EX-99.1 2 exhibit991earningsreleasef.htm EXHIBIT 99.1 Exhibit
CBF Reports Second Quarter Results
Page 1
July 20, 2017

EXHIBIT 99.1
 

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


CAPITAL BANK FINANCIAL CORP. REPORTS SECOND QUARTER GAAP EPS OF $0.45 AND CORE EPS OF $0.50

CHARLOTTE, NC. (July 20, 2017) - Capital Bank Financial Corp. (Nasdaq: CBF) (the “Company”) today reported second quarter GAAP net income of $23.8 million, which increased 14% quarter over quarter. GAAP net income per diluted share was $0.45. Core net income increased to $26.7 million, up 12% quarter over quarter. Core net income per diluted share was $0.50. Core pre-tax adjustments for the second quarter of 2017 included $3.0 million of branch closure expenses and $1.0 million of merger related expenses, offset by $0.1 million net gain on investment securities. The reconciliation of non-GAAP financial measures (including core net income, core net income per diluted share, and core ROA) are included in tabular form at the end of this release.

Highlights of the quarter include:

•
Announcement of a definitive agreement to merge with First Horizon National Corporation;
•
GAAP ROA of 0.95%, up 11 bps quarter over quarter and core ROA of 1.06%, up 10 bps quarter over quarter;
•
GAAP efficiency ratio of 60.2%; and
•
Declared quarterly dividend of $0.12 per common share.
“We are very excited about joining with First Horizon in creating a $40 billion regional bank with strong growth and high returns. Comprehensive pre-merger integration planning is off to a fast start,” said Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp.
“We are pleased with this quarter's results which demonstrated very significant progress toward our profitability and return targets for 2017. We continue to execute on cost savings initiatives and are well-positioned to carry our momentum into the second half of the year,” added Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp.

Loan Portfolio and Composition

During the second quarter, the loan portfolio increased by $58.2 million to $7.6 billion, consisting of a $95.4 million increase in commercial real estate and commercial and industrial loans, a $43.9 million decrease in consumer loans, and a $6.7 million increase in other loans.  New loan production of $481.9 million was in line with plan and partially offset by strong special assets resolutions of $42.8 million, continued run-off of the prime indirect loan portfolio of $25.1 million, and the sale of $14.1 million in loans.

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

 
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
Commercial real estate
 
26
%
 
24
%
 
23
%
C&I
 
36
%
 
37
%
 
38
%
Consumer
 
35
%
 
36
%
 
36
%
Other
 
3
%
 
3
%
 
3
%
Total
 
100
%
 
100
%
 
100
%




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July 20, 2017


Deposits Composition and Cost of Funds

During the second quarter, total deposits decreased by $17.6 million to $8.1 billion. The quarterly average balance on deposits, which is less sensitive to individual customer activity, increased by $65.2 million. Contributing to the fluctuation in deposits was a commercial deposit of $50.1 million that was recorded late in the first quarter and subsequently withdrawn early in the second quarter. The cost of total deposits increased by two basis points sequentially to 0.41%, and was flat year over year, as the Company continues to implement carefully targeted pricing strategies.

Net Interest Income and Net Interest Margin

Net interest income increased $3.1 million to $85.2 million from $82.1 million for the first quarter of 2017 and increased $23.7 million from $61.5 million for the second quarter of 2016. The net interest margin for the second quarter of 2017 was 3.75%, an increase of two basis points sequentially and 13 basis points year over year.

Non-Interest Income

Non-interest income increased $0.1 million to $16.0 million from $15.9 million for the first quarter of 2017 and increased $4.1 million from $11.9 million for the second quarter of 2016. The sequential increase was mainly driven by a $0.3 million increase in debit card income that was partially offset by a $0.1 million decrease in service charges on deposit accounts. The year over year increase was mainly due to the acquisition of CommunityOne and includes a $1.8 million increase in debit card income, a $1.4 million increase in other income (includes BOLI, credit card and merchant service income), and a $0.8 million increase in service charges.

Provision for Loan and Lease Losses and Credit Quality

The provision of $2.3 million recorded for the second quarter of 2017 included a $1.5 million provision for non-purchased credit impaired loans and a $0.8 million provision on purchased credit impaired loans. Net charge-offs for the second quarter of 2017 were $1.6 million, $1.0 million lower than the first quarter of 2017.

At June 30, 2017, the allowance for loan and lease losses was $44.6 million of which $24.0 million related to purchase credit impaired loans and $20.6 million related to non-purchased credit impaired loans. The allowance for loan and lease losses represents 0.59% of the Company’s total $7.6 billion loan portfolio.

At June 30, 2017, non-performing loans were $68.2 million, or 0.90% of loans, and decreased 4.7% from March 31, 2017, mainly as a result of resolutions and upgrades. The balance on non-performing loans increased 4.8% from June 30, 2016, due primarily to the acquisition of CommunityOne.

Non-Interest Expense

Non-interest expense declined $1.7 million to $61.0 million from $62.7 million for the first quarter of 2017 and increased $16.5 million from $44.5 million for the second quarter of 2016. The sequential decrease was mainly due to a decrease of $2.1 million in conversion and merger expense and $1.5 million in salaries and benefits. Partially offsetting the decrease was a $1.1 million increase in restructuring charges. The year over year increase was mainly due to increases of $7.5 million in salaries and benefit expense, $3.0 million in restructuring charges, and $1.5 million in occupancy and equipment expense, which were mostly related to the acquisition of CommunityOne. The Company benefited from cost savings associated with the integration of CommunityOne and continues to review opportunities for additional cost savings.

Income Tax Expense

Income tax expense was $14.1 million for the second quarter of 2017 with an effective tax rate of 37%, compared to $11.0 million and 34% for the first quarter of 2017. Income tax expense was $10.3 million and an effective tax rate of 37% for the second quarter of 2016.

Financial Position

Total assets decreased by $4.3 million to $10.1 billion as of June 30, 2017, from $10.1 billion as of March 31, 2017. During the quarter, the Company’s loan portfolio increased $58.2 million to $7.6 billion. Total deposits decreased by $17.6 million to $8.1

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Page 3
July 20, 2017

billion. Core deposits include all checking, savings and money market accounts, excluding brokered, and represent 71% of total deposits. FHLB borrowings decreased $20.1 million. Book value per share was $25.62 as of June 30, 2017, an increase of $0.45 and $2.10 from March 31, 2017 and June 30, 2016, respectively. Tangible book value per share was $20.76 as of June 30, 2017, an increase of $0.47 and $0.54 from March 31, 2017 and June 30, 2016, respectively. During the second 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 reconciliation of non-GAAP financial measures (including tangible book value and tangible book value per share) are included in tabular form at the end of this release.

The Company declared a cash dividend of $0.12 per share, payable on August 21, 2017, to shareholders of record as of August 7, 2017.

Adoption of New Accounting Guidance

The Company elected to early adopt ASU 2016-09 in the fourth quarter of 2016, which addresses, among other items, the accounting for income taxes and forfeitures. Upon adoption, excess tax benefits generated when stock awards vest or settle are no longer recognized in equity but are instead recognized as a reduction to provision for income taxes. The Company reflected the adjustments on a modified prospective basis as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption.

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, 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

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July 20, 2017

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 June 30, 2017, and 189 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. 

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CBF Reports Second Quarter Results
Page 5
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
 
Three Months Ended
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
 
Sep 30,
2016
 
Jun 30,
2016
Interest and dividend income
$
97,286

 
$
92,937

 
$
87,746

 
$
70,929

 
$
69,579

Interest expense
12,044

 
10,821

 
9,927

 
8,302

 
8,064

Net interest income
85,242

 
82,116

 
77,819

 
62,627

 
61,515

Provision for loan and lease losses
2,303

 
3,392

 
1,980

 
586

 
1,172

Net interest income after provision for loan and lease losses
82,939

 
78,724

 
75,839

 
62,041

 
60,343

Non-interest income
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
5,237

 
5,375

 
5,949

 
4,777

 
4,486

Debit card income
5,051

 
4,765

 
4,211

 
3,389

 
3,235

Fees on mortgage loans originated and sold
1,150

 
1,248

 
1,402

 
1,334

 
1,140

Investment advisory and trust fees
596

 
641

 
591

 
290

 
455

Investment securities gains, net
70

 
67

 
1,894

 
71

 
117

Other income
3,896

 
3,756

 
2,969

 
2,509

 
2,489

Total non-interest income
16,000

 
15,852

 
17,016

 
12,370

 
11,922

Non-interest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
27,662

 
29,166

 
26,134

 
20,935

 
20,139

Stock-based compensation expense
964

 
900

 
531

 
790

 
467

Net occupancy and equipment expense
8,826

 
8,992

 
8,374

 
7,340

 
7,355

Computer services
4,280

 
3,873

 
4,364

 
3,153

 
3,274

Software expense
2,573

 
2,662

 
2,391

 
1,948

 
2,000

Telecommunication expense
1,939

 
2,424

 
2,147

 
1,790

 
1,558

OREO valuation expense
262

 
247

 
677

 
742

 
1,119

Net gains on sales of OREO
(204
)
 
(308
)
 
(150
)
 
(159
)
 
(413
)
Foreclosed asset related expense
376

 
364

 
513

 
397

 
399

Loan workout expense
281

 
201

 
327

 
206

 
71

Conversion and merger related expense, net
981

 
3,037

 
18,525

 
394

 
1,236

Professional fees
1,800

 
2,096

 
1,761

 
1,642

 
1,353

Restructuring charges, net
2,978

 
1,912

 
4

 
(113
)
 
5

Legal settlement expense
45

 
—

 
1,361

 
1,500

 
—

Regulatory assessments
1,145

 
719

 
1,092

 
841

 
1,259

Other expense
7,077

 
6,418

 
5,943

 
6,124

 
4,714

Total non-interest expense
60,985

 
62,703

 
73,994

 
47,530

 
44,536

Income before income taxes
37,954

 
31,873

 
18,861

 
26,881

 
27,729

Income tax expense (1)
14,148

 
10,990

 
6,509

 
8,370

 
10,288

Net income (1)
$
23,806

 
$
20,883

 
$
12,352

 
$
18,511

 
$
17,441

 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic (1)
$
0.46

 
$
0.40

 
$
0.25

 
$
0.43

 
$
0.41

Diluted (1)
$
0.45

 
$
0.39

 
$
0.24

 
$
0.42

 
$
0.40

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
51,683

 
51,634

 
49,334

 
43,028

 
43,011

Diluted (1)
53,226

 
53,127

 
50,722

 
44,118

 
44,068


(1) 
We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. The impacts of adoption have been reflected in our consolidated statements of income for the three months ended December 31, 2016, September 30, 2016, and June 30, 2016, and did not have a material effect. Accordingly, adjustments were made using the modified prospective approach and resulted in, among other items, a $0.1 million decrease to net income for the three months ended December 31, 2016, and a $0.0 million increase to net income for the three months ended September 30, 2016 and June 30, 2016. Additionally, there was an increase

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July 20, 2017

of $0.01 to the basic earnings per share for the three months ended June 30, 2016. See "Adoption of New Accounting Guidance" above for additional information.

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CBF Reports Second Quarter Results
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July 20, 2017

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
Assets
 
 
 
 
 
Cash and due from banks
$
106,164

 
$
100,134

 
$
107,707

Interest-bearing deposits in other banks
49,247

 
60,413

 
201,348

Total cash and cash equivalents
155,411

 
160,547

 
309,055

Trading securities
4,290

 
4,150

 
3,791

Investment securities available-for-sale at fair value (amortized cost $1,152,613, $1,168,995, and $927,266, respectively)
1,145,712

 
1,154,496

 
912,250

Investment securities held-to-maturity at amortized cost (fair value $431,269, $445,696, and $460,911, respectively)
430,411

 
446,020

 
463,959

Loans held for sale
3,533

 
4,980

 
12,874

Loans, net of deferred loan costs and fees
7,566,581

 
7,506,975

 
7,393,318

Less: Allowance for loan and lease losses
44,638

 
43,891

 
43,065

Loans, net
7,521,943

 
7,463,084

 
7,350,253

Other real estate owned
41,364

 
51,050

 
53,482

Premises and equipment, net
184,939

 
199,167

 
205,425

Goodwill
234,158

 
234,158

 
235,500

Intangible assets, net
29,750

 
31,553

 
33,370

Deferred income tax asset, net
134,452

 
146,724

 
150,272

Bank owned life insurance
100,672

 
100,251

 
99,702

Other assets
107,066

 
101,862

 
100,724

Total Assets
$
10,093,701

 
$
10,098,042

 
$
9,930,657

Liabilities and Shareholders’ Equity
 
 
 
 
 
Liabilities
 
 
 
 
 
Deposits:
 
 
 
 
 
Non-interest bearing demand
$
1,662,416

 
$
1,680,243

 
$
1,590,164

Interest bearing demand
1,884,674

 
1,960,187

 
1,930,143

Money market
1,828,889

 
1,821,474

 
1,725,838

Savings
480,590

 
496,230

 
497,171

Time deposits
2,218,444

 
2,134,473

 
2,137,312

Total deposits
8,075,013

 
8,092,607

 
7,880,628

Federal Home Loan Bank advances
470,600

 
490,650

 
545,701

Short-term borrowings
32,637

 
21,125

 
19,157

Long-term borrowings
118,096

 
117,272

 
116,456

Accrued expenses and other liabilities
65,271

 
68,457

 
76,668

Total liabilities
$
8,761,617

 
$
8,790,111

 
$
8,638,610

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, 46,624
issued and 35,357 outstanding, 46,479 issued 35,212 outstanding, and 46,178 issued and 34,911 outstanding, respectively.
466

 
465

 
462

Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,407
issued and 16,634 outstanding, 18,527 issued and 16,754 outstanding, and 18,627 issued and 16,854 outstanding, respectively.
184

 
185

 
186

Additional paid in capital
1,371,224

 
1,369,689

 
1,368,459

Retained earnings
279,914

 
262,443

 
247,758

Accumulated other comprehensive loss
(7,320
)
 
(12,467
)
 
(12,434
)
Treasury stock, at cost, 13,040, 13,040, and 13,040 shares, respectively
(312,384
)
 
(312,384
)
 
(312,384
)
Total shareholders’ equity
1,332,084

 
1,307,931

 
1,292,047

Total Liabilities and Shareholders’ Equity
$
10,093,701

 
$
10,098,042

 
$
9,930,657

 

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CBF Reports Second Quarter Results
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July 20, 2017

CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
 
Three Months Ended
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
 
Sep 30,
2016
 
Jun 30,
2016
Performance Ratios
 
 
 
 
 
 
 
 
 
Interest rate spread (1)
3.59
%
 
3.58
%
 
3.53
%
 
3.43
%
 
3.48
%
Net interest margin (1)
3.75
%
 
3.73
%
 
3.67
%
 
3.58
%
 
3.62
%
Return on average assets (3)
0.95
%
 
0.84
%
 
0.53
%
 
0.98
%
 
0.93
%
Return on average shareholders’ equity (3)
7.20
%
 
6.43
%
 
4.03
%
 
7.25
%
 
6.88
%
Efficiency ratio
60.24
%
 
64.00
%
 
78.02
%
 
63.38
%
 
60.65
%
Average interest-earning assets to average interest-bearing liabilities
130.70
%
 
129.53
%
 
130.22
%
 
131.43
%
 
131.21
%
Average loans receivable to average deposits
93.97
%
 
93.41
%
 
94.57
%
 
98.46
%
 
96.56
%
Yield on interest-earning assets (1)
4.27
%
 
4.21
%
 
4.13
%
 
4.05
%
 
4.09
%
Cost of interest-bearing liabilities
0.69
%
 
0.63
%
 
0.61
%
 
0.62
%
 
0.62
%
Asset and Credit Quality Ratios-Total Loans
 

 
 

 
 

 
 

 
 

Non-accrual loans
$
13,821

 
$
13,608

 
$
11,449

 
$
11,873

 
$
9,016

Nonperforming purchase credit impaired loans
$
54,399

 
$
57,969

 
$
63,668

 
$
48,477

 
$
56,108

Nonperforming loans to loans receivable
0.90
%
 
0.95
%
 
1.01
%
 
1.02
%
 
1.13
%
Nonperforming assets to total assets
1.09
%
 
1.22
%
 
1.30
%
 
1.37
%
 
1.44
%
ALLL to nonperforming assets
40.64
%
 
35.73
%
 
33.45
%
 
41.29
%
 
40.98
%
ALLL to loans held for investment
0.59
%
 
0.58
%
 
0.58
%
 
0.75
%
 
0.78
%
Annualized net charge-offs/average loans
0.08
%
 
0.14
%
 
0.17
%
 
0.10
%
 
0.11
%
Capital Ratios (Company) (2)
 

 
 

 
 

 
 

 
 

Total average shareholders’ equity to total average assets
13.1
%
 
13.1
%
 
13.2
%
 
13.5
%
 
13.5
%
Tier 1 leverage capital ratio
11.8
%
 
11.6
%
 
12.2
%
 
12.9
%
 
12.6
%
Tier 1 common capital ratio
12.5
%
 
12.2
%
 
12.4
%
 
13.3
%
 
13.4
%
Tier 1 risk-based capital ratio
13.8
%
 
13.4
%
 
13.5
%
 
14.4
%
 
14.6
%
Total risk-based capital ratio
14.3
%
 
14.0
%
 
14.0
%
 
15.1
%
 
15.3
%
Capital Ratios (Bank) (2)
 

 
 

 
 

 
 

 
 

Tier 1 leverage capital ratio
10.7
%
 
10.7
%
 
11.2
%
 
10.5
%
 
10.4
%
Tier 1 common capital ratio
12.6
%
 
12.3
%
 
12.4
%
 
12.0
%
 
12.0
%
Tier 1 risk-based capital ratio
12.6
%
 
12.3
%
 
12.4
%
 
12.0
%
 
12.0
%
Total risk-based capital ratio
13.1
%
 
12.9
%
 
12.9
%
 
12.7
%
 
12.7
%

(1) 
Presented on a fully tax equivalent basis.
(2) 
Capital Ratios are preliminary.
(3) 
We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. The impacts of adoption have been reflected in our consolidated statements of income for the three months ended December 31, 2016, September 30, 2016, and June 30, 2016, and did not have a material effect. Accordingly, adjustments were made using the modified prospective approach and resulted in, among other items, a one basis point increase to return on average assets for the three months ended September 30, 2016. Additionally, there were changes to return on average shareholders’ equity consisting of a two basis point decrease for the three months ended December 31, 2016, and a one basis point increase for both three months ended September and June 2016. See "Adoption of New Accounting Guidance" above for additional information.







- MORE -


CBF Reports Second Quarter Results
Page 9
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
 
Sep 30,
2016
 
Jun 30,
2016
Loans
 
 
 
 
 
 
 
 
 
Non-owner occupied commercial real estate
$
1,265,576

 
$
1,187,344

 
$
1,130,883

 
$
920,521

 
$
891,830

Other commercial construction and land
384,581

 
350,401

 
327,622

 
222,794

 
212,315

Multifamily commercial real estate
147,365

 
115,996

 
117,515

 
76,296

 
74,328

1-4 family residential construction and land
153,761

 
157,920

 
140,030

 
111,954

 
100,306

Total commercial real estate
1,951,283

 
1,811,661

 
1,716,050

 
1,331,565

 
1,278,779

Owner occupied commercial real estate
1,287,811

 
1,313,086

 
1,321,405

 
1,072,586

 
1,075,306

Commercial and industrial
1,424,862

 
1,443,828

 
1,468,874

 
1,458,523

 
1,448,698

Lease financing
—

 
—

 
—

 
525

 
877

Total commercial
2,712,673

 
2,756,914

 
2,790,279

 
2,531,634

 
2,524,881

1-4 family residential
1,782,799

 
1,787,097

 
1,714,702

 
1,168,468

 
1,039,309

Home equity loans
489,497

 
502,099

 
507,759

 
364,117

 
364,169

Indirect auto loans
174,861

 
199,951

 
226,717

 
254,736

 
285,618

Other consumer loans
220,946

 
222,824

 
222,255

 
94,277

 
85,964

Total consumer
2,668,103

 
2,711,971

 
2,671,433

 
1,881,598

 
1,775,060

Other
238,055

 
231,409

 
228,430

 
191,136

 
166,185

Total loans
$
7,570,114

 
$
7,511,955

 
$
7,406,192

 
$
5,935,933

 
$
5,744,905

 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 

 
 

 
 

Non-interest bearing demand
$
1,662,416

 
$
1,680,243

 
$
1,590,164

 
$
1,207,800

 
$
1,172,481

Interest bearing demand
1,884,674

 
1,960,187

 
1,930,143

 
1,463,520

 
1,456,558

Money market
1,678,842

 
1,746,444

 
1,651,023

 
1,166,918

 
1,105,460

Savings
480,590

 
496,230

 
497,171

 
401,205

 
403,106

Total core deposits
5,706,522

 
5,883,104

 
5,668,501

 
4,239,443

 
4,137,605

Wholesale money market
150,047

 
75,030

 
74,815

 
125,030

 
50,015

Time deposits
2,218,444

 
2,134,473

 
2,137,312

 
1,668,784

 
1,619,507

Total deposits
$
8,075,013

 
$
8,092,607

 
$
7,880,628

 
$
6,033,257

 
$
5,807,127

 



- MORE -


CBF Reports Second Quarter Results
Page 10
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended 
June 30, 2017
 
Three Months Ended 
March 31, 2017
 
 
Average
Balances
 
Interest
 
Yield / Rate
 
Average
Balances
 
Interest
 
Yield / Rate
Interest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
 
$
7,515,169

 
$
86,405

 
4.61
%
 
$
7,409,284

 
$
83,753

 
4.58
%
Investment securities (1)
 
1,596,382

 
11,005

 
2.77
%
 
1,501,816

 
9,312

 
2.51
%
Interest bearing deposits in other banks
 
42,140

 
93

 
0.89
%
 
58,269

 
97

 
0.68
%
Other earning assets (2)
 
32,074

 
388

 
4.85
%
 
29,053

 
357

 
4.98
%
Total interest earning assets (1)
 
9,185,765

 
$
97,891

 
4.27
%
 
8,998,422

 
$
93,519

 
4.21
%
Non-interest earning assets
 
884,900

 
 
 
 
 
909,138

 
 
 
 
Total assets
 
$
10,070,665

 
 
 
 
 
$
9,907,560

 
 
 
 
Interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
 
$
2,152,086

 
$
4,789

 
0.89
%
 
$
2,141,806

 
$
4,539

 
0.86
%
Money market
 
1,787,200

 
1,963

 
0.44
%
 
1,777,343

 
1,756

 
0.40
%
Interest bearing demand
 
1,914,622

 
1,255

 
0.26
%
 
1,922,687

 
1,138

 
0.24
%
Savings
 
488,123

 
220

 
0.18
%
 
494,538

 
220

 
0.18
%
Total interest bearing deposits
 
6,342,031

 
8,227

 
0.52
%
 
6,336,374

 
7,653

 
0.49
%
Short-term borrowings and FHLB advances
 
568,575

 
1,433

 
1.01
%
 
493,643

 
887

 
0.73
%
Long-term borrowings
 
117,576

 
2,384

 
8.13
%
 
116,744

 
2,281

 
7.92
%
Total interest bearing liabilities
 
7,028,182

 
12,044

 
0.69
%
 
6,946,761

 
10,821

 
0.63
%
Non-interest bearing demand
 
1,655,233

 
 
 
 
 
1,595,695

 
 
 
 
Other liabilities
 
64,318

 
 
 
 
 
65,753

 
 
 
 
Shareholders’ equity
 
1,322,932

 
 
 
 
 
1,299,351

 
 
 
 
Total liabilities and shareholders’ equity
 
$
10,070,665

 
 
 
 
 
$
9,907,560

 
 
 
 
Net interest income and spread (1)
 
 
 
$
85,847

 
3.59
%
 
 
 
$
82,698

 
3.58
%
Net interest margin (1)
 
 
 
 
 
3.75
%
 
 
 
 
 
3.73
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (1)
 
 
 
$
85,847

 
 
 
 
 
$
82,698

 
 
Tax equivalent adjustment
 
 
 
(605
)
 
 
 
 
 
(582
)
 
 
Net interest income
 
 
 
$
85,242

 
 
 
 
 
$
82,116

 
 

(1) 
Presented on a fully tax equivalent basis.
(2) 
Includes Federal Home Loan Bank stocks.
 












- MORE -


CBF Reports Second Quarter Results
Page 11
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended 
June 30, 2017
 
Three Months Ended 
June 30, 2016
 
 
Average
Balances
 
Interest
 
Yield / Rate
 
Average
Balances
 
Interest
 
Yield / Rate
Interest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
 
$
7,515,169

 
$
86,405

 
4.61
%
 
$
5,653,647

 
$
62,999

 
4.48
%
Investment securities (1)
 
1,596,382

 
11,005

 
2.77
%
 
1,131,791

 
6,612

 
2.35
%
Interest bearing deposits in other banks
 
42,140

 
93

 
0.89
%
 
64,802

 
74

 
0.46
%
Other earning assets (2)
 
32,074

 
388

 
4.85
%
 
26,696

 
330

 
4.97
%
Total interest earning assets (1)
 
9,185,765

 
$
97,891

 
4.27
%
 
6,876,936

 
$
70,015

 
4.09
%
Non-interest earning assets
 
884,900

 
 
 
 
 
607,429

 
 
 
 
Total assets
 
$
10,070,665

 
 
 
 
 
$
7,484,365

 
 
 
 
Interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
 
$
2,152,086

 
$
4,789

 
0.89
%
 
$
1,620,023

 
$
4,018

 
1.00
%
Money market
 
1,787,200

 
1,963

 
0.44
%
 
1,184,532

 
1,028

 
0.35
%
Interest bearing demand
 
1,914,622

 
1,255

 
0.26
%
 
1,451,666

 
749

 
0.21
%
Savings
 
488,123

 
220

 
0.18
%
 
411,496

 
208

 
0.20
%
Total interest bearing deposits
 
6,342,031

 
8,227

 
0.52
%
 
4,667,717

 
6,003

 
0.52
%
Short-term borrowings and FHLB advances
 
568,575

 
1,433

 
1.01
%
 
485,850

 
515

 
0.43
%
Long-term borrowings
 
117,576

 
2,384

 
8.13
%
 
87,496

 
1,547

 
7.11
%
Total interest bearing liabilities
 
7,028,182

 
12,044

 
0.69
%
 
5,241,063

 
8,065

 
0.62
%
Non-interest bearing demand
 
1,655,233

 
 
 
 
 
1,187,056

 
 
 
 
Other liabilities
 
64,318

 
 
 
 
 
42,319

 
 
 
 
Shareholders’ equity
 
1,322,932

 
 
 
 
 
1,013,927

 
 
 
 
Total liabilities and shareholders’ equity
 
$
10,070,665

 
 
 
 
 
$
7,484,365

 
 
 
 
Net interest income and spread (1)
 
 
 
$
85,847

 
3.59
%
 
 
 
$
61,950

 
3.48
%
Net interest margin (1)
 
 
 
 
 
3.75
%
 
 
 
 
 
3.62
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (1)
 
 
 
$
85,847

 
 
 
 
 
$
61,950

 
 
Tax equivalent adjustment
 
 
 
(605
)
 
 
 
 
 
(435
)
 
 
Net interest income
 
 
 
$
85,242

 
 
 
 
 
$
61,515

 
 
 
(1) 
Presented on a fully tax equivalent basis.
(2) 
Includes Federal Home Loan Bank stocks.















- MORE -


CBF Reports Second Quarter Results
Page 12
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
 
 
Six Months Ended 
June 30, 2017
 
Six Months Ended 
June 30, 2016
 
 
Average
Balances
 
Interest
 
Yield / Rate
 
Average
Balances
 
Interest
 
Yield / Rate
Interest earning assets
 
 
 
 
 
 
 
 
 
 
 
 
Loans (1)
 
$
7,462,519

 
$
170,157

 
4.60
%
 
$
5,632,568

 
$
126,007

 
4.50
%
Investment securities (1)
 
1,549,360

 
20,318

 
2.64
%
 
1,127,157

 
13,096

 
2.34
%
Interest bearing deposits in other banks
 
50,160

 
190

 
0.76
%
 
68,995

 
158

 
0.46
%
Other earning assets (2)
 
30,572

 
745

 
4.91
%
 
25,916

 
644

 
5.00
%
Total interest earning assets (1)
 
9,092,611

 
$
191,410

 
4.25
%
 
6,854,636

 
$
139,905

 
4.10
%
Non-interest earning assets
 
896,951

 
 
 
 
 
612,758

 
 
 
 
Total assets
 
$
9,989,562

 
 
 
 
 
$
7,467,394

 
 
 
 
Interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
 
$
2,146,974

 
$
9,327

 
0.88
%
 
$
1,654,838

 
$
8,138

 
0.99
%
Money market
 
1,782,299

 
3,720

 
0.42
%
 
1,215,933

 
2,094

 
0.35
%
Interest bearing demand
 
1,918,632

 
2,393

 
0.25
%
 
1,411,311

 
1,397

 
0.20
%
Savings
 
491,313

 
440

 
0.18
%
 
415,542

 
435

 
0.21
%
Total interest bearing deposits
 
6,339,218

 
15,880

 
0.51
%
 
4,697,624

 
12,064

 
0.52
%
Short-term borrowings and FHLB advances
 
531,316

 
2,320

 
0.88
%
 
473,371

 
1,046

 
0.44
%
Long-term borrowings
 
117,162

 
4,664

 
8.03
%
 
86,741

 
3,058

 
7.09
%
Total interest bearing liabilities
 
6,987,696

 
22,864

 
0.66
%
 
5,257,736

 
16,168

 
0.62
%
Non-interest bearing demand
 
1,625,628

 
 
 
 
 
1,162,919

 
 
 
 
Other liabilities
 
65,032

 
 
 
 
 
42,369

 
 
 
 
Shareholders’ equity
 
1,311,206

 
 
 
 
 
1,004,370

 
 
 
 
Total liabilities and shareholders’ equity
 
$
9,989,562

 
 
 
 
 
$
7,467,394

 
 
 
 
Net interest income and spread (1)
 
 
 
$
168,546

 
3.59
%
 
 
 
$
123,737

 
3.49
%
Net interest margin (1)
 
 
 
 
 
3.74
%
 
 
 
 
 
3.63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (1)
 
 
 
$
168,546

 
 
 
 
 
$
123,737

 
 
Tax equivalent adjustment
 
 
 
(1,188
)
 
 
 
 
 
(855
)
 
 
Net interest income
 
 
 
$
167,358

 
 
 
 
 
$
122,882

 
 
 
(1) 
Presented on a fully tax equivalent basis.
(2) 
Includes Federal Home Loan Bank stocks.






- MORE -


CBF Reports Second Quarter Results
Page 13
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)

CORE NET INCOME
 
Three Months Ended
 
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
Net Income (1)
 
$
23,806

 
$
23,806

 
$
20,883

 
$
20,883

 
$
12,352

 
$
12,352

 
 
Pre-Tax
 
After-Tax
 
Pre-Tax
 
After-Tax
 
Pre-Tax
 
After-Tax
Adjustments
 
 

 
 

 
 

 
 

 
 

 
 

Non-interest income
 
 

 
 

 
 

 
 

 
 

 
 

Less: Securities gains, net (2)
 
(70
)
 
(43
)
 
(67
)
 
(41
)
 
(1,894
)
 
(1,170
)
Non-interest expense
 
 
 
 
 
 
 
 
 
 
 
 
Conversion and merger related expense tax deductible, net (2)
 
(237
)
 
(146
)
 
3,037

 
1,877

 
18,245

 
11,270

Conversion and merger related expense non tax deductible
 
1,218

 
1,218

 
—

 
—

 
280

 
280

Restructuring expense (2)
 
2,978

 
1,840

 
1,912

 
1,181

 
4

 
3

Legal Settlement (2)
 
45

 
28

 
—

 
—

 
1,361

 
841

Tax Adjustment
 
—

 
—

 
—

 
—

 
(1,350
)
 
(1,350
)
Severance expense (2)
 
—

 
—

 
—

 
—

 
7

 
4

Tax effect of adjustments (2)
 
(1,037
)
 
N/A

 
(1,865
)
 
N/A

 
(6,775
)
 
N/A

Core Net Income (1)
 
$
26,703

 
$
26,703

 
$
23,900

 
$
23,900

 
$
22,230

 
$
22,230

 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares (1)
 
53,226

 
 
 
53,127

 
 
 
50,722

 
 
Core Net Income per share (1)
 
$
0.50

 
 
 
$
0.45

 
 
 
$
0.44

 
 
Average Assets
 
10,070,665

 
 

 
9,907,560

 
 

 
9,329,334

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
ROA (1) (3)
 
0.95
%
 


 
0.84
%
 


 
0.53
%
 


Core ROA (1) (4)
 
1.06
%
 
 
 
0.96
%
 
 
 
0.95
%
 
 
 
(1) 
We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. The impacts of adoption have been reflected in our consolidated statements of income for the three months ended December 31, 2016, and did not have a material effect. Accordingly, adjustments were made using the modified prospective approach and resulted in, among other items, a $0.1 million decrease to net income and core net income as well as a one basis point decrease to core ROA for the three months ended December 31, 2016. See "Adoption of New Accounting Guidance" above for additional information.
(2) 
Tax effected at a blended income tax rate of 38%.
(3) 
ROA: Annualized net income / Average assets.
(4) 
Core ROA: Annualized core net income / Average assets.










- MORE -


CBF Reports Second Quarter Results
Page 14
July 20, 2017

CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars in thousands)
(Unaudited)

CORE EFFICIENCY RATIO
Three Months Ended
 
Jun 30,
2017
 
Mar 31,
2017
 
Dec 31,
2016
 
Sep 30,
2016
 
Jun 30,
2016
Net interest income
$
85,242

 
$
82,116

 
$
77,819

 
$
62,627

 
$
61,515

 
 
 
 
 
 
 
 
 
 
Reported non-interest income
16,000

 
15,852

 
17,016

 
12,370

 
11,922

Less: Securities gains, net
70

 
67

 
1,894

 
71

 
117

Core non-interest income
$
15,930

 
$
15,785

 
$
15,122

 
$
12,299

 
$
11,805

 
 
 
 
 
 
 
 
 
 
Reported non-interest expense
$
60,985

 
$
62,703

 
$
73,994

 
$
47,530

 
$
44,536

Less: Conversion and merger related expense tax deductible, net
(237
)
 
3,037

 
18,245

 
331

 
881

Conversion and merger related expense non tax deductible
1,218

 
—

 
280

 
61

 
355

Restructuring expense, net
2,978

 
1,912

 
4

 
(113
)
 
5

Legal settlement
45

 
—

 
1,361

 
1,500

 
—

Severance expense
—

 
—

 
7

 
—

 
—

Core non-interest expense
$
56,981

 
$
57,754

 
$
54,097

 
$
45,751

 
$
43,295

 
 
 
 
 
 
 
 
 
 
Efficiency ratio (1)
60.24
%
 
64.00
%
 
78.02
%
 
63.38
%
 
60.65
%
Core efficiency ratio (2)
56.32
%
 
58.99
%
 
58.21
%
 
61.06
%
 
59.05
%
  
(1) 
Efficiency Ratio: Non-interest expense / (Non-interest income + Net interest income).
(2) 
Core Efficiency Ratio: Core non-interest expense / (Core non-interest income + Net interest income).


- MORE -


CBF Reports Second Quarter Results
Page 15
July 20, 2017

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,
2017
 
Mar 31,
2017
 
Dec 31,
2016
 
Sep 30,
2016
 
Jun 30,
2016
Total shareholders’ equity
 
$
1,332,084

 
$
1,307,931

 
$
1,292,047

 
$
1,029,841

 
$
1,016,498

Less: goodwill
 
(234,158
)
 
(234,158
)
 
(235,500
)
 
(134,522
)
 
(134,522
)
Less: intangibles
 
(29,750
)
 
(31,553
)
 
(33,370
)
 
(12,288
)
 
(13,231
)
Tax effect on intangible assets (1)
 
11,159

 
12,003

 
12,694

 
4,669

 
5,028

Tangible book value (2)
 
$
1,079,335

 
$
1,054,223

 
$
1,035,871

 
$
887,700

 
$
873,773

Common shares outstanding
 
51,991

 
51,966

 
51,765

 
43,235

 
43,219

Tangible book value per share
 
$
20.76

 
$
20.29

 
$
20.01

 
$
20.53

 
$
20.22


(1) 
Tax effected at a blended income tax rate of 38%.
(2) 
Tangible book value is equal to shareholders’ equity less goodwill and intangibles net of taxes.