×

Capital Bank Financial Corp. Reports 3Q EPS and Record Core EPS of $0.33

  • Net income of $15.3 million increased 18% sequentially;
  • EPS grew 18% sequentially and 22% year over year;
  • Record new loans of $490 million increased 10% year over year;
  • Loan portfolio grew 12% year over year;
  • ROA and Core ROA excluding commercial indemnification expense, increased to 0.86%, and 0.92%, respectively; and
  • Declared a $0.10 quarterly common stock dividend.

CORAL GABLES, Fla., Oct. 21, 2015 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the "Company") today reported net income for the third quarter of 2015 of $15.3 million, or $0.33 per diluted share, and core net income of $15.4 million, or $0.33 per diluted share. Net income rose 18% sequentially and 16% year over year, while net income per diluted share rose 18% and 22%, respectively.

Core adjustments for the third quarter of 2015 mainly included $0.2 million in gains on sales of facilities, offset by a $0.2 million charge related to an early termination of a technology contract and $0.1 million of severance.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, "The Company's improving profitability, loan growth, commencement of a dividend program, and continued stock repurchase all demonstrate our commitment to generating strong investor returns."

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, "We are very pleased with our third quarter results, which include record core EPS and record new loan growth. We continue to see a consistently significant improvement in our ROA, driven by strong organic loan growth, responsible efficiency initiatives, and the benefit of reduced legacy credit expenses."

Loan Portfolio and Composition

During the third quarter, the loan portfolio increased by $198.5 million to $5.4 billion, a 15% annualized rate. New loans of $490.2 million were partially offset by resolutions totaling $43.4 million, including transfers to OREO of $1.8 million, and principal repayments of $246.4 million.

The relative composition of the Company's loan portfolio at the end of the third and second quarters of 2015 and fourth quarter of 2014 was as follows:

Sep 30,
2015
Jun 30,
2015
Dec 31,
2014
Commercial real estate 22% 23% 23%
C&I 42% 43% 42%
Consumer 33% 32% 32%
Other 3% 2% 3%
Total 100% 100% 100%

Deposits Composition and Cost of Funds

During the third quarter, total deposits increased by $73.2 million to $5.6 billion, or a 5% annualized rate. The sequential increase included $82 million in wholesale time deposits, which provided a lower cost source of funding than higher rate legacy time deposits. The cost of core deposits remained flat at 0.15%. Core deposits include all checking, savings and money market accounts and represent 68% of total deposits. Sequentially and year over year, the cost of total deposits increased three basis points and five basis points, respectively, to 0.39%, largely as a result of the amortization of purchase accounting. The contractual cost of total deposits, which excludes purchase accounting, increased one basis point sequentially and was flat year over year at 0.40%.

Net Interest Income and Net Interest Margin

Net interest income increased $1.0 million to $61.6 million from $60.7 million for the second quarter of 2015 and increased slightly from $61.4 million for the third quarter of 2014. The net interest margin for the third quarter of 2015 was 3.82%, a decline of twelve basis points sequentially and thirty-two basis points year over year. The sequential and year over year net interest margin decline was due to the lower average yield on new loans as compared to the yields of the Company's legacy acquired loans and the slight increase in the cost of total deposits. The implementation of interest rate swaps during the year resulted in $0.8 million in additional interest income during the third quarter and had a five basis point impact on net interest margin. New and acquired non-impaired loans represent $4.3 billion or 79% of our total loan portfolio, up from 76% and 73% at June 30, 2015 and December 31, 2014, respectively. New loans outstanding represent $3.9 billion with an average yield of 3.58%, compared to $1.1 billion of acquired impaired loans outstanding with an average yield of 8.32%.

Non-Interest Income

Non-interest income increased $1.1 million to $11.4 million from $10.4 million for the second quarter of 2015 and increased $1.5 million from $10.0 million for the third quarter of 2014. The sequential increase was mainly driven by a decline in FDIC indemnification asset amortization due to the impairment and write down of loans and OREO covered under commercial loss sharing provisions with the FDIC and higher service charges on deposits accounts, partially offset by lower fees on mortgage loans due to a decline in mortgage loan sales and a decline in investment advisory fees. Going forward, as the commercial loss sharing portion of the agreements expired during the third quarter, the Company expects FDIC loss share amortization to be significantly lower than amounts recorded in prior quarters.

The year over year increase was mainly driven by a decline in FDIC indemnification asset amortization due to impairment and write down of loans and OREO covered under commercial loss sharing agreements.

Provision for Loan and Lease Losses and Credit Quality

The provision of $0.8 million recorded for the third quarter of 2015 included a $0.3 million provision for new and acquired non-impaired loans plus an additional $0.5 million impairment due to changes in cash flow estimates for certain acquired impaired loan pools. The changes in cash flow estimates mainly resulted from an anticipated foreclosure of a real estate development loan that was covered by the loss sharing agreement with the FDIC. Net charge-offs for the third quarter of 2015 were $2.6 million, up from $1.5 million in the second quarter of 2015. The sequential increase was due to a $1.1 million charge-off of impairment on an acquired impaired loan pool as the remaining contractual cash flows of active loans in the pool fell below its recorded investment. In such cases, the Company charges off related impairment such that the recorded investment does not exceed the contractual cash flows for the remaining active loans in the pool.

At September 30, 2015, the allowance for loan and lease losses was $46.3 million, of which $25.7 million related to acquired impaired loans and $20.6 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.86% of the Company's total $5.4 billion loan portfolio.

At September 30, 2015, non-performing loans were $81.7 million, down 12% from June 30, 2015, and down 53%, from September 30, 2014, mainly as a result of resolutions and upgrades. Non-performing loans have declined 79% from a peak of $382.5 million at December 31, 2011. Non-performing loans are comprised of $9.6 million of nonaccrual originated loans and $72.0 million of acquired impaired loans.

Non-Interest Expense

Non-interest expense declined $1.2 million to $48.3 million from $49.5 million for the second quarter of 2015 and declined $3.1 million from $51.4 million for the third quarter of 2014. The sequential decline was mainly due to the absence of $1.4 million in second quarter charges from net losses on extinguishment of debt assumed through the Company's legacy acquisitions. Contributing to the year over year decline was a reduction in net occupancy expense as a result of cost savings initiatives, a reduction in stock-based compensation expense, and lower contingent value rights ("CVR") expense due to the early redemption of the CVR associated with Southern Community Financial Corporation.

As of September 30, 2015, covered loans and OREO subject to the non-single-family shared-loss agreements expiring during the third quarter, were $89.3 million and $6.9 million, respectively. As a result of the agreements' expiration, FDIC indemnification expense is expected to decline significantly in the fourth quarter of 2015. For the quarter ended September 30, 2015, excluding the impact of the non-single-family FDIC indemnification expense, the Company's efficiency ratio and core efficiency ratio declined to 64.84% and 64.69%, respectively, and ROA and Core ROA increased to 0.92%.

Income Tax Expense

Income tax expense was $8.6 million for the third quarter of 2015, an effective rate of 36%, compared to $7.3 million and 36% for the second quarter of 2015. Income tax expense was $8.1 million and 38% for the third quarter of 2014. The year over year decline in effective rate was mainly due to the favorable impact from higher tax-exempt interest income and lower non-deductible CVR expense in the current year.

Financial Position

Total assets increased by $206.7 million to $7.3 billion as of September 30, 2015, from $7.1 billion as of June 30, 2015. During the quarter, the Company's loan portfolio increased by $198.5 million to $5.4 billion, a 15% annualized rate. Deposits increased by $73.2 million to $5.6 billion, a 5% annualized rate, and FHLB borrowings increased $165.0 million. Tangible book value per share was $19.75 as of September 30, 2015, an increase of $0.06 and $0.75 over June 30, 2015 and September 30, 2014, respectively. During the third quarter, the Company repurchased 2.0 million shares of common stock for $59.6 million at an average price of $29.94. The Company has $42.2 million remaining under the current stock repurchase authorization.

The Company's national bank subsidiary, Capital Bank N.A., has preliminary Tier 1 Leverage, Tier 1 Common, Tier 1 Risk-Based and Total Risk-Based capital ratios of 11.19%, 12.85%, 12.85% and 13.69%, respectively, as of September 30, 2015, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on November 16, 2015, to shareholders of record as of November 2, 2015.

Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. The number to call for this interactive teleconference is (719) 457-2727, and the confirmation pass code is 256369. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through October 29, 2015, by dialing (719) 457-0820 and entering pass code 256369. The live broadcast of the conference call will be available online at the Company's web site at www.capitalbank-us.com, by following the link to Investor Relations. An on-line replay of the call will be available at the same site for 90 days.

Forward-Looking Statements

Information in this press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends" and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption "Risk Factors" in the annual report on Form 10-K and other periodic reports filed by us with the Securities and Exchange Commission. Any or all of our forward-looking statements in this press release may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward looking statements including, but not limited to: (1) changes in general economic and financial market conditions; (2) changes in the regulatory environment; (3) economic conditions generally and in the financial services industry; (4) changes in the economy affecting real estate values; (5) our ability to achieve loan and deposit growth; (6) the completion of future acquisitions or business combinations and our ability to integrate any acquired businesses into our business model; (7) projected population and income growth in our targeted market areas; (8) competitive pressures in our markets and industry; (9) our ability to attract and retain key personnel; (10) changes in accounting policies or judgments and (11) volatility and direction of market interest rates and a weakening of the economy which could materially impact credit quality trends and the ability to generate loans. All forward-looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements, which should be read in conjunction with the other cautionary statements that are included elsewhere in this press release. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

Core net income, core efficiency ratio, core return-on-assets ("core ROA"), tangible book value and tangible book value per share are each non-GAAP measures used in this report. A reconciliation to the most directly comparable GAAP financial measures – net income in the case of core net income and core ROA, total non-interest income and total non-interest expense in the case of core efficiency ratio, and total shareholders' equity in the case of tangible book value and tangible book value per share – appears in tabular form at the end of this release. The Company believes core net income, the core efficiency ratio and core ROA are useful for both investors and management to understand the effects of certain non-interest items and provide an alternative view of the Company's performance over time and in comparison to the Company's competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value and tangible book value per share are useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders' equity.

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 national 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 N.A., a national banking association with $7.3 billion in total assets as of September 30, 2015, and 153 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank, N.A., please visit www.capitalbank-us.com.

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
Three Months Ended
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Interest and dividend income $ 68,718 $ 67,311 $ 66,046 $ 67,750 $ 67,643
Interest expense 7,081 6,626 6,317 6,399 6,218
Net Interest Income 61,637 60,685 59,729 61,351 61,425
Provision (reversal) for loan and lease losses 799 1,299 (841) (637) (1,332)
Net interest income after provision (reversal) for loan and lease losses 60,838 59,386 60,570 61,988 62,757
Non-Interest Income
Service charges on deposit accounts 5,472 5,189 4,705 5,390 5,565
Debit card income 3,113 3,176 2,964 3,013 3,017
Fees on mortgage loans originated and sold 990 1,278 1,147 1,053 1,195
Investment advisory and trust fees 860 1,125 1,006 1,170 1,183
FDIC indemnification asset expense (1,418) (2,499) (2,439) (3,421) (3,881)
Investment securities gains (losses), net (43) 231 90 513 317
Other-than-temporary impairment loss on investments:
Gross impairment loss (288)
Less: Impairment recognized in other comprehensive income
Net impairment loss recognized in earnings (288)
Other income 2,444 2,151 2,447 2,876 2,561
Total non-interest income 11,418 10,363 9,920 10,594 9,957
Non-Interest Expense
Salaries and employee benefits 22,620 21,881 23,881 23,871 22,590
Stock-based compensation expense 309 108 284 451 443
Net occupancy and equipment expense 7,621 7,754 8,129 8,020 8,475
Computer services 3,471 3,343 3,397 3,413 3,332
Software expense 2,198 2,082 2,142 2,074 1,932
Telecommunication expense 1,515 1,367 1,380 1,347 1,406
OREO valuation expense 2,075 1,710 1,390 1,554 2,752
Net losses (gains) on sales of OREO (351) (957) (7) (419) (223)
Foreclosed asset related expense 872 600 674 619 845
Loan workout expense 194 795 623 1,352 911
Professional fees 1,958 1,723 1,734 2,116 1,532
Losses on extinguishment of debt 1,438
Restructuring charges, net 23 178 2,341
Contingent value right expense 4 116 334 278
Regulatory assessments 1,423 1,831 1,695 1,705 1,637
Other expense 4,418 5,645 4,868 4,495 5,508
Total non-interest expense 48,346 49,502 52,647 50,932 51,418
Income before income taxes 23,910 20,247 17,843 21,650 21,296
Income tax expense 8,589 7,257 6,454 7,814 8,053
Net income $ 15,321 $ 12,990 $ 11,389 $ 13,836 $ 13,243
Earnings per share:
Basic $ 0.34 $ 0.28 $ 0.25 $ 0.29 $ 0.28
Diluted $ 0.33 $ 0.28 $ 0.24 $ 0.29 $ 0.27
Weighted average shares outstanding:
Basic 45,359 45,913 46,294 46,964 47,912
Diluted 46,534 47,220 47,632 48,243 49,069
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
Sep 30,
2015
Jun 30,
2015
Dec 31,
2014
Assets
Cash and due from banks $ 80,642 $ 93,637 $ 106,193
Interest-bearing deposits in other banks 53,947 107,649 81,942
Total cash and cash equivalents 134,589 201,286 188,135
Trading securities 2,893 2,898 2,410
Investment securities available-for-sale at fair value (amortized cost $640,447, $600,053 and $554,488, respectively) 647,423 600,138 555,893
Investment securities held-to-maturity at amortized cost (fair value $475,428, $431,764 and $443,379, respectively) 467,544 426,427 436,962
Loans held for sale 8,515 7,127 5,516
Loans, net of deferred loan costs and fees 5,396,429 5,199,287 4,994,703
Less: Allowance for loan and lease losses 46,278 48,063 50,211
Loans, net 5,350,151 5,151,224 4,944,492
Other real estate owned 54,691 63,737 77,626
FDIC indemnification asset 9,789 11,764 16,762
Receivable from FDIC 1,052 2,652 3,661
Premises and equipment, net 161,342 163,070 173,176
Goodwill 134,522 134,522 134,522
Intangible assets, net 16,045 16,995 18,897
Deferred income tax asset, net 104,950 117,151 129,624
Other assets 167,690 155,510 143,734
Total Assets $ 7,261,196 $ 7,054,501 $ 6,831,410
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand $ 1,099,252 $ 1,132,085 $ 1,054,128
Interest bearing demand 1,251,365 1,367,123 1,383,990
Money market 1,005,406 991,520 898,254
Savings 436,385 479,885 500,028
Time deposits 1,773,170 1,521,810 1,418,700
Total deposits 5,565,578 5,492,423 5,255,100
Federal Home Loan Bank advances 520,947 355,995 296,091
Short-term borrowings 16,708 18,466 23,407
Long-term borrowings 85,230 84,688 139,681
Accrued expenses and other liabilities 50,091 43,583 53,557
Total liabilities $ 6,238,554 $ 5,995,155 $ 5,767,836
Shareholders' equity
Preferred stock $0.01 par value: 50,000 shares authorized, 0 shares issued
Common stock-Class A $0.01 par value: 200,000 shares authorized, 37,178 issued and 27,912 outstanding, 37,160 issued 29,886 outstanding and 36,936 issued and 30,150 outstanding, respectively 372 372 370
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,327 issued and 16,554 outstanding, 18,327 issued and 16,554 outstanding and 18,743 issued and 17,443 outstanding, respectively 183 183 187
Additional paid in capital 1,079,229 1,078,740 1,081,628
Retained earnings 198,103 182,782 158,403
Accumulated other comprehensive (loss) income 2,578 (4,545) (3,824)
Treasury stock, at cost, 11,039, 9,047 and 8,086 shares, respectively (257,823) (198,186) (173,190)
Total shareholders' equity 1,022,642 1,059,346 1,063,574
Total Liabilities and Shareholders' Equity $ 7,261,196 $ 7,054,501 $ 6,831,410
CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
Three Months Ended
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Performance Ratios
Interest rate spread 3.68% 3.79% 3.83% 3.92% 4.01%
Net interest margin 3.82 % 3.94% 3.96% 4.05% 4.14%
Return on average assets 0.86% 0.75% 0.66% 0.82% 0.80%
Return on average shareholders' equity 5.85% 4.90% 4.29% 5.21% 4.95%
Efficiency ratio 66.18% 69.67% 75.59% 70.79% 72.03%
Average interest-earning assets to average interest-bearing liabilities 132.10% 133.39% 131.94% 131.89% 131.43%
Average loans receivable to average deposits 96.01% 94.12% 95.47% 93.94% 92.32%
Yield on interest-earning assets 4.26% 4.36% 4.38% 4.47% 4.56%
Cost of interest-bearing liabilities 0.58% 0.57% 0.55% 0.55% 0.55%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans $ 9,647 $ 9,807 $ 11,482 $ 9,484 $ 10,590
Nonperforming acquired loans $ 72,023 $ 83,515 $ 115,865 $ 121,137 $ 161,670
Nonperforming loans to loans receivable 1.51% 1.79% 2.51% 2.61% 3.57%
Nonperforming assets to total assets 1.88% 2.23% 2.85% 3.05% 3.93%
Covered loans to total gross loans 1.45% 3.39% 3.71% 3.95% 4.58%
ALLL to nonperforming assets 33.88% 30.56% 24.22% 24.09% 19.92%
ALLL to total gross loans 0.86% 0.92% 0.95% 1.00% 1.08%
Annualized net charge-offs/average loans 0.20% 0.12% 0.09% 0.12% 0.14%
Asset and Credit Quality Ratios-New Loans
Nonperforming new loans to total new loans receivable 0.17% 0.19% 0.22% 0.16% 0.22%
New loans ALLL to total gross new loans 0.51% 0.59% 0.61% 0.63% 0.72%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable 5.21% 5.58% 7.30% 7.28% 9.11%
Covered acquired loans to total gross acquired loans 5.45% 11.38% 11.47% 11.47% 11.84%
Acquired loans ALLL to total gross acquired loans 1.80% 1.71% 1.67% 1.71% 1.67%
Capital Ratios (Company)
Total average shareholders' equity to total average assets 14.79% 15.41% 15.48% 15.72% 16.14%
Tangible common equity ratio (1) 12.26% 13.15% 13.22% 13.63% 13.93%
Tier 1 leverage capital ratio (2) 13.60% 14.66% 14.42% 14.28% 14.40%
Tier 1 common capital ratio (2) 14.44% 16.07% 16.42% N/A N/A
Tier 1 risk-based capital ratio (2) 15.60% 17.33% 17.70% 18.00% 18.40%
Total risk-based capital ratio (2) 16.38% 18.18% 18.66% 19.05% 19.52%
Capital Ratios (Bank)
Tangible common equity ratio (1) 11.36% 11.35% 11.32% 14.29% 14.31%
Tier 1 leverage capital ratio (2) 11.19% 11.15% 10.89% 13.52% 13.37%
Tier 1 common capital ratio (2) 12.85% 13.18% 13.34% N/A N/A
Tier 1 risk-based capital ratio (2) 12.85% 13.18% 13.34% 17.04% 17.08%
Total risk-based capital ratio (2) 13.69% 14.10% 14.30% 18.09% 18.20%

(1) See "Reconciliation of Non-GAAP Measures"
(2) September 30, 2015 regulatory capital ratios are preliminary. The Company became subject to Basel III capital rules on January 1, 2015.

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
Sep 30,
2015
Jun 30,
2015
Mar 30,
2015
Dec 31,
2014
Sep 30,
2014
Loans
Non-owner occupied commercial real estate $ 847,225 $ 834,351 $ 823,763 $ 798,556 $ 797,197
Other commercial construction and land 192,283 182,283 180,166 200,755 243,563
Multifamily commercial real estate 82,762 76,754 88,980 89,132 71,119
1-4 family residential construction and land 87,193 78,572 66,547 68,658 76,442
Total commercial real estate 1,209,463 1,171,960 1,159,456 1,157,101 1,188,321
Owner occupied commercial real estate 1,065,875 1,030,111 1,038,493 1,046,736 1,026,853
Commercial and industrial 1,219,101 1,181,451 1,125,708 1,073,791 959,641
Lease financing 1,488 1,661 1,834 2,005 2,175
Total commercial 2,286,464 2,213,223 2,166,035 2,122,532 1,988,669
1-4 family residential 985,982 959,224 928,832 925,698 913,219
Home equity loans 373,993 375,271 379,946 378,475 373,604
Other consumer loans 401,324 341,590 296,753 272,453 242,451
Total consumer 1,761,299 1,676,085 1,605,531 1,576,626 1,529,274
Other 147,718 145,146 146,987 143,960 117,507
Total loans $5,404,944 $ 5,206,414 $ 5,078,009 $ 5,000,219 $ 4,823,771
Deposits
Non-interest bearing demand $ 1,099,252 $ 1,132,085 $ 1,114,423 $ 1,054,128 $ 1,006,556
Interest bearing demand 1,251,365 1,367,123 1,405,390 1,383,990 1,309,839
Money market 1,005,406 991,520 924,228 898,254 914,226
Savings 436,385 479,885 491,394 500,028 514,729
Total core deposits 3,792,408 3,970,613 3,935,435 3,836,400 3,745,350
Time deposits 1,773,170 1,521,810 1,428,121 1,418,700 1,430,106
Total deposits $ 5,565,578 $ 5,492,423 $ 5,363,556 $ 5,255,100 $ 5,175,456
CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
Three Months Ended
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Provision (reversal) on legacy loans $ 492 $ (523) $ (1,926) $ (1,411) $ (4,205)
FDIC indemnification asset expense 1,418 2,499 2,439 3,421 3,881
OREO valuation expense 2,075 1,710 1,390 1,554 2,752
Net losses (gains) on sales of OREO (351) (957) (7) (419) (223)
Foreclosed asset related expense 872 600 674 619 845
Loan workout expense 194 795 623 1,352 911
Salaries and employee benefits 797 796 832 993 1,054
Total legacy credit expenses $ 5,497 $ 4,920 $ 4,025 $ 6,109 $ 5,015
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, 2015
Three Months Ended
June 30, 2015
Average
Balances

Interest
Yield/
Rate
Average
Balances

Interest
Yield/
Rate
Interest earning assets
Loans (1) $ 5,261,793 $ 62,461 4.71% $ 5,079,878 $ 61,717 4.87%
Investment securities (1) 1,088,818 5,885 2.14% 1,038,269 5,296 2.05%
Interest bearing deposits in other banks 36,596 19 0.21% 55,553 36 0.26%
Other earning assets (2) 54,960 760 5.49% 47,694 646 5.43%
Total interest earning assets 6,442,167 $ 69,125 4.26% 6,221,394 $ 67,695 4.36%
Non-interest earning assets 645,715 664,119
Total assets $ 7,087,882 $ 6,885,513
Interest bearing liabilities
Time deposits $ 1,642,745 $ 3,957 0.96% $ 1,464,552 $ 3,402 0.93%
Money market 977,273 658 0.27% 943,160 600 0.26%
Interest bearing demand 1,291,439 540 0.17% 1,381,609 578 0.17%
Savings 452,058 241 0.21% 484,622 259 0.21%
Total interest bearing deposits 4,363,515 5,396 0.49% 4,273,943 4,839 0.45%
Short-term borrowings and FHLB advances 428,249 272 0.25% 261,030 143 0.22%
Long-term borrowings 84,922 1,413 6.60% 129,029 1,645 5.11%
Total interest bearing liabilities 4,876,686 7,081 0.58% 4,664,002 6,627 0.57%
Non-interest bearing demand 1,116,757 1,123,466
Other liabilities 46,117 36,966
Shareholders' equity 1,048,322 1,061,079
Total liabilities and shareholders' equity $ 7,087,882 $ 6,885,513
Net interest income and spread $ 62,044 3.68% $ 61,068 3.79%
Net interest margin 3.82% 3.94%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, 2015
Three Months Ended
September 30, 2014
Average
Balances
Interest Yield/
Rate
Average
Balances
Interest Yield/
Rate
Interest earning assets
Loans (1) 5,261,793 $ 62,461 4.71% $ 4,762,260 $ 62,095 5.17%
Investment securities (1) 1,088,818 5,885 2.14% 1,064,710 5,160 1.92%
Interest bearing deposits in other banks 36,596 19 0.21% 38,857 19 0.19%
Other earning assets (2) 54,960 760 5.49% 45,774 604 5.24%
Total interest earning assets 6,442,167 $ 69,125 4.26% 5,911,601 $ 67,878 4.56%
Non-interest earning assets 645,715 725,578
Total assets $ 7,087,882 $ 6,637,179
Interest bearing liabilities
Time deposits $ 1,642,745 $ 3,957 0.96% $ 1,372,696 $ 2,983 0.86%
Money market 977,273 658 0.27% 935,223 552 0.23%
Interest bearing demand 1,291,439 540 0.17% 1,313,693 537 0.16%
Savings 452,058 241 0.21% 525,854 289 0.22%
Total interest bearing deposits 4,363,515 $ 5,396 0.49% 4,147,466 $ 4,361 0.42%
Short-term borrowings and FHLB advances 428,249 272 0.25% 214,122 125 0.23%
Long-term borrowings 84,922 1,413 6.60% 136,353 1,732 5.04%
Total interest bearing liabilities 4,876,686 7,081 0.58% 4,497,941 6,218 0.55%
Non-interest bearing demand 1,116,757 1,010,817
Other liabilities 46,117 57,430
Shareholders' equity 1,048,322 1,070,991
Total liabilities and shareholders' equity $ 7,087,882 $ 6,637,179
Net interest income and spread $ 62,044 3.68% $ 61,660 4.01%
Net interest margin 3.82% 4.14%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
YEAR TO DATE AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30, 2015
Nine Months Ended
September 30, 2014
Average
Balances
Interest Yield/
Rate
Average
Balances
Interest Yield/
Rate
Interest earning assets
Loans (1) $ 5,129,607 $ 184,889 4.82% $ 4,633,424 $ 187,325 5.41%
Investment securities (1) 1,047,451 16,324 2.08% 1,088,570 14,608 1.79%
Interest bearing deposits in other banks 50,187 88 0.23% 49,487 81 0.22%
Other earning assets (2) 51,167 2,093 5.47% 43,091 1,763 5.47%
Total interest earning assets 6,278,412 $ 203,394 4.33% 5,814,572 $ 203,777 4.69%
Non-interest earning assets 665,016 758,525
Total assets $ 6,943,428 $ 6,573,097
Interest bearing liabilities
Time deposits $ 1,506,488 $ 10,357 0.92% $ 1,381,485 $ 8,834 0.85%
Money market 945,170 1,811 0.26% 938,560 1,602 0.23%
Interest bearing demand 1,356,300 1,710 0.17% 1,319,416 1,631 0.17%
Savings 477,698 765 0.21% 530,005 857 0.22%
Total interest bearing deposits 4,285,656 $ 14,643 0.46% 4,169,466 $ 12,924 0.41%
Short-term borrowings and FHLB advances 336,791 597 0.24% 139,063 246 0.24%
Long-term borrowings 116,922 4,784 5.47% 135,837 5,154 5.07%
Total interest bearing liabilities 4,739,369 20,024 0.56% 4,444,366 18,324 0.55%
Non-interest bearing demand 1,102,393 985,445
Other liabilities 44,891 53,082
Shareholders' equity 1,056,775 1,090,204
Total liabilities and shareholders' equity $ 6,943,428 $ 6,573,097
Net interest income and spread $ 183,370 3.77% $ 185,453 4.14%
Net interest margin 3.90% 4.26%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)
CORE NET INCOME Three Months Ended
Sep 30, 2015 Jun 30, 2015 Dec 31, 2014
Net Income $ 15,321 $ 15,321 $ 12,990 $ 12,990 $ 13,836 $ 13,836
Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments
Non-interest income
Security losses (gains)* 43 26 57 35 (513) (313)
Non-interest expense
Stock-based compensation expense* 239 146
Contingent value right expense 4 2 334 334
Severance expense* 63 39 14 9
Loss on extinguishment of debt* 1,438 887
Restructuring charges* 23 14 178 110
Tax effect of adjustments* (50) N/A (648) N/A 107 N/A
Core Net Income $ 15,400 $ 15,400 $ 14,033 $ 14,033 $ 14,003 $ 14,003
Less: FDIC indemnification asset expense (non-single family) * $ 964 $ 1,397
Average Assets $ 7,087,882 $ 6,885,513 $ 6,749,124
ROA** 0.86% 0.75% 0.82%
Core ROA*** 0.87% 0.82% 0.83%
ROA** (excluding FDIC indemnification asset expense) 0.92% 0.84%
Core ROA*** (excluding FDIC indemnification asset expense) 0.92% 0.90%

* Tax effected at an income tax rate of 36%
** 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
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Net interest income $ 61,637 $ 60,685 $ 59,729 $ 61,351 $ 61,425
Reported non-interest income $ 11,418 $ 10,363 $ 9,920 $ 10,594 $ 9,957
Less: Securities gains (losses) (43) (57) 90 513 317
Core non-interest income $ 11,461 $ 10,420 $ 9,830 $ 10,081 $ 9,640
Reported non-interest expense $ 48,346 $ 49,502 $ 52,647 $ 50,932 $ 51,418
Less: Stock-based compensation expense 95 239 242
Contingent value right expense 4 116 334 278
Severance expense 63 14 111
Loss on extinguishment of debt 1,438
Restructuring charges 23 178 2,341
Core non-interest expense $ 48,260 $ 47,868 $ 49,984 $ 50,359 $ 50,898
Less: FDIC indemnification asset expense (non-single family) $ 1,506 $ 2,253
Efficiency ratio* 66.18% 69.67% 75.59% 70.79% 72.03%
Core efficiency ratio** 66.02% 67.32% 71.86% 70.50% 71.62%
Efficiency ratio* (excluding FDIC indemnification expense) 64.84% 67.53%
Core efficiency ratio** (excluding FDIC indemnification asset expense) 64.69% 65.25%

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

CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars and shares in thousands, except per share data)
(Unaudited)
TANGIBLE BOOK VALUE Three Months Ended
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Total shareholders' equity $ 1,022,642 $ 1,059,346 $ 1,054,349 $ 1,063,574 $ 1,064,939
Less: goodwill and intangible assets, net of taxes (144,447) (145,035) (145,622) (146,168) (146,671)
Tangible book value* $ 878,195 $ 914,311 $ 908,727 $ 917,406 $ 918,268
Common shares outstanding 44,466 46,440 46,632 47,593 48,331
Tangible book value per share $ 19.75 $ 19.69 $ 19.49 $ 19.28 $ 19.00

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

TANGIBLE COMMON EQUITY RATIO Three Months Ended
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Total shareholders' equity $ 1,022,642 $ 1,059,346 $ 1,054,349 $ 1,063,574 $ 1,064,939
Less: goodwill and intangible assets (150,567) (151,517) (152,465) (153,419) (154,387)
Tangible common equity $ 872,075 $ 907,829 $ 901,884 $ 910,155 $ 910,552
Total assets $ 7,261,196 $ 7,054,501 $ 6,976,736 $ 6,831,410 $ 6,690,299
Less: goodwill and intangible assets (150,567) (151,517) (152,465) (153,419) (154,387)
Tangible assets $ 7,110,629 $ 6,902,984 $ 6,824,271 $ 6,677,991 $ 6,535,912
Tangible common equity ratio 12.26% 13.15% 13.22% 13.63% 13.93%

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

Source:Capital Bank Financial Corp.