8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 16, 2015

C1 FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Florida	001-36595	46-4241720
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

100 5^th Street South

St. Petersburg, Florida 33701

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (877) 266-2265

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On July 16, 2015, C1 Financial, Inc. (the “Registrant”) issued a press release announcing the results of the Registrant for the quarter ended June 30, 2015. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference.

The information in this Current Report on Form 8-K and in Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

The following exhibit is furnished herewith.

(d) Exhibits.

Exhibit Number	Description
99.1	C1 Financial, Inc. Earnings Release – Second Quarter 2015 Results

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

C1 FINANCIAL, INC.
By:	/s/ Trevor R. Burgess
	Trevor R. Burgess
	President & Chief Executive Officer

Date: July 17, 2015

index to exhibits

Exhibit Number	Description
99.1	C1 Financial, Inc. Earnings Release – Second Quarter 2015 Results

EX-99.1

Exhibit 99.1

C1 Financial Reports 2015 Second Quarter Results

St. Petersburg, FL, July 16, 2015 - C1 Financial, Inc. (NYSE:BNK) today reported net income of $4.7 million, or $0.29 per diluted common share for the second quarter of 2015 (“2Q15”), compared to net income of $3.2 million, or $0.20 per diluted common share for the first quarter of 2015 (“1Q15”). The net income for 2Q15 included a $2.6 million pre-tax gain on sale of land, a $1.2 million pre-tax provision for loan loss expense related to the general reserve and in addition to the allowance for net loan growth, a $393 thousand recovery related to a single loan, and a $163 thousand tax adjustment made in conjunction with our 2012 and 2013 tax audit.

MESSAGE FROM PRESIDENT & CHIEF EXECUTIVE OFFICER

Trevor Burgess, President & Chief Executive Officer of C1 Financial, Inc. stated, “We continue to execute on our plan to build the best business-focused bank in Florida, originating $177 million in new loans in the quarter and making significant progress in reducing the amount of acquired classified assets.  Entrepreneurs are choosing C1 Bank because of our speed, our differentiated service, and for our certainty of execution. Extra land purchased around our Wynwood branch appreciated greatly in a very short amount of time and we took the opportunity to book a gain that reflected positively in our tangible book value. In this extraordinary quarter, we also strengthened our balance sheet with an important increase in our allowance for loan losses related to performing loans. With the first half now behind us, we are excited to enter the second half with a strong pipeline of new clients and several great new additions to the C1 Bank management and sales teams.”

2Q15 showed several positive trends in our results and included some special events:

1. We originated $177 million in new loans in the quarter, resulting in C1 Bank originated loans outstanding up $121 million (+13%) from the prior quarter and $381 million (+57%) year-over-year. Overall loans outstanding (including acquired loans) were $1.361 billion at the end of 2Q15 (up 8.3% from the prior quarter and up 28.1% year-over-year);

2. Unfunded commitments were $238 million at the end of 2Q15, down $7.2 million (-2.9%) during the quarter and continue to present a clear opportunity for near-term loan funding;

3. The quarter saw $28 million growth in core deposits. Core deposits reached 78.5% of total deposits at the end of 2Q15, compared to 77.2% at the end of 1Q15. Noninterest-bearing deposits represented 26.5% of total deposits at the end of 2Q15, in line with the previous quarter. Cost of total deposits fell 3 basis points (“bps”) to 0.44% when compared to 1Q15;

4. Adjusted net interest margin (a non-GAAP measure which excludes the impact of purchase accounting accretion income) improved by 19 bps (from 4.41% for 1Q15 to 4.60% for 2Q15), reflecting the use of excess cash and enhanced by higher loan fees (resulting primarily from loan prepayment related fees);

5. Net interest income was up $1.2 million when compared to 1Q15, driven mainly by an increase in average loan balances (despite late funding in the quarter) and higher loan fees;

6. In 2Q15, sales of other real estate owned (“OREO”) reduced our OREO balance by $2.6 million. Including the improvement in nonperforming loans, total nonperforming assets declined $4.9 million when compared to the previous quarter. Our Texas Ratio was 22.4% at the end of 2Q15, improved from 25.7% at the end of 1Q15;

7. C1 Bank originated nonperforming assets accounted for less than 1% of our total nonperforming assets (with C1 Bank originated nonperforming loans below 0.1% of C1 Bank originated loans outstanding);  

8. Our allowance for loan losses was up 10 bps to 0.56% of total loans at the end of 2Q15, from 0.46% at the end of 1Q15;

9. Special events in this quarter included: (i) we sold our excess parking lots surrounding our Wynwood branch in Miami for a $2.6 million pre-tax gain; (ii) we booked a $163 thousand tax expense adjustment as a result of an IRS audit (related primarily to years 2012-2013); and (iii) we increased the general reserve for performing loans of our allowance for loan losses approximately $1.2 million in addition to the allowance for net loan growth, which was partially funded by a $393 thousand large recovery (related to the shared national credit loan charged off in 2Q14), resulting in an additional net pre-tax provision for loan loss expense of $808 thousand in 2Q15.

ASSETS

Total assets at the end of 2Q15 were $1.678 billion, $81.1 million higher (+5.1%) than at the end of 1Q15, primarily funded by deposit growth ($16.2 million) and additional longer term Federal Home Loan Bank (“FHLB”) borrowings ($59.0 million).

LOANS

Total loans at the end of 2Q15 were $1.361 billion, up $104.9 million (+8.3%) from the end of 1Q15. Loan growth in 2Q15 was mainly driven by strong loan originations of $177.1 million and funding of unfunded commitments, partially offset by loans paying off in the acquired portfolio, which decreased $15.9 million (-4.8%) from the end of 1Q15 to $315.2 million at the end of 2Q15. The outstanding balance of C1 Bank originated loans grew $120.7 million (+13.0%) during 2Q15. At the end of 2Q15, C1 Bank originated loans represented 77% of the loan portfolio, up from 74% at the end of 1Q15.

DEPOSITS

Total deposits at the end of 2Q15 were $1.216 billion, an increase of $16.2 million (+1.3%) from the end of 1Q15. Core deposits were $954.1 million, or 78.5% of total deposits at the end of 2Q15, compared to $926.3 million, or 77.2% of total deposits at the end of 1Q15. The shift in the deposit mix provided for a 3 bps decline in the cost of total deposits to 0.44% in 2Q15 from 0.47% in 1Q15.

ASSET QUALITY

Nonperforming assets totaled $45.1 million at the end of 2Q15, declining $4.8 million (-9.7%) when compared to the end of 1Q15. The decline in 2Q15 was driven primarily by a reduction of $2.6 million in OREO balances as we continued to sell properties. As a percentage of total assets, nonperforming assets decreased to 2.69% at the end of 2Q15 when compared to 3.13% at the end of 1Q15. Our Texas Ratio improved to 22.4% at the end of 2Q15 from 25.7% at the end of 1Q15. At the end of 2Q15, only $340 thousand, or less than 1.0% of total nonperforming assets, were related to loans originated by C1 Bank.

Total recoveries of $681 thousand, net of charge-offs of $69 thousand, resulted in net recoveries of $612 thousand in 2Q15 (0.19% of total average loans on an annualized basis), which reflected our continued effort to collect deficiencies, excellent credit quality on originated loans and a lower level of charge-offs on the acquired portfolio. The $1.3 million provision for loan losses was primarily driven by net loan growth and the above mentioned addition to general reserves for existing loans, and partially funded by our net recoveries.

Our allowance for loan losses at the end of 2Q15 was $7.7 million (representing 0.56% of total loans), compared to $5.8 million (representing 0.46% of total loans) at the end of 1Q15. On a non-GAAP basis (including remaining loan discount from acquired performing loans), the allowance plus discount amount totaled $10.7 million (representing 0.79% of total loans) at the end of 2Q15, compared to $9.0 million (representing 0.72% of total loans) at the end of 1Q15.

NET INTEREST INCOME AND MARGIN

Net interest income for 2Q15 totaled $16.8 million, up $1.2 million (+7.9%) from 1Q15, mainly driven by growth of our average loans balance combined with an improvement in our earnings assets mix.

Net interest margin for 2Q15 increased 15 bps to 4.71% from 4.56% in 1Q15, mainly driven by a 15 bps higher yield on average earning assets as we redeployed lower-yielding cash investments into higher-yielding loans, and an improvement in the deposit mix (which resulted in a 3 bps decline in the cost of total deposits when compared to the previous quarter), partially offset by higher FHLB interest expense (as we continue to borrow longer term to extend the duration of our liabilities). Strong loan fees (driven primarily by prepayments) enhanced our yield on loans in the quarter, helping to offset the effect of late quarter loan funding. Adjusted net interest margin (which excludes the effect of purchase accounting) for 2Q15 was 4.60%, or 19 bps up from 4.41% in 1Q15.

Our excess cash (defined as our average available cash above our target liquidity level – See explanation of non-GAAP financial measures) was down to $5.6 million at the end of 2Q15, as we successfully deployed it into loans during the quarter. However, this was not fully reflected in the quarter’s earning assets mix, as our average excess cash was $27.6 million for 2Q15.

NONINTEREST INCOME

Noninterest income for 2Q15 totaled $4.3 million, $2.7 million higher when compared to 1Q15. The increase was primarily due to a $2.6 million gain on the sale of land (included in gains on disposals of premises and equipment). Also impacting the increase were higher gains on sales of loans of $354 thousand (due to a higher volume of Small Business Administration (“SBA”) loans sold) and income from bank-owned life insurance (“BOLI”) of $166 thousand (the income from which was not fully reflected in 1Q15 as the ramp-up investment period was completed in early 2Q15). Partially offsetting the increase in noninterest income was a $300 thousand decline in gains on sales of OREO.

NONINTEREST EXPENSE & TAXES

Noninterest expense totaled $11.8 million in 2Q15, relatively flat when compared to 1Q15. Included in noninterest expense for 2Q15 were higher occupancy expenses, primarily due to our new Doral branch, and advertising expenses, primarily due to various promotional items and seasonal events. These higher expenses were mainly offset by declines in OREO related expense and professional fees. Lower OREO related expense was due to fewer OREO properties and lower professional fees were mainly due to less activity relating to OREO properties.

Our income tax expense was $3.3 million for 2Q15 and $2.0 million for 1Q15. Included in income tax expense for 2Q15 was a $163 thousand audit related tax adjustment, which increased the effective tax rate to 40.9% from 38.4% for 1Q15. Excluding this adjustment, our effective tax rate for 2Q15 was 38.9%, in line with 1Q15.

EFFICIENCY

Our efficiency ratio improved to 56.0% in 2Q15 from 68.9% in 1Q15. The efficiency ratio for 2Q15 was down from 1Q15 due to the gain on sale of land and our growth in net interest income. We also closely track annualized revenue per employee and average assets per employee, as measures of efficiency. Annualized revenue per employee was $384 thousand in 2Q15, compared to $326 thousand in 1Q15, while average assets per employee were $6.6 million in 2Q15, compared to $6.5 million in 1Q15, which reflected our efforts to achieve productivity gains as we grow our balance sheet.

NET INCOME

Net income was $4.7 million for 2Q15, compared to $3.2 million for 1Q15. This corresponded to a return on average assets of 1.18% and 0.82% for 2Q15 and 1Q15, respectively, and a return on average equity of 9.88% and 6.81% for 2Q15 and 1Q15, respectively.

CAPITAL

Our consolidated Tier 1 leverage ratio was 12.01% and total risk-based capital ratio was 13.60% as of the end of 2Q15, reflecting that we remained well capitalized under Interim Final Basel III rules. Additional capital ratios are presented in the financial tables.

OTHER EVENTS DURING 2Q15

On April 14, C1 Bank opened in Doral, its 31^st banking center and fourth in Miami-Dade County.

On April 30, C1 Bank unveiled its Client Service Vehicle (“C1 Bankmobile”), primarily to be used for disaster recovery and community outreach, and at sporting and community events throughout Florida.

On June 12, C1 Bank announced that Rita Lowman, C1 Bank's Executive Vice President and Chief Operating Officer, was elected the 2017 Chairwoman elect of the Florida Bankers Association.

WEBCAST AND CONFERENCE CALL INFORMATION

C1 Financial, Inc. will host a webcast and conference call at 8:30 a.m. (ET) on July 17, 2015 to discuss second quarter 2015 results and other matters. To access the conference call, please dial 1-888-317-6016. The live webcast audio can be heard at http://services.choruscall.com/links/bnk150717.

C1 Financial, Inc. Information

Our name expresses our ideals to put our Clients 1^st and our Community 1^st. We are focused on serving the needs of entrepreneurs, tailoring a wide range of relationship banking services to entrepreneurs and their families, including commercial loans and a full line of depository products. We are based in St. Petersburg, Florida and operate from 31 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade and Orange Counties. As of December 31, 2014, we were the 18^th largest bank headquartered in the state of Florida by assets and the 16^th largest by equity, having grown both organically and through acquisitions, and we were the sixth fastest-growing bank in the country as measured by asset growth for the five-year period ending June 30, 2014. Additional information is available at www.c1bank.com.

Forward-Looking Statements

In addition to historical information, this earnings release contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or “may,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. There are a number of potential factors, risks and uncertainties 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. These potential factors, risks and uncertainties are discussed in Item 1A of Part I of the Annual Report of C1 Financial, Inc. on Form 10-K for the year ended December 31, 2014.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update anyof these forward-looking statements after the date of this earnings release to conform our prior statements to actual results or revised expectations.

C1 Financial, Inc.

Consolidated Balance Sheets - Unaudited

(Dollars in thousands, except per share data)

	June 30,		March 31,		June 30,
	2015		2015		2014 (1)
ASSETS
Cash and cash equivalents	$	165,200	$	182,824	$	258,944
Time deposits in other financial institutions		247		-		-
Federal Home Loan Bank stock, at cost		12,476		9,989		8,639
Loans receivable, net		1,348,185		1,245,938		1,054,785
Premises and equipment, net		63,576		64,973		62,938
Other real estate owned, net		27,686		30,321		36,278
Bank-owned life insurance		42,743		43,999		8,825
Accrued interest receivable		3,953		3,668		3,015
Core deposit intangible		824		904		1,190
Prepaid expenses		4,983		5,660		4,792
Other assets		7,933		8,463		9,808
Total assets	$	1,677,806	$	1,596,739	$	1,449,214
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Noninterest bearing	$	322,173	$	318,510	$	253,148
Interest bearing		893,815		881,318		882,303
Total deposits		1,215,988		1,199,828		1,135,451
Federal Home Loan Bank advances		261,000		202,500		165,500
Other borrowings		-		-		3,000
Other liabilities		6,263		4,599		5,072
Total liabilities		1,483,251		1,406,927		1,309,023
Stockholders’ equity
Common stock, par value $1.00; 100,000,000  shares authorized		16,101		16,101		13,340
Additional paid-in capital		148,122		148,122		108,404
Retained earnings		30,332		25,589		18,447
Accumulated other comprehensive income		-		-		-
Total stockholders’ equity		194,555		189,812		140,191
Total liabilities and stockholders’ equity	$	1,677,806	$	1,596,739	$	1,449,214
Period-end shares outstanding		16,100,966		16,100,966		13,339,837
Book value per share	$	12.08	$	11.79	$	10.51

(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.

C1 Financial, Inc.

Consolidated Income Statements - Unaudited

(Dollars in thousands, except per share data)

	For the Three Months Ended							For the Six Months Ended
	June 30,		March 31,		June 30,			June 30,		June 30,
	2015		2015		2014 (1)			2015		2014 (1)
Interest income
Loans, including fees	$	18,899	$	17,564	$	15,468		$	36,463	$	30,453
Securities		3		3		29			6		57
Federal funds sold and other		213		202		215			415		397
Total interest income		19,115		17,769		15,712			36,884		30,907
Interest expense
Savings and interest-bearing demand deposits		631		602		518			1,233		1,026
Time deposits		677		784		984			1,461		1,966
Federal Home Loan Bank advances		996		808		599			1,804		1,143
Other borrowings		-		-		14			-		29
Total interest expense		2,304		2,194		2,115			4,498		4,164
Net interest income		16,811		15,575		13,597			32,386		26,743
Provision for loan losses		1,276		191		4,572			1,467		4,608
Net interest income after provision for loan losses		15,535		15,384		9,025			30,919		22,135
Noninterest income
Gains on sales of securities		-		-		241			-		241
Gains on sales of loans		584		230		804			814		1,548
Service charges and fees		581		567		538			1,148		1,132
Bargain purchase gain		-		-		(30	)		-		11
Gains on sales of other real estate owned, net		48		348		375			396		652
Bank-owned life insurance		258		92		41			350		77
Mortgage banking fees		-		-		4			-		47
Gains on disposals of premises and equipment		2,588		2		-			2,590		-
Other noninterest income		276		363		374			639		679
Total noninterest income		4,335		1,602		2,347			5,937		4,387
Noninterest expense
Salaries and employee benefits		5,229		5,217		4,282			10,446		8,749
Occupancy expense		1,360		1,212		1,109			2,572		2,172
Furniture and equipment		740		756		641			1,496		1,281
Regulatory assessments		390		361		355			751		705
Network services and data processing		1,080		1,084		940			2,164		1,791
Printing and office supplies		71		58		88			129		193
Postage and delivery		80		84		74			164		129
Advertising and promotion		1,053		826		939			1,879		1,822
Other real estate owned related expense, net		498		593		494			1,091		1,114
Other real estate owned - valuation allowance expense		35		31		185			66		564
Amortization of intangible assets		80		83		141			163		295
Professional fees		509		698		828			1,207		1,424
Loan collection expenses		3		84		175			87		323
Other noninterest expense		717		748		699			1,465		1,385
Total noninterest expense		11,845		11,835		10,950			23,680		21,947
Income before income taxes		8,025		5,151		422			13,176		4,575
Income tax expense		3,282		1,977		192			5,259		1,819
Net Income	$	4,743	$	3,174	$	230		$	7,917	$	2,756
Weighted average shares outstanding - basic		16,100,966		16,100,966		13,232,152			16,100,966		12,868,044
Weighted average shares outstanding - diluted		16,100,966		16,100,966		13,232,152			16,100,966		12,868,044
Basic net income per share	$	0.29	$	0.20	$	0.02		$	0.49	$	0.21
Diluted net income per share		0.29		0.20		0.02			0.49		0.21

(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.

C1 Financial, Inc.

Average Balance Sheets - Unaudited

(Dollars in thousands)

	For the Three Months Ended
	June 30, 2015							March 31, 2015							June 30, 2014
	Average Balances (1)		Income/ Expense		Yields/ Rates			Average Balances (1)		Income/ Expense		Yields/ Rates			Average Balances (1)		Income/ Expense		Yields/ Rates
Interest-earning assets
Loans receivable (2)	$	1,286,665	$	18,899		5.89	%	$	1,207,295	$	17,564		5.90	%	$	1,056,231	$	15,468		5.87	%
Securities available for sale and other securities		250		3		4.56	%		250		3		4.56	%		1,050		29		10.79	%
Federal funds sold and balances at Federal Reserve Bank		132,527		93		0.28	%		166,413		97		0.24	%		205,689		138		0.27	%
Time deposits in other financial institutions		147		-		0.43	%		-		-		0.00	%		-		-		0.00	%
FHLB stock		11,300		120		4.26	%		10,001		105		4.25	%		8,320		77		3.73	%
Total interest-earning assets		1,430,889		19,115		5.36	%		1,383,959		17,769		5.21	%		1,271,290		15,712		4.96	%
Noninterest-earning assets
Cash and due from banks		36,213							38,175							33,481
Other assets (3)		148,366							154,285							121,353
Total noninterest-earning assets		184,579							192,460							154,834
Total assets	$	1,615,468						$	1,576,419						$	1,426,124
Interest-bearing liabilities
Interest-bearing deposits:
Time	$	235,998		677		1.15	%	$	290,695		784		1.09	%	$	365,812		984		1.08	%
Money market		440,430		476		0.43	%		409,553		445		0.44	%		341,248		364		0.43	%
Negotiable order of withdrawal (NOW)		145,027		133		0.37	%		145,943		136		0.38	%		143,973		132		0.37	%
Savings		39,039		22		0.22	%		38,788		21		0.22	%		38,899		22		0.22	%
Total interest-bearing deposits		860,494		1,308		0.61	%		884,979		1,386		0.64	%		889,932		1,502		0.68	%
Other interest-bearing liabilities:
FHLB advances		233,065		996		1.72	%		197,000		808		1.66	%		159,028		599		1.51	%
Other borrowings		-		-		0.00	%		-		-		0.00	%		3,000		14		1.96	%
Total interest-bearing liabilities		1,093,559		2,304		0.85	%		1,081,979		2,194		0.82	%		1,051,960		2,115		0.81	%
Noninterest-bearing liabilities and stockholders' equity:
Demand deposits		324,831							301,097							228,491
Other liabilities		4,467							4,289							5,020
Stockholders' equity		192,611							189,054							140,653
Total noninterest-bearing liabilities and stockholder's equity		521,909							494,440							374,164
Total liabilities and stockholders' equity	$	1,615,468						$	1,576,419						$	1,426,124
Interest rate spread (taxable-equivalent basis)						4.51	%						4.39	%						4.15	%
Net interest income (taxable-equivalent basis)			$	16,811						$	15,575						$	13,597
Net interest margin (taxable-equivalent basis)						4.71	%						4.56	%						4.29	%
Average interest-earning assets to interest-bearing liabilities						130.85	%						127.91	%						120.85	%

(1) Calculated using daily averages.

(2) Average loans are gross, including nonaccrual loans and overdrafts (net of deferred loan fees and before the allowance for loan losses). Interest on loans includes net deferred fees and costs of $1.2 million, $913 thousand and $712 thousand in the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

(3) Other assets include bank-owned life insurance, tax lien certificates, OREO, fixed assets, interest receivable, prepaid expense and others.

C1 Financial, Inc.

Average Balance Sheets - Unaudited

(Dollars in thousands)

	For the Six Months Ended,
	June 30, 2015							June 30, 2014
	Average Balances (1)		Income/ Expense		Yields/ Rates			Average Balances (1)		Income/ Expense		Yields/ Rates
Interest-earning assets
Loans receivable (2)	$	1,247,199	$	36,463		5.90	%	$	1,049,220	$	30,453		5.85	%
Securities available for sale and other securities		250		6		4.56	%		657		57		17.63	%
Federal funds sold and balances at Federal Reserve Bank		149,377		190		0.26	%		182,103		226		0.25	%
Time deposits in other financial institutions		74		-		0.47	%		-		-		0.00	%
FHLB stock		10,654		225		4.25	%		8,250		171		4.18	%
Total interest-earning assets		1,407,554		36,884		5.28	%		1,240,230		30,907		5.03	%
Noninterest-earning assets
Cash and due from banks		37,189							42,763
Other assets (3)		151,309							120,025
Total noninterest-earning assets		188,498							162,788
Total assets	$	1,596,052						$	1,403,018
Interest-bearing liabilities
Interest-bearing deposits:
Time	$	263,195		1,461		1.12	%	$	366,247		1,966		1.08	%
Money market		425,077		921		0.44	%		337,181		713		0.43	%
NOW		145,482		269		0.37	%		144,432		270		0.38	%
Savings		38,914		43		0.22	%		38,452		43		0.22	%
Total interest-bearing deposits		872,668		2,694		0.62	%		886,312		2,992		0.68	%
Other interest-bearing liabilities:
FHLB advances		215,132		1,804		1.69	%		155,147		1,143		1.49	%
Other borrowings		-		-		0.00	%		3,000		29		1.96	%
Total interest-bearing liabilities		1,087,800		4,498		0.83	%		1,044,459		4,164		0.80	%
Noninterest-bearing liabilities and stockholders' equity:
Demand deposits		313,030							219,557
Other liabilities		4,379							4,875
Stockholders' equity		190,843							134,127
Total noninterest-bearing liabilities and stockholder's equity		508,252							358,559
Total liabilities and stockholders' equity	$	1,596,052						$	1,403,018
Interest rate spread (taxable-equivalent basis)						4.45	%						4.23	%
Net interest income (taxable-equivalent basis)			$	32,386						$	26,743
Net interest margin (taxable-equivalent basis)						4.64	%						4.35	%
Average interest-earning assets to interest-bearing liabilities						129.39	%						118.74	%

(1) Calculated using daily averages.

(2) Average loans are gross, including nonaccrual loans and overdrafts (net of deferred loan fees and before the allowance for loan losses). Interest on loans includes net deferred fees and costs of $2.1 million and $1.1 million in the six months ended June 30, 2015 and June 30, 2014, respectively.

(3) Other assets include bank-owned life insurance, tax lien certificates, OREO, fixed assets, interest receivable, prepaid expense and others.

C1 Financial, Inc.

Selected Quarterly Financial Data - Unaudited

(In thousands, except per share and employee data)

	2Q15			1Q15			4Q14			3Q14			2Q14 (2)
Statement of Income Data
Interest income	$	19,115		$	17,769		$	17,158		$	16,245		$	15,712
Interest expense		2,304			2,194			2,239			2,223			2,115
Net interest income		16,811			15,575			14,919			14,022			13,597
Provision (reversal of provision) for loan losses		1,276			191			(1	)		207			4,572
Gains on sales of securities		-			-			-			-			241
Bargain purchase gain		-			-			-			37			(30	)
Total noninterest income		4,335			1,602			1,554			1,797			2,347
Total noninterest expense		11,845			11,835			14,005			11,280			10,950
Income before income taxes		8,025			5,151			2,469			4,332			422
Income tax expense		3,282			1,977			1,127			1,706			192
Net income		4,743			3,174			1,342			2,626			230
Selected Performance Metrics
Return on average assets		1.18	%		0.82	%		0.34	%		0.70	%		0.06	%
Return on average equity		9.88	%		6.81	%		2.84	%		6.47	%		0.66	%
Efficiency ratio (1)		56.0	%		68.9	%		85.0	%		71.3	%		69.7	%
Full-time equivalent employees at period end		247			244			238			246			221
Revenue per average number of employees (1)	$	384		$	326		$	307		$	305		$	343
Average assets per average number of employees (1)		6,594			6,541			6,414			6,356			6,759
Per Share Outstanding Data
Net earnings per share	$	0.29		$	0.20		$	0.08		$	0.18		$	0.02
Diluted net earnings per share	$	0.29		$	0.20		$	0.08		$	0.18		$	0.02
Weighted average shares		16,101			16,101			16,101			14,572			13,232
Weighted average shares - diluted		16,101			16,101			16,101			14,572			13,232
Book value per share	$	12.08		$	11.79		$	11.59		$	11.51		$	10.51
Tangible book value per share (1)	$	12.02		$	11.72		$	11.51		$	11.43		$	10.40
Common shares outstanding at period end		16,101			16,101			16,101			16,101			13,340
Market value per share at period end	$	19.38		$	18.75		$	18.29		$	18.13			N/A
Market range per share:
High		19.84			19.10			19.70			18.77			N/A
Low		17.81			16.25			15.98			16.66			N/A
Balance Sheet Data
Cash and cash equivalents	$	165,200		$	182,824		$	185,703		$	283,741		$	258,944
Other securities (included in Other assets in consolidated balance sheet)		250			250			250			250			250
Total loans		1,361,459			1,256,606			1,188,522			1,134,351			1,062,701
Loans originated by C1 Bank (Nonacquired)		1,046,227			925,511			840,275			757,529			665,615
Loans not originated by C1 Bank (Acquired)		315,232			331,095			348,247			376,822			397,086
Net deferred loan fees		(5,599	)		(4,881	)		(4,142	)		(3,759	)		(3,323	)
Loans receivable, gross (3)		1,355,860			1,251,725			1,184,380			1,130,592			1,059,378
Allowance for loan losses		(7,675	)		(5,787	)		(5,324	)		(5,441	)		(4,593	)
Loans receivable, net		1,348,185			1,245,938			1,179,056			1,125,151			1,054,785
Total assets		1,677,806			1,596,739			1,536,691			1,548,045			1,449,214
Total interest-bearing deposits		893,815			881,318			888,959			870,820			882,303
Total deposits		1,215,988			1,199,828			1,167,502			1,164,964			1,135,451

Borrowings		261,000			202,500			178,500			192,000			168,500
Federal Home Loan Bank		261,000			202,500			178,500			189,000			165,500
Other		-			-			-			3,000			3,000
Total liabilities		1,483,251			1,406,927			1,350,053			1,362,749			1,309,023
Total stockholders’ equity		194,555			189,812			186,638			185,296			140,191
Tangible stockholders’ equity (1)		193,482			188,659			185,402			183,973			138,752
Selected Average Balance Sheet Data
Loans receivable, gross (3)	$	1,286,665		$	1,207,295		$	1,145,230		$	1,098,466		$	1,056,231
Securities available for sale and other securities		250			250			250			250			1,050
Earning assets		1,430,889			1,383,959			1,395,052			1,330,762			1,271,290
Total assets		1,615,468			1,576,419			1,552,264			1,493,667			1,426,124
Total interest-bearing deposits		860,494			884,979			883,373			877,488			889,932
Total deposits		1,185,325			1,186,076			1,174,001			1,147,816			1,118,423
Borrowings		233,065			197,000			186,306			179,964			162,028
Total stockholders’ equity		192,611			189,054			187,270			160,933			140,653
Yields Earned and Rates Paid
Loans receivable, gross (3)		5.89	%		5.90	%		5.84	%		5.79	%		5.87	%
Adjusted loans receivable, gross (1),(4)		5.79	%		5.76	%		5.65	%		5.65	%		5.72	%
Securities available for sale and other securities		4.56	%		4.56	%		4.56	%		4.56	%		10.79	%
Earning assets		5.36	%		5.21	%		4.88	%		4.84	%		4.96	%
Total interest-bearing deposits		0.61	%		0.64	%		0.66	%		0.68	%		0.68	%
Total deposits		0.44	%		0.47	%		0.50	%		0.52	%		0.54	%
Adjusted total deposits (1),(5)		0.45	%		0.48	%		0.50	%		0.53	%		0.55	%
Borrowings		1.72	%		1.66	%		1.63	%		1.59	%		1.52	%
Total interest-bearing liabilities		0.85	%		0.82	%		0.83	%		0.83	%		0.81	%
Net interest margin (NIM)		4.71	%		4.56	%		4.24	%		4.18	%		4.29	%
Adjusted NIM (1),(6)		4.60	%		4.41	%		4.05	%		4.03	%		4.12	%
Capital Ratios
Total capital to risk-weighted assets (7)		13.60	%		14.01	%		14.74	%		15.45	%		12.42	%
Tier 1 capital to risk-weighted assets (7)		13.08	%		13.59	%		14.33	%		14.96	%		11.98	%
Common equity tier 1 capital to risk-weighted assets (7)		13.08	%		13.59	%		N/A			N/A			N/A
Tier 1 leverage ratio (7)		12.01	%		12.01	%		11.95	%		12.32	%		9.73	%
Tangible Equity / Tangible Assets (1)		11.54	%		11.82	%		12.07	%		11.89	%		9.58	%
Equity / Assets		11.60	%		11.89	%		12.15	%		11.97	%		9.67	%
Average Equity / Average Assets		11.92	%		11.99	%		12.06	%		10.77	%		9.86	%

Asset Quality Data
Nonacquired nonperforming assets	$	340		$	428		$	487		$	567		$	507
Nonaccrual loans		340			428			443			523			463
Other real estate owned (OREO)		-			-			44			44			44
Nonacquired restructured loans (8)		-			-			-			-			-
Nonacquired nonperforming assets to nonacquired loans plus OREO		0.03	%		0.05	%		0.06	%		0.07	%		0.08	%
Acquired nonperforming assets	$	44,804		$	49,597		$	55,323		$	58,004		$	57,224
Nonaccrual loans		17,118			19,276			20,451			20,092			20,990
OREO		27,686			30,321			34,872			37,912			36,234
Acquired restructured loans		891			900			906			913			921
Acquired nonperforming assets to acquired loans plus OREO		13.07	%		13.72	%		14.44	%		13.99	%		13.21	%
Total nonperforming assets	$	45,144		$	50,025		$	55,810		$	58,571		$	57,731
Nonaccrual loans		17,458			19,704			20,894			20,615			21,453
OREO		27,686			30,321			34,916			37,956			36,278
Total restructured loans		891			900			906			913			921
Total nonperforming assets to total loans plus OREO		3.25	%		3.89	%		4.56	%		5.00	%		5.25	%
Net charge-offs (recoveries)	$	(612	)	$	(272	)	$	116		$	(641	)	$	3,605
Charge-offs		69			4			552			157			4,418
Recoveries		(681	)		(276	)		(436	)		(798	)		(813	)
Asset Quality Ratios
Total nonperforming loans to loans receivable		1.28	%		1.57	%		1.76	%		1.82	%		2.02	%
Total nonperforming assets to total assets		2.69	%		3.13	%		3.63	%		3.78	%		3.98	%
Allowance for loan losses to nonperforming loans		43.96	%		29.37	%		25.48	%		26.39	%		21.41	%
Annualized net charge-offs (recoveries) to total average loans		(0.19	)%		(0.09	)%		0.04	%		(0.23	)%		1.37	%
Annualized nonacquired net charge-offs (recoveries) to average nonacquired loans		(0.14	)%		(0.01	)%		0.02	%		(0.08	)%		2.46	%
Allowance for loan losses to total loans receivable		0.56	%		0.46	%		0.45	%		0.48	%		0.43	%
Allowance for loan losses to nonacquired loans		0.73	%		0.63	%		0.63	%		0.72	%		0.69	%
Texas ratio (9)		22.4	%		25.7	%		29.3	%		30.9	%		40.3	%

Loan Composition
Nonacquired loans by type
1-4 family residential real estate	$	146,192	$	132,253	$	123,421	$	116,244	$	94,675
Owner occupied commercial real estate		136,789		139,780		124,067		107,530		97,458
Nonowner occupied commercial real estate		407,654		343,539		311,239		275,598		240,886
Secured by farmland commercial real estate		52,876		54,774		57,825		59,009		60,179
Multifamily commercial real estate		26,721		26,993		27,385		26,256		26,295
Construction		135,586		92,389		88,072		75,126		52,238
Commercial		63,190		57,683		58,809		58,450		55,031
Consumer		77,219		78,100		49,457		39,316		38,853
Acquired loans by type
1-4 family residential real estate	$	90,516	$	96,758	$	100,995	$	105,083	$	110,548
Owner occupied commercial real estate		95,445		99,859		107,169		113,957		118,854
Nonowner occupied commercial real estate		83,227		86,089		88,363		95,549		98,705
Secured by farmland commercial real estate		1,941		1,977		2,013		3,242		5,584
Multifamily commercial real estate		5,040		5,140		5,516		5,941		6,437
Construction		16,985		18,738		19,364		20,069		21,092
Commercial		14,556		14,704		16,551		24,423		26,840
Consumer		7,522		7,830		8,276		8,558		9,026
New loan originations (10)	$	177,090	$	176,356	$	139,009	$	141,436	$	163,611
Unfunded commitments (includes loans, unused lines and standby letters of credit)		237,877		245,051		189,049		181,224		158,557
Deposit Composition
Noninterest-bearing demand	$	322,173	$	318,510	$	278,543	$	294,144	$	253,148
Interest-bearing demand/NOW		148,724		146,873		140,598		135,623		140,939
Money market and savings		483,157		460,933		435,105		398,000		383,259
Retail time		247,700		251,825		286,979		310,243		330,832
Jumbo time (11)		14,234		21,687		26,277		26,954		27,273

(1) See below for the Generally Accepted Accounting Principles (GAAP) reconciliation and explanation of non-GAAP financial measures.

(2) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.

(3) Total loans, net of deferred loan fees and before the allowance for loan losses. Yield on gross loans is calculated on a 365-day basis and may differ from regulatory “Uniform Bank Performance Report” (UBPR) yield, which annualizes quarterly data by a factor of 4 (Section II, UBPR User’s Guide).

(4) Adjusted yield earned on loans receivable excludes loan accretion from the acquired loan portfolio.

(5) Adjusted rate paid on total deposits excludes amortization of premium for acquired time deposits.

(6) Adjusted net interest margin excludes loan accretion from the acquired loan portfolio, and amortization of premiums for acquired time deposits and Federal Home Loan Bank advances.

(7) Ratios for 2Q15 and 1Q15 are calculated under Interim Final Basel III rules. Ratios prior to 1Q15 are calculated under Basel I rules.

(8) Restructured loans include accruing and nonaccrual troubled debt restructurings. Nonaccrual restructured loans are included in nonaccrual loans.

(9) Texas ratio is calculated as nonperforming assets divided by tangible stockholders’ equity plus allowance for loan losses.

(10) New loan originations represent new loan commitments during the periods presented.

(11) Jumbo time deposits are deposits over $250 thousand.

C1 Financial, Inc.

Generally Accepted Accounting Principles (GAAP) Reconciliation and

    Explanation of Non-GAAP Financial Measures

(In thousands, except per share and employee data)

Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition and results of operations computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP measures that other companies use. The following tables provide a more detailed analysis of these non-GAAP financial measures.

	2Q15			1Q15			4Q14			3Q14			2Q14 (1)
Loan loss reserves
Allowance for loan losses	$	7,675		$	5,787		$	5,324		$	5,441		$	4,593
Acquired performing loans discount		3,047			3,242			3,532			3,811			4,093
Total	$	10,722		$	9,029		$	8,856		$	9,252		$	8,686
Loans receivable, gross	$	1,361,459		$	1,256,606		$	1,188,522		$	1,134,351		$	1,062,701
Allowance for loan losses to total loans receivable		0.56	%		0.46	%		0.45	%		0.48	%		0.43	%
Allowance plus performing loans discount to total loans receivable		0.79	%		0.72	%		0.75	%		0.82	%		0.82	%
Efficiency ratio
Noninterest expense	$	11,845		$	11,835		$	14,005		$	11,280		$	10,950
Taxable-equivalent net interest income	$	16,811		$	15,575		$	14,919		$	14,022		$	13,597
Noninterest income	$	4,335		$	1,602		$	1,554		$	1,797		$	2,347
Gains on sales of securities		-			-			-			-			(241	)
Adjusted noninterest income	$	4,335		$	1,602		$	1,554		$	1,797		$	2,106
Efficiency ratio		56.0	%		68.9	%		85.0	%		71.3	%		69.7	%
Revenue and average assets per average number of employees
Interest income	$	19,115		$	17,769		$	17,158		$	16,245		$	15,712
Noninterest income		4,335			1,602			1,554			1,797			2,347
Total revenue	$	23,450		$	19,371		$	18,712		$	18,042		$	18,059
Total revenue annualized	$	94,058		$	78,560		$	74,238		$	71,580		$	72,434
Total average assets	$	1,615,468		$	1,576,419		$	1,552,264		$	1,493,667		$	1,426,124
Average number of employees		245			241			242			235			211
Revenue per average number of employees	$	384		$	326		$	307		$	305		$	343
Average assets per average number of employees	$	6,594		$	6,541		$	6,414		$	6,356		$	6,759
Tangible stockholders' equity and Tangible book value per share
Total stockholders' equity	$	194,555		$	189,812		$	186,638		$	185,296		$	140,191
Less: Goodwill		(249	)		(249	)		(249	)		(249	)		(249	)
Other intangible assets		(824	)		(904	)		(987	)		(1,074	)		(1,190	)
Tangible stockholders' equity	$	193,482		$	188,659		$	185,402		$	183,973		$	138,752
Common shares outstanding		16,101			16,101			16,101			16,101			13,340
Book value per share	$	12.08		$	11.79		$	11.59		$	11.51		$	10.51
Tangible book value per share		12.02			11.72			11.51			11.43			10.40
Adjusted yield earned on loans
Reported yield on loans		5.89	%		5.90	%		5.84	%		5.79	%		5.87	%
Effect of accretion income on acquired loans		(0.10	)%		(0.14	)%		(0.19	)%		(0.14	)%		(0.15	)%
Adjusted yield on loans		5.79	%		5.76	%		5.65	%		5.65	%		5.72	%
Adjusted rate paid on total deposits
Reported rate paid on total deposits		0.44	%		0.47	%		0.50	%		0.52	%		0.54	%
Effect of premium amortization on acquired deposits		0.01	%		0.01	%		0.00	%		0.01	%		0.01	%
Adjusted rate paid on total deposits		0.45	%		0.48	%		0.50	%		0.53	%		0.55	%

Adjusted net interest margin
Reported net interest margin		4.71	%		4.56	%		4.24	%		4.18	%		4.29	%
Effect of accretion income on acquired loans		(0.09	)%		(0.12	)%		(0.16	)%		(0.11	)%		(0.13	)%
Effect of premium amortization on acquired deposits and borrowings		(0.02	)%		(0.03	)%		(0.03	)%		(0.04	)%		(0.04	)%
Adjusted net interest margin		4.60	%		4.41	%		4.05	%		4.03	%		4.12	%
Average excess cash
Average total deposits	$	1,185,325		$	1,186,076		$	1,174,001		$	1,147,816		$	1,118,423
Borrowings due in one year or less		17,750			25,189			28,940			34,753			33,750
Total base for liquidity	$	1,203,075		$	1,211,265		$	1,202,941		$	1,182,569		$	1,152,173
Minimum liquidity level (10% of base) (a)	$	120,308		$	121,127		$	120,294		$	118,257		$	115,217
Average cash and cash equivalents (b)		168,740			204,588			271,827			262,617			239,171
Cash above liquidity level (b)-(a)		48,432			83,461			151,533			144,360			123,954
Less estimated short-term deposits		(20,823	)		(11,353	)		(24,421	)		(28,440	)		(24,662	)
Average excess cash	$	27,609		$	72,108		$	127,112		$	115,920		$	99,292
Tangible equity to tangible assets
Total stockholders' equity	$	194,555		$	189,812		$	186,638		$	185,296		$	140,191
Less: Goodwill		(249	)		(249	)		(249	)		(249	)		(249	)
Other intangible assets		(824	)		(904	)		(987	)		(1,074	)		(1,190	)
Tangible stockholders' equity	$	193,482		$	188,659		$	185,402		$	183,973		$	138,752
Total assets	$	1,677,806		$	1,596,739		$	1,536,691		$	1,548,045		$	1,449,214
Less: Goodwill		(249	)		(249	)		(249	)		(249	)		(249	)
Other intangible assets		(824	)		(904	)		(987	)		(1,074	)		(1,190	)
Tangible assets	$	1,676,733		$	1,595,586		$	1,535,455		$	1,546,722		$	1,447,775
Equity/Assets		11.60	%		11.89	%		12.15	%		11.97	%		9.67	%
Tangible Equity/Tangible Assets		11.54	%		11.82	%		12.07	%		11.89	%		9.58	%

(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.

Definitions of Non-GAAP financial measures

Allowance for loan losses plus performing loans discount to total loans receivable adds the remaining discount on acquired performing loans to the allowance for loan losses to determine the total reserves and loan discounts established against our loans. Our management believes that this metric provides useful information for investors to analyze the overall level of reserves in banks that have completed acquisitions with no allowance carryover.

Efficiency ratio is defined as total noninterest expense divided by the sum of taxable-equivalent net interest income and noninterest income. Noninterest income is adjusted for nonrecurring gains and losses on sales of securities. This ratio is important to investors looking for a measure of efficiency in the Company's productivity measured by the amount of revenue generated for each dollar spent.

Revenue per average number of employees is annualized total interest income and total noninterest income divided by the average number of employees during the period and measures the Company's productivity by calculating the average amount of revenue generated per employee. Average assets per average number of employees is average assets divided by the average number of employees during the period and measures the average value of assets per employee.

Tangible stockholders' equity is defined as total equity reduced by goodwill and other intangible assets. Tangible book value per share is tangible stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets. We have not considered loan servicing rights as an intangible asset for purposes of this calculation.

Adjusted yield earned on loans is our yield on loans after excluding loan accretion from our acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on yield on loans, as the effect of loan discounts accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet.

Adjusted rate paid on total deposits is our cost of deposits after excluding amortization of premiums for acquired time deposits. Our management uses this metric to better assess the impact of purchase accounting on cost of deposits, as the effect of amortization of premiums related to deposits is expected to decrease as the acquired deposits mature or roll off of our balance sheet.

Adjusted net interest margin is net interest margin after excluding loan accretion from the acquired loan portfolio and amortization of premiums for acquired time deposits and Federal Home Loan Bank advances. Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discounts accretion and amortization of premiums related to deposits or borrowings is expected to decrease as the acquired loans and deposits mature or roll off of our balance sheet.

Average excess cash represents the cash and cash equivalents in excess of our minimum liquidity level (defined as 10% of average total deposits plus borrowings due in one year or less), minus Company estimated short-term deposits. In 2015, based on an historical analysis, we changed our methodology for estimating short-term deposits, which reduced the results beginning in 1Q15.

Tangible equity to tangible assets is defined as total equity reduced by goodwill and other intangible assets, divided by total assets reduced by goodwill and other intangible assets. This measure is important to investors interested in relative changes from period-to-period in total equity and total assets, each exclusive of changes in intangible assets. We have not considered loan servicing rights as an intangible asset for purposes of this calculation.