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Capital Bank Financial Corp. Reports 2Q EPS of $0.40, Up 43% Year Over Year, and Core EPS of $0.42, Up 40% Year Over Year

CHARLOTTE, N.C., July 21, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported net income for the second quarter of 2016 of $17.4 million, or $0.40 per diluted share and core net income of $18.2 million, or $0.42 per diluted share. Year over year net income per diluted share and core net income per diluted share rose 43% and 40%, respectively.

Core adjustments for the second quarter of 2016 included $0.4 million of non-tax deductible merger related expenses, $0.9 million of tax deductible merger related expenses, and $0.1 million of gains on sales of investment securities.

Second quarter highlights include:

• New loan fundings of $473 million;
• Sequential growth in loan portfolio at an 8% annualized rate;
• GAAP and Core efficiency ratio of 60.6% and 59.1%, respectively;
• An increase in GAAP and Core ROA to 0.93% and 0.97%, respectively; and
• Declaration of a $0.10 per share quarterly common stock dividend.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, “Our team continues to execute well in a tough operating environment, with solid loan growth despite runoff from indirect, tight cost control, excellent credit quality, reduced deposit costs, and relative stability in the net interest margin.”

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, “We are pleased with our second quarter results, which include continued improvement in ROA, efficiency and EPS. We are focused on generating improvements as we plan for completing the CommunityOne acquisition.”

Loan Portfolio and Composition

During the second quarter, the loan portfolio was up $109.9 million at $5.7 billion. New loans of $473.3 million were offset by loan resolutions and payoffs totaling $363.4 million.

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

Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Commercial real estate 22% 22% 22%
C&I 44% 44% 43%
Consumer 31% 32% 32%
Other 3% 2% 3%
Total 100% 100% 100%

Deposits Composition and Cost of Funds

During the second quarter, total deposits decreased by $132.6 million to $5.8 billion. The sequential decrease included $129 million in brokered deposits, as a result of the Company's efforts to lower the cost of deposits. The cost of total deposits decreased one basis point to 0.41%, while the cost of core deposits increased one basis point to 0.18%. Core deposits include all checking, savings and money market accounts, excluding brokered, and now represent 71% of total deposits. The contractual cost of total deposits, which excludes purchase accounting, was flat sequentially at 0.42%.

Net Interest Income and Net Interest Margin

Net interest income increased $0.1 million to $61.5 million from $61.4 million for the first quarter of 2016 and increased $0.8 million from $60.7 million for the second quarter of 2015. The net interest margin for the second quarter of 2016 was 3.62%, a decline of two basis points sequentially and 32 basis points year over year. The sequential and year over year net interest margin decline was mostly due to the lower average yield on new loans as compared to the yields of the Company's legacy acquired loans. New and acquired non-impaired loans represent $4.8 billion with an average yield of 3.63%, compared to $0.9 billion of acquired impaired loans outstanding with an average yield of 8.48%.

Non-Interest Income

Non-interest income increased $9.4 million to $11.9 million from $2.6 million for the first quarter of 2016 and increased $1.6 million from $10.4 million for the second quarter of 2015. The sequential increase was mainly driven by the absence of the $9.2 million termination for the FDIC loss share agreements.

The year over year increase was mainly due to the absence of $2.5 million of FDIC indemnification asset expense and $0.3 million of gross impairment loss recorded in the prior year. Partially offsetting the increase was a $0.7 million decline in investment advisory income and a $0.7 million decline in service charges.

Provision for Loan and Lease Losses and Credit Quality

The provision of $1.2 million recorded for the second quarter of 2016 included a $2.0 million provision for new and acquired non-impaired loans partially offset by a provision reversal of $0.8 million on acquired impaired loans during the quarter. Net charge-offs for the second quarter of 2016 were $1.5 million, up from $1.1 million in the first quarter of 2016.

At June 30, 2016, the allowance for loan and lease losses was $44.9 million, of which $23.7 million related to acquired impaired loans and $21.2 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.78% of the Company's total $5.7 billion loan portfolio.

At June 30, 2016, non-performing loans were $65.1 million, an increase of 0.77% from March 31, 2016, and a decrease of 30.22%, from June 30, 2015, mainly as a result of resolutions and upgrades.

Non-Interest Expense

Non-interest expense declined $2.4 million to $44.5 million from $46.9 million for the first quarter of 2016 and declined $5.0 million from $49.5 million for the second quarter of 2015. The sequential decline was mainly due to a $2.0 million decrease in salaries and benefit expense resulting from seasonality decreases in tax and employee benefit expenses, a $0.6 million decrease in combined merger and restructuring expense, and a $0.4 million decrease in occupancy expense and equipment expense. Partially offsetting the decline was a $0.7 million increase in OREO write downs.

The year over year decline was mainly due to a $1.7 million decrease in salaries and benefit expense resulting from cost saving initiatives, the absence of $1.4 million loss on extinguishment of debt in the prior year, and a decrease of $0.4 million in occupancy and equipment due to the consolidation of facilities.

Income Tax Expense

Income tax expense was $10.3 million for the second quarter of 2016, an effective rate of 37%, compared to $5.8 million and 37% for the first quarter of 2016. Income tax expense was $7.3 million and 36% for the second quarter of 2015.

Financial Position

Total assets increased by $141.4 million to $7.6 billion as of June 30, 2016, from $7.5 billion as of March 31, 2016. During the quarter, the Company’s loan portfolio increased $109.9 million to $5.7 billion. Total deposits decreased by $132.6 million to $5.8 billion, and core deposits decreased by $38.2 million, or a 4% annualized rate. FHLB borrowings increased $250.0 million. Book value per share was $23.52 as of June 30, 2016, an increase of $0.44 and $0.71 over March 31, 2016 and June 30, 2015, respectively. Tangible book value per share was $20.22 as of June 30, 2016, an increase of $0.45 and $0.53 over March 31, 2016 and June 30, 2015, respectively. During the second quarter, the Company did not repurchase shares of common stock. 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 10.4%, 12.0%, 12.0% and 12.7%, respectively, as of June 30, 2016, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on August 25, 2016, to shareholders of record as of August 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) 325-2454, and the confirmation pass code is 7425320. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through July 28, 2016, by dialing (719) 457-0820 and entering pass code 7425320. 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.

The Company uses these non-GAAP measures for various purposes, including measuring performance for incentive compensation and as a basis for strategic planning and forecasting.

These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

About Capital Bank Financial Corp.

Capital Bank Financial Corp. is a bank holding company, formed in 2009 to create a premier regional banking franchise in the southeastern United States. CBF is the parent of Capital Bank Corporation, a State of North Carolina chartered financial institution with $7.6 billion in total assets as of June 30, 2016, and 151 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank Financial Corp., please visit www.capitalbank-us.com.


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
Three Months Ended
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Interest and dividend income$69,579 $69,472 $69,553 $68,718 $67,311
Interest expense8,064 8,105 7,475 7,081 6,626
Net Interest Income61,515 61,367 62,078 61,637 60,685
Provision for loan and lease losses1,172 1,375 1,089 799 1,299
Net interest income after provision for loan and lease losses60,343 59,992 60,989 60,838 59,386
Non-Interest Income
Service charges on deposit accounts4,486 4,811 4,911 5,472 5,189
Debit card income3,235 3,086 3,029 3,113 3,176
Fees on mortgage loans originated and sold1,140 971 875 990 1,278
Investment advisory and trust fees455 497 597 860 1,125
FDIC indemnification asset expense (1,526) (1,418) (2,499)
Termination of loss share agreements (9,178)
Investment securities gains (losses), net117 40 54 (43) 231
Other-than-temporary impairment loss on investments:
Gross impairment loss (288)
Other income2,489 2,339 2,657 2,444 2,151
Total non-interest income11,922 2,566 10,597 11,418 10,363
Non-Interest Expense
Salaries and employee benefits20,139 22,162 20,219 22,620 21,881
Stock-based compensation expense467 317 309 108
Net occupancy and equipment expense7,355 7,703 7,385 7,621 7,754
Computer services3,274 3,575 3,479 3,471 3,343
Software expense2,000 2,036 2,061 2,198 2,082
Telecommunication expense1,558 1,532 1,168 1,515 1,367
OREO valuation expense1,119 467 341 2,075 1,710
Net gains on sales of OREO(413) (679) (801) (351) (957)
Foreclosed asset related expense399 285 405 872 600
Loan workout expense71 244 650 194 795
Conversion and merger related expense1,236 1,687 704
Professional fees1,353 1,612 1,529 1,958 1,723
Losses on extinguishment of debt 1,438
Restructuring charges, net5 142 4,248 23 178
Contingent value right expense 4
Regulatory assessments1,259 1,275 1,486 1,423 1,831
Other expense4,714 4,580 4,882 4,418 5,645
Total non-interest expense44,536 46,938 47,756 48,346 49,502
Income before income taxes27,729 15,620 23,830 23,910 20,247
Income tax expense10,327 5,780 8,809 8,589 7,257
Net income$17,402 $9,840 $15,021 $15,321 $12,990
Earnings per share:
Basic$0.40 $0.23 $0.35 $0.34 $0.28
Diluted$0.40 $0.22 $0.34 $0.33 $0.28
Weighted average shares outstanding:
Basic43,011 43,063 43,499 45,359 45,913
Diluted43,879 43,904 44,550 46,534 47,220


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Assets
Cash and due from banks$84,038 $88,802 $87,985
Interest-bearing deposits in other banks135,977 93,218 56,711
Total cash and cash equivalents220,015 182,020 144,696
Trading securities3,536 3,418 3,013
Investment securities available-for-sale at fair value (amortized cost $637,072,
$657,631 and $640,455, respectively)
650,470 663,925 637,329
Investment securities held-to-maturity at amortized cost (fair value $477,731,
$467,372 and $475,134, respectively)
468,943 460,483 472,505
Loans held for sale6,446 8,070 10,569
Loans, net of deferred loan costs and fees5,738,459 5,626,887 5,622,147
Less: Allowance for loan and lease losses44,883 45,263 45,034
Loans, net5,693,576 5,581,624 5,577,113
Other real estate owned44,236 48,505 52,776
FDIC indemnification asset 6,725
Receivable from FDIC 678
Premises and equipment, net158,305 157,131 159,149
Goodwill134,522 134,522 134,522
Intangible assets, net13,231 14,166 15,100
Deferred income tax asset, net92,277 95,363 105,316
Other assets135,668 130,571 129,988
Total Assets$7,621,225 $7,479,798 $7,449,479
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand$1,172,481 $1,190,831 $1,121,160
Interest bearing demand1,456,558 1,402,342 1,382,732
Money market1,155,475 1,262,581 1,190,121
Savings403,106 420,073 418,879
Time deposits1,619,507 1,663,906 1,747,318
Total deposits5,807,127 5,939,733 5,860,210
Federal Home Loan Bank advances650,800 400,849 460,898
Short-term borrowings16,785 16,200 12,410
Long-term borrowings86,883 86,328 85,777
Accrued expenses and other liabilities43,132 39,695 43,919
Total liabilities$6,604,727 $6,482,805 $6,463,214
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, 37,237
issued and 26,665 outstanding, 37,207 issued 26,636 outstanding and 37,012
issued and 26,589 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
18,327 issued and 16,554 outstanding, respectively.
183 183 183
Additional paid in capital1,077,769 1,076,931 1,076,415
Retained earnings227,370 214,268 208,742
Accumulated other comprehensive (loss) income9,443 3,878 (5,196)
Treasury stock, at cost, 12,345, 12,345 and 12,196 shares, respectively(298,639) (298,639) (294,249)
Total shareholders’ equity1,016,498 996,993 986,265
Total Liabilities and Shareholders’ Equity$7,621,225 $7,479,798 $7,449,479


CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
Three Months Ended
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Performance Ratios
Interest rate spread3.48% 3.50% 3.57% 3.68% 3.79%
Net interest margin3.62% 3.64% 3.70% 3.82% 3.94%
Return on average assets0.93% 0.53% 0.82% 0.86% 0.75%
Return on average shareholders' equity6.87% 3.96% 5.99% 5.85% 4.90%
Efficiency ratio60.65% 73.42% 65.71% 66.18% 69.67%
Average interest-earning assets to average interest-bearing liabilities131.21% 129.54% 129.55% 132.10% 133.39%
Average loans receivable to average deposits96.56% 95.66% 96.68% 96.01% 94.12%
Yield on interest-earning assets4.09% 4.11% 4.14% 4.26% 4.36%
Cost of interest-bearing liabilities0.62% 0.62% 0.57% 0.58% 0.57%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans$9,016 $8,526 $8,945 $9,647 $9,807
Nonperforming acquired loans$56,108 $56,041 $59,194 $72,023 $83,515
Nonperforming loans to loans receivable1.13% 1.15% 1.21% 1.51% 1.79%
Nonperforming assets to total assets1.44% 1.51% 1.63% 1.88% 2.23%
Covered loans to total gross loans% % 1.30% 1.45% 3.39%
ALLL to nonperforming assets40.98% 39.97% 37.13% 33.88% 30.56%
ALLL to total gross loans0.78% 0.80% 0.80% 0.86% 0.92%
Annualized net charge-offs/average loans0.11% 0.08% 0.17% 0.20% 0.12%
Asset and Credit Quality Ratios-New Loans
Nonperforming new loans to total new loans receivable0.12% 0.11% 0.11% 0.17% 0.19%
New loans ALLL to total gross new loans0.46% 0.47% 0.47% 0.51% 0.59%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable5.08% 4.67% 4.69% 5.21% 5.58%
Covered acquired loans to total gross acquired loans% % 5.43% 5.45% 11.38%
Acquired loans ALLL to total gross acquired loans2.04% 1.93% 1.83% 1.80% 1.71%
Capital Ratios (Company)
Total average shareholders' equity to total average assets13.55% 13.35% 13.67% 14.79% 15.41%
Tangible common equity ratio (1)11.62% 11.57% 11.46% 12.26% 13.15%
Tier 1 leverage capital ratio12.64% 12.49% 12.67% 13.60% 14.66%
Tier 1 common capital ratio13.38% 13.38% 14.73% 14.44% 16.07%
Tier 1 risk-based capital ratio14.57% 14.58% 13.63% 15.60% 17.33%
Total risk-based capital ratio15.29% 15.32% 15.47% 16.38% 18.18%
Capital Ratios (Bank)
Tangible common equity ratio (1)10.71% 11.45% 11.20% 11.36% 11.35%
Tier 1 leverage capital ratio10.42% 11.10% 11.09% 11.19% 11.15%
Tier 1 common capital ratio11.97% 12.95% 12.89% 12.85% 13.18%
Tier 1 risk-based capital ratio11.97% 12.95% 12.89% 12.85% 13.18%
Total risk-based capital ratio12.72% 13.72% 13.68% 13.69% 14.10%
(1) See "Reconciliation of Non-GAAP Measures"


CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Loans
Non-owner occupied commercial real estate$891,830 $850,766 $866,392 $847,225 $834,351
Other commercial construction and land212,315 194,971 196,795 192,283 182,283
Multifamily commercial real estate74,328 75,737 80,708 82,762 76,754
1-4 family residential construction and land100,306 96,703 93,242 87,193 78,572
Total commercial real estate1,278,779 1,218,177 1,237,137 1,209,463 1,171,960
Owner occupied commercial real estate1,075,306 1,095,460 1,104,972 1,065,875 1,030,111
Commercial and industrial1,448,698 1,375,233 1,309,704 1,219,101 1,181,451
Lease financing877 1,088 1,256 1,488 1,661
Total commercial2,524,881 2,471,781 2,415,932 2,286,464 2,213,223
1-4 family residential1,039,309 1,015,071 1,017,791 985,982 959,224
Home equity loans364,169 368,510 375,276 373,993 375,271
Indirect auto loans285,618 317,863 351,817 318,841 263,723
Other consumer loans85,964 84,108 84,661 82,483 77,867
Total consumer1,775,060 1,785,552 1,829,545 1,761,299 1,676,085
Other166,185 159,447 150,102 147,718 145,146
Total loans$5,744,905 $5,634,957 $5,632,716 $5,404,944 $5,206,414
Deposits
Non-interest bearing demand$1,172,481 $1,190,831 $1,121,160 $1,099,252 $1,132,085
Interest bearing demand1,456,558 1,402,342 1,382,732 1,251,365 1,367,123
Money market1,105,460 1,162,546 1,040,086 927,391 991,520
Savings403,106 420,073 418,879 436,385 479,885
Total core deposits4,137,605 4,175,792 3,962,857 3,714,393 3,970,613
Wholesale money market50,015 100,035 150,035 78,015
Time deposits1,619,507 1,663,906 1,747,318 1,773,170 1,521,810
Total deposits$5,807,127 $5,939,733 $5,860,210 $5,565,578 $5,492,423


CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
Three Months Ended
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Provision (reversal) on legacy loans $(778) $9 $(1,161) $492 $(523)
FDIC indemnification asset expense 1,526 1,418 2,499
OREO valuation expense 1,119 467 341 2,075 1,710
Termination of loss share agreements 9,178
Net gains on sales of OREO (413) (679) (801) (351) (957)
Foreclosed asset related expense 399 285 405 872 600
Loan workout expense 71 244 650 194 795
Salaries and employee benefits 519 522 549 797 796
Total legacy credit expenses $917 $10,026 $1,509 $5,497 $4,920


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30, 2016
Three Months Ended
March 31, 2016
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,653,647 $62,999 4.48% $5,611,488 $63,009 4.52%
Investment securities (1) 1,131,791 6,612 2.35% 1,122,523 6,483 2.32%
Interest bearing deposits in other banks 64,802 74 0.46% 73,188 84 0.46%
Other earning assets (2) 26,696 330 4.97% 25,136 315 5.04%
Total interest earning assets 6,876,936 $70,015 4.09% 6,832,335 $69,891 4.11%
Non-interest earning assets 607,429 618,087
Total assets $7,484,365 $7,450,422
Interest bearing liabilities
Time deposits $1,620,023 $4,018 1.00% $1,689,653 $4,120 0.98%
Money market 1,184,532 1,028 0.35% 1,247,333 1,067 0.34%
Interest bearing demand 1,451,666 749 0.21% 1,370,957 648 0.19%
Savings 411,496 208 0.20% 419,588 227 0.22%
Total interest bearing deposits 4,667,717 6,003 0.52% 4,727,531 6,062 0.52%
Short-term borrowings and FHLB advances 485,850 515 0.43% 460,892 532 0.46%
Long-term borrowings 87,496 1,547 7.11% 85,986 1,511 7.07%
Total interest bearing liabilities 5,241,063 8,065 0.62% 5,274,409 $8,105 0.62%
Non-interest bearing demand 1,187,056 1,138,782
Other liabilities 42,319 42,418
Shareholders’ equity 1,013,927 994,813
Total liabilities and shareholders’ equity $7,484,365 $7,450,422
Net interest income and spread $61,950 3.48% $61,786 3.50%
Net interest margin 3.62% 3.64%
(1) Presented on a fully tax equivalent basis
(2) Includes Federal Home Loan Bank stocks


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30, 2016
Three Months Ended
June 30, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,653,647 $62,999 4.48% $5,079,878 $61,717 4.87%
Investment securities (1) 1,131,791 6,612 2.35% 1,038,269 5,296 2.05%
Interest bearing deposits in other banks 64,802 74 0.46% 55,553 36 0.26%
Other earning assets (2) 26,696 330 4.97% 47,694 646 5.43%
Total interest earning assets 6,876,936 $70,015 4.09% 6,221,394 $67,695 4.36%
Non-interest earning assets 607,429 664,119
Total assets $7,484,365 $6,885,513
Interest bearing liabilities
Time deposits $1,620,023 $4,018 1.00% $1,464,552 $3,402 0.93%
Money market 1,184,532 1,028 0.35% 943,160 600 0.26%
Interest bearing demand 1,451,666 749 0.21% 1,381,609 578 0.17%
Savings 411,496 208 0.20% 484,622 259 0.21%
Total interest bearing deposits 4,667,717 $6,003 0.52% 4,273,943 4,839 0.45%
Short-term borrowings and FHLB advances 485,850 515 0.43% 261,030 143 0.22%
Long-term borrowings 87,496 1,547 7.11% 129,029 1,645 5.11%
Total interest bearing liabilities 5,241,063 8,065 0.62% 4,664,002 $6,627 0.57%
Non-interest bearing demand 1,187,056 1,123,466
Other liabilities 42,319 36,966
Shareholders’ equity 1,013,927 1,061,079
Total liabilities and shareholders’ equity $7,484,365 $6,885,513
Net interest income and spread $61,950 3.48% $61,068 3.79%
Net interest margin 3.62% 3.94%


Six Months Ended
June 30, 2016
Six Months Ended
June 30, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,632,568 $126,007 4.50% $5,062,417 $122,428 4.88%
Investment securities (1) 1,127,157 13,096 2.34% 1,026,424 10,439 2.05%
Interest bearing deposits in other banks 68,995 158 0.46% 57,095 69 0.24%
Other earning assets (2) 25,916 644 5.00% 49,240 1,334 5.46%
Total interest earning assets 6,854,636 $139,905 4.10% 6,195,176 $134,270 4.37%
Non-interest earning assets 612,758 674,827
Total assets $7,467,394 $6,870,003
Interest bearing liabilities
Time deposits $1,654,838 $8,138 0.99% $1,437,231 $6,400 0.90%
Money market 1,215,933 2,094 0.35% 928,852 1,153 0.25%
Interest bearing demand 1,411,311 1,397 0.20% 1,389,267 1,170 0.17%
Savings 415,542 435 0.21% 490,731 524 0.22%
Total interest bearing deposits 4,697,624 $12,064 0.52% 4,246,081 $9,247 0.44%
Short-term borrowings and FHLB advances 473,371 1,046 0.44% 290,304 325 0.23%
Long-term borrowings 86,741 3,058 7.09% 133,188 3,371 5.10%
Total interest bearing liabilities 5,257,736 16,168 0.62% 4,669,573 12,943 0.56%
Non-interest bearing demand 1,162,919 1,095,092
Other liabilities 42,369 44,266
Shareholders’ equity 1,004,370 1,061,072
Total liabilities and shareholders’ equity $7,467,394 $6,870,003
Net interest income and spread $123,737 3.49% $121,327 3.81%
Net interest margin 3.63% 3.95%
(1) Presented on a fully tax equivalent basis
(2) Includes Federal Home Loan Bank stocks


CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)
CORE NET INCOME Three Months Ended
Jun 30, 2016 Mar 31, 2016 Dec 31, 2015
Net Income $17,402 $17,402 $9,840 $9,840 $15,021 $15,021
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* (117) (72) (40) (25) (54) (33)
Non-interest expense
Severance expense* 75 46
Restructuring expense* 5 3 142 88 32 20
Conversion costs and merger tax deductible* 881 544 1,107 684 33 20
Legal merger non deductible 355 355 580 580 673 673
Contract termination* 4,215 2,594
Tax effect of adjustments* (294) N/A (3,999) N/A (1,625) N/A
Core Net Income $18,232 $18,232 $16,883 $16,883 $18,295 $18,295
Diluted shares 43,879 43,904 44,550
Core Net Income per share $0.42 $0.38 $0.41
Average Assets 7,484,365 7,450,422 7,332,516
ROA** 0.93% 0.53% 0.82%
Core ROA*** 0.97% 0.91% 1.00%
* 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
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Net interest income$61,515 $61,367 $62,078 $61,637 $60,685
Reported non-interest income11,922 2,566 10,597 11,418 10,363
Indemnification asset termination (9,178)
Less: Securities gains (losses)117 40 54 (43) (57)
Core non-interest income$11,805 $11,704 $10,543 $11,461 $10,420
Reported non-interest expense$44,536 $46,938 $47,756 $48,346 $49,502
Less: Contingent value right expense 4
Severance expense 75 63 14
Loss on extinguishment of debt 1,438
Conversion costs and merger tax deductible881 1,107 33
Legal merger non deductible355 580
Restructuring expense5 142 23 178
Contract termination 4,215
Conversion and severance expenses (conversion and
merger expenses and salaries and employees benefits)
704
Core non-interest expense$43,295 $45,034 $42,804 $48,260 $47,868
Efficiency ratio*60.65% 73.42% 65.71% 66.18% 69.67%
Core efficiency ratio**59.05% 61.63% 58.94% 66.02% 67.32%
* 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
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Total shareholders' equity $1,016,498 $996,993 $986,265 $1,022,642 $1,059,346
Less: goodwill and intangible assets, net of taxes (142,725) (143,304) (143,863) (144,447) (145,035)
Tangible book value* $873,773 $853,689 $842,402 $878,195 $914,311
Common shares outstanding 43,219 43,189 43,143 44,466 46,440
Tangible book value per share $20.22 $19.77 $19.53 $19.75 $19.69
* 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
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Total shareholders' equity $1,016,498 $996,993 $986,265 $1,022,642 $1,059,346
Less: goodwill and intangible assets (147,753) (148,688) (149,622) (150,567) (151,517)
Tangible common equity $868,745 $848,305 $836,643 $872,075 $907,829
Total assets $7,621,225 $7,479,798 $7,449,479 $7,261,196 $7,054,501
Less: goodwill and intangible assets (147,753) (148,688) (149,622) (150,567) (151,517)
Tangible assets $7,473,472 $7,331,110 $7,299,857 $7,110,629 $6,902,984
Tangible common equity ratio 11.62% 11.57% 11.46% 12.26% 13.15%

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.