Capital Bank Financial
Oct 20, 2016

Capital Bank Financial Corp. Reports Third Quarter EPS of $0.42, Up 27% Year Over Year, and Increases Dividend 20% to $0.12 Per Share

CHARLOTTE, N.C., Oct. 20, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported net income for the third quarter of 2016 of $18.5 million, or $0.42 per diluted share and core net income of $18.5 million, or $0.42 per diluted share. Net income rose 21% year over year, while net income per diluted share rose 27%.

Core adjustments for the third quarter of 2016 included $1.5 million of legal settlement expense and $0.3 million of tax deductible merger related expenses, offset by a $1.1 million tax adjustment and $0.1 million of gains on sales of investment securities.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "We look forward to completion of the CommunityOne merger, a carefully-executed conversion, and an expanded footprint in North Carolina."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "We are pleased with this quarter's results and are positioning to end the year strongly and enter 2017 with good momentum."

Loan Portfolio and Composition

During the third quarter, the loan portfolio was up $191.0 million at $5.9 billion. New loans of $471 million were offset by loan resolutions and payoffs totaling $280 million.

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

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

Deposits Composition and Cost of Funds

During the third quarter, total deposits increased by $226.1 million to $6.0 billion. The cost of total deposits remained flat at 0.41% basis points, while the cost of core deposits increased one basis point to 0.19%. Core deposits include all checking, savings and money market accounts, excluding brokered, now represent 70% of total deposits. The contractual cost of total deposits, which excludes purchase accounting was 0.41%, a decline of one basis point sequentially.

Net Interest Income and Net Interest Margin

Net interest income increased $1.1 million to $62.6 million from $61.5 million for the second quarter of 2016 and increased $1.0 million from $61.6 million for the third quarter of 2015. The net interest margin for the third quarter of 2016 was 3.58%, a decline of four basis points sequentially and 24 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 $5.0 billion with an average yield of 3.67%, compared to $0.9 billion of acquired impaired loans outstanding with an average yield of 8.55%.

Non-Interest Income

Non-interest income increased $0.4 million to $12.4 million from $11.9 million for the second quarter of 2016 and increased $1.0 million from $11.4 million for the third quarter of 2015. The sequential increase was mainly driven by higher service charges on deposit accounts and fees on mortgage loans originated and sold, as fees for residential mortgages sold increased 17% quarter over quarter, partially offset by a decline in investment advisory income.

The year over year increase was mainly due to the absence of $1.4 million of FDIC indemnification asset expense recorded in the prior year and an increase of fees on mortgage loans originated and sold. Partially offsetting the increase was a $0.7 million decline in service charges and a $0.6 million decline in investment advisory income.

Provision for Loan and Lease Losses and Credit Quality

The provision of $0.6 million recorded for the third quarter of 2016 included a $0.6 million provision for new and acquired non-impaired loans and a $48 thousand reversal on acquired impaired loans. Net charge-offs for the third quarter of 2016 were $1.5 million, remaining at the same level of the second quarter of 2016.

At September 30, 2016, the allowance for loan and lease losses was $44.0 million, of which $23.7 million related to acquired impaired loans and $20.3 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.75% of the Company's total $5.9 billion loan portfolio.

At September 30, 2016, non-performing loans were $60.4 million, a decrease of 7% from June 30, 2016, and a decrease of 26%, from September 30, 2015, mainly as a result of resolutions and upgrades.

Non-Interest Expense

Non-interest expense increased $3.0 million to $47.5 million from $44.5 million for the second quarter of 2016 and declined $0.8 million from $48.3 million for the third quarter of 2015. The sequential increase was mainly due to $1.5 million legal settlement expense and increased salaries and benefit expense of $0.8 million. Partially offsetting the increase was a $0.8 million decrease in conversion and merger expense.

The year over year decline was mainly due to a $1.7 million decrease in salaries and benefit expense resulting from cost saving initiatives and lower OREO valuation expenses of $1.3 million, partially offset by $1.5 million legal settlement expense occurring in the third quarter of 2016.

Income Tax Expense

Income tax expense was $8.4 million for the third quarter of 2016, an effective rate of 31%, compared to $10.3 million and 37% for the second quarter of 2016. Income tax expense was $8.6 million and 36% for the third quarter of 2015. The change in effective income tax rate was mainly due to a favorable adjustment for discrete items, partially offset by an increase in rate change and state taxes and lower tax-exempt interest income.

Financial Position

Total assets increased by $171.2 million to $7.8 billion as of September 30, 2016, from $7.6 billion as of June 30, 2016. During the quarter, the Company's loan portfolio increased $191.0 million to $5.9 billion . Total deposits increased by $226.1 million to $6.0 billion, and core deposits increased by $101.8 million, or a 10% annualized rate. FHLB borrowings decreased $75.0 million. Book value per share was $23.82 as of September 30, 2016, an increase of $0.30 and $0.82 over June 30, 2016 and September 30, 2015, respectively. Tangible book value per share was $20.53 as of September 30, 2016, an increase of $0.31 and $0.78 over June 30, 2016 and September 30, 2015, respectively. During the third 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 10.5%, 12.0%, 12.0% and 12.7%, respectively, as of September 30, 2016, under currently applicable regulations.

The GreenBank CVR expired on September 7, 2016 and based on portfolio losses exceeding the stipulated amount, there was no payout to CVR holders.

The Company declared a cash dividend of $0.12 per share, payable on November 22, 2016, to shareholders of record as of November 9, 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 (913) 312-0720, and the confirmation pass code is 5829592.  Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through October 28, 2016, by dialing (719) 457-0820 and entering pass code 5829592. 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 $7.8 billion in total assets as of September 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
 Sep 30,
 2016
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Interest and dividend income$70,929  $69,579   $69,472  $69,553  $68,718 
Interest expense8,302  8,064  8,105  7,475  7,081 
Net Interest Income62,627  61,515  61,367  62,078  61,637 
Provision for loan and lease losses586  1,172  1,375  1,089  799 
Net interest income after provision for loan and lease losses62,041  60,343  59,992  60,989  60,838 
Non-Interest Income         
Service charges on deposit accounts4,777  4,486  4,811  4,911  5,472 
Debit card income3,389  3,235  3,086  3,029  3,113 
Fees on mortgage loans originated and sold1,334  1,140  971  875  990 
Investment advisory and trust fees290  455  497  597  860 
FDIC indemnification asset expense      (1,526) (1,418)
Termination of loss share agreements    (9,178)    
Investment securities gains (losses), net71  117  40  54  (43)
Other income2,509  2,489  2,339  2,657  2,444 
Total non-interest income12,370  11,922   2,566  10,597  11,418 
Non-Interest Expense         
Salaries and employee benefits20,935  20,139  22,162  20,219  22,620 
Stock-based compensation expense790  467  317     309 
Net occupancy and equipment expense7,340  7,355  7,703  7,385  7,621 
Computer services3,153  3,274  3,575  3,479  3,471 
Software expense1,948  2,000  2,036  2,061  2,198 
Telecommunication expense1,790  1,558  1,532  1,168  1,515 
OREO valuation expense742  1,119  467  341  2,075 
Net gains on sales of OREO(159) (413) (679) (801) (351)
Foreclosed asset related expense397  399  285  405  872 
Loan workout expense206   71  244  650  194 
Conversion and merger related expense394  1,236  1,687  704   
Professional fees1,642  1,353  1,612  1,529  1,958 
Restructuring charges, net(113) 5  142  4,248  23 
Legal settlement expense1,500         
Regulatory assessments841  1,259  1,275  1,486  1,423 
Other expense6,124  4,714  4,580  4,882  4,418 
Total non-interest expense47,530  44,536  46,938  47,756  48,346 
Income before income taxes26,881  27,729  15,620  23,830  23,910 
Income tax expense8,393  10,327  5,780  8,809  8,589 
Net income $18,488  $17,402  $9,840  $15,021  $15,321 
           
Earnings per share:         
Basic$0.43  $0.40   $0.23  $0.35  $0.34 
Diluted$0.42  $0.40  $0.22  $0.34  $0.33 
          
Weighted average shares outstanding:          
Basic43,028  43,011  43,063  43,499  45,359 
Diluted43,909  43,879  43,904  44,550  46,534 
               


 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
 
 Sep 30,
 2016
 Jun 30,
 2016
 Dec 31,
 2015
Assets     
Cash and due from banks$88,171  $84,038  $87,985 
Interest-bearing deposits in other banks116,136  135,977  56,711 
Total cash and cash equivalents204,307  220,015  144,696 
Trading securities3,701  3,536  3,013 
Investment securities available-for-sale at fair value (amortized cost $639,687 $637,072 and $640,455, respectively)652,945  650,470  637,329 
Investment securities held-to-maturity at amortized cost (fair value $474,834 $477,731 and $475,134, respectively)466,063  468,943  472,505 
Loans held for sale95,253  6,446  10,569 
Loans, net of deferred loan costs and fees5,840,680  5,738,459  5,622,147 
Less: Allowance for loan and lease losses43,984  44,883  45,034 
Loans, net5,796,696  5,693,576  5,577,113 
Other real estate owned46,007  44,236  52,776 
FDIC indemnification asset    6,725 
Receivable from FDIC    678 
Premises and equipment, net157,863  158,305  159,149 
Goodwill134,522  134,522  134,522 
Intangible assets, net12,288  13,231  15,100 
Deferred income tax asset, net80,418  92,277  105,316 
Other assets142,395  135,668  129,988 
Total Assets$7,792,458  $7,621,225  $7,449,479 
Liabilities and Shareholders' Equity     
Liabilities     
Deposits:     
Non-interest bearing demand$1,207,800  $1,172,481  $1,121,160 
Interest bearing demand1,463,520  1,456,558  1,382,732 
Money market1,291,948  1,155,475  1,190,121 
Savings401,205  403,106  418,879 
Time deposits1,668,784  1,619,507  1,747,318 
Total deposits6,033,257  5,807,127  5,860,210 
Federal Home Loan Bank advances575,751  650,800  460,898 
Short-term borrowings15,428  16,785  12,410 
Long-term borrowings87,445  86,883  85,777 
Accrued expenses and other liabilities50,736  43,132  43,919 
Total liabilities$6,762,617  $6,604,727  $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, 37,253
issued and 26,381 outstanding, 37,237 issued 26,665 outstanding and 37,012 issued and 26,589 outstanding, respectively.
373  372  370 
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,627
issued and 16,854 outstanding, 18,327 issued and 16,554 outstanding and 18,327 issued and 16,554 outstanding, respectively.
186  183  183 
Additional paid in capital1,078,746  1,077,769  1,076,415 
Retained earnings241,554  227,370  208,742 
Accumulated other comprehensive (loss) income7,621  9,443  (5,196)
Treasury stock, at cost, 12,645, 12,345 and 12,196 shares, respectively(298,639) (298,639) (294,249)
Total shareholders' equity1,029,841  1,016,498  986,265 
Total Liabilities and Shareholders' Equity$7,792,458  $7,621,225  $7,449,479 
 


 
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
 
 Three Months Ended
 Sep 30,
 2016
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Performance Ratios         
Interest rate spread3.43% 3.48% 3.50% 3.57% 3.68%
Net interest margin3.58% 3.62% 3.64% 3.70% 3.82%
Return on average assets0.97% 0.93% 0.53% 0.82% 0.86%
Return on average shareholders' equity7.24% 6.87% 3.96% 5.99% 5.85%
Efficiency ratio63.38% 60.65% 73.42% 65.71% 66.18%
Average interest-earning assets to average interest-bearing liabilities131.43%  131.21% 129.54% 129.55% 132.10%
Average loans receivable to average deposits98.46% 96.56% 95.66% 96.68% 96.01%
Yield on interest-earning assets4.05% 4.09% 4.11% 4.14%  4.26%
Cost of interest-bearing liabilities0.62% 0.62% 0.62%  0.57% 0.58%
Asset and Credit Quality Ratios-Total Loans         
Non-accrual loans$11,873  $9,016  $8,526  $8,945  $9,647 
Nonperforming acquired loans$48,477  $56,108  $56,041  $59,194  $72,023 
Nonperforming loans to loans receivable1.02% 1.13% 1.15% 1.21% 1.51%
Nonperforming assets to total assets1.37% 1.44% 1.51% 1.63% 1.88%
Covered loans to total gross loans% % % 1.30% 1.45%
ALLL to nonperforming assets41.29% 40.98% 39.97% 37.13% 33.88%
ALLL to total gross loans0.75% 0.78% 0.80% 0.80%  0.86%
Annualized net charge-offs/average loans0.10% 0.11% 0.08%  0.17% 0.20%
Asset and Credit Quality Ratios-New Loans         
Nonperforming new loans to total new loans receivable0.19% 0.12% 0.11% 0.11% 0.17%
New loans ALLL to total gross new loans0.43% 0.46% 0.47% 0.47 % 0.51%
Asset and Credit Quality Ratios-Acquired Loans         
Nonperforming acquired loans to total acquired loans receivable4.65% 5.08% 4.67% 4.69% 5.21%
Covered acquired loans to total gross acquired loans% % % 5.43% 5.45%
Acquired loans ALLL to total gross acquired loans2.15% 2.04% 1.93% 1.83% 1.80%
Capital Ratios (Company)         
Total average shareholders' equity to total average assets13.46% 13.55% 13.35% 13.67% 14.79%
Tangible common equity ratio (1)11.55% 11.62% 11.57% 11.46% 12.26%
Tier 1 leverage capital ratio12.89% 12.64% 12.49% 12.67% 13.60%
Tier 1 common capital ratio13.27% 13.38% 13.38% 14.73% 14.44%
Tier 1 risk-based capital ratio14.44% 14.57% 14.58% 13.63% 15.60%
Total risk-based capital ratio15.12% 15.29% 15.32% 15.47% 16.38%
Capital Ratios (Bank)         
Tangible common equity ratio (1)10.74 % 10.71% 11.45% 11.20% 11.36%
Tier 1 leverage capital ratio10.53% 10.42% 11.10% 11.09% 11.19%
Tier 1 common capital ratio11.98% 11.97% 12.95% 12.89% 12.85%
Tier 1 risk-based capital ratio11.98% 11.97% 12.95% 12.89% 12.85%
Total risk-based capital ratio12.70% 12.72% 13.72% 13.68% 13.69%

(1) See "Reconciliation of Non-GAAP Measures"

 
 
CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
 
 Sep 30,
 2016
  Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Loans         
Non-owner occupied commercial real estate$920,521  $891,830  $850,766  $866,392  $847,225 
Other commercial construction and land222,794  212,315  194,971  196,795  192,283 
Multifamily commercial real estate76,296  74,328  75,737  80,708  82,762 
1-4 family residential construction and land111,954  100,306  96,703  93,242  87,193 
Total commercial real estate1,331,565  1,278,779  1,218,177  1,237,137  1,209,463 
Owner occupied commercial real estate1,072,586  1,075,306  1,095,460  1,104,972  1,065,875 
Commercial and industrial1,458,523  1,448,698  1,375,233  1,309,704  1,219,101 
Lease financing525  877  1,088  1,256  1,488 
Total commercial2,531,634  2,524,881  2,471,781   2,415,932  2,286,464 
1-4 family residential1,168,468  1,039,309  1,015,071  1,017,791  985,982 
Home equity loans364,117  364,169  368,510  375,276  373,993 
Indirect auto loans254,736  285,618  317,863  351,817  318,841 
Other consumer loans94,277  85,964  84,108  84,661  82,483 
Total consumer1,881,598  1,775,060  1,785,552   1,829,545  1,761,299 
Other191,136  166,185  159,447  150,102  147,718 
Total loans$5,935,933  $5,744,905  $5,634,957  $5,632,716  $5,404,944 
          
Deposits         
Non-interest bearing demand $1,207,800  $1,172,481  $1,190,831  $1,121,160  $1,099,252 
Interest bearing demand1,463,520  1,456,558  1,402,342  1,382,732  1,251,365 
Money market1,166,918  1,105,460  1,162,546  1,040,086  927,391 
Savings401,205  403,106  420,073  418,879  436,385 
Total core deposits4,239,443  4,137,605  4,175,792  3,962,857  3,714,393 
Wholesale money market125,030  50,015  100,035  150,035  78,015 
Time deposits1,668,784  1,619,507  1,663,906  1,747,318  1,773,170 
Total deposits$6,033,257  $5,807,127  $5,939,733  $5,860,210  $5,565,578 
                    


 
CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
 
 Three Months Ended
 Sep 30,
2016
 June 30,
2016
 Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
Provision (reversal) on legacy loans$48  $(778) $9  $(1,161) $492 
FDIC indemnification asset expense       1,526  1,418 
OREO valuation expense742  1,119  467  341  2,075 
Termination of loss share agreements    9,178     
Net gains on sales of OREO(159) (413) (679) (801) (351)
Foreclosed asset related expense397  399  285  405  872 
Loan workout expense206  71  244  650  194 
Salaries and employee benefits511  519  522  549  797 
Total legacy credit expenses $1,745  $917  $10,026   $1,509  $5,497 
                     


 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
September 30, 2016
 Three Months Ended
June 30, 2016
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets             
Loans (1) $5,786,171  $64,055  4.40% $5,653,647  $62,999  4.48%
Investment securities (1) 1,133,031  6,924  2.43% 1,131,791  6,612  2.35 %
Interest bearing deposits in other banks 60,373  69  0.45% 64,802  74  0.46%
Other earning assets (2) 29,788  337  4.50% 26,696  330  4.97%
Total interest earning assets 7,009,363  $71,385  4.05% 6,876,936  $70,015  4.09%
Non-interest earning assets 583,413      607,429     
Total assets $7,592,776      $7,484,365     
Interest bearing liabilities             
Time deposits $1,613,502  $3,992  0.98% $1,620,023  $4,018   1.00%
Money market 1,225,743  1,132  0.37% 1,184,532  1,028  0.35%
Interest bearing demand 1,444,305  752  0.21% 1,451,666  749  0.21%
Savings 404,187  205  0.20% 411,496  208  0.20%
Total interest bearing deposits 4,687,737  6,081  0.52% 4,667,717  6,003  0.52%
Short-term borrowings and FHLB advances 558,313  635  0.45% 485,850  515  0.43%
Long-term borrowings 87,095  1,586  7.24% 87,496  1,547  7.11%
Total interest bearing liabilities 5,333,145  8,302  0.62% 5,241,063  8,065  0.62%
Non-interest bearing demand 1,188,771      1,187,056     
Other liabilities 48,997      42,319     
Shareholders' equity 1,021,863      1,013,927     
Total liabilities and shareholders' equity $7,592,776      $7,484,365     
Net interest income and spread   $63,083  3.43%   $61,950  3.48%
Net interest margin      3.58%     3.62%

(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
September 30, 2016
 Three Months Ended
September 30, 2015
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1) $5,786,171  $64,055  4.40% $5,261,793  $62,461  4.71%
Investment securities (1) 1,133,031  6,924  2.43% 1,088,818  5,885  2.14%
Interest bearing deposits in other banks 60,373   69  0.45% 36,596  19  0.21%
Other earning assets (2) 29,788  337  4.50% 54,960   760  5.49%
Total interest earning assets 7,009,363  $71,385  4.05% 6,442,167  $69,125  4.26%
Non-interest earning assets 583,413      645,715     
Total assets $7,592,776       $7,087,882     
Interest bearing liabilities            
Time deposits $1,613,502  $3,992  0.98 % $1,642,745  $3,957  0.96%
Money market 1,225,743  1,132  0.37% 977,273  658  0.27%
Interest bearing demand 1,444,305  752  0.21% 1,291,439  540  0.17%
Savings 404,187  205  0.20% 452,058  241  0.21%
Total interest bearing deposits  4,687,737  6,081  0.52% 4,363,515  5,396  0.49%
Short-term borrowings and FHLB advances 558,313  635  0.45% 428,249  272  0.25%
Long-term borrowings 87,095  1,586  7.24% 84,922  1,413  6.60%
Total interest bearing liabilities 5,333,145  8,302  0.62% 4,876,686  7,081  0.58%
Non-interest bearing demand 1,188,771      1,116,757     
Other liabilities 48,997      46,117     
Shareholders' equity 1,021,863       1,048,322     
Total liabilities and shareholders' equity $7,592,776      $7,087,882     
Net interest income and spread   $63,083  3.43%   $62,044   3.68%
Net interest margin     3.58%     3.82%


  Nine Months Ended
September 30, 2016
 Nine Months Ended
September 30, 2015
  Average
Balances
 Interest Yield /
Rate
 Average
Balances
 Interest Yield /
Rate
Interest earning assets            
Loans (1) $5,684,143  $ 190,063  4.47% $5,129,607  $184,889  4.82%
Investment securities (1) 1,129,129  20,020  2.37% 1,047,451  16,324  2.08%
Interest bearing deposits in other banks 66,100  227  0.46% 50,187  88  0.23%
Other earning assets (2) 27,216  981  4.81% 51,167  2,093  5.47%
Total interest earning assets 6,906,588  $211,291  4.09% 6,278,412  $203,394  4.33%
Non-interest earning assets 602,904      665,016     
Total assets $7,509,492      $6,943,428      
Interest bearing liabilities            
Time deposits $1,640,959  $12,130  0.99% $ 1,506,488  $10,357  0.92%
Money market 1,219,227  3,227  0.35% 945,170  1,811  0.26%
Interest bearing demand 1,422,389  2,149  0.20% 1,356,300  1,710  0.17%
Savings 411,729  640  0.21% 477,698  765  0.21%
Total interest bearing deposits 4,694,304   $18,146  0.52% 4,285,656  $14,643  0.46%
Short-term borrowings and FHLB advances 501,892  1,680  0.45% 336,791  597  0.24%
Long-term borrowings 86,860  4,644   7.14% 116,922  4,784  5.47%
Total interest bearing liabilities 5,283,056  24,470  0.62% 4,739,369  20,024   0.56%
Non-interest bearing demand 1,171,599      1,102,393     
Other liabilities 44,594      44,891     
Shareholders' equity 1,010,244      1,056,775     
Total liabilities and shareholders' equity $7,509,493       $6,943,428     
Net interest income and spread   $186,821  3.47%   $183,370  3.77%
Net interest margin     3.61%     3.90%

(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
  Sep 30, 2016 Jun 30, 2016 Dec 31, 2015
Net Income $18,488  $18,488  $17,402   $17,402  $15,021  $15,021 
  Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments             
Non-interest income            
Security (gains) losses* (71) (44) (117) (72) (54) (33)
Non-interest expense             
Legal Settlement 1,500  927         
Tax Adjustment (1,067) (1,067)         
Restructuring expense* (113) (70) 5  3  32  20 
Conversion costs and merger tax deductible* 331  205  881  544  33  20 
Legal merger non deductible 61  61  355  355  673  673 
Contract termination*         4,215  2,594 
Tax effect of adjustments* (629) N/A (294) N/A (1,625) N/A
Core Net Income $18,500  $18,500  $18,232  $18,232  $18,295  $18,295 
             
Diluted shares  43,909    43,879    44,550   
Core Net Income per share $0.42    $0.42    $0.41   
Average Assets 7,592,776    7,484,365    7,332,516   
             
ROA** 0.97%   0.93%   0.82%  
Core ROA*** 0.97%   0.97%   1.00%  

    * Tax effected at an income tax rate of 38%
  ** ROA: Annualized net income / Average assets
*** Core ROA: Annualized core net income / Average assets

 
 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars in thousands)
(Unaudited)
 
CORE EFFICIENCY RATIOThree Months Ended
 Sep 30,
 2016
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Net interest income$62,627  $61,515  $61,367  $62,078  $61,637 
          
Reported non-interest income12,370  11,922  2,566  10,597  11,418 
Indemnification asset termination    (9,178)    
Less: Securities gains (losses)71  117  40  54  (43)
Core non-interest income$12,299  $11,805  $11,704  $10,543   $11,461 
          
Reported non-interest expense$47,530  $44,536  $46,938  $47,756  $48,346 
Less: Severance expense    75    63 
Conversion costs and merger tax deductible331  881  1,107  33   
Legal settlement1,500         
Legal merger non deductible61  355  580     
Restructuring expense(113) 5  142    23 
Contract termination      4,215   
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits)      704   
Core non-interest expense$45,751  $43,295  $45,034  $42,804  $48,260 
          
Efficiency ratio*63.38% 60.65% 73.42% 65.71% 66.18%
Core efficiency ratio**61.06% 59.05% 61.63% 58.94% 66.02%

   *  Efficiency Ratio: Non-interest expense / (Non-interest income + Net interest income)
 **  Core Efficiency Ratio: Core non-interest expense / (Core non-interest income + Net interest income)

 
 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars and shares in thousands, except per share data)
(Unaudited)
 
TANGIBLE BOOK VALUE Three Months Ended
  Sep 30,
 2016
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Total shareholders' equity $1,029,841  $1,016,498  $996,993  $986,265  $1,022,642 
Less: goodwill and intangible assets, net of taxes (142,141) (142,725) (143,304) (143,863) (144,447)
Tangible book value* $887,700  $873,773  $853,689  $842,402  $878,195 
Common shares outstanding 43,235  43,219  43,189  43,143  44,466 
Tangible book value per share $ 20.53  $20.22  $19.77  $19.53  $19.75 

* Tangible book value is equal to book value less goodwill and core deposit intangibles,
net of related deferred tax liabilities.

TANGIBLE COMMON EQUITY RATIO Three Months Ended
  Sep 30,
 2016
 Jun 30,
 2016
 Mar 31,
 2016
 Dec 31,
 2015
 Sep 30,
 2015
Total shareholders' equity $1,029,841  $1,016,498  $996,993  $986,265  $1,022,642 
Less: goodwill and intangible assets (146,810) (147,753) (148,688)  (149,622) (150,567)
Tangible common equity $883,031  $868,745  $848,305  $836,643  $872,075 
Total assets $7,792,458  $7,621,225  $7,479,798   $7,449,479  $7,261,196 
Less: goodwill and intangible assets (146,810) (147,753) (148,688) (149,622) (150,567)
Tangible assets $7,645,648  $7,473,472  $7,331,110   $7,299,857  $7,110,629 
Tangible common equity ratio 11.55% 11.62% 11.57% 11.46% 12.26 %
                
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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