Capital Bank Financial Corp. Reports First Quarter GAAP and Core EPS of $0.39 and $0.45

CHARLOTTE, N.C., April 21, 2017 (GLOBE NEWSWIRE) — Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported first quarter net income of $20.9 million, which increased 112% year over year. GAAP net income per diluted share was $0.39. Core net income increased to $23.9 million, up 42% year over year. Core net income per diluted share was $0.45. Core pre-tax adjustments for the first quarter of 2017 included $4.9 million of acquisition and branch closure expenses, offset by $0.1 million gain on investment securities.

“With the CommunityOne conversion now behind us, we are totally focused on high-quality loan and core deposit growth. Thanks to the consistent focus and efforts of Capital Bank’s teammates, we’re optimistic about the outlook,” said Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp.

“In addition to successfully completing the CommunityOne systems conversion, we’ve put in place new plans to rationalize excess facilities, which will help us achieve our stated profitability and return targets,” added Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp.

Loan Portfolio and Composition

During the first quarter, the loan portfolio increased by $105.8 million to $7.5 billion. New loans of $504.8 million were offset by payoffs totaling $379.6 million and special asset resolutions of $19.4 million.

The relative composition of the Company’s loan portfolio at the end of the first quarter of 2017 and fourth and first quarters of 2016 was as follows:

    Mar 31,
 2017
    Dec 31,
 2016
    Mar 31,
 2016
Commercial real estate                               24 %     23 %     22 %
C&I   37 %     38 %     44 %
Consumer   36 %     36 %     32 %
Other   3 %     3 %     2 %
Total   100 %     100 %     100 %

Deposits Composition and Cost of Funds

During the first quarter, total deposits increased by $212.0 million to $8.1 billion. The sequential increase was primarily due to a $90.1 million increase of non-interest checking balances and an increase of $95.6 million in money market balances. The cost of total deposits remained flat at 0.39%, while the cost of core deposits increased two basis points to 0.21%. Core deposits include all checking, savings and money market accounts, excluding brokered, and represent 73% of total deposits.

Net Interest Income and Net Interest Margin

Net interest income increased $4.3 million to $82.1 million from $77.8 million for the fourth quarter of 2016 and increased $20.7 million from $61.4 million for the first quarter of 2016. The net interest margin for the first quarter of 2017 was 3.73%, an increase of six basis points sequentially and nine basis points year over year. The sequential and year over year net interest margin increase was mainly due to a legacy loan recovery, which occurred during the first quarter of 2017.

Non-Interest Income

Non-interest income declined $1.2 million to $15.9 million from $17.0 million for the fourth quarter of 2016 and increased $13.3 million from $2.6 million for the first quarter of 2016. The sequential decrease was mainly driven by $1.8 million lower investment securities gains. The year over year increase was mainly due to the absence of a $9.2 million charge for the termination of loss share agreements in the prior year and an increase associated with the acquisition of CommunityOne.

Provision for Loan and Lease Losses and Credit Quality

The provision of $3.4 million recorded for the first quarter of 2017 included a $3.2 million provision for new and acquired non-impaired loans and a $186 thousand provision on acquired impaired loans. Net charge-offs for the first quarter of 2017 were $2.6 million, $0.3 million lower than the fourth quarter of 2016.

At March 31, 2017, the allowance for loan and lease losses was $43.9 million, of which $23.2 million related to acquired impaired loans and $20.7 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.58% of the Company’s total $7.5 billion loan portfolio.

At March 31, 2017, non-performing loans were $71.6 million, a decrease of 4.7% from December 31, 2016, mainly as a result of resolutions and upgrades. Non-performing loans increased 10.8% from March 31, 2016, due primarily to the acquisition of CommunityOne.

Non-Interest Expense

Non-interest expense declined $11.3 million to $62.7 million from $74.0 million for the fourth quarter of 2016 and increased $15.8 million from $46.9 million for the first quarter of 2016. The sequential decrease was mainly due to a decrease of $15.5 million in conversion and merger expense and the absence of $1.4 million legal settlement expenses. Partially offsetting the decrease was a $3.0 million increase in salaries expense and benefit expense and $1.9 million in restructuring charges. The year over year increase was mainly due to an increase of $7.0 million in salaries and benefit expense, $1.8 million in restructuring charges, $1.4 million in conversion and merger expense and $1.3 million in occupancy expense, mostly related to the acquisition of CommunityOne.

Income Tax Expense

Income tax expense was $11.0 million for the first quarter of 2017, an effective rate of 34%, compared to $6.4 million and 34% for the fourth quarter of 2016. Income tax expense was $5.8 million and an effective tax rate of 37% for the first quarter of 2016. The year-over-year decrease in effective income tax rate is due to lower state income taxes, higher tax exempt interest income and other favorable adjustments.

Financial Position

Total assets increased by $167.4 million to $10.1 billion as of March 31, 2017, from $9.9 billion as of December 31, 2016. During the quarter, the Company’s loan portfolio increased $105.8 million to $7.5 billion. Total deposits increased by $212.0 million to $8.1 billion, and core deposits increased by $214.6 million, or a 15% annualized rate. FHLB borrowings decreased $55.1 million. Book value per share was $25.17 as of March 31, 2017, an increase of $0.21 and $2.09 over December 31, 2016 and March 31, 2016, respectively. Tangible book value per share was $20.29 as of March 31, 2017, an increase of $0.28 and $0.52 over December 31, 2016 and March 31, 2016, respectively. During the first quarter, the Company did not repurchase shares of common stock. The Company has $88 million remaining under the current board authorized stock repurchase program.

The Company declared a cash dividend of $0.12 per share, payable on May 19, 2017, to shareholders of record as of May 5, 2017.

Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. The number to call for this interactive teleconference is (913) 312-0654, and the confirmation pass code is 7115841. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through April 28, 2017, by dialing (719) 457-0820 and entering pass code 7115841. 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 the most directly comparable GAAP measure.

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 $10.1 billion in total assets as of March 31, 2017, and 193 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
  Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Interest and dividend income $ 92,937     $ 87,746     $ 70,929     $ 69,579     $ 69,472  
Interest expense 10,821     9,927     8,302     8,064     8,105  
Net Interest Income 82,116     77,819     62,627     61,515     61,367  
Provision for loan and lease losses 3,392     1,980     586     1,172     1,375  
Net interest income after provision for loan and lease losses         78,724     75,839     62,041     60,343     59,992  
Non-Interest Income                  
Service charges on deposit accounts 5,375     5,949     4,777     4,486     4,811  
Debit card income 4,765     4,211     3,389     3,235     3,086  
Fees on mortgage loans originated and sold 1,248     1,402     1,334     1,140     971  
Investment advisory and trust fees 641     591     290     455     497  
Termination of loss share agreements                 (9,178 )
Investment securities gains (losses), net 67     1,894     71     117     40  
Other income 3,756     2,969     2,509     2,489     2,339  
Total non-interest income 15,852     17,016     12,370     11,922     2,566  
Non-Interest Expense                  
Salaries and employee benefits 29,166     26,134     20,935     20,139     22,162  
Stock-based compensation expense 900     531     790     467     317  
Net occupancy and equipment expense 8,992     8,374     7,340     7,355     7,703  
Computer services 3,873     4,364     3,153     3,274     3,575  
Software expense 2,662     2,391     1,948     2,000     2,036  
Telecommunication expense 2,424     2,147     1,790     1,558     1,532  
OREO valuation expense 247     677     742     1,119     467  
Net gains on sales of OREO (308 )   (150 )   (159 )   (413 )   (679 )
Foreclosed asset related expense 364     513     397     399     285  
Loan workout expense 201     327     206     71     244  
Conversion and merger related expense 3,037     18,525     394     1,236     1,687  
Professional fees 2,096     1,761     1,642     1,353     1,612  
Restructuring charges, net 1,912     4     (113 )   5     142  
Legal settlement expense     1,361     1,500          
Regulatory assessments 719     1,092     841     1,259     1,275  
Other expense 6,418     5,943     6,124     4,714     4,580  
Total non-interest expense 62,703     73,994     47,530     44,536     46,938  
Income before income taxes 31,873     18,861     26,881     27,729     15,620  
Income tax expense 10,990     6,427     8,393     10,327     5,780  
Net income $ 20,883     $ 12,434     $ 18,488     $ 17,402     $ 9,840  
                   
Earnings per share:                  
Basic $ 0.40     $ 0.25     $ 0.43     $ 0.40     $ 0.23  
Diluted $ 0.39     $ 0.24     $ 0.42     $ 0.40     $ 0.22  
                   
Weighted average shares outstanding:                  
Basic 51,634     49,334     43,028     43,011     43,063  
Diluted 53,127     50,387     43,909     43,879     43,904  

 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
 
  Mar 31,
 2017
  Dec 31,
 2016
  Mar 31,
 2016
Assets          
Cash and due from banks $ 100,134     $ 107,707     $ 88,802  
Interest-bearing deposits in other banks 60,413     201,348     93,218  
Total cash and cash equivalents 160,547     309,055     182,020  
Trading securities 4,150     3,791     3,418  
Investment securities available-for-sale at fair value (amortized cost $1,168,995 $927,266 and $657,631, respectively) 1,154,496     912,250     663,925  
Investment securities held-to-maturity at amortized cost (fair value $445,696 $460,911 and $467,372, respectively) 446,020     463,959     460,483  
Loans held for sale 4,980     12,874     8,070  
Loans, net of deferred loan costs and fees 7,506,975     7,393,318     5,626,887  
Less: Allowance for loan and lease losses 43,891     43,065     45,263  
Loans, net 7,463,084     7,350,253     5,581,624  
Other real estate owned 51,050     53,482     48,505  
Premises and equipment, net 199,167     205,425     157,131  
Goodwill 234,158     235,500     134,522  
Intangible assets, net 31,553     33,370     14,166  
Deferred income tax asset, net 146,724     150,272     95,363  
Bank owned life insurance 100,251     99,703     56,425  
Other assets 101,862     100,723     74,146  
Total Assets $ 10,098,042     $ 9,930,657     $ 7,479,798  
Liabilities and Shareholders’ Equity          
Liabilities          
Deposits:          
Non-interest bearing demand $ 1,680,243     $ 1,590,164     $ 1,190,831  
Interest bearing demand 1,960,187     1,930,143     1,402,342  
Money market 1,821,474     1,725,838     1,262,581  
Savings 496,230     497,171     420,073  
Time deposits 2,134,473     2,137,312     1,663,906  
Total deposits 8,092,607     7,880,628     5,939,733  
Federal Home Loan Bank advances 490,650     545,701     400,849  
Short-term borrowings 21,125     19,157     16,200  
Long-term borrowings 117,272     116,456     86,328  
Accrued expenses and other liabilities 68,457     76,668     39,695  
Total liabilities $ 8,790,111     $ 8,638,610     $ 6,482,805  
Shareholders’ equity          
Preferred stock $0.01 par value: 50,000 shares authorized, 0 shares issued          
Common stock-Class A $0.01 par value: 200,000 shares authorized, 46,479 issued and 35,213 outstanding, 46,178 issued 34,911 outstanding and 37,207 issued and 26,636 outstanding, respectively. 465     462     372  
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,527 issued and 16,753 outstanding, 18,627 issued and 16,854 outstanding and 18,327 issued and 16,554 outstanding, respectively. 185     186     183  
Additional paid in capital 1,369,689     1,368,459     1,076,931  
Retained earnings 262,443     247,758     214,268  
Accumulated other comprehensive (loss) gain (12,467 )   (12,434 )   3,878  
Treasury stock, at cost, 13,040, 13,040 and 12,345 shares, respectively (312,384 )   (312,384 )   (298,639 )
Total shareholders’ equity 1,307,931     1,292,047     996,993  
Total Liabilities and Shareholders’ Equity $ 10,098,042     $ 9,930,657     $ 7,479,798  

 
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
  Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Performance Ratios                  
Interest rate spread 3.58 %   3.53 %   3.43 %   3.48 %   3.50 %
Net interest margin 3.73 %   3.67 %   3.58 %   3.62 %   3.64 %
Return on average assets 0.84 %   0.53 %   0.97 %   0.93 %   0.53 %
Return on average shareholders’ equity 6.43 %   4.05 %   7.24 %   6.87 %   3.96 %
Efficiency ratio 64.00 %   78.02 %   63.38 %   60.65 %   73.42 %
Average interest-earning assets to average interest-bearing liabilities 129.53 %   130.22 %   131.43 %   131.21 %   129.54 %
Average loans receivable to average deposits 93.41 %   94.57 %   98.46 %   96.56 %   95.66 %
Yield on interest-earning assets 4.21 %   4.13 %   4.05 %   4.09 %   4.11 %
Cost of interest-bearing liabilities 0.63 %   0.61 %   0.62 %   0.62 %   0.62 %
Asset and Credit Quality Ratios-Total Loans                  
Non-accrual loans $ 13,608     $ 11,449     $ 11,873     $ 9,016     $ 8,526  
Acquired impaired loans > 90 days past due and still accruing $ 57,969     $ 63,668     $ 48,477     $ 56,108     $ 56,041  
Nonperforming loans to loans receivable 0.95 %   1.01 %   1.02 %   1.13 %   1.15 %
Nonperforming assets to total assets 1.22 %   1.30 %   1.37 %   1.44 %   1.51 %
ALLL to nonperforming assets 35.73 %   33.45 %   41.29 %   40.98 %   39.97 %
ALLL to total gross loans 0.58 %   0.58 %   0.75 %   0.78 %   0.80 %
Annualized net charge-offs/average loans 0.14 %   0.17 %   0.10 %   0.11 %   0.08 %
Asset and Credit Quality Ratios-Non Acquired Loans                  
Nonperforming non acquired loans to total non acquired loans receivable     0.21 %   0.18 %   0.19 %   0.12 %   0.11 %
Non acquired loans ALLL to total gross non acquired loans receivable 0.40 %   0.41 %   0.43 %   0.46 %   0.47 %
Asset and Credit Quality Ratios-Acquired Loans                  
Nonperforming acquired loans to total acquired loans receivable 2.55 %   2.66 %   4.65 %   5.08 %   4.67 %
Acquired loans ALLL to total gross acquired loans 0.98 %   0.93 %   2.15 %   2.04 %   1.93 %
Capital Ratios (Company) (1)                  
Total average shareholders’ equity to total average assets 13.11 %   13.15 %   13.46 %   13.55 %   13.35 %
Tangible common equity ratio (2) 10.60 %   10.59 %   11.55 %   11.62 %   11.57 %
Tier 1 leverage capital ratio 11.63 %   12.22 %   12.89 %   12.64 %   12.49 %
Tier 1 common capital ratio 12.18 %   12.40 %   13.27 %   13.38 %   13.38 %
Tier 1 risk-based capital ratio 13.43 %   13.49 %   14.44 %   14.57 %   14.58 %
Total risk-based capital ratio 13.96 %   14.02 %   15.12 %   15.29 %   15.32 %
Capital Ratios (Bank) (1)                  
Tangible common equity ratio (2) 11.03 %   11.07 %   10.74 %   10.71 %   11.45 %
Tier 1 leverage capital ratio 10.67 %   11.23 %   10.53 %   10.42 %   11.10 %
Tier 1 common capital ratio 12.32 %   12.39 %   11.98 %   11.97 %   12.95 %
Tier 1 risk-based capital ratio 12.32 %   12.39 %   11.98 %   11.97 %   12.95 %
Total risk-based capital ratio 12.86 %   12.93 %   12.70 %   12.72 %   13.72 %

(1) Capital Ratios are preliminary
(2) See “Reconciliation of Non-GAAP Measures”

 
CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
 
  Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Loans                  
Non-owner occupied commercial real estate             $ 1,187,344     $ 1,130,883     $ 920,521     $ 891,830     $ 850,766  
Other commercial construction and land 350,401     327,622     222,794     212,315     194,971  
Multifamily commercial real estate 115,996     117,515     76,296     74,328     75,737  
1-4 family residential construction and land 157,920     140,030     111,954     100,306     96,703  
Total commercial real estate 1,811,661     1,716,050     1,331,565     1,278,779     1,218,177  
Owner occupied commercial real estate 1,313,086     1,321,405     1,072,586     1,075,306     1,095,460  
Commercial and industrial 1,443,828     1,468,874     1,458,523     1,448,698     1,375,233  
Lease financing         525     877     1,088  
Total commercial 2,756,914     2,790,279     2,531,634     2,524,881     2,471,781  
1-4 family residential 1,787,097     1,714,702     1,168,468     1,039,309     1,015,071  
Home equity loans 502,099     507,759     364,117     364,169     368,510  
Indirect auto loans 199,951     226,717     254,736     285,618     317,863  
Other consumer loans 222,824     222,255     94,277     85,964     84,108  
Total consumer 2,711,971     2,671,433     1,881,598     1,775,060     1,785,552  
Other 231,409     228,430     191,136     166,185     159,447  
Total loans $ 7,511,955     $ 7,406,192     $ 5,935,933     $ 5,744,905     $ 5,634,957  
                   
Deposits                  
Non-interest bearing demand $ 1,680,243     $ 1,590,164     $ 1,207,800     $ 1,172,481     $ 1,190,831  
Interest bearing demand 1,960,187     1,930,143     1,463,520     1,456,558     1,402,342  
Money market 1,746,444     1,651,023     1,166,918     1,105,460     1,162,546  
Savings 496,230     497,171     401,205     403,106     420,073  
Total core deposits 5,883,104     5,668,501     4,239,443     4,137,605     4,175,792  
Wholesale money market 75,030     74,815     125,030     50,015     100,035  
Time deposits 2,134,473     2,137,312     1,668,784     1,619,507     1,663,906  
Total deposits $ 8,092,607     $ 7,880,628     $ 6,033,257     $ 5,807,127     $ 5,939,733  

 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
    Three Months Ended
March 31, 2017
  Three Months Ended
December 31, 2016
    Average
Balances
  Interest   Yield /
Rate
  Average
Balances
  Interest   Yield /
Rate
Interest earning assets                        
Loans (1)   $ 7,409,284     $ 83,753     4.58 %   $ 6,977,690     $ 79,690     4.54 %
Investment securities (1)   1,501,816     9,312     2.51 %   1,347,554     8,065     2.38 %
Interest bearing deposits in other banks       58,269     97     0.68 %   143,446     166     0.46 %
Other earning assets (2)   29,053     357     4.98 %   30,904     382     4.92 %
Total interest earning assets   8,998,422     $ 93,519     4.21 %   8,499,594     $ 88,303     4.13 %
Non-interest earning assets   909,138             829,740          
Total assets   $ 9,907,560             $ 9,329,334          
Interest bearing liabilities                        
Time deposits   $ 2,141,806     $ 4,539     0.86 %   $ 2,049,066     $ 4,526     0.88 %
Money market   1,777,343     1,756     0.40 %   1,601,167     1,498     0.37 %
Interest bearing demand   1,922,687     1,138     0.24 %   1,748,269     935     0.21 %
Savings   494,538     220     0.18 %   471,466     219     0.18 %
Total interest bearing deposits   6,336,374     7,653     0.49 %   5,869,968     7,178     0.49 %
Short-term borrowings and FHLB advances   493,643     887     0.73 %   548,667     662     0.48 %
Long-term borrowings   116,744     2,281     7.92 %   108,276     2,087     7.67 %
Total interest bearing liabilities   6,946,761     10,821     0.63 %   6,526,911     9,927     0.61 %
Non-interest bearing demand   1,595,695             1,508,496          
Other liabilities   65,753             66,710          
Shareholders’ equity   1,299,351             1,227,217          
Total liabilities and shareholders’ equity   $ 9,907,560             $ 9,329,334          
Net interest income and spread       $ 82,698     3.58 %       $ 78,376     3.53 %
Net interest margin           3.73 %           3.67 %

(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
March 31, 2017
  Three Months Ended
March 31, 2016
    Average
Balances
  Interest   Yield /
Rate
  Average
Balances
  Interest   Yield /
Rate
Interest earning assets                        
Loans (1)   $ 7,409,284     $ 83,753     4.58 %   $ 5,611,488     $ 63,009     4.52 %
Investment securities (1)   1,501,816     9,312     2.51 %   1,122,523     6,483     2.32 %
Interest bearing deposits in other banks             58,269     97     0.68 %   73,188     84     0.46 %
Other earning assets (2)   29,053     357     4.98 %   25,136     315     5.04 %
Total interest earning assets   8,998,422     $ 93,519     4.21 %   6,832,335     $ 69,891     4.11 %
Non-interest earning assets   909,138             618,087          
Total assets   $ 9,907,560             $ 7,450,422          
Interest bearing liabilities                        
Time deposits   $ 2,141,806     $ 4,539     0.86 %   $ 1,689,653     $ 4,120     0.98 %
Money market   1,777,343     1,756     0.40 %   1,247,333     1,067     0.34 %
Interest bearing demand   1,922,687     1,138     0.24 %   1,370,957     648     0.19 %
Savings   494,538     220     0.18 %   419,588     227     0.22 %
Total interest bearing deposits   6,336,374     7,653     0.49 %   4,727,531     6,062     0.52 %
Short-term borrowings and FHLB advances   493,643     887     0.73 %   460,892     532     0.46 %
Long-term borrowings   116,744     2,281     7.92 %   85,986     1,511     7.07 %
Total interest bearing liabilities   6,946,761     10,821     0.63 %   5,274,409     8,105     0.62 %
Non-interest bearing demand   1,595,695             1,138,782          
Other liabilities   65,753             42,418          
Shareholders’ equity   1,299,351             994,813          
Total liabilities and shareholders’ equity   $ 9,907,560             $ 7,450,422          
Net interest income and spread       $ 82,698     3.58 %       $ 61,786     3.50 %
Net interest margin           3.73 %           3.64 %

(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
    Mar 31, 2017   Dec 31, 2016   Mar 30, 2016
Net Income   $ 20,883     $ 20,883     $ 12,434     $ 12,434     $ 9,840     $ 9,840  
    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*   (67 )   (41 )   (1,894 )   (1,170 )   (40 )   (25 )
Non-interest expense                        
Legal Settlement           1,361     841          
Tax Adjustment           (1,350 )   (1,350 )        
Severance expense*           7     4     75     46  
Restructuring expense*   1,912     1,181     4     3     142     88  
Conversion costs and merger tax deductible*           3,037     1,877     18,245     11,270     1,107     684  
Legal merger non deductible           280     280     580     580  
Tax effect of adjustments*   (1,865 )     N/A     (6,775 )     N/A     (3,999 )     N/A  
Core Net Income   $ 23,900     $ 23,900     $ 22,312     $ 22,312     $ 16,883     $ 16,883  
                         
Diluted shares   53,127         50,387         43,904      
Core Net Income per share   $ 0.45         $ 0.44         $ 0.38      
Average Assets   9,907,560         9,329,334         7,450,422      
                         
ROA**   0.84 %       0.53 %       0.53 %    
Core ROA***   0.96 %       0.96 %       0.91 %    

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

 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars in thousands)
(Unaudited)
 
CORE EFFICIENCY RATIO Three Months Ended
  Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Net interest income $ 82,116     $ 77,819     $ 62,627     $ 61,515     $ 61,367  
                   
Reported non-interest income 15,852     17,016     12,370     11,922     2,566  
Indemnification asset termination                 (9,178 )
Less: Securities gains (losses) 67     1,894     71     117     40  
Core non-interest income $ 15,785     $ 15,122     $ 12,299     $ 11,805     $ 11,704  
                   
Reported non-interest expense $ 62,703     $ 73,994     $ 47,530     $ 44,536     $ 46,938  
Less: Severance expense     7             75  
Conversion costs and merger tax deductible 3,037     18,245     331     881     1,107  
Legal settlement     1,361     1,500          
Legal merger non deductible     280     61     355     580  
Restructuring expense 1,912     4     (113 )   5     142  
Contract termination                  
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits)                      
Core non-interest expense $ 57,754     $ 54,097     $ 45,751     $ 43,295     $ 45,034  
                   
Efficiency ratio* 64.00 %   78.02 %   63.38 %   60.65 %   73.42 %
Core efficiency ratio** 58.99 %   58.21 %   61.06 %   59.05 %   61.63 %

   *  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
    Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Total shareholders’ equity   $ 1,307,931     $ 1,292,047     $ 1,029,841     $ 1,016,498     $ 996,993  
Less: goodwill and intangible assets, net of taxes       (253,708 )   (256,176 )   (142,141 )   (142,725 )   (143,304 )
Tangible book value*   $ 1,054,223     $ 1,035,871     $ 887,700     $ 873,773     $ 853,689  
Common shares outstanding   51,966     51,765     43,235     43,219     43,189  
Tangible book value per share   $ 20.29     $ 20.01     $ 20.53     $ 20.22     $ 19.77  

* 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
    Mar 31,
 2017
  Dec 31,
 2016
  Sep 30,
 2016
  Jun 30,
 2016
  Mar 31,
 2016
Total shareholders’ equity   $ 1,307,931     $ 1,292,047     $ 1,029,841     $ 1,016,498     $ 996,993  
Less: goodwill and intangible assets   (265,711 )   (268,870 )   (146,810 )   (147,753 )   (148,688 )
Tangible common equity   $ 1,042,220     $ 1,023,177     $ 883,031     $ 868,745     $ 848,305  
Total assets   $ 10,098,042     $ 9,930,657     $ 7,792,458     $ 7,621,225     $ 7,479,798  
Less: goodwill and intangible assets   (265,711 )   (268,870 )   (146,810 )   (147,753 )   (148,688 )
Tangible assets   $ 9,832,331     $ 9,661,787     $ 7,645,648     $ 7,473,472     $ 7,331,110  
Tangible common equity ratio   10.60 %   10.59 %   11.55 %   11.62 %   11.57 %
                               

 

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