EX-99.1 2 exh_991.htm EXHIBIT 99.1 exh_991.htm
EXHIBIT 99.1
 
 
 
CONTACT:
Kenneth A. Posner
Chief of Investment Analytics and Investor Relations Executive
Phone: (212) 399-4020
E-mail: Kposner@cbfcorp.com

CAPITAL BANK FINANCIAL CORP. REPORTS THIRD QUARTER NET INCOME OF $11.4 MILLION OR $0.22 PER DILUTED SHARE AND CORE NET INCOME OF $12.7 MILLION OR $0.24 PER DILUTED SHARE
 
 
·
Loan originations increased 68% from the prior year third quarter to $291.3 million;
 
·
Total cost of deposits declined during the quarter by five basis points to 0.38%;
 
·
Net interest margin increased during the quarter by thirteen basis points to 4.45%;
 
·
Resolved $79.0 million in problem assets on strong long collections and REO sales;
 
·
Repurchased 600,000 shares and ended the quarter with a Tier 1 leverage ratio of 14.5%;
 
·
Recorded Southern Community Financial Corporation measurement period adjustments, which increased estimated fair values of loans by $43.2 million.

Coral Gables, Fla. (October 17, 2013) - Capital Bank Financial Corp. (Nasdaq: CBF) (the “Company”) today reported third quarter 2013 net income of $11.4 million, or $0.22 per diluted share, an increase of 29% compared to net income of $9.4 million, or $0.17 per diluted share, for the second quarter of 2013.  Core net income for the third quarter of 2013, increased 20% to $12.7 million, or $0.24 per diluted share, compared to core net income of $10.6 million, or $0.20 per diluted share for the second quarter of 2013.

Core adjustments for the third quarter of 2013 included $1.1 million of non-cash equity compensation associated with original founder awards, $0.8 million of income from the reduction of contingent value right (“CVR”) expected payouts, a $0.4 million gain on extinguishment of debt related to $8.0 million in prepayments of trust preferred securities, a $0.1 million loss on investment securities, and a tax adjustment of $1.6 million associated with changes in certain statutory rates that were enacted into law during the third quarter, which are effective in future years. The reconciliation of non-GAAP measures (including core net income, tangible book value and tangible book value per share), which the Company believes facilitate the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.  In addition, the reconciliation of the impact of measurement period adjustments details the retrospective adjustments and their impact on the operating results of the Company during the fourth quarter of 2012 and the first and second quarters of 2013.

Gene Taylor, Chairman and Chief Executive Officer of Capital Bank Financial Corp., commented, “I am very pleased with our improving return on assets and continued momentum in loan originations, which were up 68% year-over-year.  We remain committed to further improvements in return on assets and return on tangible equity and to generating organic growth in loans and core deposits.” 
 
 
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CBF Reports Third Quarter Results
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October 17, 2013
 
Chris Marshall, Chief Financial Officer of Capital Bank Financial Corp., added, “Our third quarter results reflect consistent improvement across our company, but most importantly in our bottom line.  Despite the sluggish economy, we continue to generate new business with top tier clients, while carefully exiting less profitable, higher risk relationships. ”

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 Financial Corporation on October 1, 2012.  Accordingly, operating results for the three and nine months ended September 30, 2013 and 2012 are not generally comparable.

As previously discussed in the Company’s annual report on Form 10-K, the initial estimated fair values of assets acquired and liabilities assumed for the acquisition of Southern Community Financial Corporation were based on the information that was available at the time to make the preliminary estimates of fair value.  During the third quarter of 2013, we concluded that the underlying asset quality should lead to stronger than initially expected credit performance for the Southern Community Financial Corporation loan portfolio, which required revisions to the original estimated fair value amounts.  As required by the acquisition method of accounting, the Company retrospectively adjusted the acquisition date balance sheet and the results of operations of the fourth quarter of 2012 and first two quarters of 2013 to reflect the following: (1) increase in the estimated fair value of the loan portfolio; (2) increase in the associated CVR ; (3)  decrease in the deferred tax asset related to the increased value of loans; and (4) decrease in Goodwill caused by the net effect of these adjustments. All amounts presented in this press release reflect such adjustments.  A reconciliation of their impact on the acquired assets, assumed liabilities and prior period operating results is included in tabular form at the end of this release.

Loan Portfolio and Composition

During the third quarter, the loan portfolio decreased by $121.8 million, or 3%, to $4.5 billion as originations of $291.3 million were offset by $65.8 million of resolutions of problem loans and $337.0 and $10.3 million of principal repayments and transfers to OREO, respectively.

Commenting on this performance, Mr. Taylor stated, “We are seeing intense competition involving long-term fixed rates and unattractive credit terms for commercial and commercial real estate loans that we believe would be imprudent for us to match.  To achieve our loan growth goals in this difficult environment, we are continuing to invest in our salesforce and realigning certain parts of the commercial team to more effectively identify and manage payoff risk.”

 
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CBF Reports Third Quarter Results
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October 17, 2013

The relative composition of the Company’s loan portfolio at the end of the third and second quarters of 2013 and the fourth quarter of 2012, was as follows:

   
September 30,
2013
   
June 30,
2013
   
December 31,
2012
 
Commercial real estate
    29 %     29 %     31 %
Commercial
    39 %     39 %     37 %
Consumer
    30 %     30 %     30 %
Other
    2 %     2 %     2 %
Total
    100 %     100 %     100 %

At September 30, 2013, the mix of the loan portfolio remained consistent with the prior quarter.

Deposits , Composition and Yields

During the third quarter, total deposits decreased to $5.3 billion from $5.5 billion at June 30, 2013. The $202.1 million decrease was mainly due to continued planned shrinkage in high-cost legacy time deposits.  Core deposits now make up 70.0% of total deposits as compared to 67.5% in the second quarter of 2013.

The cost of deposits declined during the third quarter to 0.38% from 0.43% for the second quarter of 2013.  Lower average balances and rates in time deposits coupled with increased noninterest bearing accounts drove the improvement during the third quarter.  The costs of core deposits remained flat at 0.14%.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2013 remained consistent with the second quarter of 2013 at $65.4 million and increased $5.0 million, or 8%, from $60.3 million for the third quarter of 2012.  The increase in net interest income over the prior year third quarter was mainly due to increased loan and securities balances attributable to the acquisition of Southern Community Financial Corporation, a decline in cost of all deposit types and the extinguishment of debt through the prepayment of $8.0 million of high coupon trust preferred securities during the third quarter of 2013.

The net interest margin for the third quarter was 4.45%, an increase of thirteen basis points, from the second quarter of 2013, which was also largely driven by additional accretion from legacy loan portfolios, the decline in average balances and rates in time deposits and the reduction in high coupon trust preferred debt pre-paid in the third quarter.  New loan originations, which were booked at an average yield of 3.98%, partially offset funding cost savings and the higher loan yields on legacy portfolios.  The net interest margin remained consistent with the third quarter of 2012.
 
 
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CBF Reports Third Quarter Results
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October 17, 2013
 
Non-Interest Income

Non-interest income increased $1.8 million to $15.3 million for the third quarter of 2013 from $13.5 million for the second quarter of 2013 and decreased $5.0 million from $20.3 million for the third quarter of 2012.  The increase during the quarter was mainly driven by gains of $1.5 million and $0.9 million on the sale of two small investment company partnership interests and favorable legal settlements, respectively, and a quarter-over-quarter decrease in FDIC indemnification asset amortization of $0.6 million. The higher second quarter amortization resulted from lower credit loss expectations, which remained consistent with the Company’s most recent estimates for covered loans.  The decrease in non-interest income over the prior year third quarter was mainly due to the decrease in investment securities gains and higher FDIC indemnification asset amortization.  The higher prior-year third quarter investment securities gains were as a result of the Company’s strategy to sell non-core assets and lower premium and prepayment risk in our investment portfolio.

Provision for Loan Losses and Credit Quality

The provision for loan losses of $1.0 million recorded for the third quarter of 2013 includes a $1.1 million provision for originated loans and $0.1 million reversal due to improvements in cash flow expectations on certain acquired impaired loan pools.  Net charge-offs for the third quarter of 2013 were $1.4 million.

The provision for originated loans served to increase the allowance for originated loans to $17.3 million, or 0.88% of $2.0 billion in originated loans outstanding.

During the third quarter, non-performing loans decreased by $36.2 million to $275.3 million, or 6.1% of total loans, from $311.5 million, or 6.8% of total loans at the end of the second quarter of 2013.  Acquired impaired loans greater than 90 days past due and still accruing decreased by $39.0 million or 13.0% to $261.5 million at the end of the quarter.   Nonaccrual loans increased to 0.57% of total non-purchased credit impaired loans from 0.48% at the end of the second quarter.

Non-Interest Expense

Non-interest expense decreased to $59.3 million for the third quarter of 2013 from $59.4 million for the second quarter of 2013 and decreased from $69.4 million for the third quarter of 2012.  The decrease in non-interest expense over the prior year third quarter was mainly due to a reduction in non-cash equity compensation, conversion and merger related expenses and foreclosed asset related expenses along with a gain on the prepayment of $8.0 million of high coupon trust preferred securities during the third quarter of 2013.

Income Tax Expense

Income tax expense was $9.0 million for the third quarter of 2013, an effective income tax rate of 44.0%.  Income tax expense was $5.6 million for the second quarter of 2013, an effective income tax rate of 37.2%.  The increase in effective rate is mainly due to the impact of a $1.6 million charge as a result of changes in certain statutory rates that were enacted into law during the third quarter, which are effective in future years.  For the third quarter of 2012, the Company reported an income tax benefit of  $32.4 million as a result of an improvement in forecasted tax deductible credit losses from acquired loans.
 
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CBF Reports Third Quarter Results
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October 17, 2013
 
Financial Position

Total assets decreased by $205.9 million to $6.6 billion as of September 30, 2013 from $6.8 billion as of June 30, 2013, mainly due to a $202.1 million reduction in deposits and its associated effect on cash.

Cash and cash equivalents increased to $163.7 million at the end of the third quarter from $156.5 million as of June 30, 2013.  The Company’s investment securities decreased by $52.1 million mainly due to principal payments partially offset by an improvement in the market value of our available-for-sale securities as a result of favorable interest rate fluctuations.  During the third quarter of 2013, the Company transferred $511.0 million of available-for-sale securities to held-to-maturity securities, at fair value, reflecting the Company’s intent and ability to hold those securities to maturity. The related $9.7 million of unrealized holding loss, net of tax, related to the assets transferred is retained in accumulated other comprehensive (loss) income, a component of shareholders equity, and is being amortized as an adjustment to interest income over the remaining life of the securities. This will offset the impact of amortization of the net discount created in the transfer. There were no gains or losses recognized as a result of this transfer.

Total shareholders’ equity increased by $5.1 million during the quarter to $1.1 billion at September 30, 2013.  Tangible book value per share was $18.33 as of September 30, 2013.  During the third quarter of 2013, the Company’s Board of Directors authorized a $100.0 million stock repurchase program, and the Company repurchased approximately 600,000 shares of its common stock at an average price of $21.50 per share.

The Company’s national bank subsidiary, Capital Bank N.A., reported Tier 1, Tier 1 Risk-Based and Total Risk-Based capital ratios of 12.8%, 17.5% and 18.7%, respectively, as of September 30, 2013, under currently applicable regulations.

Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time.  The number to call for this interactive teleconference is (719) 325-2454, and the confirmation pass code is 1681125. 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.  An on-line replay of the call will be available for 90 days.  A telephonic replay of the conference call will be available through October 24, 2013, by dialing (719) 457-0820 and entering pass code 1681125.  
 

 
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CBF Reports Third Quarter Results
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October 17, 2013
 
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 the acquired business into our business model; (7) projected population and income growth in our targeted market areas; (8) competitive pressures in our markets and industry; and (9) 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, 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 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 is a useful for both investors and management to understand the effects of certain non-interest items and provides an alternative view of the Company’s performance over time and in comparison to the Company’s competitors.  Core net income 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.

 
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October 17, 2013
 
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 analyses 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 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 $6.6 billion in total assets as of September 30, 2013 and 163 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.
 

 
 
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CBF Reports Third Quarter Results
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October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
   
For the Quarter Ended
 
   
September 30,
2013
   
June 30,
2013
   
March 31,
2013
   
December 31,
2012
   
September 30,
2012
 
Interest and dividend income
  $ 72,480     $ 73,189     $ 76,106     $ 77,808     $ 69,438  
Interest expense
    7,094       7,837       8,992       10,115       9,104  
Net Interest Income
    65,386       65,352       67,114       67,693       60,334  
                                         
Provision for loan losses
    984       4,467       5,402       6,736       5,771  
Non-Interest Income
                                       
Service charges on deposit accounts
    6,034       6,335       6,342       6,630       5,058  
Debit card income
    2,854       2,979       2,836       2,724       2,442  
Fees on mortgage loans originated and sold
    1,477       1,601       1,241       2,074       1,612  
Investment advisory and trust fees
    740       357       283       378       253  
FDIC indemnification asset (amortization) accretion
    (502 )     (1,108 )     (2,169 )     317       850  
Investment securities (losses) gains, net
    (247 )     205       -       9       4,918  
Other-than-temporary impairment losses on investments:
                                       
Gross impairment loss
    (54 )     -       -       -       -  
Less: Impairments recognized in other comprehensive income
    -       -       -       -       -  
Net impairment losses recognized in earnings
    (54 )     -       -       -       -  
                                         
Other income
    4,978       3,137       2,376       3,306       5,135  
Total non-interest income
    15,280       13,506       10,909       15,438       20,268  
                                         
Non-Interest Expense
                                       
Salaries & employee benefits
    22,606       22,660       20,819       24,661       21,295  
Non-cash equity compensation
    1,371       1,364       1,577       3,753       4,242  
Net occupancy expense
    10,740       10,503       10,730       11,031       9,355  
OREO Valuation Expense
    6,045       6,539       6,260       6,999       8,633  
Loss (gain) on sales of OREO
    188       (2,535 )     (857 )     107       (1,514 )
Foreclosed asset related expense
    1,265       2,225       1,419       2,116       2,530  
Loan workout expenses
    2,063       2,236       2,064       1,753       2,310  
Conversion and merger related expenses
    (19 )     140       113       604       3,894  
Professional fees
    2,426       2,344       2,648       3,426       2,759  
CVR (income) expense
    (776 )     428       2,883       366       (179 )
(Gain) loss on extinguishment of debt
    (430 )     -       308       -       2,946  
Legal settlement expense
    535       -       -       -       1,755  
Impairment of intangible asset
    -       -       -       202       -  
Other expenses
    13,249       13,478       13,349       13,702       11,345  
Total non-interest expense
    59,263       59,382       61,313       68,720       69,371  
                                         
Income before income taxes
    20,419       15,009       11,308       7,675       5,460  
Income tax expense (benefit)
    8,975       5,580       5,543       3,031       (32,385 )
Net Income Before Attribution of Noncontrolling Interest
    11,444       9,429       5,765       4,644       37,845  
Net income attributable to non-controlling interests
    -       -       -       -       2,762  
Net income attributable to Capital Bank Financial Corp.
  $ 11,444     $ 9,429     $ 5,765     $ 4,644     $ 35,083  
 Basic Earnings Per Common Share
  $ 0.22     $ 0.18     $ 0.11     $ 0.09     $ 0.76  
 Diluted Earnings Per Common Share
  $ 0.22     $ 0.17     $ 0.11     $ 0.08     $ 0.75  
 
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CBF Reports Third Quarter Results
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October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per share data)
  (Unaudited)
 
   
September 30, 2013
   
June 30, 2013
   
December 31, 2012
 
Assets
                 
Cash and due from banks
  $ 115,671     $ 99,958     $ 142,361  
Interest-bearing deposits with banks
    48,033       56,505       592,375  
Federal funds sold
    -       -       138  
                         
Total cash and cash equivalents
    163,704       156,463       734,874  
                         
Trading securities
    6,091       13       -  
Investment securities held- to- maturity at amortized cost
    482,986       -       -  
Investment securities available-for-sale at fair value
    717,602       1,258,752       1,006,744  
                         
Loans held for sale
    8,918       20,702       11,276  
                         
Loans, net of deferred loan costs and fees
    4,468,362       4,578,419       4,724,214  
Less:  Allowance for loan losses
    56,393       56,832       57,262  
                         
Loans, net
    4,411,969       4,521,587       4,666,952  
                         
Other real estate owned
    129,654       142,792       154,093  
Indemnification asset
    36,837       38,730       49,417  
Receivable from FDIC
    8,439       7,573       8,486  
Premises and equipment, net
    183,498       186,368       198,457  
Goodwill
    131,987       131,987       131,987  
Intangible assets, net
    24,681       25,996       28,636  
Deferred income tax asset, net
    177,928       187,414       183,157  
Accrued interest receivable and other assets
    117,017       128,859       132,874  
                         
Total Assets
  $ 6,601,311     $ 6,807,236     $ 7,306,953  
                         
Liabilities and Shareholders’ Equity
                       
Liabilities
                       
Deposits:
                       
Noninterest-bearing demand
  $ 937,152     $ 909,428     $ 895,274  
Negotiable order of withdrawal accounts
    1,281,036       1,266,388       1,288,742  
Money market
    938,854       1,002,907       1,125,967  
Savings
    531,655       511,616       492,187  
Time deposits
    1,579,772       1,780,201       2,070,698  
                         
Total deposits
    5,268,469       5,470,540       5,872,868  
                         
Federal Home Loan Bank advances
    1,324       1,369       1,460  
Short-term borrowings
    23,224       28,964       41,508  
Long-term borrowings
    138,290       146,753       180,430  
Accrued interest payable and other liabilities
    62,179       56,859       55,344  
                         
Total liabilities
    5,493,486       5,704,485       6,151,610  
                         
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, 36,177 issued and 32,738 outstanding and 36,075 issued and 33,236 outstanding and 33,025 shares issued and outstanding, respectively
    361       360       330  
Common stock-Class B $0.01 par value: 200,000 shares authorized, 19,682 and 19,783 and 22,821 shares issued and outstanding, respectively
    197       198       228  
Additional paid in capital
    1,081,108       1,079,736       1,076,797  
Retained earnings
    95,279       83,835       68,641  
Accumulated other comprehensive (loss) income
    (6,236 )     (11,394 )     9,347  
Treasury stock, at cost, 3,439 and 2,839 and 0 shares, respectively
    (62,884 )     (49,984 )     -  
                         
Total shareholders’ equity
    1,107,825       1,102,751       1,155,343  
Total Liabilities and Shareholders’ Equity
  $ 6,601,311     $ 6,807,236     $ 7,306,953  


 
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CBF Reports Third Quarter Results
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October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
(In thousands)
(Unaudited)

   
As of
   
As of
   
As of
 
Loans
 
September 30, 2013
   
June 30, 2013
   
December 31, 2012
 
                   
Non-owner occupied commercial real estate
  $ 803,954     $ 817,211     $ 904,215  
Other commercial construction and land
    326,040       366,586       415,969  
Multifamily commercial real estate
    72,627       74,748       84,838  
1-4 family residential construction and land
    76,013       74,703       91,680  
Total commercial real estate
    1,278,634       1,333,248       1,496,702  
                         
Owner occupied commercial real estate
    1,052,994       1,061,522       1,065,900  
Commercial and industrial loans
    681,882       731,538       665,507  
Leases
    2,554       -       -  
Total commercial
    1,737,430       1,793,060       1,731,407  
                         
1-4 family residential
    816,915       829,715       838,557  
Home equity loans
    386,071       397,825       430,887  
Other consumer loans
    158,452       147,196       136,806  
Total consumer
    1,361,438       1,374,736       1,406,250  
                         
Other
    99,778       98,077       101,131  
                         
Total loans
  $ 4,477,280     $ 4,599,121     $ 4,735,490  
Deposits
                       
                         
Noninterest-bearing demand
  $ 937,152     $ 909,428     $ 895,274  
Negotiable order of withdrawal accounts
    1,281,036       1,266,388       1,288,742  
Money market
    938,854       1,002,907       1,125,967  
Savings
    531,655       511,616       492,187  
Time deposits
    1,579,772       1,780,201       2,070,698  
Total deposits
  $ 5,268,469     $ 5,470,540     $ 5,872,868  

 
- MORE -

 
CBF Reports Third Quarter Results
Page 11
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
(Dollars and shares in thousands, except per share data)
(Unaudited)

   
As of or for the Quarter Ended
 
   
September 30,
2013
   
June 30,
2013
   
March 31,
2013
   
December 31,
2012
   
September 30,
2012
 
Net loan charge-offs (recoveries)
  $ 1,422     $ 4,806     $ 5,493     $ 1,060     $ (344 )
Allowance for loan losses
  $ 56,393     $ 56,832     $ 57,171     $ 57,262     $ 51,587  
Allowance for loan losses/ total loans
    1.26 %     1.24 %     1.23 %     1.21 %     1.27 %
Non-accrual loans
  $ 13,824     $ 11,054     $ 18,362     $ 14,011     $ 11,192  
Acquired impaired loans >90 days past due and still accruing
  $ 261,470     $ 300,452     $ 344,012     $ 352,070     $ 326,453  
Annualized net charge-offs/average loans
    0.04 %     0.21 %     0.47 %     0.02 %     N/A  
                                         
Total interest-earning assets
  $ 5,768,187     $ 5,954,573     $ 6,231,405     $ 6,373,827     $ 5,459,668  
Other real estate owned
  $ 129,654     $ 142,792     $ 151,613     $ 154,093     $ 144,621  
Goodwill and intangibles, net of accumulated amortization
  $ 156,667     $ 157,983     $ 159,302     $ 160,623     $ 139,330  
Tax equivalent net interest margin
    4.45 %     4.32 %     4.33 %     4.18 %     4.45 %
Efficiency ratio
    73.47 %     75.30 %     78.58 %     82.66 %     86.07 %
ROA
    0.69 %     0.54 %     0.32 %     0.25 %     2.44 %
ROE
    4.12 %     3.30 %     1.98 %     1.61 %     14.68 %
Average diluted common shares outstanding
    52,411       54,062       55,493       55,401       46,738  
End of quarter common shares outstanding
    52,419       53,019       55,703       55,846       55,844  
Average equity
  $ 1,111,550     $ 1,142,000     $ 1,164,861     $ 1,153,091     $ 1,031,230  
Total equity
  $ 1,107,825     $ 1,102,751     $ 1,160,866     $ 1,155,343     $ 1,150,131  
Book value per common share
  $ 21.13     $ 20.80     $ 20.84     $ 20.69     $ 20.60  
Tangible book value per common share
  $ 18.33     $ 18.01     $ 18.17     $ 18.01     $ 18.26  
Tier 1 capital to average assets - Capital Bank, N.A.
    12.8 %     12.7 %     12.1 %     11.7 %     12.0 %
Tier 1 capital to risk weighted assets – Capital Bank, N.A.
    17.5 %     17.7 %     17.4 %     17.1 %     17.5 %
Total capital to risk weighted assets – Capital Bank, N.A.
    18.7 %     18.9 %     18.7 %     18.3 %     18.8 %
Average assets
  $ 6,680,667     $ 6,962,653     $ 7,200,085     $ 7,363,199     $ 6,198,852  
Total assets
  $ 6,601,311     $ 6,807,236     $ 7,095,605     $ 7,306,953     $ 6,237,178  


 
- MORE -

 
CBF Reports Third Quarter Results
Page 12
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)

   
Quarter Ended
September 30, 2013
   
Quarter Ended
June 30, 2013
 
   
Average
Balances
   
Interest*
   
Yield*
   
Average
Balances
   
Interest*
   
Yield*
 
Loans
  $ 4,514,747     $ 67,524       5.93 %   $ 4,604,224     $ 68,363       5.96 %
Investments
    1,230,771       4,639       1.50 %     1,292,249       4,525       1.40 %
Interest bearing deposits
    61,995       37       0.24 %     164,784       102       0.25 %
Federal Home Loan Bank stock
    40,195       533       5.26 %     36,278       462       5.11 %
Total interest earning assets
    5,847,708       72,733       4.93 %     6,097,535       73,452       4.83 %
Non-interest earning assets
    832,959                       865,118                  
Total assets
  $ 6,680,667                     $ 6,962,653                  
                                                 
Interest bearing liabilities:
                                               
Time
  $ 1,660,373     $ 3,792       0.91 %   $ 1,853,592     $ 4,598       0.99 %
Money market
    977,698       544       0.22 %     1,055,635       575       0.22 %
NOW
    1,260,477       521       0.16 %     1,263,133       499       0.16 %
Savings
    524,728       276       0.21 %     506,997       255       0.20 %
Total interest-bearing deposits
    4,423,276       5,133       0.46 %     4,679,357       5,927       0.51 %
Short-term borrowings and FHLB advances
    34,820       7       0.08 %     38,794       15       0.16 %
Long-term borrowings
    140,938       1,953       5.50 %     142,541       1,894       5.33 %
Total interest bearing liabilities
    4,599,034       7,093       0.61 %     4,860,692       7,836       0.65 %
                                                 
Non-interest bearing deposits
    914,260                       903,637                  
Other liabilities
    55,823                       56,324                  
Shareholders’ equity
    1,111,550                       1,142,000                  
Total liabilities and shareholders’ equity
  $ 6,680,667                     $ 6,962,653                  
                                                 
Net interest income and spread
          $ 65,640       4.32 %           $ 65,616       4.18 %
                                                 
Net interest margin
                    4.45 %                     4.32 %
 
_______
* Presented on a fully tax equivalent basis
 
- MORE -

 
CBF Reports Third Quarter Results
Page 13
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
QUARTERLY AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)

   
Quarter Ended
September 30, 2013
   
Quarter Ended
September 30, 2012
 
   
Average
Balances
   
Interest*
   
Yield*
   
Average
Balances
   
Interest*
   
Yield*
 
Loans
  $ 4,514,747     $ 67,524       5.93 %   $ 4,120,374     $ 65,031       6.28 %
Investments
    1,230,771       4,639       1.50 %     982,750       4,025       1.63 %
Interest bearing deposits
    61,995       37       0.24 %     280,164       181       0.26 %
Federal Home Loan Bank stock
    40,195       533       5.26 %     39,224       460       4.67 %
Total interest earning assets
    5,847,708       72,733       4.93 %     5,422,512       69,697       5.11 %
Non-interest earning assets
    832,959                       776,340                  
Total assets
  $ 6,680,667                     $ 6,198,852                  
                                                 
Interest bearing liabilities:
                                               
Time
  $ 1,660,373     $ 3,792       0.91 %   $ 1,857,122     $ 5,341       1.14 %
Money market
    977,698       544       0.22 %     876,891       758       0.34 %
NOW
    1,260,477       521       0.16 %     1,044,506       636       0.24 %
Savings
    524,728       276       0.21 %     399,300       288       0.29 %
Total interest-bearing deposits
    4,423,276       5,133       0.46 %     4,177,819       7,023       0.67 %
Short-term borrowings and FHLB advances
    34,820       7       0.08 %     80,336       130       0.64 %
Long-term borrowings
    140,938       1,953       5.50 %     135,893       1,951       5.71 %
Total interest bearing liabilities
    4,599,034       7,093       0.61 %     4,394,048       9,104       0.82 %
                                                 
Non-interest bearing deposits
    914,260                       722,987                  
Other liabilities
    55,823                       50,587                  
Shareholders’ equity
    1,111,550                       1,031,230                  
Total liabilities and shareholders’ equity
  $ 6,680,667                     $ 6,198,852                  
                                                 
Net interest income and spread
          $ 65,640       4.32 %           $ 60,593       4.29 %
                                                 
Net interest margin
                    4.45 %                     4.45 %
 
_______
* Presented on a fully tax equivalent basis
 
- MORE -

 
CBF Reports Third Quarter Results
Page 14
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
NINE MONTH AVERAGE BALANCES AND YIELDS
(Dollars in thousands)
(Unaudited)

   
Nine Months Ended
September 30, 2013
   
Nine Months Ended
September 30, 2012
 
   
Average
Balances
   
Interest*
   
Yield*
   
Average
Balances
   
Interest*
   
Yield*
 
Loans
  $ 4,597,730     $ 207,842       6.04 %   $ 4,195,229     $ 199,990       6.37 %
Investments
    1,177,377       12,714       1.44 %     1,079,141       15,584       1.93 %
Interest bearing deposits
    269,121       510       0.25 %     266,805       476       0.24 %
Federal Home Loan Bank stock
    38,451       1,485       5.16 %     38,641       1,293       4.47 %
Total interest earning assets
    6,082,679       222,551       4.89 %     5,579,816       217,343       5.20 %
Non-interest earning assets
    859,025                       789,630                  
Total assets
  $ 6,941,704                     $ 6,369,446                  
                                                 
Interest bearing liabilities:
                                               
Time
  $ 1,832,242     $ 13,429       0.98 %   $ 1,985,543     $ 16,141       1.09 %
Money market
    1,048,559       1,748       0.22 %     892,059       3,057       0.46 %
NOW
    1,266,451       1,575       0.17 %     1,065,208       2,152       0.27 %
Savings
    511,890       789       0.21 %     356,267       831       0.31 %
Total interest-bearing deposits
    4,659,142       17,541       0.50 %     4,299,077       22,181       0.69 %
Short-term borrowings and  FHLB advances
    38,924       36       0.12 %     143,215       937       0.87 %
Long-term borrowings
    151,354       6,346       5.61 %     135,464       5,823       5.74 %
Total interest bearing liabilities
    4,849,420       23,923       0.66 %     4,577,756       28,941       0.84 %
                                                 
Non-interest bearing deposits
    902,337                       732,041                  
Other liabilities
    50,639                       46,194                  
Shareholders’ equity
    1,139,308                       1,013,455                  
Total liabilities and shareholders’ equity
  $ 6,941,704                     $ 6,369,446                  
                                                 
Net interest income and spread
          $ 198,628       4.23 %           $ 188,402       4.36 %
                                                 
Net interest margin
                    4.37 %                     4.51 %
 
_______
* Presented on a fully tax equivalent basis
 
- MORE -

 
CBF Reports Third Quarter Results
Page 15
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF THE IMPACT OF MEASUREMENT PERIOD ADJUSTMENTS
(Dollars in thousands)
(Unaudited)
 
(Dollars in thousands)
 
Reported on Dec. 31,
2012 as of October 1,
2012
   
Measurement Period
Adjustments
   
Revised as of
October 1, 2012
 
                   
Fair value of assets acquired:
                 
Cash and cash equivalents
  $ 256,267           $ 256,267  
Investment securities
    189,771             189,771  
Loans
    774,781       43,238       818,019  
Premises and equipment
    35,061               35,061  
Other intangible assets
    6,860               6,860  
Deferred tax asset
    43,481       (15,532 )     27,949  
Other assets
    60,159       (174 )     59,985  
                         
Total assets acquired
    1,366,380               1,393,912  
                         
Fair value of liabilities assumed:
                       
Deposits
    1,093,914               1,093,914  
Long term debt and other borrowings
    187,341               187,341  
Other liabilities
    17,703       11,656       29,359  
                         
Total liabilities assumed
    1,298,958       11,656       1,310,614  
                         
Fair value of net assets acquired
    67,422       15,876       83,298  
Purchase price
    99,325               99,325  
                         
Goodwill
  $ 31,903             $ 16,027  
 
   
For the Quarter Ended
 
   
Revised
June 30,
2013
   
As Filed
June 30,
2013
   
Revised
March 31,
2013
   
As Filed
March 31,
2013
   
Revised
December 31,
2012
   
As filed
December 31,
2012
 
Interest and dividend income
  $ 73,189     $ 74,989     $ 76,106     $ 76,814     $ 77,808     $ 76,122  
Interest expense
    7,837       7,837     $ 8,992       8,992       10,115       10,115  
Net Interest Income
    65,352       67,152       67,114       67,822       67,693       66,007  
                                                 
Provision for loan losses
    4,467       3,868       5,402       6,904       6,736       4,370  
                                                 
Total non-interest income
    13,506       13,506       10,909       10,909       15,438       15,438  
                                                 
Total non-interest expense
    59,382       59,141       61,313       61,040       68,720       68,448  
                                                 
Income before income taxes
    15,009       17,649       11,308       10,787       7,675       8,627  
Income tax expense
    5,580       6,514       5,543       5,234       3,031       3,295  
Net income attributable to Capital Bank Financial Corp.
  $ 9,429     $ 11,135     $ 5,765     $ 5,553       4,644     $ 5,332  
 Basic Earnings Per Common Share
  $ 0.18     $ 0.21     $ 0.11     $ 0.10     $ 0.09     $ 0.10  
 Diluted Earnings Per Common Share
  $ 0.17     $ 0.21     $ 0.11     $ 0.10     $ 0.08     $ 0.10  


 
- MORE -

 
CBF Reports Third Quarter Results
Page 16
October 17, 2013
 
CAPITAL BANK FINANCIAL CORP.
RECONCILIATION OF NON-GAAP MEASURES
 
CORE NET INCOME
                       
(Dollars in millions)
                       
   
Quarter Ended
   
Quarter Ended
   
Quarter Ended
   
Quarter Ended
 
   
September 30,
2013
   
September 30,
2013
   
June 30,
2013
   
June 30,
2013
 
Net income 
  $ 11.4     $ 11.4     $ 9.4     $ 9.4  
Adjustments 
 
Pre-Tax
   
After-Tax
   
Pre-Tax
   
After-Tax
 
Non-Interest Income 
                               
Security (gains) losses
    0.1       0.1       (0.2 )     (0.1 )
                                 
Non-Interest Expense 
                               
Non-cash equity compensation*
    1.1       0.7       1.3       0.8  
CVR Valuation (income) expense
    (0.8 )     (0.8 )     0.4       0.4  
Conversion and severance expense*(conversion and merger  expense and salaries and employee benefits)
    -       -       0.1       0.1  
Tax adjustment 
    1.6       1.6       -       -  
(Gain) loss on extinguishment of debt*
    (0.4 )     (0.3 )     -       -  
Taxes 
                               
Tax effect of adjustments* 
    (0.3 )     N/A       (0.4 )     N/A  
Core Net Income
  $ 12.7     $ 12.7     $ 10.6     $ 10.6  
Average Assets