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Capital Bank Financial Corp. Reports Third-Quarter 2012 Results

CORAL GABLES, Fla., Oct. 23, 2012 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) today reported third quarter 2012 net income of $37.8 million, or $0.75 per diluted share, compared with net income of $6.4 million or $0.12 per diluted share, for the second quarter of 2012 and net income of $3.7 million, or $0.07 per diluted share, for the third quarter of 2011. Results for the third quarter of 2012 included a tax benefit of $34.0 million related to an increase in our deferred tax asset resulting from an improvement in forecasted tax deductible losses from acquired loans and gains on securities sales of $4.9 million, offset by $4.7 million of merger and conversion related expense, $4.2 million of non-cash equity compensation and $2.9 million of early debt extinguishment expense. Excluding these items, net income for the third quarter of 2012 was $8.7 million or $0.19 per diluted share. On a similar basis, net income for the second quarter of 2012 was $9.7 million. The reconciliation of Non-GAAP measures, which we believe facilitates assessment of the Company's banking operations and peer comparability, is included in tabular form at the end of this release.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank, commented, "Since the beginning of the third quarter, we have completed our initial public offering, which raised approximately $90 million in growth capital for the Company, and reorganized our subsidiaries into a single holding company. We also closed the acquisition of Southern Community Financial Corporation ("Southern Community") on October 1, 2012 which strengthened our North Carolina footprint with the addition of 22 well-situated branches, a talented employee base and important customers.

"During the third quarter, our tangible book value benefitted from the increase in our deferred tax assets. On a pro forma basis, assuming the acquisition of Southern Community was completed on September 30, 2012, we estimate that tangible book value per share at the end of the third quarter increased between $0.62 and $0.82 to $17.60 to $17.80, pending final purchase accounting, from $16.98 on June 30, 2012 on a pro forma basis, giving effect to the initial public offering, the reorganization and the Southern Community acquisition. Additionally, this range does not include the incremental $2.67 per share that we estimated would be accretive to our tangible book value if we were marked to fair value at June 30th."

Operating and financial highlights since the start of the quarter include the following:

  • Substantially concurrent with the Company's initial public offering, which raised net proceeds for the Company of approximately $90 million, we reorganized our former subsidiaries, TIB Financial Corp., Capital Bank Corporation and Green Bankshares, Inc., into a single holding company.
  • New loan originations for the quarter totaled $172.5 million, 60.1% of which were commercial loans, demonstrating continued execution of our organic growth and portfolio diversification strategies. In addition to our originations, planned reductions occurred in both criticized and classified loans and in non-strategic commercial real estate portfolios totaling $112.2 million. Commercial real estate represented 32% of our portfolio as of September 30, 2012, a decrease of 15% from December 31, 2011. In total, loans decreased by $118.8 million from the end of the second quarter to $4.1 billion at the end of the third quarter.
  • Core deposits (total deposits minus time deposits) were flat during the third quarter as strong growth in Florida and the Carolinas was offset by reductions in the Tennessee market, where branch operations and product offerings are being realigned to meet Capital Bank strategies and objectives. Core deposits now represent 63% of total deposit funding and total deposits increased to 96.4% of total funding compared to 95.1% the prior quarter.
  • Capital Bank, N.A. ended the third quarter with a tier 1 leverage ratio of 12.0%, in excess of regulatory requirements, and Capital Bank Financial Corporation held $234.5 million in cash and cash equivalents at the holding company.
  • Subsequent to the end of the third quarter, on October 1, 2012, we acquired Southern Community, repaid approximately $47 million in outstanding TARP preferred stock and warrants, and merged Southern Community Bank and Trust into our bank subsidiary, Capital Bank, N.A. Southern Community's 22 branches are now operating under the Capital Bank brand, and systems conversion will take place in the fourth quarter of this year. At the end of the third quarter, Southern Community had total assets of $1.4 billion, gross loans of $0.9 billion and total deposits of $1.1 billion.

"Our third-quarter results reflected some seasonal softness in loan demand compared with the second quarter and the impact of historically low interest rates on asset yields," remarked Chris Marshall, Chief Financial Officer of Capital Bank. "As a result of our diligent emphasis on credit quality, we remain confident in our overall credit loss estimates, although continued refinement of specific problem asset resolution plans resulted in third-quarter charges including $7.2 million in OREO expenses and valuation adjustments (net of gains on disposition and FDIC indemnification income) and $4.7 million of impairments to legacy loans.

"Looking ahead, we are fully focused on increasing the Company's profitability. We have initiatives under way intended to grow earning assets and boost fee income organically, and to improve our efficiency ratio. Additionally, we continue to evaluate acquisition opportunities that meet our strategic and financial objectives."

Financial Discussion

The Company's banking operations began with the acquisitions of three banks from the FDIC on July 16, 2010 and subsequently included the acquisitions of TIB Financial Corp. on September 30, 2010, Capital Bank Corporation on January 28, 2011, Green Bankshares, Inc on September 7, 2011 and Southern Community on October 1, 2012. Accordingly, operating results for the three and nine months ended September 30, 2011 are not generally comparable to the current year operations.

Loan Portfolio Composition

At September 30, 2012, commercial real estate loans were 32% of the total portfolio, down from 35% at December 31, 2011, consistent with our portfolio diversification strategy.

The relative composition of our loan portfolio was as follows:

September 30, 2012 December 31, 2011
Commercial real estate 32% 35%
Commercial 36% 32%
Consumer 30% 31%
Other 2% 2%
Total 100% 100%

Net Interest Income

Net interest income for the third quarter of 2012 decreased by approximately $3.0 million, or 4.7%, to $60.3 million, from $63.3 million for the second quarter of 2012 and increased $6.1 million, or 11.3%, from the third quarter of 2011. The main driver of the decline in net interest income for the quarter was the reduction in interest earning assets, which fell to $5.4 billion from $5.6 billion, led by problem loan resolutions and strategic repayments, as noted above, partially offset by continuation of a deleveraging strategy, which reduced wholesale borrowings by approximately $67.5 million.

Additionally, the net interest margin contracted 15 basis points to 4.45% for the third quarter of 2012 from 4.60% for the second quarter due to pressure on earning asset yields from the low-interest rate environment. Loan yields declined to 6.28% from 6.37% as new originations for the quarter were booked at a weighted-average yield of 4.5%. Securities yields declined to 1.63% from 1.96%. Earning asset yield pressure was partially offset by a decline in cost of funds to 0.71% from 0.72%, due to growth in the relative proportion of, and reduced costs of, core deposits.

Non-Interest Income

Non-interest income increased $8.3 million to $20.4 million for the third quarter of 2012 from $12.2 million for the second quarter and increased $8.0 million from $12.4 million for the third quarter of 2011. For the third quarter of 2012, the Company had increased investment securities gains of $4.0 million, legal and insurance settlement gains of $3.5 million and an FDIC indemnification asset accretion increase of $1.0 million.

During the third quarter, fees (consisting of service charges, debit card income and fees on mortgage loans sold) declined to $9.1 million from $10.1 million, reflecting strength in mortgage lending offset by a reversal of $0.9 million of prior-quarter fees which were charged-off during the second quarter and lower deposit service charges largely due to closed accounts in Tennessee.

Provision for Loan Losses and Credit Quality

The provision for loan losses of $5.8 million recorded for the third quarter of 2012 includes approximately $4.7 million related to impairment of acquired impaired loan pools and a $1.1 million provision for newly originated loans (including the impact of the reversal of charge-offs of $0.9 million related to a reversal of deposit service charge fees). The $4.7 million impairment primarily reflects declines in appraised values and lower expectations for future cash flows from residential, construction and land loans in Southeast Florida and South Carolina. Since our first acquisition in 2010, we have cumulatively recognized $38.4 million in provisions for legacy acquired impaired loan pools that have performed below expectations.

The provision for newly originated loans served to increase the allowance to 1.05% of $1.2 billion in originated loans outstanding. Net recoveries for newly originated loans were $0.3 million for the third quarter.

During the third quarter, non-performing loans declined from 8.4% to 8.3% of total loans as acquired impaired loans greater than 90 days past due declined by $11.2 million to $326.5 million and nonaccrual loans declined by 10.8% to $11.2 million.

Non-Interest Expense

Non-interest expense increased to $69.5 million for the third quarter of 2012 from $58.6 million for the second quarter and from $48.8 for the third quarter of 2011. The main driver of the increase for the quarter was an increase of $4.5 million in OREO related costs; $2.9 million resulting from the prepayment of all our remaining FHLB advances; a $2.1 million increase in merger and conversion related expenses and a $1.8 million legal settlement. Compensation related costs declined $0.3 million as the Company continues to rationalize excess capacity. At the end of the third quarter, headcount was reduced by 138 people from the end of the prior quarter.

Financial Position

During the third quarter of 2012, total assets decreased by $66.7 million to $6.2 billion as of September 30, 2012 from $6.3 billion as of June 30, 2012.

Total shareholders' equity increased by $132.4 million during the quarter to $1.2 billion at September 30, 2012, primarily as a result of our initial public offering and the tax benefit discussed above. Tangible book value per share was $18.26 per common share as of September 30, 2012.

The Company's national bank subsidiary, Capital Bank N.A., reported Tier 1, Tier 1 Risk-Based and Total Risk-Based capital ratios of 12.0%, 17.4% and 18.8%, respectively, as of September 30, 2012.

Conference Call

The Company will host a conference call today at 11:00 a.m. Eastern Time. The number to call for this interactive teleconference is (719) 325-2329, and the confirmation pass code is 5632047. Please dial in 10 minutes prior to the beginning of the call. A 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. A telephonic replay of the conference call will be available through November 5, 2012, by dialing (719) 457-0820 and entering pass code 5632047. An on-line replay of the call will be available at the same site for 90 days.

About Capital Bank Financial Corp.

Capital Bank Financial Corp. is a national bank holding company, formed in 2009 to create a premier regional banking franchise in the southeastern United States. CBF is the parent of Capital Bank N.A., a national banking association with approximately $7.5 billion in total assets and 165 full-service banking offices throughout Florida, North Carolina, South Carolina, Tennessee and Virginia. To learn more about Capital Bank, N.A., please visit www.capitalbank-us.com.

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 prospectus 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 statements regarding: (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 our future acquisitions or business combinations and our ability to integrate the acquired business into our business model; (7) projected population and income growth in our targeted market areas; and (8) 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.

CAPITAL BANK FINANCIAL CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
For the Quarter Ended
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
Interest and dividend income $69,438 $72,893 $74,141 $74,341 $63,723
Interest expense 9,104 9,548 10,289 10,761 9,506
NET INTEREST INCOME 60,334 63,345 63,852 63,580 54,217
Provision for loan losses 5,771 6,608 5,376 16,790 11,846
NON-INTEREST INCOME:
Service charges on deposit accounts 5,058 6,332 5,991 6,064 3,256
Debit card income 2,442 2,589 2,761 2,847 1,623
Fees on mortgage loans sold 1,612 1,205 1,103 942 669
Investment advisory and trust fees 85 142 152 196 442
FDIC indemnification asset accretion 850 (164) 322 2,428 2,341
Investment securities gains, net 4,918 933 2,759 1,780 2,940
Other-than-temporary impairment losses on investments:
Gross impairment loss -- (38) (6) -- --
Less: Impairments recognized in other comprehensive income -- -- -- -- --
Net impairment losses recognized in earnings -- (38) (6) -- --
Gain on extinguishment of debt -- -- -- -- --
Other income 5,482 1,180 1,741 1,755 1,128
Total non-interest income 20,447 12,179 14,823 16,012 12,399
NON-INTEREST EXPENSE:
Salaries & employee benefits 25,202 25,535 30,144 26,237 20,818
Net occupancy expense 10,985 10,901 10,551 10,371 7,428
Foreclosed asset related expense 9,649 5,150 4,207 4,348 5,584
Conversion and merger related expenses 3,894 1,757 1,288 1,092 1,779
Professional fees 5,069 4,855 5,342 4,245 4,068
Loss (gain) on extinguishment of debt 2,946 -- 321 -- (416)
Legal settlement expense 1,755 97 900 -- --
Impairment of wealth management customer relationship intangible -- -- -- 2,872 --
Other expense 10,050 10,339 10,480 11,261 9,567
Total non-interest expense 69,550 58,634 63,233 60,426 48,828
Income before income taxes 5,460 10,282 10,066 2,376 5,942
Income tax (benefit) expense (32,385) 3,909 3,903 983 2,193
NET INCOME BEFORE ATTRIBUTION OF NONCONTROLLING INTERESTS 37,845 6,373 6,163 1,393 3,749
Net income attributable to non-controlling interests 2,762 862 910 378 538
Net income attributable to Capital Bank Financial Corp. $35,083 $5,511 $5,253 $1,015 $3,211
BASIC EARNINGS PER COMMON SHARE: $0.76 $0.12 $0.12 $0.02 $0.07
DILUTED EARNINGS PER COMMON SHARE: $0.75 $0.12 $0.12 $0.02 $0.07
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per share data)
September 30, 2012 June 30, 2012 December 31, 2011
Assets
Cash and due from banks $94,406 $103,902 $87,637
Interest-bearing deposits with banks 367,796 125,110 611,137
Federal funds sold -- 8 11,189
Total cash and cash equivalents 462,202 229,020 709,963
Trading securities -- 759 637
Investment securities held to maturity -- -- --
Investment securities available for sale 982,309 1,161,970 826,274
Loans held for sale 12,928 12,451 20,746
Loans, net of deferred loan costs and fees 4,059,284 4,178,564 4,281,717
Less: Allowance for loan losses 51,587 45,472 34,749
Loans, net 4,007,697 4,133,092 4,246,968
Other real estate owned 144,621 158,235 168,781
Indemnification asset 56,544 9,699 66,282
Receivable from FDIC 9,294 60,750 13,315
Premises and equipment, net 165,028 165,274 159,730
Goodwill 115,960 115,960 115,960
Intangible assets, net 23,370 24,407 26,692
Deferred income tax asset 170,293 140,652 140,047
Accrued interest receivable and other assets 86,932 91,615 90,985
Total Assets $6,237,178 $6,303,884 $6,586,380
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest-bearing demand $721,785 $734,605 $683,258
Negotiable order of withdrawal accounts 1,045,177 1,061,809 1,087,760
Money market 867,238 890,409 868,375
Savings 424,785 378,415 296,355
Time deposits 1,788,271 1,914,990 2,189,436
Total deposits 4,847,256 4,980,228 5,125,184
Federal Home Loan Bank advances -- 67,520 221,018
Short-term borrowings 41,694 49,717 54,533
Long-term borrowings 140,766 140,537 140,101
Accrued interest payable and other liabilities 57,331 48,199 54,634
Total liabilities 5,087,047 5,286,201 5,595,470
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, 32,646, 20,334 and 20,028 shares issued and outstanding, respectively 326 203 200
Common stock—Class B $0.01 par value: 200,000 shares authorized, 23,198, 26,122 and 26,122 shares issued and outstanding, respectively 232 261 261
Additional paid in capital 1,073,073 901,296 890,627
Retained earnings 63,997 28,914 18,150
Accumulated other comprehensive income 12,503 10,399 7,167
Noncontrolling interest -- 76,610 74,505
Total shareholders' equity 1,150,131 1,017,683 990,910
Total Liabilities and Shareholders' Equity $6,237,178 $6,303,884 $6,586,380
CAPITAL BANK FINANCIAL CORP.
(Dollars and shares in thousands)
As of
September 30, 2012
As of
June 30, 2012
As of
December 31, 2011
Non-owner occupied commercial real estate $818,171 $849,820 $903,914
Other commercial construction and land 332,519 365,832 423,932
Multifamily commercial real estate 69,954 76,933 98,207
1-4 family residential construction and land 66,460 74,533 85,978
Total commercial real estate 1,287,104 1,367,118 1,512,031
Owner occupied commercial real estate 949,887 1,002,448 902,816
Commercial and industrial loans 518,386 473,592 467,047
Total commercial 1,468,273 1,476,040 1,369,863
1-4 family residential 737,179 762,886 818,547
Home equity loans 351,731 368,557 383,768
Other consumer loans 130,935 136,211 123,121
Total consumer 1,219,845 1,267,654 1,325,436
Other 96,990 80,203 95,133
Total loans $4,072,212 $4,191,015 $4,302,463
Noninterest-bearing demand $721,785 $734,605 $683,258
Negotiable order of withdrawal accounts 1,045,177 1,061,809 1,087,760
Money market 867,238 890,409 868,375
Savings 424,785 378,415 296,355
Time deposits 1,788,271 1,914,990 2,189,436
Total deposits $4,847,256 $4,980,228 $5,125,184
CAPITAL BANK FINANCIAL CORP.
(Dollars and shares in thousands, except per share data)
As of or For the Quarter Ended
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
September 30,
2011
Net loan charge-offs (recoveries) $(344) $1,744 $(483) $1,024 $349
Allowance for loan losses $51,587 $45,472 $40,608 $34,749 $18,982
Allowance for loan losses/ total loans 1.27% 1.08% 0.96% 0.81% 0.44%
Non-accrual loans $11,192 $12,544 $7,021 $5,875 $4,716
Annualized net charge-offs/average loans N/A 0.17% N/A 0.14% 0.04%
Total interest-earning assets $5,459,668 $5,520,236 $5,637,008 $5,789,911 $5,748,122
Other real estate owned $144,621 $158,235 $169,433 $168,781 $152,509
Goodwill and intangibles, net of accumulated amortization $139,330 $140,367 $141,551 $142,652 $144,374
Tax equivalent net interest margin 4.45% 4.60% 4.50% 4.33% 4.38%
Efficiency ratio 86.10% 77.64% 80.37% 75.92% 73.30%
Average diluted common shares outstanding 46,738 45,632 45,478 45,531 45,457
End of quarter common shares outstanding 55,844 46,457 46,457 46,150 46,150
Total equity $1,150,131 $1,017,683 $1,001,135 $990,910 $987,242
Book value per common share $20.60 $20.26 $19.93 $19.86 $19.73
Tangible book value per common share $18.26 $17.69 $17.35 $17.25 $17.18
Tier 1 capital to average assets - Capital Bank, N.A . 12.0% 11.4% 10.8% 10.4% 13.8%
Tier 1 capital to risk weighted assets - Capital Bank, N.A. 17.4% 16.4% 16.1% 15.7% 16.0%
Total capital to risk weighted assets - Capital Bank, N.A. 18.8% 17.6% 17.2% 16.7% 16.5%
Total assets $6,237,178 $6,303,884 $6,453,216 $6,586,380 $6,718,991
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Quarter Ended
September 30, 2012
Quarter Ended
June 30, 2012
Average
Balances

Interest*

Yield*
Average
Balances

Interest*

Yield*
Loans $4,120,374 $65,031 6.28% $4,210,746 $66,682 6.37%
Investments 982,750 4,025 1.63% 1,215,494 5,931 1.96%
Interest bearing deposits 280,164 181 0.26% 101,657 65 0.26%
Federal Home Loan Bank stock 39,224 460 4.67% 37,966 488 5.17%
Total interest earning assets 5,422,512 69,697 5.11% 5,565,863 73,166 5.29%
Non-interest earning assets 776,340 789,219
Total assets $6,198,852 $6,355,082
Interest bearing liabilities:
Time $1,857,122 $5,341 1.14% $1,982,499 $5,335 1.08%
Money market 876,891 758 0.34% 902,334 1,000 0.45%
NOW 1,044,506 636 0.24% 1,069,756 691 0.26%
Savings 399,300 288 0.29% 360,347 276 0.31%
Total interest-bearing deposits 4,177,819 7,023 0.67% 4,314,936 7,302 0.68%
Short-term borrowings and FHLB advances 80,336 130 0.64% 132,517 317 0.96%
Long-term borrowings 135,893 1,951 5.71% 135,477 1,928 5.72%
Total interest bearing liabilities 4,394,048 9,104 0.82% 4,582,930 9,547 0.84%
Non-interest bearing deposits 722,987 722,929
Other liabilities 50,587 38,483
Shareholders' equity 1,031,230 1,010,740
Total liabilities and shareholders' equity $6,198,852 $6,355,082
Net interest income and spread $60,593 4.29% $63,619 4.45%
Net interest margin 4.45% 4.60%
* Presented on a fully tax equivalent basis
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
Quarter Ended
September 30, 2012
Quarter Ended
September 30, 2011
Average
Balances

Interest*

Yield*
Average
Balances

Interest*

Yield*
Loans $4,120,374 $65,031 6.28% $3,421,264 $57,620 6.68%
Investments 982,750 4,025 1.63% 905,618 5,851 2.56%
Interest bearing deposits 280,164 181 0.26% 589,843 501 0.34%
Federal Home Loan Bank stock 39,224 460 4.67% 31,612 154 1.93%
Total interest earning assets 5,422,512 69,697 5.11% 4,948,337 64,126 5.14%
Non-interest earning assets 776,340 556,999
Total assets $6,198,852 $5,505,336
Interest bearing liabilities:
Time $1,857,122 $5,341 1.14% $2,075,175 $5,645 1.08%
Money market 876,891 758 0.34% 633,600 1,041 0.65%
NOW 1,044,506 636 0.24% 617,440 573 0.37%
Savings 399,300 288 0.29% 213,301 232 0.43%
Total interest-bearing deposits 4,177,819 7,023 0.67% 3,539,516 7,491 0.84%
Short-term borrowings and FHLB advances 80,336 130 0.64% 341,207 658 0.77%
Long-term borrowings 135,893 1,951 5.71% 109,228 1,357 4.93%
Total interest bearing liabilities 4,394,048 9,104 0.82% 3,989,951 9,506 0.95%
Non-interest bearing deposits 722,987 522,047
Other liabilities 50,587 27,056
Shareholders' equity 1,031,230 966,282
Total liabilities and shareholders' equity $6,198,852 $5,505,336
Net interest income and spread $60,593 4.29% $54,620 4.21%
Net interest margin 4.45% 4.38%
* Presented on a fully tax equivalent basis
CAPITAL BANK FINANCIAL CORP.
YEAR TO DATE AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
YTD Ended
September 30, 2012
YTD Ended
September 30, 2011
Average
Balances

Interest*

Yield*
Average
Balances

Interest*

Yield*
Loans $4,195,229 $199,990 6.37% $2,952,554 $136,636 6.19%
Investments 1,079,141 15,584 1.93% 777,674 15,731 2.70%
Interest bearing deposits 266,805 476 0.24% 638,566 1,799 0.38%
Federal Home Loan Bank stock 38,641 1,293 4.47% 29,888 386 1.73%
Total interest earning assets 5,579,816 217,343 5.20% 4,398,682 154,552 4.70%
Non-interest earning assets 789,630 526,769
Total assets $6,369,446 $4,925,451
Interest bearing liabilities:
Time $1,985,543 $16,141 1.09% $1,945,403 $15,603 1.07%
Money market 892,059 3,057 0.46% 507,544 2,647 0.70%
NOW 1,065,208 2,152 0.27% 462,067 1,577 0.46%
Savings 356,267 831 0.31% 172,881 641 0.50%
Total interest-bearing deposits 4,299,077 22,181 0.69% 3,087,895 20,468 0.89%
Short-term borrowings and FHLB advances 143,215 937 0.87% 324,063 2,007 0.83%
Long-term borrowings 135,464 5,823 5.74% 91,398 3,356 4.91%
Total interest bearing liabilities 4,577,756 28,941 0.84% 3,503,356 25,831 0.99%
Non-interest bearing deposits 732,041 442,451
Other liabilities 46,194 34,417
Shareholders' equity 1,013,455 945,227
Total liabilities and shareholders' equity $6,369,446 $4,925,451
Net interest income and spread $188,402 4.36% $128,721 3.71%
Net interest margin 4.51% 3.91%
* Presented on a fully tax equivalent basis
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in millions)
ADJUSTED NET INCOME
For the Quarter
Ended

September 30, 2012
For the Quarter
Ended

June 30, 2012
Net income after tax $37.8 $6.4
Adjustments
Tax Benefit (34.0) --
Legal and merger 1.5 0.4
Security Gains* (3.0) (0.6)
Non cash equity compensation* 2.6 2.6
Conversion and severance expense* 2.0 0.9
Extinguishment loss* 1.8 --
Adjusted net income $8.7 $9.7
*Tax effected at an income tax rate of 39%
TANGIBLE BOOK
(In thousands, except per share data)
As of
September 30,
2012
As of
June 30,
2012
As of
March 31,
2012
As of
December 31,
2011
As of
September 30,
2011
Total shareholders' equity $1,150,131 $1,017,683 $1,001,135 $990,910 $987,242
Less: Noncontrolling interest -- (76,610) (75,134) (74,505) (76,786)
Less: CBF proportional share of goodwill, core deposit intangibles, net of taxes(*) (130,234) (119,097) (119,753) (120,367) (117,711)
Tangible book value $1,019,897 $821,976 $806,248 $796,038 $792,745
Shares 55,844 46,457 46,457 46,150 46,150
Tangible book value per share(**) $18.26 $17.69 $17.35 $17.25 $17.18
Pro Forma Adjustments Estimated Range as of
September 30, 2012 -
Pending Finalization of
Purchase Accounting

Estimated as
of June 30,
2012
Incremental intangible impact of acquisition as of September 30, 2012 $(36,900) $(26,000)
Impact of acquisition, initial public offering and reorganization as of June 30, 2012 $126,220
Pro forma tangible book value $982,997 $993,897 $948,196
Shares 55,844 55,844 55,848
Pro forma tangible book value per share $17.60 $17.80 $16.98
(*)Proportional share is calculated based upon our ownership percentage of TIB Financial, Capital Bank Corp. and Green Bankshares at each respective period. Pro forma proportional share is equal to 100%.
(**)Tangible book value is equal to book value less goodwill and core deposit intangibles, net of related deferred tax liabilities.
CONTACT: Kenneth A. Posner Chief of Investment Analytics Phone: (704) 554-5901 E-mail: kenneth.posner@capitalbank-us.comSource:Capital Bank Financial Corp.