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Capital Bank Financial Corp. Reports First Quarter GAAP and Core EPS of $0.39 and $0.45

CHARLOTTE, N.C., April 21, 2017 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported first quarter net income of $20.9 million, which increased 112% year over year. GAAP net income per diluted share was $0.39. Core net income increased to $23.9 million, up 42% year over year. Core net income per diluted share was $0.45. Core pre-tax adjustments for the first quarter of 2017 included $4.9 million of acquisition and branch closure expenses, offset by $0.1 million gain on investment securities.

“With the CommunityOne conversion now behind us, we are totally focused on high-quality loan and core deposit growth. Thanks to the consistent focus and efforts of Capital Bank’s teammates, we’re optimistic about the outlook,” said Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp.

“In addition to successfully completing the CommunityOne systems conversion, we’ve put in place new plans to rationalize excess facilities, which will help us achieve our stated profitability and return targets,” added Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp.

Loan Portfolio and Composition

During the first quarter, the loan portfolio increased by $105.8 million to $7.5 billion. New loans of $504.8 million were offset by payoffs totaling $379.6 million and special asset resolutions of $19.4 million.

The relative composition of the Company’s loan portfolio at the end of the first quarter of 2017 and fourth and first quarters of 2016 was as follows:

Mar 31,
2017
Dec 31,
2016
Mar 31,
2016
Commercial real estate 24% 23% 22%
C&I 37% 38% 44%
Consumer 36% 36% 32%
Other 3% 3% 2%
Total 100% 100% 100%

Deposits Composition and Cost of Funds

During the first quarter, total deposits increased by $212.0 million to $8.1 billion. The sequential increase was primarily due to a $90.1 million increase of non-interest checking balances and an increase of $95.6 million in money market balances. The cost of total deposits remained flat at 0.39%, while the cost of core deposits increased two basis points to 0.21%. Core deposits include all checking, savings and money market accounts, excluding brokered, and represent 73% of total deposits.

Net Interest Income and Net Interest Margin

Net interest income increased $4.3 million to $82.1 million from $77.8 million for the fourth quarter of 2016 and increased $20.7 million from $61.4 million for the first quarter of 2016. The net interest margin for the first quarter of 2017 was 3.73%, an increase of six basis points sequentially and nine basis points year over year. The sequential and year over year net interest margin increase was mainly due to a legacy loan recovery, which occurred during the first quarter of 2017.

Non-Interest Income

Non-interest income declined $1.2 million to $15.9 million from $17.0 million for the fourth quarter of 2016 and increased $13.3 million from $2.6 million for the first quarter of 2016. The sequential decrease was mainly driven by $1.8 million lower investment securities gains. The year over year increase was mainly due to the absence of a $9.2 million charge for the termination of loss share agreements in the prior year and an increase associated with the acquisition of CommunityOne.

Provision for Loan and Lease Losses and Credit Quality

The provision of $3.4 million recorded for the first quarter of 2017 included a $3.2 million provision for new and acquired non-impaired loans and a $186 thousand provision on acquired impaired loans. Net charge-offs for the first quarter of 2017 were $2.6 million, $0.3 million lower than the fourth quarter of 2016.

At March 31, 2017, the allowance for loan and lease losses was $43.9 million, of which $23.2 million related to acquired impaired loans and $20.7 million related to new and acquired non-impaired loans. The allowance for loan and lease losses represents 0.58% of the Company’s total $7.5 billion loan portfolio.

At March 31, 2017, non-performing loans were $71.6 million, a decrease of 4.7% from December 31, 2016, mainly as a result of resolutions and upgrades. Non-performing loans increased 10.8% from March 31, 2016, due primarily to the acquisition of CommunityOne.

Non-Interest Expense

Non-interest expense declined $11.3 million to $62.7 million from $74.0 million for the fourth quarter of 2016 and increased $15.8 million from $46.9 million for the first quarter of 2016. The sequential decrease was mainly due to a decrease of $15.5 million in conversion and merger expense and the absence of $1.4 million legal settlement expenses. Partially offsetting the decrease was a $3.0 million increase in salaries expense and benefit expense and $1.9 million in restructuring charges. The year over year increase was mainly due to an increase of $7.0 million in salaries and benefit expense, $1.8 million in restructuring charges, $1.4 million in conversion and merger expense and $1.3 million in occupancy expense, mostly related to the acquisition of CommunityOne.

Income Tax Expense

Income tax expense was $11.0 million for the first quarter of 2017, an effective rate of 34%, compared to $6.4 million and 34% for the fourth quarter of 2016. Income tax expense was $5.8 million and an effective tax rate of 37% for the first quarter of 2016. The year-over-year decrease in effective income tax rate is due to lower state income taxes, higher tax exempt interest income and other favorable adjustments.

Financial Position

Total assets increased by $167.4 million to $10.1 billion as of March 31, 2017, from $9.9 billion as of December 31, 2016. During the quarter, the Company’s loan portfolio increased $105.8 million to $7.5 billion. Total deposits increased by $212.0 million to $8.1 billion, and core deposits increased by $214.6 million, or a 15% annualized rate. FHLB borrowings decreased $55.1 million. Book value per share was $25.17 as of March 31, 2017, an increase of $0.21 and $2.09 over December 31, 2016 and March 31, 2016, respectively. Tangible book value per share was $20.29 as of March 31, 2017, an increase of $0.28 and $0.52 over December 31, 2016 and March 31, 2016, respectively. During the first quarter, the Company did not repurchase shares of common stock. The Company has $88 million remaining under the current board authorized stock repurchase program.

The Company declared a cash dividend of $0.12 per share, payable on May 19, 2017, to shareholders of record as of May 5, 2017.

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) 312-0654, and the confirmation pass code is 7115841. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through April 28, 2017, by dialing (719) 457-0820 and entering pass code 7115841. 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 the most directly comparable GAAP measure.

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 $10.1 billion in total assets as of March 31, 2017, and 193 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
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Interest and dividend income$92,937 $87,746 $70,929 $69,579 $69,472
Interest expense10,821 9,927 8,302 8,064 8,105
Net Interest Income82,116 77,819 62,627 61,515 61,367
Provision for loan and lease losses3,392 1,980 586 1,172 1,375
Net interest income after provision for loan and lease losses 78,724 75,839 62,041 60,343 59,992
Non-Interest Income
Service charges on deposit accounts5,375 5,949 4,777 4,486 4,811
Debit card income4,765 4,211 3,389 3,235 3,086
Fees on mortgage loans originated and sold1,248 1,402 1,334 1,140 971
Investment advisory and trust fees641 591 290 455 497
Termination of loss share agreements (9,178)
Investment securities gains (losses), net67 1,894 71 117 40
Other income3,756 2,969 2,509 2,489 2,339
Total non-interest income15,852 17,016 12,370 11,922 2,566
Non-Interest Expense
Salaries and employee benefits29,166 26,134 20,935 20,139 22,162
Stock-based compensation expense900 531 790 467 317
Net occupancy and equipment expense8,992 8,374 7,340 7,355 7,703
Computer services3,873 4,364 3,153 3,274 3,575
Software expense2,662 2,391 1,948 2,000 2,036
Telecommunication expense2,424 2,147 1,790 1,558 1,532
OREO valuation expense247 677 742 1,119 467
Net gains on sales of OREO(308) (150) (159) (413) (679)
Foreclosed asset related expense364 513 397 399 285
Loan workout expense201 327 206 71 244
Conversion and merger related expense3,037 18,525 394 1,236 1,687
Professional fees2,096 1,761 1,642 1,353 1,612
Restructuring charges, net1,912 4 (113) 5 142
Legal settlement expense 1,361 1,500
Regulatory assessments719 1,092 841 1,259 1,275
Other expense6,418 5,943 6,124 4,714 4,580
Total non-interest expense62,703 73,994 47,530 44,536 46,938
Income before income taxes31,873 18,861 26,881 27,729 15,620
Income tax expense10,990 6,427 8,393 10,327 5,780
Net income$20,883 $12,434 $18,488 $17,402 $9,840
Earnings per share:
Basic$0.40 $0.25 $0.43 $0.40 $0.23
Diluted$0.39 $0.24 $0.42 $0.40 $0.22
Weighted average shares outstanding:
Basic51,634 49,334 43,028 43,011 43,063
Diluted53,127 50,387 43,909 43,879 43,904


CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
Mar 31,
2017
Dec 31,
2016
Mar 31,
2016
Assets
Cash and due from banks$100,134 $107,707 $88,802
Interest-bearing deposits in other banks60,413 201,348 93,218
Total cash and cash equivalents160,547 309,055 182,020
Trading securities4,150 3,791 3,418
Investment securities available-for-sale at fair value (amortized cost $1,168,995 $927,266 and $657,631, respectively)1,154,496 912,250 663,925
Investment securities held-to-maturity at amortized cost (fair value $445,696 $460,911 and $467,372, respectively)446,020 463,959 460,483
Loans held for sale4,980 12,874 8,070
Loans, net of deferred loan costs and fees7,506,975 7,393,318 5,626,887
Less: Allowance for loan and lease losses43,891 43,065 45,263
Loans, net7,463,084 7,350,253 5,581,624
Other real estate owned51,050 53,482 48,505
Premises and equipment, net199,167 205,425 157,131
Goodwill234,158 235,500 134,522
Intangible assets, net31,553 33,370 14,166
Deferred income tax asset, net146,724 150,272 95,363
Bank owned life insurance100,251 99,703 56,425
Other assets101,862 100,723 74,146
Total Assets$10,098,042 $9,930,657 $7,479,798
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand$1,680,243 $1,590,164 $1,190,831
Interest bearing demand1,960,187 1,930,143 1,402,342
Money market1,821,474 1,725,838 1,262,581
Savings496,230 497,171 420,073
Time deposits2,134,473 2,137,312 1,663,906
Total deposits8,092,607 7,880,628 5,939,733
Federal Home Loan Bank advances490,650 545,701 400,849
Short-term borrowings21,125 19,157 16,200
Long-term borrowings117,272 116,456 86,328
Accrued expenses and other liabilities68,457 76,668 39,695
Total liabilities$8,790,111 $8,638,610 $6,482,805
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, 46,479 issued and 35,213 outstanding, 46,178 issued 34,911 outstanding and 37,207 issued and 26,636 outstanding, respectively.465 462 372
Common stock-Class B $0.01 par value: 200,000 shares authorized, 18,527 issued and 16,753 outstanding, 18,627 issued and 16,854 outstanding and 18,327 issued and 16,554 outstanding, respectively.185 186 183
Additional paid in capital1,369,689 1,368,459 1,076,931
Retained earnings262,443 247,758 214,268
Accumulated other comprehensive (loss) gain(12,467) (12,434) 3,878
Treasury stock, at cost, 13,040, 13,040 and 12,345 shares, respectively(312,384) (312,384) (298,639)
Total shareholders’ equity1,307,931 1,292,047 996,993
Total Liabilities and Shareholders’ Equity$10,098,042 $9,930,657 $7,479,798


CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
Three Months Ended
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Performance Ratios
Interest rate spread3.58% 3.53% 3.43% 3.48% 3.50%
Net interest margin3.73% 3.67% 3.58% 3.62% 3.64%
Return on average assets0.84% 0.53% 0.97% 0.93% 0.53%
Return on average shareholders’ equity6.43% 4.05% 7.24% 6.87% 3.96%
Efficiency ratio64.00% 78.02% 63.38% 60.65% 73.42%
Average interest-earning assets to average interest-bearing liabilities129.53% 130.22% 131.43% 131.21% 129.54%
Average loans receivable to average deposits93.41% 94.57% 98.46% 96.56% 95.66%
Yield on interest-earning assets4.21% 4.13% 4.05% 4.09% 4.11%
Cost of interest-bearing liabilities0.63% 0.61% 0.62% 0.62% 0.62%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans$13,608 $11,449 $11,873 $9,016 $8,526
Acquired impaired loans > 90 days past due and still accruing$57,969 $63,668 $48,477 $56,108 $56,041
Nonperforming loans to loans receivable0.95% 1.01% 1.02% 1.13% 1.15%
Nonperforming assets to total assets1.22% 1.30% 1.37% 1.44% 1.51%
ALLL to nonperforming assets35.73% 33.45% 41.29% 40.98% 39.97%
ALLL to total gross loans0.58% 0.58% 0.75% 0.78% 0.80%
Annualized net charge-offs/average loans0.14% 0.17% 0.10% 0.11% 0.08%
Asset and Credit Quality Ratios-Non Acquired Loans
Nonperforming non acquired loans to total non acquired loans receivable 0.21% 0.18% 0.19% 0.12% 0.11%
Non acquired loans ALLL to total gross non acquired loans receivable0.40% 0.41% 0.43% 0.46% 0.47%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable2.55% 2.66% 4.65% 5.08% 4.67%
Acquired loans ALLL to total gross acquired loans0.98% 0.93% 2.15% 2.04% 1.93%
Capital Ratios (Company) (1)
Total average shareholders’ equity to total average assets13.11% 13.15% 13.46% 13.55% 13.35%
Tangible common equity ratio (2)10.60% 10.59% 11.55% 11.62% 11.57%
Tier 1 leverage capital ratio11.63% 12.22% 12.89% 12.64% 12.49%
Tier 1 common capital ratio12.18% 12.40% 13.27% 13.38% 13.38%
Tier 1 risk-based capital ratio13.43% 13.49% 14.44% 14.57% 14.58%
Total risk-based capital ratio13.96% 14.02% 15.12% 15.29% 15.32%
Capital Ratios (Bank) (1)
Tangible common equity ratio (2)11.03% 11.07% 10.74% 10.71% 11.45%
Tier 1 leverage capital ratio10.67% 11.23% 10.53% 10.42% 11.10%
Tier 1 common capital ratio12.32% 12.39% 11.98% 11.97% 12.95%
Tier 1 risk-based capital ratio12.32% 12.39% 11.98% 11.97% 12.95%
Total risk-based capital ratio12.86% 12.93% 12.70% 12.72% 13.72%

(1) Capital Ratios are preliminary
(2) See “Reconciliation of Non-GAAP Measures”

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Loans
Non-owner occupied commercial real estate $1,187,344 $1,130,883 $920,521 $891,830 $850,766
Other commercial construction and land350,401 327,622 222,794 212,315 194,971
Multifamily commercial real estate115,996 117,515 76,296 74,328 75,737
1-4 family residential construction and land157,920 140,030 111,954 100,306 96,703
Total commercial real estate1,811,661 1,716,050 1,331,565 1,278,779 1,218,177
Owner occupied commercial real estate1,313,086 1,321,405 1,072,586 1,075,306 1,095,460
Commercial and industrial1,443,828 1,468,874 1,458,523 1,448,698 1,375,233
Lease financing 525 877 1,088
Total commercial2,756,914 2,790,279 2,531,634 2,524,881 2,471,781
1-4 family residential1,787,097 1,714,702 1,168,468 1,039,309 1,015,071
Home equity loans502,099 507,759 364,117 364,169 368,510
Indirect auto loans199,951 226,717 254,736 285,618 317,863
Other consumer loans222,824 222,255 94,277 85,964 84,108
Total consumer2,711,971 2,671,433 1,881,598 1,775,060 1,785,552
Other231,409 228,430 191,136 166,185 159,447
Total loans$7,511,955 $7,406,192 $5,935,933 $5,744,905 $5,634,957
Deposits
Non-interest bearing demand$1,680,243 $1,590,164 $1,207,800 $1,172,481 $1,190,831
Interest bearing demand1,960,187 1,930,143 1,463,520 1,456,558 1,402,342
Money market1,746,444 1,651,023 1,166,918 1,105,460 1,162,546
Savings496,230 497,171 401,205 403,106 420,073
Total core deposits5,883,104 5,668,501 4,239,443 4,137,605 4,175,792
Wholesale money market75,030 74,815 125,030 50,015 100,035
Time deposits2,134,473 2,137,312 1,668,784 1,619,507 1,663,906
Total deposits$8,092,607 $7,880,628 $6,033,257 $5,807,127 $5,939,733


CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31, 2017
Three Months Ended
December 31, 2016
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $7,409,284 $83,753 4.58% $6,977,690 $79,690 4.54%
Investment securities (1) 1,501,816 9,312 2.51% 1,347,554 8,065 2.38%
Interest bearing deposits in other banks 58,269 97 0.68% 143,446 166 0.46%
Other earning assets (2) 29,053 357 4.98% 30,904 382 4.92%
Total interest earning assets 8,998,422 $93,519 4.21% 8,499,594 $88,303 4.13%
Non-interest earning assets 909,138 829,740
Total assets $9,907,560 $9,329,334
Interest bearing liabilities
Time deposits $2,141,806 $4,539 0.86% $2,049,066 $4,526 0.88%
Money market 1,777,343 1,756 0.40% 1,601,167 1,498 0.37%
Interest bearing demand 1,922,687 1,138 0.24% 1,748,269 935 0.21%
Savings 494,538 220 0.18% 471,466 219 0.18%
Total interest bearing deposits 6,336,374 7,653 0.49% 5,869,968 7,178 0.49%
Short-term borrowings and FHLB advances 493,643 887 0.73% 548,667 662 0.48%
Long-term borrowings 116,744 2,281 7.92% 108,276 2,087 7.67%
Total interest bearing liabilities 6,946,761 10,821 0.63% 6,526,911 9,927 0.61%
Non-interest bearing demand 1,595,695 1,508,496
Other liabilities 65,753 66,710
Shareholders’ equity 1,299,351 1,227,217
Total liabilities and shareholders’ equity $9,907,560 $9,329,334
Net interest income and spread $82,698 3.58% $78,376 3.53%
Net interest margin 3.73% 3.67%

(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
March 31, 2017
Three Months Ended
March 31, 2016
Average
Balances
Interest Yield /
Rate
Average
Balances
Interest Yield /
Rate
Interest earning assets
Loans (1) $7,409,284 $83,753 4.58% $5,611,488 $63,009 4.52%
Investment securities (1) 1,501,816 9,312 2.51% 1,122,523 6,483 2.32%
Interest bearing deposits in other banks 58,269 97 0.68% 73,188 84 0.46%
Other earning assets (2) 29,053 357 4.98% 25,136 315 5.04%
Total interest earning assets 8,998,422 $93,519 4.21% 6,832,335 $69,891 4.11%
Non-interest earning assets 909,138 618,087
Total assets $9,907,560 $7,450,422
Interest bearing liabilities
Time deposits $2,141,806 $4,539 0.86% $1,689,653 $4,120 0.98%
Money market 1,777,343 1,756 0.40% 1,247,333 1,067 0.34%
Interest bearing demand 1,922,687 1,138 0.24% 1,370,957 648 0.19%
Savings 494,538 220 0.18% 419,588 227 0.22%
Total interest bearing deposits 6,336,374 7,653 0.49% 4,727,531 6,062 0.52%
Short-term borrowings and FHLB advances 493,643 887 0.73% 460,892 532 0.46%
Long-term borrowings 116,744 2,281 7.92% 85,986 1,511 7.07%
Total interest bearing liabilities 6,946,761 10,821 0.63% 5,274,409 8,105 0.62%
Non-interest bearing demand 1,595,695 1,138,782
Other liabilities 65,753 42,418
Shareholders’ equity 1,299,351 994,813
Total liabilities and shareholders’ equity $9,907,560 $7,450,422
Net interest income and spread $82,698 3.58% $61,786 3.50%
Net interest margin 3.73% 3.64%

(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
Mar 31, 2017 Dec 31, 2016 Mar 30, 2016
Net Income $20,883 $20,883 $12,434 $12,434 $9,840 $9,840
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* (67) (41) (1,894) (1,170) (40) (25)
Non-interest expense
Legal Settlement 1,361 841
Tax Adjustment (1,350) (1,350)
Severance expense* 7 4 75 46
Restructuring expense* 1,912 1,181 4 3 142 88
Conversion costs and merger tax deductible* 3,037 1,877 18,245 11,270 1,107 684
Legal merger non deductible 280 280 580 580
Tax effect of adjustments* (1,865) N/A (6,775) N/A (3,999) N/A
Core Net Income $23,900 $23,900 $22,312 $22,312 $16,883 $16,883
Diluted shares 53,127 50,387 43,904
Core Net Income per share $0.45 $0.44 $0.38
Average Assets 9,907,560 9,329,334 7,450,422
ROA** 0.84% 0.53% 0.53%
Core ROA*** 0.96% 0.96% 0.91%

* 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,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Net interest income$82,116 $77,819 $62,627 $61,515 $61,367
Reported non-interest income15,852 17,016 12,370 11,922 2,566
Indemnification asset termination (9,178)
Less: Securities gains (losses)67 1,894 71 117 40
Core non-interest income$15,785 $15,122 $12,299 $11,805 $11,704
Reported non-interest expense$62,703 $73,994 $47,530 $44,536 $46,938
Less: Severance expense 7 75
Conversion costs and merger tax deductible3,037 18,245 331 881 1,107
Legal settlement 1,361 1,500
Legal merger non deductible 280 61 355 580
Restructuring expense1,912 4 (113) 5 142
Contract termination
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits)
Core non-interest expense$57,754 $54,097 $45,751 $43,295 $45,034
Efficiency ratio*64.00% 78.02% 63.38% 60.65% 73.42%
Core efficiency ratio**58.99% 58.21% 61.06% 59.05% 61.63%

* 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,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Total shareholders’ equity $1,307,931 $1,292,047 $1,029,841 $1,016,498 $996,993
Less: goodwill and intangible assets, net of taxes (253,708) (256,176) (142,141) (142,725) (143,304)
Tangible book value* $1,054,223 $1,035,871 $887,700 $873,773 $853,689
Common shares outstanding 51,966 51,765 43,235 43,219 43,189
Tangible book value per share $20.29 $20.01 $20.53 $20.22 $19.77

* 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,
2017
Dec 31,
2016
Sep 30,
2016
Jun 30,
2016
Mar 31,
2016
Total shareholders’ equity $1,307,931 $1,292,047 $1,029,841 $1,016,498 $996,993
Less: goodwill and intangible assets (265,711) (268,870) (146,810) (147,753) (148,688)
Tangible common equity $1,042,220 $1,023,177 $883,031 $868,745 $848,305
Total assets $10,098,042 $9,930,657 $7,792,458 $7,621,225 $7,479,798
Less: goodwill and intangible assets (265,711) (268,870) (146,810) (147,753) (148,688)
Tangible assets $9,832,331 $9,661,787 $7,645,648 $7,473,472 $7,331,110
Tangible common equity ratio 10.60% 10.59% 11.55% 11.62% 11.57%


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.