Company's bank subsidiary, Capital Bank Corporation, had preliminary Tier 1 Leverage, Tier 1 Common, Tier 1 Risk-Based and Total Risk-Based capital ratios of 10.4%, 12.0%, 12.0% and 12.7%, respectively, as of June 30, 2016, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on August 25, 2016, to shareholders of record as of August 11, 2016.

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) 325-2454, and the confirmation pass code is 7425320.  Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through July 28, 2016, by dialing (719) 457-0820 and entering pass code 7425320. 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 $7.6 billion in total assets as of June 30, 2016, and 151 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank Financial Corp., 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
 Jun 30,
 2016
 Mar 31,
 2016
  Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
Interest and dividend income$69,579  $69,472  $69,553  $68,718  $67,311 
Interest expense8,064  8,105  7,475  7,081  6,626 
Net Interest Income61,515  61,367  62,078  61,637  60,685 
Provision for loan and lease losses1,172  1,375   1,089  799  1,299 
Net interest income after provision for loan and lease losses 60,343  59,992  60,989  60,838  59,386 
Non-Interest Income         
Service charges on deposit accounts4,486  4,811  4,911  5,472  5,189 
Debit card income3,235  3,086  3,029  3,113  3,176 
Fees on mortgage loans originated and sold1,140  971  875  990  1,278 
Investment advisory and trust fees455  497  597  860  1,125 
FDIC indemnification asset expense    (1,526) (1,418) (2,499 )
Termination of loss share agreements  (9,178)      
Investment securities gains (losses), net117  40  54  (43) 231 
Other-than-temporary impairment loss on investments:         
Gross impairment loss        (288)
Other income2,489  2,339  2,657  2,444  2,151 
Total non-interest income11,922  2,566  10,597  11,418  10,363 
Non-Interest Expense         
Salaries and employee benefits20,139  22,162  20,219  22,620  21,881 
Stock-based compensation expense467  317    309  108 
Net occupancy and equipment expense7,355  7,703  7,385  7,621  7,754 
Computer services3,274  3,575  3,479  3,471  3,343 
Software expense2,000  2,036  2,061  2,198  2,082 
Telecommunication expense1,558  1,532  1,168  1,515  1,367 
OREO valuation expense1,119  467  341  2,075  1,710 
Net gains on sales of OREO(413) (679)  (801) (351) (957)
Foreclosed asset related expense399  285  405  872  600 
Loan workout expense71  244  650  194  795 
Conversion and merger related expense1,236  1,687   704     
Professional fees1,353  1,612  1,529  1,958  1,723 
Losses on extinguishment of debt        1,438 
Restructuring charges, net5  142  4,248  23  178 
Contingent value right expense        4 
Regulatory assessments1,259  1,275  1,486  1,423  1,831 
Other expense4,714  4,580  4,882  4,418  5,645 
Total non-interest expense44,536  46,938  47,756  48,346  49,502 
Income before income taxes27,729  15,620  23,830  23,910  20,247 
Income tax expense10,327  5,780  8,809  8,589  7,257 
Net income $17,402  $9,840  $15,021  $15,321  $12,990 
Earnings per share:         
Basic$0.40  $0.23  $0.35  $0.34  $0.28 
Diluted$0.40  $0.22  $0.34  $0.33  $0.28 
Weighted average shares outstanding:         
Basic43,011  43,063  43,499  45,359  45,913 
Diluted43,879  43,904  44,550  46,534  47,220 
 


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
 
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
Assets     
Cash and due from banks$84,038  $88,802  $87,985 
Interest-bearing deposits in other banks135,977  93,218  56,711 
Total cash and cash equivalents220,015  182,020   144,696 
Trading securities3,536  3,418  3,013 
Investment securities available-for-sale at fair value (amortized cost $637,072,
$657,631 and $640,455, respectively)
650,470  663,925  637,329 
Investment securities held-to-maturity at amortized cost (fair value $477,731,
$467,372 and $475,134, respectively)
468,943  460,483  472,505 
Loans held for sale6,446  8,070  10,569 
Loans, net of deferred loan costs and fees5,738,459  5,626,887  5,622,147 
Less: Allowance for loan and lease losses44,883  45,263  45,034 
Loans, net5,693,576  5,581,624  5,577,113 
Other real estate owned44,236  48,505  52,776 
FDIC indemnification asset    6,725 
Receivable from FDIC    678 
Premises and equipment, net158,305  157,131  159,149 
Goodwill 134,522  134,522  134,522 
Intangible assets, net13,231  14,166  15,100 
Deferred income tax asset, net92,277  95,363  105,316 
Other assets135,668  130,571  129,988 
Total Assets$7,621,225  $7,479,798  $7,449,479 
Liabilities and Shareholders' Equity     
Liabilities     
Deposits:     
Non-interest bearing demand$1,172,481  $1,190,831  $1,121,160 
Interest bearing demand1,456,558  1,402,342  1,382,732 
Money market1,155,475  1,262,581  1,190,121 
Savings403,106  420,073  418,879 
Time deposits1,619,507  1,663,906  1,747,318 
Total deposits5,807,127  5,939,733  5,860,210 
Federal Home Loan Bank advances650,800  400,849  460,898 
Short-term borrowings16,785   16,200  12,410 
Long-term borrowings86,883  86,328  85,777 
Accrued expenses and other liabilities43,132  39,695  43,919 
Total liabilities$6,604,727  $6,482,805  $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, 37,237
issued and 26,665 outstanding, 37,207 issued 26,636 outstanding and 37,012
issued and 26,589 outstanding, respectively.
372  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
18,327 issued and 16,554 outstanding, respectively.
183  183  183 
Additional paid in capital1,077,769  1,076,931  1,076,415 
Retained earnings227,370  214,268  208,742 
Accumulated other comprehensive (loss) income9,443  3,878  (5,196)
Treasury stock, at cost, 12,345, 12,345 and 12,196 shares, respectively(298,639) (298,639) (294,249)
Total shareholders' equity1,016,498  996,993  986,265 
Total Liabilities and Shareholders' Equity$7,621,225  $7,479,798  $7,449,479 
 


CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
 
 Three Months Ended
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
Performance Ratios         
Interest rate spread3.48% 3.50% 3.57% 3.68% 3.79%
Net interest margin3.62% 3.64% 3.70% 3.82% 3.94%
Return on average assets0.93% 0.53% 0.82% 0.86% 0.75%
Return on average shareholders' equity6.87% 3.96% 5.99% 5.85% 4.90%
Efficiency ratio60.65% 73.42% 65.71% 66.18% 69.67%
Average interest-earning assets to average interest-bearing liabilities131.21% 129.54%  129.55% 132.10% 133.39%
Average loans receivable to average deposits96.56% 95.66% 96.68% 96.01% 94.12%
Yield on interest-earning assets4.09% 4.11% 4.14% 4.26% 4.36%
Cost of interest-bearing liabilities0.62% 0.62% 0.57% 0.58%  0.57%
Asset and Credit Quality Ratios-Total Loans         
Non-accrual loans$9,016  $8,526  $8,945  $9,647  $9,807 
Nonperforming acquired loans$56,108  $56,041  $59,194  $72,023  $83,515 
Nonperforming loans to loans receivable1.13% 1.15% 1.21%  1.51% 1.79%
Nonperforming assets to total assets1.44% 1.51%  1.63% 1.88% 2.23%
Covered loans to total gross loans% %  1.30% 1.45% 3.39%
ALLL to nonperforming assets40.98% 39.97% 37.13% 33.88% 30.56%
ALLL to total gross loans0.78% 0.80% 0.80% 0.86% 0.92%
Annualized net charge-offs/average loans0.11% 0.08% 0.17% 0.20% 0.12 %
Asset and Credit Quality Ratios-New Loans         
Nonperforming new loans to total new loans receivable0.12% 0.11% 0.11% 0.17% 0.19%
New loans ALLL to total gross new loans0.46% 0.47% 0.47% 0.51% 0.59%
Asset and Credit Quality Ratios-Acquired Loans         
Nonperforming acquired loans to total acquired loans receivable5.08% 4.67% 4.69% 5.21% 5.58%
Covered acquired loans to total gross acquired loans% % 5.43% 5.45% 11.38%
Acquired loans ALLL to total gross acquired loans2.04% 1.93% 1.83% 1.80% 1.71%
Capital Ratios (Company)         
Total average shareholders' equity to total average assets13.55% 13.35% 13.67% 14.79% 15.41%
Tangible common equity ratio (1)11.62% 11.57% 11.46% 12.26% 13.15%
Tier 1 leverage capital ratio12.64% 12.49% 12.67%  13.60% 14.66%
Tier 1 common capital ratio13.38% 13.38%  14.73% 14.44% 16.07%
Tier 1 risk-based capital ratio14.57% 14.58% 13.63% 15.60% 17.33%
Total risk-based capital ratio15.29% 15.32% 15.47% 16.38% 18.18%
Capital Ratios (Bank)         
Tangible common equity ratio (1)10.71% 11.45% 11.20% 11.36% 11.35%
Tier 1 leverage capital ratio10.42% 11.10% 11.09% 11.19% 11.15%
Tier 1 common capital ratio11.97% 12.95% 12.89% 12.85% 13.18%
Tier 1 risk-based capital ratio11.97% 12.95% 12.89% 12.85% 13.18%
Total risk-based capital ratio12.72% 13.72% 13.68% 13.69% 14.10%
               
(1) See "Reconciliation of Non-GAAP Measures"              
               


CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
 
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
Loans         
Non-owner occupied commercial real estate$891,830  $850,766  $866,392  $847,225  $834,351 
Other commercial construction and land212,315  194,971  196,795  192,283  182,283 
Multifamily commercial real estate74,328  75,737  80,708  82,762  76,754 
1-4 family residential construction and land100,306  96,703  93,242  87,193  78,572 
Total commercial real estate1,278,779  1,218,177  1,237,137  1,209,463  1,171,960 
Owner occupied commercial real estate1,075,306  1,095,460  1,104,972  1,065,875  1,030,111 
Commercial and industrial1,448,698  1,375,233  1,309,704  1,219,101  1,181,451 
Lease financing877  1,088  1,256  1,488  1,661 
Total commercial2,524,881  2,471,781  2,415,932  2,286,464  2,213,223 
1-4 family residential1,039,309  1,015,071  1,017,791  985,982  959,224 
Home equity loans364,169  368,510  375,276  373,993  375,271 
Indirect auto loans285,618  317,863  351,817  318,841  263,723 
Other consumer loans85,964  84,108  84,661  82,483  77,867 
Total consumer 1,775,060  1,785,552  1,829,545  1,761,299  1,676,085 
Other166,185  159,447  150,102  147,718  145,146 
Total loans$5,744,905  $5,634,957  $5,632,716  $5,404,944  $5,206,414 
          
Deposits         
Non-interest bearing demand$ 1,172,481  $1,190,831  $1,121,160  $1,099,252  $1,132,085  
Interest bearing demand1,456,558  1,402,342  1,382,732  1,251,365  1,367,123 
Money market1,105,460  1,162,546  1,040,086  927,391   991,520 
Savings403,106  420,073  418,879  436,385  479,885 
Total core deposits4,137,605  4,175,792  3,962,857  3,714,393  3,970,613 
Wholesale money market50,015  100,035  150,035  78,015   
Time deposits1,619,507  1,663,906  1,747,318   1,773,170  1,521,810 
Total deposits$5,807,127  $5,939,733  $5,860,210  $5,565,578  $5,492,423 
 


CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
 
   Three Months Ended
   Jun 30,
 2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
Provision (reversal) on legacy loans  $(778) $9   $(1,161) $492  $(523)
FDIC indemnification asset expense      1,526  1,418  2,499 
OREO valuation expense  1,119  467  341  2,075  1,710 
Termination of loss share agreements    9,178       
Net gains on sales of OREO  (413) (679) (801)  (351) (957)
Foreclosed asset related expense  399  285   405  872  600 
Loan workout expense  71  244  650  194  795 
Salaries and employee benefits  519  522  549  797  796 
Total legacy credit expenses  $917  $10,026  $1,509  $5,497  $4,920 
 


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
June 30, 2016
 Three Months Ended
March 31, 2016
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1)  $5,653,647  $62,999  4.48% $5,611,488  $63,009  4.52%
Investment securities (1) 1,131,791  6,612  2.35 % 1,122,523  6,483  2.32%
Interest bearing deposits in other banks 64,802  74  0.46% 73,188  84  0.46%
Other earning assets (2)  26,696  330  4.97% 25,136  315  5.04%
Total interest earning assets 6,876,936  $70,015  4.09% 6,832,335  $69,891  4.11%
Non-interest earning assets 607,429      618,087     
Total assets $7,484,365      $7,450,422     
Interest bearing liabilities            
Time deposits $1,620,023  $4,018  1.00 % $1,689,653  $4,120  0.98%
Money market 1,184,532  1,028  0.35% 1,247,333  1,067  0.34 %
Interest bearing demand 1,451,666  749  0.21% 1,370,957  648  0.19%
Savings 411,496  208  0.20% 419,588  227  0.22%
Total interest bearing deposits 4,667,717  6,003  0.52% 4,727,531  6,062  0.52%
Short-term borrowings and FHLB advances 485,850  515  0.43%  460,892  532  0.46%
Long-term borrowings 87,496  1,547  7.11% 85,986  1,511  7.07%
Total interest bearing liabilities 5,241,063  8,065  0.62% 5,274,409  $8,105  0.62%
Non-interest bearing demand 1,187,056      1,138,782     
Other liabilities 42,319      42,418     
Shareholders' equity 1,013,927      994,813     
Total liabilities and shareholders' equity $7,484,365      $7,450,422     
Net interest income and spread   $61,950  3.48%   $61,786   3.50%
Net interest margin     3.62%     3.64%
     
(1) Presented on a fully tax equivalent basis    
(2) Includes Federal Home Loan Bank stocks    
     


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
   Three Months Ended
June 30, 2016
 Three Months Ended
June 30, 2015
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1) $5,653,647  $62,999  4.48% $5,079,878  $61,717  4.87%
Investment securities (1) 1,131,791  6,612  2.35% 1,038,269   5,296  2.05%
Interest bearing deposits in other banks 64,802  74  0.46% 55,553  36  0.26%
Other earning assets (2) 26,696  330  4.97% 47,694  646  5.43%
Total interest earning assets 6,876,936  $70,015  4.09% 6,221,394  $67,695  4.36%
Non-interest earning assets 607,429      664,119     
Total assets $7,484,365      $6,885,513     
Interest bearing liabilities            
Time deposits $1,620,023  $4,018  1.00% $1,464,552  $3,402  0.93%
Money market 1,184,532  1,028  0.35% 943,160  600  0.26%
Interest bearing demand 1,451,666   749  0.21% 1,381,609  578  0.17%
Savings 411,496  208  0.20% 484,622  259  0.21%
Total interest bearing deposits 4,667,717  $ 6,003  0.52% 4,273,943  4,839  0.45%
Short-term borrowings and FHLB advances 485,850  515  0.43% 261,030  143  0.22%
Long-term borrowings 87,496  1,547  7.11% 129,029  1,645  5.11%
Total interest bearing liabilities 5,241,063  8,065  0.62% 4,664,002  $6,627  0.57%
Non-interest bearing demand 1,187,056      1,123,466     
Other liabilities 42,319      36,966     
Shareholders' equity 1,013,927      1,061,079     
Total liabilities and shareholders' equity $7,484,365      $6,885,513     
Net interest income and spread   $61,950  3.48%   $61,068  3.79%
Net interest margin     3.62%     3.94%


  Six Months Ended
June 30, 2016
 Six Months Ended
June 30, 2015
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets             
Loans (1) $5,632,568  $126,007  4.50%  $5,062,417  $122,428  4.88%
Investment securities (1) 1,127,157  13,096  2.34% 1,026,424  10,439  2.05%
Interest bearing deposits in other banks 68,995  158  0.46% 57,095  69  0.24%
Other earning assets (2) 25,916  644  5.00%  49,240  1,334  5.46%
Total interest earning assets 6,854,636   $139,905  4.10% 6,195,176  $134,270  4.37%
Non-interest earning assets 612,758      674,827     
Total assets $7,467,394      $6,870,003     
Interest bearing liabilities            
Time deposits $1,654,838  $8,138  0.99% $1,437,231  $6,400  0.90%
Money market 1,215,933  2,094  0.35% 928,852  1,153  0.25%
Interest bearing demand 1,411,311  1,397  0.20% 1,389,267  1,170  0.17%
Savings 415,542  435  0.21% 490,731  524  0.22%
Total interest bearing deposits 4,697,624  $12,064  0.52% 4,246,081  $9,247  0.44%
Short-term borrowings and FHLB advances 473,371  1,046  0.44% 290,304  325  0.23%
Long-term borrowings 86,741  3,058  7.09% 133,188   3,371  5.10%
Total interest bearing liabilities 5,257,736  16,168  0.62% 4,669,573  12,943  0.56%
Non-interest bearing demand  1,162,919      1,095,092     
Other liabilities 42,369      44,266     
Shareholders' equity  1,004,370      1,061,072     
Total liabilities and shareholders' equity $7,467,394      $6,870,003     
Net interest income and spread   $123,737  3.49%   $121,327  3.81%
Net interest margin      3.63%     3.95%
      
(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
   Jun 30, 2016 Mar 31, 2016 Dec 31, 2015
Net Income $17,402  $17,402  $9,840   $9,840  $15,021  $15,021 
  Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments            
Non-interest income            
Indemnification asset termination     9,178  5,670      
Security (gains) losses* (117) (72) (40) (25) (54) (33)
Non-interest expense             
Severance expense*     75  46     
Restructuring expense* 5  3  142  88  32  20 
Conversion costs and merger tax deductible* 881  544  1,107  684  33  20 
Legal merger non deductible 355  355  580  580  673  673 
Contract termination*         4,215  2,594 
Tax effect of adjustments* (294)  N/A  (3,999)  N/A  (1,625)  N/A 
Core Net Income $18,232  $18,232  $16,883  $16,883  $18,295  $18,295 
             
Diluted shares 43,879    43,904    44,550   
Core Net Income per share $0.42    $0.38    $0.41   
Average Assets  7,484,365     7,450,422     7,332,516   
             
ROA** 0.93%   0.53%   0.82%  
Core ROA*** 0.97%   0.91%   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 RATIOThree Months Ended
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
Net interest income$61,515  $61,367  $62,078  $61,637  $60,685 
          
Reported non-interest income11,922  2,566  10,597  11,418  10,363 
Indemnification asset termination  (9,178)      
Less: Securities gains (losses)117  40  54  (43) (57)
Core non-interest income$11,805  $11,704  $10,543  $11,461  $10,420 
          
Reported non-interest expense$44,536  $46,938  $47,756  $48,346  $49,502 
Less: Contingent value right expense        4 
Severance expense  75    63   14 
Loss on extinguishment of debt        1,438 
Conversion costs and merger tax deductible881  1,107  33     
Legal merger non deductible355  580       
Restructuring expense5  142    23  178 
Contract termination    4,215     
Conversion and severance expenses (conversion and
merger expenses and salaries and employees benefits)
    704     
Core non-interest expense$43,295  $45,034  $42,804  $48,260  $47,868 
          
Efficiency ratio*60.65% 73.42% 65.71% 66.18% 69.67%
Core efficiency ratio**59.05% 61.63% 58.94% 66.02% 67.32%
               
*  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
  Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
  Jun 30,
 2015
Total shareholders' equity $1,016,498  $996,993  $986,265  $1,022,642  $1,059,346 
Less: goodwill and intangible assets, net of taxes (142,725 ) (143,304) (143,863) (144,447) (145,035)
Tangible book value* $873,773  $853,689  $842,402  $878,195  $914,311 
Common shares outstanding 43,219  43,189  43,143  44,466  46,440 
Tangible book value per share $20.22  $19.77  $19.53  $ 19.75  $19.69 
                     
* 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
  Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
Total shareholders' equity $1,016,498  $996,993  $986,265  $1,022,642  $1,059,346 
Less: goodwill and intangible assets (147,753) (148,688) (149,622) (150,567) (151,517)
Tangible common equity $868,745  $848,305  $836,643   $872,075  $907,829 
Total assets $7,621,225  $7,479,798  $7,449,479  $7,261,196  $7,054,501 
Less: goodwill and intangible assets (147,753) (148,688) (149,622) (150,567) (151,517)
Tangible assets $7,473,472  $7,331,110  $7,299,857  $7,110,629  $ 6,902,984 
Tangible common equity ratio 11.62% 11.57% 11.46% 12.26% 13.15%

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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