CHARLOTTE, N.C., Jan. 28, 2016 (GLOBE NEWSWIRE) -- Capital Bank Financial Corp. (Nasdaq:CBF) (the “Company”) today reported fourth quarter net income of $15.0 million, or $0.34 per diluted share. Core adjustments for the fourth quarter included a pre-tax charge of $4.2 million related to the previously announced contract termination of debit card processing, initially estimated at approximately $5.0 million, and $0.7 million of non-tax deductible merger related expenses. Core net income for the fourth quarter was $18.3 million, or $0.41 per diluted share. Core net income rose 31% year-over-year and core net income per diluted share rose 41%. ROA decreased to 0.82% and Core ROA increased to 1.00%.

• Loan portfolio grew sequentially at a 17% annualized rate and was up 13% year-over-year;
  
• Total deposits were up 12% year-over-year;
  
• Terminated legacy debit card processing contract and executed long-term agreement with MasterCard;
  
• Achieved GAAP and Core ROA of 0.82% and 1.00%, respectively;
  
• Achieved efficiency and Core efficiency ratios of 65.7% and 58.9%, respectively; and
  
• Signed a definitive agreement to acquire CommunityOne Bancorp.
  

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, “We enjoyed excellent results in Q4, and throughout 2015, thanks to the hard work of our outstanding teammates and the trust and confidence of our customers.”

Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, “We feel good about hitting our financial targets for the quarter and the year, but we feel even better about how we are positioned for future growth. Our strong Balance Sheet, excellent credit and expense discipline, and the rollout of our new payments platform will all contribute to making 2016 a record year for Capital Bank.”

Loan Portfolio and Composition

During the fourth quarter, the loan portfolio increased by $227.8 million to $5.6 billion, a 17% annualized growth rate and up 13% year-over-year. New loans of $486.9 million included $29.0 million in portfolio purchases of high-quality residential mortgages and were offset by resolutions totaling $33.8 million and principal repayments of $225.3 million.

The relative composition of the Company’s loan portfolio at the end of the fourth quarter of 2014 and third and fourth quarters of 2015 was as follows:

		Dec 31,  2015			Sep 30,  2015			Dec 31, 2014
Commercial real estate		22	%		22	%		23	%
C&I		43	%		42	%		42	%
Consumer		32	%		33	%		32	%
Other		3	%		3	%		3	%
Total		100	%		100	%		100	%

Deposits Composition and Cost of Funds

During the fourth quarter, total deposits increased by $294.6 million to $5.9 billion, or up 12% year-over-year. The sequential increase was mainly a result of the Company’s continued focus on growing low-cost core deposits, which were up $248.0 million, and an increase in low-cost brokered money market accounts of $72.0 million that were used to replace maturing borrowings; partially offset by some contraction in time deposit balances. Sequentially and year-over-year, the cost of core deposits remained flat at 0.15%. Core deposits include all checking, savings and money market accounts, excluding brokered, and now represent 68% of total deposits. Sequentially and year-over-year, the cost of total deposits increased by one basis point and six basis points, respectively, to 0.40%. The contractual cost of deposits, which excludes purchase accounting, was flat sequentially and increased one basis point year-over-year to 0.40%.

Net Interest Income and Net Interest Margin

Net interest income increased $0.4 million to $62.1 million from $61.6 million for the third quarter of 2015 and increased $0.7 million year-over-year from $61.4 million. The net interest margin for the fourth quarter of 2015 was 3.70%, a decline of 12 basis points sequentially and 35 basis points year-over-year. As expected, the decline in net interest margin continues to reflect higher earning asset balances, offset by the lower earning asset yields. The implementation of interest rate swaps during the year resulted in $0.8 million in additional interest income during the fourth quarter and had a five basis point impact on the net interest margin. New and acquired non-impaired loans represent $4.6 billion or 81% of the Company’s total loan portfolio, up from 79% and 73% at September 30, 2015 and December 31, 2014, respectively. New loans outstanding represent $4.3 billion with an average yield of 3.56%, compared to $1.1 billion of acquired impaired loans outstanding with a weighted average yield of 8.43%.

Non-Interest Income

Non-interest income declined $0.8 million to $10.6 million from $11.4 million for the third quarter of 2015 and was flat compared to the fourth quarter of 2014. The sequential decrease was mainly driven by a decline in service charge fee income and lower investment advisory fee income. FDIC indemnification amortization expense included $1 million attributable to recoveries on legacy loans that were previously covered by loss-sharing contracts.

Provision for Loan Losses and Credit Quality

The provision of $1.1 million recorded for the fourth quarter of 2015 included a $2.3 million provision for new and acquired non-impaired loans, offset by $1.2 million due to changes in cash flow estimates for certain acquired impaired loan pools. The changes in cash flow estimates mainly resulted from improvements in the Company’s expectations of future cash flows resulting from higher than anticipated payoffs and resolutions. Net charge-offs for the fourth quarter of 2015 were $2.3 million.

At December 31, 2015, the allowance for loan losses was $45.0 million, of which $24.5 million related to acquired impaired loans and $20.5 million related to new and acquired non-impaired loans. The allowance for loan losses represents 0.80% of the Company’s total $5.6 billion loan portfolio.

During the fourth quarter, non-performing loans declined sequentially by $13.5 million, or 17%, to $68.1 million. Nonaccrual loans declined sequentially to $8.9 million, or to 0.21% of total non-purchased credit impaired loans, from 0.24%. Acquired impaired loans greater than 90 days past due and still accruing declined sequentially by $2.0 million, or 12%, to $14.5 million. 

Non-Interest Expense

Non-interest expense declined $0.6 million to $47.8 million from $48.3 million for the third quarter of 2015 and declined $3.2 million from $50.9 million for the fourth quarter of 2014. The sequential decline was mainly due to a reduction in employee compensation expense, lower legacy credit expenses reflecting the continued resolution of special assets, and lower professional fees. Partially offsetting the decline were $4.2 million in restructuring charges related to the termination of a legacy debit card processing contract and execution of a long-term agreement with MasterCard as part of the Company’s cost savings initiatives, and $0.7 million of merger related costs primarily associated with legal and consulting services. The year-over-year decline was mainly due to a decline in employee compensation and lower legacy credit expenses as discussed above, a reduction in stock-based compensation expense associated with original founder awards, and the reduction in occupancy costs as a result of the Company’s continued focus on consolidating facilities.

Income Tax Expense

Income tax expense was $8.8 million for the fourth quarter of 2015, an effective income tax rate of 37.0%, as compared to income tax expense of $8.6 million for the third quarter of 2015, an effective income tax rate of 35.9%. Income tax expense was $7.8 million for the fourth quarter of 2014, an effective income tax rate of 36.1%. The sequential and year-over-year increase in the effective tax rate is mainly due to lower tax-exempt interest income during the fourth quarter of 2015.

Financial Position

Total assets increased by $188.3 million to $7.4 billion as of December 31, 2015, from $7.3 billion as of September 30, 2015. During the quarter, the Company’s loan portfolio increased by $227.8 million to $5.6 billion, a 17% annualized rate. Deposits increased by $294.6 million to $5.9 billion and FHLB borrowings decreased by $60.0 million. Tangible book value per share was $19.53 as of December 31, 2015, a decrease of $0.22 and an increase of $0.25 over September 30, 2015 and December 31, 2014, respectively. During the fourth quarter, the Company repurchased 1.2 million shares of common stock for $36.4 million at an average price of $31.47 per share. 

The Company’s bank subsidiary, Capital Bank Corporation, has preliminary Tier 1 Leverage, Tier 1 Common, Tier 1 Risk-Based and Total Risk-Based capital ratios of 11.1%, 12.9%, 12.9% and 13.7%, respectively, as of December 31, 2015, under currently applicable regulations.

The Company declared a cash dividend of $0.10 per share, payable on February 22, 2016, to shareholders of record as of February 8, 2016.

The Company has $5.8 million remaining under the current stock repurchase authorization and the Board of Directors has authorized a new $100 million repurchase program.

Conference Call

The Company will host a conference call today at 2:00 p.m. Eastern Time. The number to call for this interactive teleconference is (719) 325-2354, and the confirmation pass code is 3809442. Please dial in 10 minutes prior to the beginning of the call. A telephonic replay of the conference call will be available through February 5, 2016, by dialing (719) 457-0820 and entering pass code 3809442. The live broadcast of the conference call will be available online at the Company’s web site at www.capitalbank‑us.com, by following the link to Investor Relations. An on-line replay of the call will be available at the same site for 90 days.

Forward-Looking Statements

Information in this press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption “Risk Factors” in the annual report on Form 10-K and other periodic reports filed by us with the Securities and Exchange Commission. Any or all of our forward-looking statements in this press release may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward looking statements including, but not limited to: (1) changes in general economic and financial market conditions; (2) changes in the regulatory environment; (3) economic conditions generally and in the financial services industry; (4) changes in the economy affecting real estate values; (5) our ability to achieve loan and deposit growth; (6) the completion of future acquisitions or business combinations and our ability to integrate any acquired businesses into our business model; (7) projected population and income growth in our targeted market areas; (8) competitive pressures in our markets and industry; (9) our ability to attract and retain key personnel; (10) changes in accounting policies or judgments and (11) volatility and direction of market interest rates and a weakening of the economy which could materially impact credit quality trends and the ability to generate loans. All forward-looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements, which should be read in conjunction with the other cautionary statements that are included elsewhere in this press release. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

Core net income, core efficiency ratio, core return-on-assets (“core ROA”), tangible book value and tangible book value per share are each non-GAAP measures used in this report. A reconciliation to the most directly comparable GAAP financial measures – net income in the case of core net income and core ROA, total non-interest income and total non-interest expense in the case of core efficiency ratio, and total shareholders’ equity in the case of tangible book value and tangible book value per share – appears in tabular form at the end of this release. The Company believes core net income, the core efficiency ratio and core ROA are useful for both investors and management to understand the effects of certain non-interest items and provide an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. These measures should not be viewed as a substitute for net income. The Company believes that tangible book value and tangible book value per share are useful for both investors and management as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company’s capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total shareholders’ equity.

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

About Capital Bank Financial Corp.

Capital Bank Financial Corp. is a bank holding company, formed in 2009 to create a premier regional banking franchise in the southeastern United States. CBF is the parent of Capital Bank Corporation, a State of North Carolina chartered financial institution with $7.4 billion in total assets as of December 31, 2015, and 153 full-service banking offices throughout Florida, North and South Carolina, Tennessee and Virginia. To learn more about Capital Bank Financial Corporation, please visit www.capitalbank-us.com.

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share data)
(Unaudited)
		Three Months Ended
		Dec 31,  2015				Sep 30,  2015				Jun 30,  2015				Mar 31,  2015				Dec 31,  2014
Interest and dividend income		$	69,553			$	68,718			$	67,311			$	66,046			$	67,750
Interest expense		7,475				7,081				6,626				6,317				6,399
Net Interest Income		62,078				61,637				60,685				59,729				61,351
Provision (reversal) for loan and lease losses		1,089				799				1,299				(841		)		(637		)
Net interest income after provision (reversal) for loan and lease losses		60,989				60,838				59,386				60,570				61,988
Non-Interest Income
Service charges on deposit accounts		4,911				5,472				5,189				4,705				5,390
Debit card income		3,029				3,113				3,176				2,964				3,013
Fees on mortgage loans originated and sold		875				990				1,278				1,147				1,053
Investment advisory and trust fees		597				860				1,125				1,006				1,170
FDIC indemnification asset expense		(1,526		)		(1,418		)		(2,499		)		(2,439		)		(3,421		)
Investment securities gains (losses), net		54				(43		)		231				90				513
Other-than-temporary impairment loss on investments:
Gross impairment loss		—				—				(288		)		—				—
Other income		2,657				2,444				2,151				2,447				2,876
Total non-interest income		10,597				11,418				10,363				9,920				10,594
Non-Interest Expense
Salaries and employee benefits		20,219				22,620				21,881				23,881				23,871
Stock-based compensation expense		—				309				108				284				451
Net occupancy and equipment expense		7,385				7,621				7,754				8,129				8,020
Computer services		3,479				3,471				3,343				3,397				3,413
Software expense		2,061				2,198				2,082				2,142				2,074
Telecommunication expense		1,168				1,515				1,367				1,380				1,347
OREO valuation expense		341				2,075				1,710				1,390				1,554
Net gains on sales of OREO		(801		)		(351		)		(957		)		(7		)		(419		)
Foreclosed asset related expense		405				872				600				674				619
Loan workout expense		650				194				795				623				1,352
Conversion and merger related expense		704				—				—				—				—
Professional fees		1,529				1,958				1,723				1,734				2,116
Losses on extinguishment of debt		—				—				1,438				—				—
Restructuring charges, net		4,248				23				178				2,341				—
Contingent value right expense		—				—				4				116				334
Regulatory assessments		1,486				1,423				1,831				1,695				1,705
Other expense		4,882				4,418				5,645				4,868				4,495
Total non-interest expense		47,756				48,346				49,502				52,647				50,932
Income before income taxes		23,830				23,910				20,247				17,843				21,650
Income tax expense		8,809				8,589				7,257				6,454				7,814
Net income		$	15,021			$	15,321			$	12,990			$	11,389			$	13,836
Earnings per share:
Basic		$	0.35			$	0.34			$	0.28			$	0.25			$	0.29
Diluted		$	0.34			$	0.33			$	0.28			$	0.24			$	0.29
Weighted average shares outstanding:
Basic		43,499				45,359				45,913				46,294				46,964
Diluted		44,550				46,534				47,220				47,632				48,243

CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
(Unaudited)
	Dec 31,  2015				Sep 30,  2015				Dec 31,  2014
Assets
Cash and due from banks	$	87,985			$	80,642			$	106,193
Interest-bearing deposits in other banks	56,711				53,947				81,942
Total cash and cash equivalents	144,696				134,589				188,135
Trading securities	3,013				2,893				2,410
Investment securities available-for-sale at fair value (amortized cost $640,455,
$640,447 and $544,488, respectively)	637,329				647,423				555,893
Investment securities held-to-maturity at amortized cost (fair value $475,134,
$475,428 and $443,379, respectively)	472,505				467,544				436,962
Loans held for sale	10,569				8,515				5,516
Loans, net of deferred loan costs and fees	5,622,147				5,396,429				4,994,703
Less: Allowance for loan and lease losses	45,034				46,278				50,211
Loans, net	5,577,113				5,350,151				4,944,492
Other real estate owned	52,776				54,691				77,626
FDIC indemnification asset	6,725				9,789				16,762
Receivable from FDIC	678				1,052				3,661
Premises and equipment, net	159,149				161,342				173,176
Goodwill	134,522				134,522				134,522
Intangible assets, net	15,100				16,045				18,897
Deferred income tax asset, net	105,316				104,950				129,624
Other assets	129,988				167,690				143,734
Total Assets	$	7,449,479			$	7,261,196			$	6,831,410
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Non-interest bearing demand	$	1,121,160			$	1,099,252			$	1,054,128
Negotiable order of withdrawal	1,382,732				1,251,365				1,383,990
Money market	1,190,121				1,005,406				898,254
Savings	418,879				436,385				500,028
Time deposits	1,747,318				1,773,170				1,418,700
Total deposits	5,860,210				5,565,578				5,255,100
Federal Home Loan Bank advances	460,898				520,947				296,091
Short-term borrowings	12,410				16,708				23,407
Long-term borrowings	85,777				85,230				139,681
Accrued expenses and other liabilities	43,919				50,091				53,557
Total liabilities	$	6,463,214			$	6,238,554			$	5,767,836
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, 37,012
issued and 26,589 outstanding, 37,178 issued and 27,912 outstanding and 36,936 issued and 30,150 outstanding, respectively.	370				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 18,743 issued and 17,443 outstanding, respectively.	183				183				187
Additional paid in capital	1,076,415				1,079,229				1,081,628
Retained earnings	208,742				198,103				158,403
Accumulated other comprehensive loss	(5,196		)		2,578				(3,824		)
Treasury stock, at cost, 12,196, 11,039 and 8,086 shares, respectively	(294,249		)		(257,823		)		(173,190		)
Total shareholders’ equity	986,265				1,022,642				1,063,574
Total Liabilities and Shareholders’ Equity	$	7,449,479			$	7,261,196			$	6,831,410

CAPITAL BANK FINANCIAL CORP.
KEY METRICS
(Dollars in thousands)
(Unaudited)
	Three Months Ended
	Dec 31,  2015				Sep 30,  2015				Jun 30, 2015				Mar 31, 2015				Dec 31, 2014
Performance Ratios
Interest rate spread	3.57		%		3.68		%		3.79		%		3.83		%		3.92		%
Net interest margin	3.70		%		3.82		%		3.94		%		3.96		%		4.05		%
Return on average assets	0.82		%		0.86		%		0.75		%		0.66		%		0.82		%
Return on average shareholders’ equity	5.99		%		5.85		%		4.90		%		4.29		%		5.21		%
Efficiency ratio	65.71		%		66.18		%		69.67		%		75.59		%		70.79		%
Average interest-earning assets to average interest-bearing liabilities	129.55		%		132.10		%		133.39		%		131.94		%		131.89		%
Average loans receivable to average deposits	96.68		%		96.01		%		94.12		%		95.47		%		93.94		%
Yield on interest-earning assets	4.14		%		4.26		%		4.36		%		4.38		%		4.47		%
Cost of interest-bearing liabilities	0.57		%		0.58		%		0.57		%		0.55		%		0.55		%
Asset and Credit Quality Ratios-Total Loans
Non-accrual loans	$	8,945			$	9,647			$	9,807			$	11,482			$	9,484
Acquired impaired loans > 90 days past due and still accruing	$	59,194			$	72,023			$	83,515			$	115,865			$	121,137
Nonperforming loans to loans receivable	1.21		%		1.51		%		1.79		%		2.51		%		2.61		%
Nonperforming assets to total assets	1.63		%		1.88		%		2.23		%		2.85		%		3.05		%
Covered loans to total gross loans	1.30		%		1.45		%		3.39		%		3.71		%		3.95		%
ALLL to nonperforming assets	37.13		%		33.88		%		30.56		%		24.22		%		24.09		%
ALLL to total gross loans	0.80		%		0.86		%		0.92		%		0.95		%		1.00		%
Annualized net charge-offs/average loans	0.17		%		0.20		%		0.12		%		0.09		%		0.12		%
Asset and Credit Quality Ratios-New Loans
Nonperforming new loans to total new loans receivable	0.11		%		0.17		%		0.19		%		0.22		%		0.16		%
New loans ALLL to total gross new loans	0.47		%		0.51		%		0.59		%		0.61		%		0.63		%
Asset and Credit Quality Ratios-Acquired Loans
Nonperforming acquired loans to total acquired loans receivable	4.69		%		5.21		%		5.58		%		7.30		%		7.28		%
Covered acquired loans to total gross acquired loans	5.43		%		5.45		%		11.38		%		11.47		%		11.47		%
Acquired loans ALLL to total gross acquired loans	1.83		%		1.80		%		1.71		%		1.67		%		1.71		%
Capital Ratios (Company)
Total average shareholders’ equity to total average assets	13.67		%		14.79		%		15.41		%		15.48		%		15.72		%
Tangible common equity ratio (1)	11.46		%		12.26		%		13.15		%		13.22		%		13.63		%
Tier 1 leverage ratio (2)	12.67		%		13.60		%		14.66		%		14.42		%		14.28		%
Tier 1 risk-based capital ratio (2)	14.73		%		14.44		%		16.07		%		16.42		%		N/A
Tier 1 common capital ratio (2)	13.63		%		15.60		%		17.33		%		17.70		%		18.00		%
Total risk-based capital ratio (2)	15.47		%		16.38		%		18.18		%		18.66		%		19.05		%
Capital Ratios (Bank)
Tangible common equity ratio (1)	11.20		%		11.36		%		11.35		%		11.32		%		14.29		%
Tier 1 leverage ratio (2)	11.09		%		11.19		%		11.15		%		10.89		%		13.52		%
Tier 1 common capital ratio (2)	12.89		%		12.85		%		13.18		%		13.34		%		N/A
Tier 1 risk-based capital ratio (2)	12.89		%		12.85		%		13.18		%		13.34		%		17.04		%
Total risk-based capital ratio (2)	13.68		%		13.69		%		14.10		%		14.30		%		18.09		%

(1) See “Reconciliation of Non-GAAP Measures”
(2) December 31, 2015 regulatory capital ratios are preliminary. The Company became subject to Basel III capital rules on January 1, 2015.

CAPITAL BANK FINANCIAL CORP.
LOANS AND DEPOSITS
(Dollars in thousands)
(Unaudited)
	Dec 31,  2015				Sep 30,  2015				Jun 30,  2015				Mar 31,  2015				Dec 31, 2014
Loans
Non-owner occupied commercial real estate	$	866,392			$	847,225			$	834,351			$	823,763			$	798,556
Other commercial construction and land	196,795				192,283				182,283				180,166				200,755
Multifamily commercial real estate	80,708				82,762				76,754				88,980				89,132
1-4 family residential construction and land	93,242				87,193				78,572				66,547				68,658
Total commercial real estate	1,237,137				1,209,463				1,171,960				1,159,456				1,157,101
Owner occupied commercial real estate	1,104,972				1,065,875				1,030,111				1,038,493				1,046,736
Commercial and industrial	1,309,704				1,219,101				1,181,451				1,125,708				1,073,791
Lease financing	1,256				1,488				1,661				1,834				2,005
Total commercial	2,415,932				2,286,464				2,213,223				2,166,035				2,122,532
1-4 family residential	1,017,791				985,982				959,224				928,832				925,698
Home equity loans	375,276				373,993				375,271				379,946				378,475
Other consumer loans	436,478				401,324				341,590				296,753				272,453
Total consumer	1,829,545				1,761,299				1,676,085				1,605,531				1,576,626
Other	150,102				147,718				145,146				146,987				143,960
Total loans	$	5,632,716			$	5,404,944			$	5,206,414			$	5,078,009			$	5,000,219
Deposits
Non-interest bearing demand	$	1,121,160			$	1,099,252			$	1,132,085			$	1,114,423			$	1,054,128
Negotiable order of withdrawal	1,382,732				1,251,365				1,367,123				1,405,390				1,383,990
Money market	1,040,086				927,391				991,520				924,228				898,254
Savings	418,879				436,385				479,885				491,394				500,028
Total core deposits	3,962,857				3,714,393				3,970,613				3,935,435				3,836,400
Wholesale money market	150,035				78,015				—				—				—
Time deposits	1,747,318				1,773,170				1,521,810				1,428,121				1,418,700
Total deposits	$	5,860,210			$	5,565,578			$	5,492,423			$	5,363,556			$	5,255,100

CAPITAL BANK FINANCIAL CORP.
LEGACY CREDIT EXPENSES
(Dollars in thousands)
(Unaudited)
	Three Months Ended
	Dec 31,  2015				Sep 30, 2015				Jun 30, 2015				Mar 31, 2015				Dec. 31, 2014
Reversal of provision on legacy loans	$	(1,161	)		$	492			$	(523	)		$	(1,926	)		$	(1,411	)
FDIC indemnification asset expense	1,526				1,418				2,499				2,439				3,421
OREO valuation expense	341				2,075				1,710				1,390				1,554
Net gains on sales of OREO	(801		)		(351		)		(957		)		(7		)		(419		)
Foreclosed asset related expense	405				872				600				674				619
Loan workout expense	650				194				795				623				1,352
Salaries and employee benefits	549				797				796				832				993
Total legacy credit expenses	$	1,509			$	5,497			$	4,920			$	4,025			$	6,109

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
		Three Months Ended  December 31, 2015											Three Months Ended  September 30, 2015
		Average Balances				Interest				Yield / Rate			Average Balances				Interest				Yield / Rate
Interest earning assets
Loans (1)		$	5,496,222			$	63,035			4.55	%		$	5,261,793			$	62,461			4.71	%
Investment securities (1)		1,119,848				6,355				2.25	%		1,088,818				5,885				2.14	%
Interest-bearing deposits in other banks		40,177				23				0.23	%		36,596				19				0.21	%
Other earning assets (2)		42,473				553				5.17	%		54,960				760				5.49	%
Total interest earning assets		6,698,720				$	69,966			4.14	%		6,442,167				$	69,125			4.26	%
Non-interest earning assets		633,796											645,715
Total assets		$	7,332,516										$	7,087,882
Interest bearing liabilities
Time deposits		$	1,774,732			$	4,124			0.92	%		$	1,642,745			$	3,957			0.96	%
Money market		1,081,968				780				0.29	%		977,273				658				0.27	%
Negotiable order of withdrawal		1,286,737				529				0.16	%		1,291,439				540				0.17	%
Savings		426,686				236				0.22	%		452,058				241				0.21	%
Total interest bearing deposits		4,570,123				5,669				0.49	%		4,363,515				5,396				0.49	%
Short-term borrowings and FHLB advances		515,302				365				0.28	%		428,249				272				0.25	%
Long-term borrowings		85,438				1,441				6.69	%		84,922				1,413				6.60	%
Total interest bearing liabilities		5,170,863				$	7,475			0.57	%		4,876,686				$	7,081			0.58	%
Non-interest bearing demand		1,114,932											1,116,757
Other liabilities		44,479											46,117
Shareholders’ equity		1,002,242											1,048,322
Total liabilities and shareholders’ equity		$	7,332,516										$	7,087,882
Net interest income and spread						$	62,491			3.57	%						$	62,044			3.68	%
Net interest margin										3.70	%										3.82	%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
		Three Months Ended  December 31, 2015											Three Months Ended  December 31, 2014
		Average Balances				Interest				Yield / Rate			Average Balances				Interest				Yield / Rate
Interest earning assets
Loans (1)		$	5,496,222			$	63,035			4.55	%		$	4,929,599			$	62,053			4.99	%
Investment securities (1)		1,119,848				6,355				2.25	%		1,025,016				5,386				2.08	%
Interest-bearing deposits in other banks		40,177				23				0.23	%		43,532				24				0.22	%
Other earning assets (2)		42,473				553				5.17	%		47,601				659				5.49	%
Total interest earning assets		6,698,720				$	69,966			4.14	%		6,045,748				$	68,122			4.47	%
Non-interest earning assets		633,796											703,376
Total assets		$	7,332,516										$	6,749,124
Interest bearing liabilities
Time deposits		$	1,774,732			$	4,124			0.92	%		$	1,434,775			$	3,108			0.86	%
Money market		1,081,968				780				0.29	%		905,225				550				0.24	%
Negotiable order of withdrawal		1,286,737				529				0.16	%		1,351,295				591				0.17	%
Savings		426,686				236				0.22	%		508,979				279				0.22	%
Total interest bearing deposits		4,570,123				5,669				0.49	%		4,200,274				4,528				0.43	%
Short-term borrowings and FHLB advances		515,302				365				0.28	%		246,675				139				0.22	%
Long-term borrowings		85,438				1,441				6.69	%		136,876				1,732				5.02	%
Total interest bearing liabilities		5,170,863				$	7,475			0.57	%		4,583,825				$	6,399			0.55	%
Non-interest bearing demand		1,114,932											1,047,135
Other liabilities		44,479											56,883
Shareholders’ equity		1,002,242											1,061,281
Total liabilities and shareholders’ equity		$	7,332,516										$	6,749,124
Net interest income and spread						$	62,491			3.57	%						$	61,723			3.92	%
Net interest margin										3.70	%										4.05	%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
FULL YEAR AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)
		Year Ended  December 31, 2015											Year Ended  December 31, 2014
		Average Balances				Interest				Yield/ Rate			Average Balances				Interest				Yield/ Rate
Interest earning assets
Loans (1)		$	5,222,014			$	247,912			4.75	%		$	4,708,076			$	249,718			5.30	%
Investment securities (1)		1,065,699				22,679				2.13	%		1,072,551				19,997				1.86	%
Interest-bearing deposits in other banks		47,664				112				0.23	%		47,986				105				0.22	%
Other earning assets (2)		48,976				2,646				5.40	%		44,227				2,423				5.48	%
Total interest earning assets		6,384,353				$	273,349			4.28	%		5,872,840				$	272,243			4.64	%
Non-interest earning assets		657,146											744,625
Total assets		$	7,041,499										$	6,617,465
Interest bearing liabilities
Time deposits		$	1,574,100			$	14,481			0.92	%		$	1,394,916			$	11,943			0.86	%
Money market		979,650				2,591				0.26	%		930,158				2,151				0.23	%
Negotiable order of withdrawal		1,338,766				2,239				0.17	%		1,327,452				2,222				0.17	%
Savings		464,840				1,002				0.22	%		524,705				1,135				0.22	%
Total interest bearing deposits		4,357,356				20,313				0.47	%		4,177,231				17,451				0.42	%
Short-term borrowings and FHLB advances		381,786				960				0.25	%		166,187				385				0.23	%
Long-term borrowings		108,987				6,225				5.71	%		136,099				6,886				5.06	%
Total interest bearing liabilities		4,848,129				$	27,498			0.57	%		4,479,517				$	24,722			0.55	%
Non-interest bearing demand		1,105,553											1,000,994
Other liabilities		44,787											54,041
Shareholders’ equity		1,043,030											1,082,913
Total liabilities and shareholders’ equity		$	7,041,499										$	6,617,465
Net interest income and spread						$	245,851			3.71	%						$	247,521			4.09	%
Net interest margin										3.85	%										4.21	%

(1) Presented on a fully tax equivalent basis
(2) Includes Federal Reserve Bank, Federal Home Loan Bank and Bankers Bank stocks

CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in thousands)
(Unaudited)
CORE NET INCOME		Three Months Ended
		December 31, 2015								September 30, 2015								December 31, 2014
Net Income		$	15,021			$	15,021			$	15,321			$	15,321			$	13,836			$	13,836
		Pre-Tax				After-Tax				Pre-Tax				After-Tax				Pre-Tax				After-Tax
Adjustments
Non-interest income
Security gains*		(54		)		(33		)		43				26				(513		)		(313		)
Non-interest expense
Stock-based compensation expense*		—				—				—				—				239				146
Contingent value right expense		—				—				—				—				334				334
Severance expense		—				—				63				39				—				—
Restructuring expense		32				20				23				14				—				—
Conversion costs and merger tax deductible		33				20				—				—				—				—
Legal merger non deductible		673				673				—				—				—				—
Contract Termination		4,215				2,594				—				—				—				—
Tax effect of adjustments*		(1,625		)			N/A			(50		)			N/A			107					N/A
Core Net Income		$	18,295			$	18,295			$	15,400			$	15,400			$	14,003			$	14,003
Diluted shares		$	44,550							$	46,534							$	48,243
Core Net Income per share		$	0.41							$	0.33							$	0.29
Less: FDIC indemnification asset expense (non-single family)		$	430							$	964
Average Assets		$	7,332,516							$	7,087,882							$	6,749,124
ROA**		0.82		%						0.86		%						0.82		%
Core ROA***		1.00		%						0.87		%						0.83		%
ROA** (excluding FDIC indemnification asset expense)		0.84		%						0.92		%
Core ROA** (excluding FDIC indemnification asset expense)		1.02		%						0.92		%

* Tax effected at an income tax rate of 37.0%
** 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 RATIO		Three Months Ended
		Dec 31  2015				Sep 30  2015				Jun 30  2015				Mar 31  2015				Dec 31  2014
Net interest income		$	62,078			$	61,637			$	60,685			$	59,729			$	61,351
Reported non-interest income		10,597				11,418				10,363				9,920				10,594
Less: Securities gains (losses)		54				(43		)		(57		)		90				513
Core non-interest income		$	10,543			$	11,461			$	10,420			$	9,830			$	10,081
Reported non-interest expense		$	47,756			$	48,346			$	49,502			$	52,647			$	50,932
Less: Stock-based compensation expense		—				—				—				95				239
Contingent value right expense		—				—				4				116				334
Severance expense		—				63				14				111				—
Restructuring expense		—				23				178				2,341				—
Loss on extinguishment of debt		—				—				1,438				—				—
Conversion Costs and merger		33				—				—				—				—
Contract termination		4,215				—				—				—				—
Conversion and severance expenses (conversion and merger expenses and salaries and employees benefits)		704				—				—				—				—
Core non-interest expense		$	42,804			$	48,260			$	47,868			$	49,984			$	50,359
Less: FDIC indemnification asset expense   (non-single family)		$	683			$	1,506			$	2,253
Efficiency ratio*		65.71		%		66.18		%		69.67		%		75.59		%		70.79		%
Core efficiency ratio**		58.94		%		66.02		%		67.32		%		71.86		%		70.50		%
Efficiency ratio*   (excluding FDIC indemnification expense)		65.10		%		64.84		%		67.53		%
Core efficiency ratio**    (excluding FDIC indemnification expense)		58.39		%		64.69		%		65.25		%

 
* 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
		Dec 31,  2015				Sep 30,  2015				Jun 30,  2015				Mar 31,  2015				Dec 31,  2014
Total shareholders’ equity		$	986,265			$	1,022,642			$	1,059,346			$	1,054,349			$	1,063,574
Less: goodwill, core deposits intangibles, net of taxes		(143,863		)		(144,447		)		(145,035		)		(145,622		)		(146,168		)
Tangible book value*		$	842,402			$	878,195			$	914,311			$	908,727			$	917,406
Common shares outstanding		43,143				44,466				46,440				46,632				47,593
Tangible book value per share		$	19.53			$	19.75			$	19.69			$	19.49			$	19.28

* 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
		Dec 31,  2015				Sep 30,  2015				Jun 30,  2015				Mar 31,  2015				Dec 31,  2014
Total shareholders’ equity		$	986,265			$	1,022,642			$	1,059,346			$	1,054,349			$	1,063,574
Less: goodwill, core deposits intangibles		(149,622		)		(150,567		)		(151,517		)		(152,465		)		(153,419		)
Tangible common equity		$	836,643			$	872,075			$	907,829			$	901,884			$	910,155
Total assets		$	7,449,479			$	7,261,196			$	7,054,501			$	6,976,736			$	6,831,410
Less: goodwill, core deposits intangibles		(149,622		)		(150,567		)		(151,517		)		(152,465		)		(153,419		)
Tangible assets		$	7,299,857			$	7,110,629			$	6,902,984			$	6,824,271			$	6,677,991
Tangible common equity ratio		11.46		%		12.26		%		13.15		%		13.22		%		13.63		%

 

CONTACT:
Kenneth A. Posner
Chief of Strategic Planning and Investor Relations
Phone: (212) 399-4020
E-mail: Kposner@cbfcorp.com

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