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Capital Bank Financial Corp. Reports 1Q GAAP and Core EPS of $0.22 and $0.38

CHARLOTTE, N.C., April 22, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported net income for the first quarter of 2016 of $9.8 million, or $0.22 per diluted share, and core net income of $16.9 million, or $0.38 per diluted share. Core adjustments for the first quarter of 2016 included a pre-tax charge of $9.2 million, related to the early termination of the FDIC loss share agreements, $0.6 million of non-tax deductible merger related expenses, $1.1 million of tax deductible merger related expenses, and $0.1 million of severance. Year over year core net income and core net income per diluted share rose 30% and 41%, respectively.

First quarter highlights include:

• Loan portfolio grew 11% year over year;
• Total deposits were up 11% year over year, with a 21% sequential annualized growth in Core deposits;
• Remaining FDIC loss share agreements were terminated;
• Tangible Book Value per share increased to $19.77; and
• Declared a $0.10 per share quarterly common stock dividend.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, “The highlight of the quarter was strong core deposit growth, tight expense control, and excellent credit metrics. As anticipated, loan portfolio growth slowed in the first quarter, reflecting the decision to put Capital Bank's prime indirect auto portfolio into run-off during the fourth quarter, which is one component of our strategy to improve profitability over the next two years.”

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, “Integration planning for CommunityOne merger is nearly complete, thanks to hard work by teammates at both banks. We are looking forward to doing even more business with our customers upon closing.”

Loan Portfolio and Composition

During the first quarter, the loan portfolio was flat at $5.6 billion. New loans of $296 million were offset by loan resolutions totaling $29 million, and principal repayments of $265 million. New loan production during the first quarter was absent of indirect auto lending, which contributed $65 million during the prior quarter.

The effects of exiting indirect auto lending had a $68 million loan portfolio impact in comparison to the prior quarter, as shown below:

(Dollars in millions) Mar 31,
2016
Dec 31,
2015
Beginning balance of gross loans $5,633 $5,405
New loan production 296 487
Principal repayments / resolutions (294) (259)
Ending balance of gross loans $5,635 $5,633
Annualized loan growth rate 0% 17%
Indirect lending portfolio (contraction) growth (34) 34
Effect of discontinuing indirect lending, quarter over quarter (68)
Loan growth rate (excluding impact of indirect lending) 5%

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

Mar 31,
2016
Dec 31,
2015
Mar 31,
2015
Commercial real estate 22% 22% 23%
C&I 44% 43% 43%
Consumer 32% 32% 32%
Other 2% 3% 2%
Total 100% 100% 100%

Deposits Composition and Cost of Funds

During the first quarter, total deposits increased by $79.5 million to $5.9 billion. The sequential increase was mainly the result of the Company's continued focus on growing low-cost core deposits, which were up $213 million, or a 21% annualized rate. Partially offsetting the increase was a decrease in higher rate brokered deposits and time deposits, which were down $134 million. The cost of core deposits increased two basis points to 0.17%, mostly due to re-pricing of deposits as a result of the federal funds rate increase and increased money market balances. Core deposits include all checking, savings and money market accounts, excluding brokered, and now represent 70% of total deposits. Sequentially and year over year, the cost of total deposits increased two basis points and eight basis points, respectively, to 0.42%. The contractual cost of total deposits, which excludes purchase accounting, increased two basis point sequentially and four basis points year over year to 0.42%.

Net Interest Income and Net Interest Margin

Net interest income declined $0.7 million to $61.4 million from $62.1 million for the fourth quarter of 2015 mainly due to a shorter calendar, and increased $1.6 million from $59.7 million for the first quarter of 2015. The net interest margin for the first quarter of 2016 was 3.64%, a decline of six basis points sequentially and 32 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. New and acquired non-impaired loans represent $4.6 billion with an average yield of 3.7%, compared to $1.0 billion of acquired loans outstanding with an average yield of 8.2%.

Non-Interest Income

Non-interest income declined $8.0 million to $2.6 million from $10.6 million for the fourth quarter of 2015 and declined $7.4 million from $9.9 million for the first quarter of 2015. The sequential decline was mainly driven by the termination of the FDIC loss share agreements, which resulted in additional FDIC indemnification asset expense of $7.7 million when compared to last quarter, and a decline in bank-owned life insurance income, resulting from a death benefit in the fourth quarter of 2015. The year over year decline was mainly driven by a $6.7 million increase in FDIC indemnification asset expense as discussed above, and a $0.5 million decline in investment advisory fee income.

Provision for Loan and Lease Losses and Credit Quality

The provision of $1.4 million recorded for the first quarter of 2016 included a $1.4 million provision for new and acquired non-impaired loans. There was a de minimis amount of reversal of provision on legacy loans during the quarter. Net charge-offs for the first quarter of 2016 were $1.1 million, down from $2.3 million in the fourth quarter of 2015.

At March 31, 2016, the allowance for loan and lease losses was $45.3 million, of which $24.5 million related to acquired impaired loans and $20.8 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.80% of the Company's total $5.6 billion loan portfolio.

At March 31, 2016, non-performing loans were $64.6 million, down 5% from December 31, 2015, and down 49%, from March 31, 2015, mainly as a result of resolutions and upgrades.

Non-Interest Expense

Non-interest expense declined $0.8 million to $46.9 million from $47.8 million for the fourth quarter of 2015 and declined $5.7 million from $52.6 million for the first quarter of 2015. The sequential decline was mainly due to the absence of a $4.2 million charge in fourth quarter resulting from the termination of a legacy debit card processing contract, and a decrease of legacy credit expenses. Partially offsetting the decline was a $2.3 million increase in employee compensation mostly due to a seasonality increase in tax and employee benefit expenses, and a $0.3 million increase in occupancy expense and equipment expense.

The year over year decline was mainly due to the absence of a $2.3 million restructuring charge in the first quarter from consolidation of facilities and severance, a $1.7 million decline in employee compensation resulting from cost savings initiatives, and lower legacy credit costs as discussed above.

Income Tax Expense

Income tax expense was $5.8 million for the first quarter of 2016, an effective rate of 37%, compared to $8.8 million and 37% for the fourth quarter of 2015. Income tax expense was $6.5 million and 36% for the first quarter of 2015.

Financial Position

Total assets increased by $503 million to $7.5 billion as of March 31, 2016, from $7.0 billion as of March 31, 2015. During the quarter, the Company’s loan portfolio was flat at $5.6 billion. Total deposits increased by $80 million to $5.9 billion, and Core deposits increased by $213 million, or a 21% annualized rate. FHLB borrowings decreased $60 million. Tangible book value per share was $19.77 as of March 31, 2016, an increase of $0.24 and $0.28 over December 31, 2015 and March 31, 2015, respectively. During the first quarter, the Company repurchased 148 thousand shares of common stock for $4.4 million at an average price of $29.61. The Company has $101 million remaining under the current board authorized stock repurchase program.

The Company’s bank subsidiary, Capital Bank Corporation, had preliminary Tier 1 Leverage, Tier 1 Common, Tier 1 Risk-Based and Total Risk-Based capital ratios of 11.1%, 13.0%, 13.0% and 13.7%, respectively, as of March 31, 2016, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on May 25, 2016, to shareholders of record as of May 11, 2016.

Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. The number to call for this interactive teleconference is (719) 325-2469, and the confirmation pass code is 3145353. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through April 29, 2016, by dialing (719) 457-0820 and entering pass code 3145353. 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 bank holding company, formed in 2009 to create a premier regional banking franchise in the southeastern United States. CBF is the parent of Capital Bank Corporation, a State of North Carolina chartered financial institution with $7.5 billion in total assets as of March 31, 2016, and 151 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank Financial Corporation, please visit www.capitalbank-us.com.

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
Three Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Interest and dividend income$69,472 $69,553 $68,718 $67,311 $66,046
Interest expense8,105 7,475 7,081 6,626 6,317
Net Interest Income61,367 62,078 61,637 60,685 59,729
Provision (reversal) for loan and lease losses1,375 1,089 799 1,299 (841)
Net interest income after provision (reversal) for loan and lease losses59,992 60,989 60,838 59,386 60,570
Non-Interest Income
Service charges on deposit accounts4,811 4,911 5,472 5,189 4,705
Debit card income3,086 3,029 3,113 3,176 2,964
Fees on mortgage loans originated and sold971 875 990 1,278 1,147
Investment advisory and trust fees497 597 860 1,125 1,006
FDIC indemnification asset expense (1,526) (1,418) (2,499) (2,439)
Termination of loss share agreements(9,178)
Investment securities gains (losses), net40 54 (43) 231 90
Other-than-temporary impairment loss on investments:
Gross impairment loss (288)
Other income2,339 2,657 2,444 2,151 2,447
Total non-interest income2,566 10,597 11,418 10,363 9,920
Non-Interest Expense
Salaries and employee benefits22,162 20,219 22,620 21,881 23,881
Stock-based compensation expense317 309 108 284
Net occupancy and equipment expense7,703 7,385 7,621 7,754 8,129
Computer services3,575 3,479 3,471 3,343 3,397
Software expense2,036 2,061 2,198 2,082 2,142
Telecommunication expense1,532 1,168 1,515 1,367 1,380
OREO valuation expense467 341 2,075 1,710 1,390
Net gains on sales of OREO(679) (801) (351) (957) (7)
Foreclosed asset related expense285 405 872 600 674
Loan workout expense244 650 194 795 623
Conversion and merger related expense1,687 704
Professional fees1,612 1,529 1,958 1,723 1,734
Losses on extinguishment of debt 1,438
Restructuring charges, net142 4,248 23 178 2,341
Contingent value right expense 4 116
Regulatory assessments1,275 1,486 1,423 1,831 1,695
Other expense4,580 4,882 4,418 5,645 4,868
Total non-interest expense46,938 47,756 48,346 49,502 52,647
Income before income taxes15,620 23,830 23,910 20,247 17,843
Income tax expense5,780 8,809 8,589 7,257 6,454
Net income$9,840 $15,021 $15,321 $12,990 $11,389
Earnings per share:
Basic$0.23 $0.35 $0.34 $0.28 $0.25
Diluted$0.22 $0.34 $0.33 $0.28 $0.24
Weighted average shares outstanding:
Basic43,063 43,499 45,359 45,913 46,294
Diluted43,904 44,550 46,534 47,220 47,632


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
Mar 31,
2016
Dec 31,
2015
Mar 31,
2015
Assets
Cash and due from banks$88,802 $87,985 $96,484
Interest-bearing deposits in other banks93,218 56,711 143,497
Total cash and cash equivalents182,020 144,696 239,981
Trading securities3,418 3,013 2,853
Investment securities available-for-sale at fair value (amortized cost $657,631, $640,455 and $568,621, respectively)663,925 637,329 575,593
Investment securities held-to-maturity at amortized cost (fair value $467,372, $475,134 and $457,939, respectively)460,483 472,505 448,962
Loans held for sale8,070 10,569 12,403
Loans, net of deferred loan costs and fees5,626,887 5,622,147 5,065,606
Less: Allowance for loan and lease losses45,263 45,034 48,225
Loans, net5,581,624 5,577,113 5,017,381
Other real estate owned48,505 52,776 71,453
FDIC indemnification asset 6,725 15,195
Receivable from FDIC 678 3,172
Premises and equipment, net157,131 159,149 163,501
Goodwill134,522 134,522 134,522
Intangible assets, net14,166 15,100 17,943
Deferred income tax asset, net95,363 105,316 121,083
Other assets130,571 129,988 152,694
Total Assets$7,479,798 $7,449,479 $6,976,736
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand$1,190,831 $1,121,160 $1,114,423
Interest bearing demand1,402,342 1,382,732 1,405,390
Money market1,262,581 1,190,121 924,228
Savings420,073 418,879 491,394
Time deposits1,663,906 1,747,318 1,428,121
Total deposits5,939,733 5,860,210 5,363,556
Federal Home Loan Bank advances400,849 460,898 356,043
Short-term borrowings16,200 12,410 27,605
Long-term borrowings86,328 85,777 139,975
Accrued expenses and other liabilities39,695 43,919 35,208
Total liabilities$6,482,805 $6,463,214 $5,922,387
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, 37,207 issued and 26,636 outstanding, 37,012 issued 26,589 outstanding and 37,310 issued and 30,037 outstanding, respectively.372 370 373
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 18,369 issued and 16,595 outstanding, respectively.183 183 184
Additional paid in capital1,076,931 1,076,415 1,081,912
Retained earnings214,268 208,742 169,792
Accumulated other comprehensive (loss) income3,878 (5,196) 274
Treasury stock, at cost, 12,345, 12,196 and 9,047 shares, respectively(298,639) (294,249) (198,186)
Total shareholders’ equity996,993 986,265 1,054,349
Total Liabilities and Shareholders’ Equity$7,479,798 $7,449,479 $6,976,736



CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
Three Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Performance Ratios
Interest rate spread3.50% 3.57% 3.68% 3.79% 3.83%
Net interest margin3.64% 3.70% 3.82% 3.94% 3.96%
Return on average assets0.53% 0.82% 0.86% 0.75% 0.66%
Return on average shareholders' equity3.96% 5.99% 5.85% 4.90% 4.29%
Efficiency ratio73.42% 65.71% 66.18% 69.67% 75.59%
Average interest-earning assets to average interest-bearing liabilities129.54% 129.55% 132.10% 133.39% 131.94%
Average loans receivable to average deposits95.66% 96.68% 96.01% 94.12% 95.47%
Yield on interest-earning assets4.11% 4.14% 4.26% 4.36% 4.38%
Cost of interest-bearing liabilities0.62% 0.57% 0.58% 0.57% 0.55%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans$8,526 $8,945 $9,647 $9,807 $11,482
Nonperforming acquired loans$56,041 $59,194 $72,023 $83,515 $115,865
Nonperforming loans to loans receivable1.15% 1.21% 1.51% 1.79% 2.51%
Nonperforming assets to total assets1.51% 1.63% 1.88% 2.23% 2.85%
Covered loans to total gross loans% 1.30% 1.45% 3.39% 3.71%
ALLL to nonperforming assets39.97% 37.13% 33.88% 30.56% 24.22%
ALLL to total gross loans0.80% 0.80% 0.86% 0.92% 0.95%
Annualized net charge-offs/average loans0.08% 0.17% 0.20% 0.12% 0.09%
Asset and Credit Quality Ratios-New Loans
Nonperforming new loans to total new loans receivable0.11% 0.11% 0.17% 0.19% 0.22%
New loans ALLL to total gross new loans0.47% 0.47% 0.51% 0.59% 0.61%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable4.67% 4.69% 5.21% 5.58% 7.30%
Covered acquired loans to total gross acquired loans% 5.43% 5.45% 11.38% 11.47%
Acquired loans ALLL to total gross acquired loans1.93% 1.83% 1.80% 1.71% 1.67%
Capital Ratios (Company)
Total average shareholders' equity to total average assets13.35% 13.67% 14.79% 15.41% 15.48%
Tangible common equity ratio (1)11.57% 11.46% 12.26% 13.15% 13.22%
Tier 1 leverage capital ratio12.49% 12.67% 13.60% 14.66% 14.42%
Tier 1 common capital ratio13.38% 14.73% 14.44% 16.07% 16.42%
Tier 1 risk-based capital ratio14.58% 13.63% 15.60% 17.33% 17.70%
Total risk-based capital ratio15.32% 15.47% 16.38% 18.18% 18.66%
Capital Ratios (Bank)
Tangible common equity ratio (1)11.45% 11.20% 11.36% 11.35% 11.32%
Tier 1 leverage capital ratio11.10% 11.09% 11.19% 11.15% 10.89%
Tier 1 common capital ratio12.95% 12.89% 12.85% 13.18% 13.34%
Tier 1 risk-based capital ratio12.95% 12.89% 12.85% 13.18% 13.34%
Total risk-based capital ratio13.72% 13.68% 13.69% 14.10% 14.30%
(1) See "Reconciliation of Non-GAAP Measures"


CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Loans
Non-owner occupied commercial real estate$850,766 $866,392 $847,225 $834,351 $823,763
Other commercial construction and land194,971 196,795 192,283 182,283 180,166
Multifamily commercial real estate75,737 80,708 82,762 76,754 88,980
1-4 family residential construction and land96,703 93,242 87,193 78,572 66,547
Total commercial real estate1,218,177 1,237,137 1,209,463 1,171,960 1,159,456
Owner occupied commercial real estate1,095,460 1,104,972 1,065,875 1,030,111 1,038,493
Commercial and industrial1,375,233 1,309,704 1,219,101 1,181,451 1,125,708
Lease financing1,088 1,256 1,488 1,661 1,834
Total commercial2,471,781 2,415,932 2,286,464 2,213,223 2,166,035
1-4 family residential1,015,071 1,017,791 985,982 959,224 928,832
Home equity loans368,510 375,276 373,993 375,271 379,946
Indirect auto loans317,863 351,817 318,841 263,723 222,087
Other consumer loans84,108 84,661 82,483 77,867 74,666
Total consumer1,785,552 1,829,545 1,761,299 1,676,085 1,605,531
Other159,447 150,102 147,718 145,146 146,987
Total loans$5,634,957 $5,632,716 $5,404,944 $5,206,414 $5,078,009
Deposits
Non-interest bearing demand$1,190,831 $1,121,160 $1,099,252 $1,132,085 $1,114,423
Interest bearing demand1,402,342 1,382,732 1,251,365 1,367,123 1,405,390
Money market1,162,546 1,040,086 927,391 991,520 924,228
Savings420,073 418,879 436,385 479,885 491,394
Total core deposits4,175,792 3,962,857 3,714,393 3,970,613 3,935,435
Wholesale money market100,035 150,035 78,015
Time deposits1,663,906 1,747,318 1,773,170 1,521,810 1,428,121
Total deposits$5,939,733 $5,860,210 $5,565,578 $5,492,423 $5,363,556



CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
Three Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Provision (reversal) on legacy loans$9 $(1,161) $492 $(523) $(1,926)
FDIC indemnification asset expense 1,526 1,418 2,499 2,439
OREO valuation expense467 341 2,075 1,710 1,390
Termination of loss share agreements9,178
Net gains on sales of OREO(679) (801) (351) (957) (7)
Foreclosed asset related expense285 405 872 600 674
Loan workout expense244 650 194 795 623
Salaries and employee benefits522 549 797 796 832
Total legacy credit expenses$10,026 $1,509 $5,497 $4,920 $4,025


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31, 2016
Three Months Ended
December 31, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,611,488 $63,009 4.52% $5,496,222 $63,035 4.55%
Investment securities (1) 1,122,523 6,483 2.32% 1,119,848 6,355 2.25%
Interest bearing deposits in other banks 73,188 84 0.46% 40,177 23 0.23%
Other earning assets (2) 25,136 315 5.04% 42,473 553 5.17%
Total interest earning assets 6,832,335 $69,891 4.11% 6,698,720 $69,966 4.14%
Non-interest earning assets 618,087 633,796
Total assets $7,450,422 $7,332,516
Interest bearing liabilities
Time deposits $1,689,653 $4,120 0.98% $1,774,732 $4,124 0.92%
Money market 1,247,333 1,067 0.34% 1,081,968 780 0.29%
Interest bearing demand 1,370,957 648 0.19% 1,286,737 529 0.16%
Savings 419,588 227 0.22% 426,686 236 0.22%
Total interest bearing deposits 4,727,531 6,062 0.52% 4,570,123 5,669 0.49%
Short-term borrowings and FHLB advances 460,892 532 0.46% 515,302 365 0.28%
Long-term borrowings 85,986 1,511 7.07% 85,438 1,441 6.69%
Total interest bearing liabilities 5,274,409 8,105 0.62% 5,170,863 $7,475 0.57%
Non-interest bearing demand 1,138,782 1,114,932
Other liabilities 42,418 44,479
Shareholders’ equity 994,813 1,002,242
Total liabilities and shareholders’ equity $7,450,422 $7,332,516
Net interest income and spread $61,786 3.50% $62,491 3.57%
Net interest margin 3.64% 3.70%
(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
March 31, 2016
Three Months Ended
March 31, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,611,488 $63,009 4.52% $5,044,763 $60,710 4.88%
Investment securities (1) 1,122,523 6,483 2.32% 1,014,448 5,141 2.06%
Interest bearing deposits in other banks 73,188 84 0.46% 58,654 33 0.23%
Other earning assets (2) 25,136 315 5.04% 50,803 688 5.49%
Total interest earning assets 6,832,335 $69,891 4.11% 6,168,668 $66,572 4.38%
Non-interest earning assets 618,087 685,654
Total assets $7,450,422 $6,854,322
Interest bearing liabilities
Time deposits $1,689,653 $4,120 0.98% $1,409,605 $2,999 0.86%
Money market 1,247,333 1,067 0.34% 914,385 554 0.25%
Interest bearing demand 1,370,957 648 0.19% 1,397,011 592 0.17%
Savings 419,588 227 0.22% 496,907 265 0.22%
Total interest bearing deposits 4,727,531 $6,062 0.52% 4,217,908 4,410 0.42%
Short-term borrowings and FHLB advances 460,892 532 0.46% 319,901 182 0.23%
Long-term borrowings 85,986 1,511 7.07% 137,394 1,725 5.09%
Total interest bearing liabilities 5,274,409 8,105 0.62% 4,675,203 $6,317 0.55%
Non-interest bearing demand 1,138,782 1,066,401
Other liabilities 42,418 51,653
Shareholders’ equity 994,813 1,061,065
Total liabilities and shareholders’ equity $7,450,422 $6,854,322
Net interest income and spread $61,786 3.50% $60,255 3.83%
Net interest margin 3.64% 3.96%
(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
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Net Income $9,840 $9,840 $15,021 $15,021 $11,389 $11,389
Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments
Non-interest income
Indemnification asset termination 9,178 5,670
Security (gains) losses* (40) (25) (54) (33) (90) (55)
Non-interest expense
Stock-based compensation expense* 95 58
Contingent value right expense* 116 72
Severance expense* 75 46 111 68
Restructuring expense* 142 88 32 20 2,341 1,444
Conversion costs and merger tax deductible* 1,107 684 33 20
Legal merger non deductible 580 580 673 673
Contract termination* 4,215 2,594
Tax effect of adjustments* (3,999) N/A (1,625) N/A (986) N/A
Core Net Income $16,883 $16,883 $18,295 $18,295 $12,976 $12,976
Diluted shares 43,904 44,550 47,632
Core Net Income per share $0.38 $0.41 $0.27
Average Assets 7,450,422 7,332,516 6,854,322
ROA** 0.53% 0.82% 0.66%
Core ROA*** 0.91% 1.00% 0.76%
* Tax effected at an income tax rate of 38%
** ROA: Annualized net income / Average assets
*** Core ROA: Annualized core net income / Average assets


CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars in thousands)
(Unaudited)
CORE EFFICIENCY RATIOThree Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Net interest income$61,367 $62,078 $61,637 $60,685 $59,729
Reported non-interest income2,566 10,597 11,418 10,363 9,920
Indemnification asset termination(9,178)
Less: Securities gains (losses)40 54 (43) (57) 90
Core non-interest income$11,704 $10,543 $11,461 $10,420 $9,830
Reported non-interest expense$46,938 $47,756 $48,346 $49,502 $52,647
Less: Stock-based compensation expense 95
Contingent value right expense 4 116
Severance expense75 63 14 111
Loss on extinguishment of debt 1,438
Conversion costs and merger tax deductible1,107 33
Legal merger non deductible580
Restructuring expense142 23 178 2,341
Contract termination 4,215
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits) 704
Core non-interest expense$45,034 $42,804 $48,260 $47,868 $49,984
Efficiency ratio*73.42% 65.71% 66.18% 69.67% 75.59%
Core efficiency ratio**61.63% 58.94% 66.02% 67.32% 71.86%
* Efficiency Ratio: Non-interest expense / (Non-interest income + Net interest income)
** Core Efficiency Ratio: Core non-interest expense / (Core non-interest income + Net interest income)


CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES (Continuation)
(Dollars and shares in thousands, except per share data)
(Unaudited)
TANGIBLE BOOK VALUE Three Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Total shareholders' equity $996,993 $986,265 $1,022,642 $1,059,346 $1,054,349
Less: goodwill and intangible assets, net of taxes (143,304) (143,863) (144,447) (145,035) (145,622)
Tangible book value* $853,689 $842,402 $878,195 $914,311 $908,727
Common shares outstanding 43,189 43,143 44,466 46,440 46,632
Tangible book value per share $19.77 $19.53 $19.75 $19.69 $19.49
* Tangible book value is equal to book value less goodwill and core deposit intangibles, net of related deferred tax liabilities.


TANGIBLE COMMON EQUITY RATIO Three Months Ended
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Total shareholders' equity $996,993 $986,265 $1,022,642 $1,059,346 $1,054,349
Less: goodwill and intangible assets (148,688) (149,622) (150,567) (151,517) (152,465)
Tangible common equity $848,305 $836,643 $872,075 $907,829 $901,884
Total assets $7,479,798 $7,449,479 $7,261,196 $7,054,501 $6,976,736
Less: goodwill and intangible assets (148,688) (149,622) (150,567) (151,517) (152,465)
Tangible assets $7,331,110 $7,299,857 $7,110,629 $6,902,984 $6,824,271
Tangible common equity ratio 11.57% 11.46% 12.26% 13.15% 13.22%


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.