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Capital Bank Financial Corp. Reports Third Quarter EPS of $0.42, Up 27% Year Over Year, and Increases Dividend 20% to $0.12 Per Share

CHARLOTTE, N.C., Oct. 20, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported net income for the third quarter of 2016 of $18.5 million, or $0.42 per diluted share and core net income of $18.5 million, or $0.42 per diluted share. Net income rose 21% year over year, while net income per diluted share rose 27%.

Core adjustments for the third quarter of 2016 included $1.5 million of legal settlement expense and $0.3 million of tax deductible merger related expenses, offset by a $1.1 million tax adjustment and $0.1 million of gains on sales of investment securities.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, “We look forward to completion of the CommunityOne merger, a carefully-executed conversion, and an expanded footprint in North Carolina.”

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, “We are pleased with this quarter's results and are positioning to end the year strongly and enter 2017 with good momentum.”

Loan Portfolio and Composition

During the third quarter, the loan portfolio was up $191.0 million at $5.9 billion. New loans of $471 million were offset by loan resolutions and payoffs totaling $280 million.

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

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

Deposits Composition and Cost of Funds

During the third quarter, total deposits increased by $226.1 million to $6.0 billion. The cost of total deposits remained flat at 0.41% basis points, while the cost of core deposits increased one basis point to 0.19%. Core deposits include all checking, savings and money market accounts, excluding brokered, now represent 70% of total deposits. The contractual cost of total deposits, which excludes purchase accounting was 0.41%, a decline of one basis point sequentially.

Net Interest Income and Net Interest Margin

Net interest income increased $1.1 million to $62.6 million from $61.5 million for the second quarter of 2016 and increased $1.0 million from $61.6 million for the third quarter of 2015. The net interest margin for the third quarter of 2016 was 3.58%, a decline of four basis points sequentially and 24 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 $5.0 billion with an average yield of 3.67%, compared to $0.9 billion of acquired impaired loans outstanding with an average yield of 8.55%.

Non-Interest Income

Non-interest income increased $0.4 million to $12.4 million from $11.9 million for the second quarter of 2016 and increased $1.0 million from $11.4 million for the third quarter of 2015. The sequential increase was mainly driven by higher service charges on deposit accounts and fees on mortgage loans originated and sold, as fees for residential mortgages sold increased 17% quarter over quarter, partially offset by a decline in investment advisory income.

The year over year increase was mainly due to the absence of $1.4 million of FDIC indemnification asset expense recorded in the prior year and an increase of fees on mortgage loans originated and sold. Partially offsetting the increase was a $0.7 million decline in service charges and a $0.6 million decline in investment advisory income.

Provision for Loan and Lease Losses and Credit Quality

The provision of $0.6 million recorded for the third quarter of 2016 included a $0.6 million provision for new and acquired non-impaired loans and a $48 thousand reversal on acquired impaired loans. Net charge-offs for the third quarter of 2016 were $1.5 million, remaining at the same level of the second quarter of 2016.

At September 30, 2016, the allowance for loan and lease losses was $44.0 million, of which $23.7 million related to acquired impaired loans and $20.3 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.75% of the Company's total $5.9 billion loan portfolio.

At September 30, 2016, non-performing loans were $60.4 million, a decrease of 7% from June 30, 2016, and a decrease of 26%, from September 30, 2015, mainly as a result of resolutions and upgrades.

Non-Interest Expense

Non-interest expense increased $3.0 million to $47.5 million from $44.5 million for the second quarter of 2016 and declined $0.8 million from $48.3 million for the third quarter of 2015. The sequential increase was mainly due to $1.5 million legal settlement expense and increased salaries and benefit expense of $0.8 million. Partially offsetting the increase was a $0.8 million decrease in conversion and merger expense.

The year over year decline was mainly due to a $1.7 million decrease in salaries and benefit expense resulting from cost saving initiatives and lower OREO valuation expenses of $1.3 million, partially offset by $1.5 million legal settlement expense occurring in the third quarter of 2016.

Income Tax Expense

Income tax expense was $8.4 million for the third quarter of 2016, an effective rate of 31%, compared to $10.3 million and 37% for the second quarter of 2016. Income tax expense was $8.6 million and 36% for the third quarter of 2015. The change in effective income tax rate was mainly due to a favorable adjustment for discrete items, partially offset by an increase in rate change and state taxes and lower tax-exempt interest income.

Financial Position

Total assets increased by $171.2 million to $7.8 billion as of September 30, 2016, from $7.6 billion as of June 30, 2016. During the quarter, the Company’s loan portfolio increased $191.0 million to $5.9 billion. Total deposits increased by $226.1 million to $6.0 billion, and core deposits increased by $101.8 million, or a 10% annualized rate. FHLB borrowings decreased $75.0 million. Book value per share was $23.82 as of September 30, 2016, an increase of $0.30 and $0.82 over June 30, 2016 and September 30, 2015, respectively. Tangible book value per share was $20.53 as of September 30, 2016, an increase of $0.31 and $0.78 over June 30, 2016 and September 30, 2015, respectively. During the third 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 10.5%, 12.0%, 12.0% and 12.7%, respectively, as of September 30, 2016, under currently applicable regulations.

The GreenBank CVR expired on September 7, 2016 and based on portfolio losses exceeding the stipulated amount, there was no payout to CVR holders.

The Company declared a cash dividend of $0.12 per share, payable on November 22, 2016, to shareholders of record as of November 9, 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 (913) 312-0720, and the confirmation pass code is 5829592. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through October 28, 2016, by dialing (719) 457-0820 and entering pass code 5829592. 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 $7.8 billion in total assets as of September 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
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Interest and dividend income$70,929 $69,579 $69,472 $69,553 $68,718
Interest expense8,302 8,064 8,105 7,475 7,081
Net Interest Income62,627 61,515 61,367 62,078 61,637
Provision for loan and lease losses586 1,172 1,375 1,089 799
Net interest income after provision for loan and lease losses62,041 60,343 59,992 60,989 60,838
Non-Interest Income
Service charges on deposit accounts4,777 4,486 4,811 4,911 5,472
Debit card income3,389 3,235 3,086 3,029 3,113
Fees on mortgage loans originated and sold1,334 1,140 971 875 990
Investment advisory and trust fees290 455 497 597 860
FDIC indemnification asset expense (1,526) (1,418)
Termination of loss share agreements (9,178)
Investment securities gains (losses), net71 117 40 54 (43)
Other income2,509 2,489 2,339 2,657 2,444
Total non-interest income12,370 11,922 2,566 10,597 11,418
Non-Interest Expense
Salaries and employee benefits20,935 20,139 22,162 20,219 22,620
Stock-based compensation expense790 467 317 309
Net occupancy and equipment expense7,340 7,355 7,703 7,385 7,621
Computer services3,153 3,274 3,575 3,479 3,471
Software expense1,948 2,000 2,036 2,061 2,198
Telecommunication expense1,790 1,558 1,532 1,168 1,515
OREO valuation expense742 1,119 467 341 2,075
Net gains on sales of OREO(159) (413) (679) (801) (351)
Foreclosed asset related expense397 399 285 405 872
Loan workout expense206 71 244 650 194
Conversion and merger related expense394 1,236 1,687 704
Professional fees1,642 1,353 1,612 1,529 1,958
Restructuring charges, net(113) 5 142 4,248 23
Legal settlement expense1,500
Regulatory assessments841 1,259 1,275 1,486 1,423
Other expense6,124 4,714 4,580 4,882 4,418
Total non-interest expense47,530 44,536 46,938 47,756 48,346
Income before income taxes26,881 27,729 15,620 23,830 23,910
Income tax expense8,393 10,327 5,780 8,809 8,589
Net income$18,488 $17,402 $9,840 $15,021 $15,321
Earnings per share:
Basic$0.43 $0.40 $0.23 $0.35 $0.34
Diluted$0.42 $0.40 $0.22 $0.34 $0.33
Weighted average shares outstanding:
Basic43,028 43,011 43,063 43,499 45,359
Diluted43,909 43,879 43,904 44,550 46,534


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
Sep 30,
2016
Jun 30,
2016
Dec 31,
2015
Assets
Cash and due from banks$88,171 $84,038 $87,985
Interest-bearing deposits in other banks116,136 135,977 56,711
Total cash and cash equivalents204,307 220,015 144,696
Trading securities3,701 3,536 3,013
Investment securities available-for-sale at fair value (amortized cost $639,687 $637,072 and $640,455, respectively)652,945 650,470 637,329
Investment securities held-to-maturity at amortized cost (fair value $474,834 $477,731 and $475,134, respectively)466,063 468,943 472,505
Loans held for sale95,253 6,446 10,569
Loans, net of deferred loan costs and fees5,840,680 5,738,459 5,622,147
Less: Allowance for loan and lease losses43,984 44,883 45,034
Loans, net5,796,696 5,693,576 5,577,113
Other real estate owned46,007 44,236 52,776
FDIC indemnification asset 6,725
Receivable from FDIC 678
Premises and equipment, net157,863 158,305 159,149
Goodwill134,522 134,522 134,522
Intangible assets, net12,288 13,231 15,100
Deferred income tax asset, net80,418 92,277 105,316
Other assets142,395 135,668 129,988
Total Assets$7,792,458 $7,621,225 $7,449,479
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand$1,207,800 $1,172,481 $1,121,160
Interest bearing demand1,463,520 1,456,558 1,382,732
Money market1,291,948 1,155,475 1,190,121
Savings401,205 403,106 418,879
Time deposits1,668,784 1,619,507 1,747,318
Total deposits6,033,257 5,807,127 5,860,210
Federal Home Loan Bank advances575,751 650,800 460,898
Short-term borrowings15,428 16,785 12,410
Long-term borrowings87,445 86,883 85,777
Accrued expenses and other liabilities50,736 43,132 43,919
Total liabilities$6,762,617 $6,604,727 $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, 37,253
issued and 26,381 outstanding, 37,237 issued 26,665 outstanding and 37,012 issued and 26,589 outstanding, respectively.
373 372 370
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,627
issued and 16,854 outstanding, 18,327 issued and 16,554 outstanding and 18,327 issued and 16,554 outstanding, respectively.
186 183 183
Additional paid in capital1,078,746 1,077,769 1,076,415
Retained earnings241,554 227,370 208,742
Accumulated other comprehensive (loss) income7,621 9,443 (5,196)
Treasury stock, at cost, 12,645, 12,345 and 12,196 shares, respectively(298,639) (298,639) (294,249)
Total shareholders’ equity1,029,841 1,016,498 986,265
Total Liabilities and Shareholders’ Equity$7,792,458 $7,621,225 $7,449,479


CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
Three Months Ended
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Performance Ratios
Interest rate spread3.43% 3.48% 3.50% 3.57% 3.68%
Net interest margin3.58% 3.62% 3.64% 3.70% 3.82%
Return on average assets0.97% 0.93% 0.53% 0.82% 0.86%
Return on average shareholders' equity7.24% 6.87% 3.96% 5.99% 5.85%
Efficiency ratio63.38% 60.65% 73.42% 65.71% 66.18%
Average interest-earning assets to average interest-bearing liabilities131.43% 131.21% 129.54% 129.55% 132.10%
Average loans receivable to average deposits98.46% 96.56% 95.66% 96.68% 96.01%
Yield on interest-earning assets4.05% 4.09% 4.11% 4.14% 4.26%
Cost of interest-bearing liabilities0.62% 0.62% 0.62% 0.57% 0.58%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans$11,873 $9,016 $8,526 $8,945 $9,647
Nonperforming acquired loans$48,477 $56,108 $56,041 $59,194 $72,023
Nonperforming loans to loans receivable1.02% 1.13% 1.15% 1.21% 1.51%
Nonperforming assets to total assets1.37% 1.44% 1.51% 1.63% 1.88%
Covered loans to total gross loans% % % 1.30% 1.45%
ALLL to nonperforming assets41.29% 40.98% 39.97% 37.13% 33.88%
ALLL to total gross loans0.75% 0.78% 0.80% 0.80% 0.86%
Annualized net charge-offs/average loans0.10% 0.11% 0.08% 0.17% 0.20%
Asset and Credit Quality Ratios-New Loans
Nonperforming new loans to total new loans receivable0.19% 0.12% 0.11% 0.11% 0.17%
New loans ALLL to total gross new loans0.43% 0.46% 0.47% 0.47% 0.51%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable4.65% 5.08% 4.67% 4.69% 5.21%
Covered acquired loans to total gross acquired loans% % % 5.43% 5.45%
Acquired loans ALLL to total gross acquired loans2.15% 2.04% 1.93% 1.83% 1.80%
Capital Ratios (Company)
Total average shareholders' equity to total average assets13.46% 13.55% 13.35% 13.67% 14.79%
Tangible common equity ratio (1)11.55% 11.62% 11.57% 11.46% 12.26%
Tier 1 leverage capital ratio12.89% 12.64% 12.49% 12.67% 13.60%
Tier 1 common capital ratio13.27% 13.38% 13.38% 14.73% 14.44%
Tier 1 risk-based capital ratio14.44% 14.57% 14.58% 13.63% 15.60%
Total risk-based capital ratio15.12% 15.29% 15.32% 15.47% 16.38%
Capital Ratios (Bank)
Tangible common equity ratio (1)10.74% 10.71% 11.45% 11.20% 11.36%
Tier 1 leverage capital ratio10.53% 10.42% 11.10% 11.09% 11.19%
Tier 1 common capital ratio11.98% 11.97% 12.95% 12.89% 12.85%
Tier 1 risk-based capital ratio11.98% 11.97% 12.95% 12.89% 12.85%
Total risk-based capital ratio12.70% 12.72% 13.72% 13.68% 13.69%

(1) See "Reconciliation of Non-GAAP Measures"

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Loans
Non-owner occupied commercial real estate$920,521 $891,830 $850,766 $866,392 $847,225
Other commercial construction and land222,794 212,315 194,971 196,795 192,283
Multifamily commercial real estate76,296 74,328 75,737 80,708 82,762
1-4 family residential construction and land111,954 100,306 96,703 93,242 87,193
Total commercial real estate1,331,565 1,278,779 1,218,177 1,237,137 1,209,463
Owner occupied commercial real estate1,072,586 1,075,306 1,095,460 1,104,972 1,065,875
Commercial and industrial1,458,523 1,448,698 1,375,233 1,309,704 1,219,101
Lease financing525 877 1,088 1,256 1,488
Total commercial2,531,634 2,524,881 2,471,781 2,415,932 2,286,464
1-4 family residential1,168,468 1,039,309 1,015,071 1,017,791 985,982
Home equity loans364,117 364,169 368,510 375,276 373,993
Indirect auto loans254,736 285,618 317,863 351,817 318,841
Other consumer loans94,277 85,964 84,108 84,661 82,483
Total consumer1,881,598 1,775,060 1,785,552 1,829,545 1,761,299
Other191,136 166,185 159,447 150,102 147,718
Total loans$5,935,933 $5,744,905 $5,634,957 $5,632,716 $5,404,944
Deposits
Non-interest bearing demand$1,207,800 $1,172,481 $1,190,831 $1,121,160 $1,099,252
Interest bearing demand1,463,520 1,456,558 1,402,342 1,382,732 1,251,365
Money market1,166,918 1,105,460 1,162,546 1,040,086 927,391
Savings401,205 403,106 420,073 418,879 436,385
Total core deposits4,239,443 4,137,605 4,175,792 3,962,857 3,714,393
Wholesale money market125,030 50,015 100,035 150,035 78,015
Time deposits1,668,784 1,619,507 1,663,906 1,747,318 1,773,170
Total deposits$6,033,257 $5,807,127 $5,939,733 $5,860,210 $5,565,578


CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
Three Months Ended
Sep 30,
2016
June 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Provision (reversal) on legacy loans$48 $(778) $9 $(1,161) $492
FDIC indemnification asset expense 1,526 1,418
OREO valuation expense742 1,119 467 341 2,075
Termination of loss share agreements 9,178
Net gains on sales of OREO(159) (413) (679) (801) (351)
Foreclosed asset related expense397 399 285 405 872
Loan workout expense206 71 244 650 194
Salaries and employee benefits511 519 522 549 797
Total legacy credit expenses$1,745 $917 $10,026 $1,509 $5,497


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, 2016
Three Months Ended
June 30, 2016
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,786,171 $64,055 4.40% $5,653,647 $62,999 4.48%
Investment securities (1) 1,133,031 6,924 2.43% 1,131,791 6,612 2.35%
Interest bearing deposits in other banks 60,373 69 0.45% 64,802 74 0.46%
Other earning assets (2) 29,788 337 4.50% 26,696 330 4.97%
Total interest earning assets 7,009,363 $71,385 4.05% 6,876,936 $70,015 4.09%
Non-interest earning assets 583,413 607,429
Total assets $7,592,776 $7,484,365
Interest bearing liabilities
Time deposits $1,613,502 $3,992 0.98% $1,620,023 $4,018 1.00%
Money market 1,225,743 1,132 0.37% 1,184,532 1,028 0.35%
Interest bearing demand 1,444,305 752 0.21% 1,451,666 749 0.21%
Savings 404,187 205 0.20% 411,496 208 0.20%
Total interest bearing deposits 4,687,737 6,081 0.52% 4,667,717 6,003 0.52%
Short-term borrowings and FHLB advances 558,313 635 0.45% 485,850 515 0.43%
Long-term borrowings 87,095 1,586 7.24% 87,496 1,547 7.11%
Total interest bearing liabilities 5,333,145 8,302 0.62% 5,241,063 8,065 0.62%
Non-interest bearing demand 1,188,771 1,187,056
Other liabilities 48,997 42,319
Shareholders’ equity 1,021,863 1,013,927
Total liabilities and shareholders’ equity $7,592,776 $7,484,365
Net interest income and spread $63,083 3.43% $61,950 3.48%
Net interest margin 3.58% 3.62%

(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
September 30, 2016
Three Months Ended
September 30, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,786,171 $64,055 4.40% $5,261,793 $62,461 4.71%
Investment securities (1) 1,133,031 6,924 2.43% 1,088,818 5,885 2.14%
Interest bearing deposits in other banks 60,373 69 0.45% 36,596 19 0.21%
Other earning assets (2) 29,788 337 4.50% 54,960 760 5.49%
Total interest earning assets 7,009,363 $71,385 4.05% 6,442,167 $69,125 4.26%
Non-interest earning assets 583,413 645,715
Total assets $7,592,776 $7,087,882
Interest bearing liabilities
Time deposits $1,613,502 $3,992 0.98% $1,642,745 $3,957 0.96%
Money market 1,225,743 1,132 0.37% 977,273 658 0.27%
Interest bearing demand 1,444,305 752 0.21% 1,291,439 540 0.17%
Savings 404,187 205 0.20% 452,058 241 0.21%
Total interest bearing deposits 4,687,737 6,081 0.52% 4,363,515 5,396 0.49%
Short-term borrowings and FHLB advances 558,313 635 0.45% 428,249 272 0.25%
Long-term borrowings 87,095 1,586 7.24% 84,922 1,413 6.60%
Total interest bearing liabilities 5,333,145 8,302 0.62% 4,876,686 7,081 0.58%
Non-interest bearing demand 1,188,771 1,116,757
Other liabilities 48,997 46,117
Shareholders’ equity 1,021,863 1,048,322
Total liabilities and shareholders’ equity $7,592,776 $7,087,882
Net interest income and spread $63,083 3.43% $62,044 3.68%
Net interest margin 3.58% 3.82%


Nine Months Ended
September 30, 2016
Nine Months Ended
September 30, 2015
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $5,684,143 $190,063 4.47% $5,129,607 $184,889 4.82%
Investment securities (1) 1,129,129 20,020 2.37% 1,047,451 16,324 2.08%
Interest bearing deposits in other banks 66,100 227 0.46% 50,187 88 0.23%
Other earning assets (2) 27,216 981 4.81% 51,167 2,093 5.47%
Total interest earning assets 6,906,588 $211,291 4.09% 6,278,412 $203,394 4.33%
Non-interest earning assets 602,904 665,016
Total assets $7,509,492 $6,943,428
Interest bearing liabilities
Time deposits $1,640,959 $12,130 0.99% $1,506,488 $10,357 0.92%
Money market 1,219,227 3,227 0.35% 945,170 1,811 0.26%
Interest bearing demand 1,422,389 2,149 0.20% 1,356,300 1,710 0.17%
Savings 411,729 640 0.21% 477,698 765 0.21%
Total interest bearing deposits 4,694,304 $18,146 0.52% 4,285,656 $14,643 0.46%
Short-term borrowings and FHLB advances 501,892 1,680 0.45% 336,791 597 0.24%
Long-term borrowings 86,860 4,644 7.14% 116,922 4,784 5.47%
Total interest bearing liabilities 5,283,056 24,470 0.62% 4,739,369 20,024 0.56%
Non-interest bearing demand 1,171,599 1,102,393
Other liabilities 44,594 44,891
Shareholders’ equity 1,010,244 1,056,775
Total liabilities and shareholders’ equity $7,509,493 $6,943,428
Net interest income and spread $186,821 3.47% $183,370 3.77%
Net interest margin 3.61% 3.90%

(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
Sep 30, 2016 Jun 30, 2016 Dec 31, 2015
Net Income $18,488 $18,488 $17,402 $17,402 $15,021 $15,021
Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Adjustments
Non-interest income
Security (gains) losses* (71) (44) (117) (72) (54) (33)
Non-interest expense
Legal Settlement 1,500 927
Tax Adjustment (1,067) (1,067)
Restructuring expense* (113) (70) 5 3 32 20
Conversion costs and merger tax deductible* 331 205 881 544 33 20
Legal merger non deductible 61 61 355 355 673 673
Contract termination* 4,215 2,594
Tax effect of adjustments* (629) N/A (294) N/A (1,625) N/A
Core Net Income $18,500 $18,500 $18,232 $18,232 $18,295 $18,295
Diluted shares 43,909 43,879 44,550
Core Net Income per share $0.42 $0.42 $0.41
Average Assets 7,592,776 7,484,365 7,332,516
ROA** 0.97% 0.93% 0.82%
Core ROA*** 0.97% 0.97% 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
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Net interest income$62,627 $61,515 $61,367 $62,078 $61,637
Reported non-interest income12,370 11,922 2,566 10,597 11,418
Indemnification asset termination (9,178)
Less: Securities gains (losses)71 117 40 54 (43)
Core non-interest income$12,299 $11,805 $11,704 $10,543 $11,461
Reported non-interest expense$47,530 $44,536 $46,938 $47,756 $48,346
Less: Severance expense 75 63
Conversion costs and merger tax deductible331 881 1,107 33
Legal settlement1,500
Legal merger non deductible61 355 580
Restructuring expense(113) 5 142 23
Contract termination 4,215
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits) 704
Core non-interest expense$45,751 $43,295 $45,034 $42,804 $48,260
Efficiency ratio*63.38% 60.65% 73.42% 65.71% 66.18%
Core efficiency ratio**61.06% 59.05% 61.63% 58.94% 66.02%

* 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,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Total shareholders' equity $1,029,841 $1,016,498 $996,993 $986,265 $1,022,642
Less: goodwill and intangible assets, net of taxes (142,141) (142,725) (143,304) (143,863) (144,447)
Tangible book value* $887,700 $873,773 $853,689 $842,402 $878,195
Common shares outstanding 43,235 43,219 43,189 43,143 44,466
Tangible book value per share $20.53 $20.22 $19.77 $19.53 $19.75

* 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,
2016
Jun 30,
2016
Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Total shareholders' equity $1,029,841 $1,016,498 $996,993 $986,265 $1,022,642
Less: goodwill and intangible assets (146,810) (147,753) (148,688) (149,622) (150,567)
Tangible common equity $883,031 $868,745 $848,305 $836,643 $872,075
Total assets $7,792,458 $7,621,225 $7,479,798 $7,449,479 $7,261,196
Less: goodwill and intangible assets (146,810) (147,753) (148,688) (149,622) (150,567)
Tangible assets $7,645,648 $7,473,472 $7,331,110 $7,299,857 $7,110,629
Tangible common equity ratio 11.55% 11.62% 11.57% 11.46% 12.26%

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.