C1 Financial Reports 2015 Fourth Quarter Results

28 Jan, 2016, 16:15 ET from C1 Financial, Inc.

ST. PETERSBURG, Fla., Jan. 28, 2016 /PRNewswire/ -- C1 Financial, Inc. (NYSE: BNK) today reported net income of $1.4 million, or $0.09 per diluted common share for the fourth quarter of 2015 ("4Q15"), compared to net income of $5.0 million, or $0.31 per diluted common share for the third quarter of 2015 ("3Q15"), and net income of $1.3 million, or $0.08 per diluted common share for the fourth quarter of 2014 ("4Q14").

On November 9, 2015, C1 Financial and its wholly owned bank subsidiary, C1 Bank, entered into a definitive agreement and plan of merger ("Agreement") with Bank of the Ozarks, Inc. ("OZRK") and its wholly owned bank subsidiary, Bank of the Ozarks ("Ozarks Bank"), whereby, subject to the terms and conditions of the Agreement, OZRK will acquire C1 Financial and C1 Bank in an all-stock transaction valued at approximately $402.5 million, or approximately $25.00 per share of C1 Financial common stock, subject to potential adjustments as described in the Agreement. Upon the closing of the transaction, C1 Financial will merge into OZRK and C1 Bank will merge into Ozarks Bank, with each of OZRK and Ozarks Bank to continue as the surviving entity, respectively. Completion of the transaction is subject to certain closing conditions, including customary regulatory approvals and approval by C1 Financial shareholders and are described in the Agreement. Although there can be no assurance, the transaction is expected to close in the first half of 2016.

FOURTH QUARTER SUMMARY

4Q15 results were impacted by the following:

  1. We originated $102 million in new loans in the quarter, resulting in C1 Bank originated loans outstanding up $68 million (+6%) from the prior quarter and $323 million (+38%) year-over-year. Loan originations for the year were $549 million, up $60 million (+12%) compared to last year. Overall loans outstanding (including acquired loans) were $1.443 billion at the end of 4Q15 (up 4% from the prior quarter and up 21% year-over-year);
  2. Total deposits grew $14 million (+1.1%) compared to the prior quarter and 9.5% year-over-year. Quarterly growth was primarily due to higher time deposits and a slight increase in core deposits, while year-over-year growth was driven by core deposits, which were up $144 million (+17%). At the end of 4Q15, 3Q15 and 4Q14, core deposits were 78.1%, 78.9% and 73.2% of total deposits, respectively, and noninterest-bearing deposits were 25.1%, 26.6% and 23.9% of total deposits, respectively. These deposit mix changes impacted our cost of total deposits, which grew 1 basis point ("bps") to 0.47% for 4Q15 when compared to 3Q15, but was down 3 bps when compared to 4Q14;
  3. Adjusted net interest margin (a non-GAAP measure which excludes the impact of purchase accounting accretion income) declined from 4.64% for 3Q15 to 4.40% for 4Q15, reflecting a normalized level of loan fees and reversal of interest income on nonaccrual loans, and was up from 4.05% for 4Q14, reflecting the deployment of excess cash during the year. On a GAAP basis, net interest margin was 4.51% for 4Q15, compared to 4.75% for 3Q15 and 4.24% for 4Q14;
  4. Annualized revenue per employee was $369 thousand in 4Q15, compared to $367 thousand in 3Q15 and $307 thousand in 4Q14, and average assets per employee were $7.3 million in 4Q15, compared to $6.9 million in 3Q15 and $6.4 million in 4Q14, as a result of our efforts to improve our efficiency through the use of technology;
  5. In 4Q15, total nonperforming assets increased $21.0 million when compared to the previous quarter (+$19.2 million in nonaccrual loans and +$1.8 million in other estate owned ("OREO")), and increased $8.5 million (+$15.1 million in nonaccrual loans and -$6.6 million in OREO) when compared to 4Q14. The increase in nonaccrual loans was primarily due to two commercial real estate loans to a Brazilian borrower. Our Texas Ratio (a non-GAAP measure) was 30.9% at the end of 4Q15, compared to 21.0% at the end of 3Q15 and 29.3% at the end of 4Q14;
  6. C1 Bank originated nonperforming assets accounted for 35% of our total nonperforming assets (with C1 Bank originated nonperforming loans equal to 1.83% of C1 Bank originated loans outstanding). Our allowance for loan losses was 0.56% of total loans at the end of 4Q15 and 0.57% at the end of 3Q15, up from 0.45% at the end of 4Q14 (primarily driven by an increase in general reserves); 
  7. Our headcount ended the quarter at 229, down from 239 at the end of 3Q15 and 238 at the end of 4Q14, as a result of our continuing headcount efficiency initiatives and deployment of technology;
  8. Net income for 4Q15 included after-tax merger related expenses of $2.6 million incurred pursuant to the Agreement with OZRK and $100 thousand income tax expense related to BOLI policies surrendered in 2015.

ASSETS

Total assets at the end of 4Q15 were $1.726 billion, $13.0 million higher (+0.8%) than at the end of 3Q15, primarily funded by deposit growth ($13.9 million).

LOANS

Total loans at the end of 4Q15 were $1.443 billion, up $52.4 million (+3.8%) from the end of 3Q15. Loan growth in 4Q15 was mainly driven by loan originations of $101.7 million and funding of unfunded commitments, partially offset by loan prepayments in the C1 Bank originated loan portfolio, and loans paying off in both the C1 Bank originated loan portfolio and in the acquired portfolio. The outstanding balance of C1 Bank originated loans grew $68.0 million (+6.2%) during 4Q15, while the outstanding balance of acquired loans decreased $15.6 million (-5.3%) to $279.4 million at the end of 4Q15. At the end of 4Q15, C1 Bank originated loans represented 81% of the loan portfolio, up from 79% at the end of 3Q15.

DEPOSITS

Total deposits at the end of 4Q15 were $1.278 billion, an increase of $13.9 million (+1.1%) from the end of 3Q15. Core deposits were $998.2 million, or 78.1% of total deposits at the end of 4Q15, compared to $997.8 million, or 78.9% of total deposits at the end of 3Q15. This deposit mix change impacted our cost of total deposits, which was 0.47% in 4Q15 and 0.46% in 3Q15.

ASSET QUALITY

Nonperforming assets totaled $64.3 million at the end of 4Q15, increasing $21.0 million (+48.6%) when compared to the end of 3Q15. The higher amount in 4Q15 was due to an increase of $19.2 million in nonaccrual loans (primarily due to two commercial real estate loans to a Brazilian borrower) and $1.8 million in OREO balances. As a percentage of total assets, nonperforming assets were 3.73% and 2.53% at the end of 4Q15 and 3Q15, respectively, while our Texas Ratio was 30.9% and 21.0% at the end of 4Q15 and 3Q15, respectively. At the end of 4Q15, $22.8 million (35.4%) of total nonperforming assets were related to loans originated by C1 Bank, compared to $2.0 million (4.6%) at the end of 3Q15.

As of December 31, 2015, a loan to a second Brazilian borrower was past due 81 days and we have been informed that the borrower is in the process of making the payments to bring the loan current. If the past due payments are not received as expected, our nonperforming assets would increase to 4.71% of total assets and our Texas Ratio would increase to 39.1% at the end of 4Q15.

Total recoveries of $474 thousand, net of charge-offs of $93 thousand, resulted in net recoveries of $381 thousand in 4Q15 (0.11% of total average loans on an annualized basis as compared to 0.09% for 3Q15). Net recoveries reflected our continued effort to collect deficiencies and a lower level of charge-offs, and provided a $282 thousand reversal of provision for loan losses after covering the allowance for loan losses required for net loan growth.

Our allowance for loan losses at the end of 4Q15 was $8.0 million (representing 0.56% of total loans) as compared to $7.9 million (representing 0.57% of total loans) at the end of 3Q15. On a non-GAAP basis (including remaining loan discount from acquired performing loans), the allowance plus discount amount totaled $10.7 million (representing 0.74% of total loans) at the end of 4Q15, compared to $10.8 million (representing 0.77% of total loans) at the end of 3Q15.

NET INTEREST INCOME AND MARGIN

Net interest income was $17.7 million for 4Q15 and $18.0 million for 3Q15. Net interest margin for 4Q15 declined 24 bps to 4.51% from 4.75% in 3Q15, mainly driven by a lower yield on average earning assets (primarily related to a normalized level of loan fees and reversal of interest income on nonaccrual loans). Adjusted net interest margin (which excludes the effect of purchase accounting) was 4.40% for 4Q15 and 4.64% in 3Q15.

Our excess cash (defined as our available cash above our target liquidity level – See explanation of non-GAAP financial measures) was $5.2 million at the end of 4Q15, while our average excess cash was $37.4 million for 4Q15, $26.8 million higher than for 3Q15.

NONINTEREST INCOME

Noninterest income for 4Q15 totaled $1.8 million, $364 thousand less when compared to 3Q15. The decrease was primarily due to a $670 thousand gain on the early redemption of long-term Federal Home Loan Bank ("FHLB") advances (included in other noninterest income) in 3Q15, which was partially offset by a $247 thousand increase in gains on sales of loans (due to a higher volume of Small Business Administration ("SBA") loans sold in 4Q15).

NONINTEREST EXPENSE & TAXES

Noninterest expense totaled $15.7 million in 4Q15, $3.7 million more when compared to 3Q15. The increase was primarily due to higher salaries and employee benefits of $1.2 million (mainly driven by bonus expense) and pre-tax merger related expenses of $2.6 million pursuant to the Agreement with OZRK.

Our income tax expense was $2.6 million for 4Q15 and $3.2 million for 3Q15. The effective tax rate for 4Q15 was 64.9%, which reflected nondeductible merger related expenses relating to the Agreement with OZRK and $100 thousand income tax expense related to BOLI policies surrendered during 2015. The effective tax rate for 3Q15 was 39.3%.

EFFICIENCY

Our efficiency ratio was 80.7% in 4Q15, higher than the 59.4% in 3Q15 primarily due to the increase in noninterest expenses (mainly driven by merger related expense). We also closely track annualized revenue per employee and average assets per employee, as measures of efficiency. Annualized revenue per employee was $369 thousand in 4Q15, compared to $367 thousand in 3Q15, and average assets per employee were $7.3 million in 4Q15, compared to $6.9 million in 3Q15, as a result of our efforts to improve our efficiency through the use of technology.

NET INCOME

Net income was $1.4 million for 4Q15, compared to $5.0 million for 3Q15. This corresponded to a return on average assets of 0.32% and 1.18% for 4Q15 and 3Q15, respectively, and a return on average equity of 2.79% and 10.02% for 4Q15 and 3Q15, respectively.

CAPITAL

Our consolidated Tier 1 leverage ratio was 11.55% and total risk-based capital ratio was 13.85% as of the end of 4Q15, reflecting that we remained well capitalized under Interim Final Basel III rules. Additional capital ratios are presented in the financial tables.

OTHER EVENTS DURING 4Q15

In November 2015, C1 Bank opened in Ft. Lauderdale, its 32nd banking center.

C1 Financial, Inc. Information Our name expresses our ideals to put our Clients 1st and our Community 1st. We are focused on serving the needs of entrepreneurs, tailoring a wide range of relationship banking services to entrepreneurs and their families, including commercial loans and a full line of depository products. We are based in St. Petersburg, Florida and operate from 32 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade, Broward and Orange Counties. As of September 30, 2015, we were the 17th largest bank headquartered in the state of Florida by assets and the 16th largest by equity, having grown both organically and through acquisitions. Additional information is available at www.c1bank.com.

Forward-Looking Statements This communication contains certain forward-looking information about C1 and OZRK that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. In some cases, you can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue," "could," "future" or the negative of those terms or other words of similar meaning. These forward-looking statements include, without limitation, statements relating to the terms and closing of the proposed transaction between C1 and OZRK, the proposed impact of the merger on OZRK's financial results, including any expected increase in OZRK's book value and tangible book value per common share and any expected increase in diluted earnings per common share, acceptance by C1's customers of OZRK's products and services, the opportunities to enhance market share in certain markets, market acceptance of OZRK generally in new markets, and the integration of C1's operations. You should carefully read forward-looking statements, including statements that contain these words, because they discuss the future expectations or state other "forward-looking" information about C1 and OZRK. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, many of which are beyond the parties' control, including the parties' ability to consummate the transaction or satisfy the conditions to the completion of the transaction, including the receipt of shareholder approval, the receipt of regulatory approvals required for the transaction on the terms expected or on the anticipated schedule; the parties' ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction; the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period; the risk that integration of C1's operations with those of OZRK will be materially delayed or will be more costly or difficult than expected; the failure of the proposed merger to close for any other reason; the effect of the announcement of the merger on customer relationships and operating results (including, without limitation, difficulties in maintaining relationships with employees or customers); dilution caused by OZRK's issuance of additional shares of its common stock in connection with the merger; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; the diversion of management time on transaction related issues; general competitive, economic, political and market conditions and fluctuations; changes in the regulatory environment; changes in the economy affecting real estate values; C1's ability to achieve loan and deposit growth; projected population and income growth in C1's targeted market areas; 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; and the other factors described in C1's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission ("SEC") or described in OZRK's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in its most recent Quarterly Report on Form 10-Q filed with the SEC. C1 and OZRK assume no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, all of which speak only as of the date hereof.

ADDITIONAL INFORMATION

This communication is being made in respect of the proposed merger transaction involving C1 Financial, Inc. ("C1") and Bank of the Ozarks, Inc. ("OZRK"). This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. In connection with the proposed merger, OZRK has filed with the SEC a registration statement on Form S-4 (Registration Statement No. 333-208877) that includes a prospectus of the Company and a proxy statement of C1. C1 and OZRK also plan to file other documents with the SEC regarding the proposed merger transaction and a definitive proxy statement/prospectus will be mailed to shareholders of C1. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy statement/prospectus, as well as other filings containing information about C1 and OZRK will be available without charge, at the SEC's Internet site (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, when available, without charge, from C1's website at https://www.c1bank.com (in the case of documents filed by C1) and on OZRK's website at http://www.bankozarks.com under the Investor Relations tab (in the case of documents filed by OZRK).

C1 and OZRK, and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of C1 in respect of the proposed merger transaction.   Certain information about the directors and executive officers of C1 is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 20, 2015, its proxy statement for its 2015 annual meeting of shareholders, which was filed with the SEC on March 10, 2015, and its Current Reports on Form 8-K, which were filed with the SEC on July 1, 2015 and September 14, 2015.  Certain information about the directors and executive officers of OZRK is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015 and its proxy statement for its 2015 annual meeting of shareholders, which was filed with the SEC on March 25, 2015.  Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus and other relevant documents filed with the SEC when they become available.

 

 

C1 Financial, Inc.

Consolidated Balance Sheets - Unaudited

(Dollars in thousands, except per share data)

December 31,

September 30,

December 31,

2015

2015

2014

ASSETS

Cash and cash equivalents

$

137,259

$

175,289

$

185,703

Time deposits in other financial institutions

248

247

-

Federal Home Loan Bank stock, at cost

11,668

11,668

9,224

Loans receivable, net

1,429,131

1,376,617

1,179,056

Premises and equipment, net

65,139

63,613

64,075

Other real estate owned, net

28,330

26,490

34,916

Bank-owned life insurance

37,275

43,018

43,907

Accrued interest receivable

4,641

4,269

3,490

Core deposit intangible

699

754

987

Prepaid expenses

5,613

4,778

5,243

Other assets

5,517

5,740

10,090

Total assets

$

1,725,520

$

1,712,483

$

1,536,691

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits

Noninterest bearing

$

321,034

$

336,361

$

278,543

Interest bearing

957,231

928,019

888,959

Total deposits

1,278,265

1,264,380

1,167,502

Federal Home Loan Bank advances

242,000

242,000

178,500

Other liabilities

4,274

6,543

4,051

Total liabilities

1,524,539

1,512,923

1,350,053

Stockholders' equity

Common stock, par value $1.00; 100,000,000 shares authorized

16,101

16,101

16,101

Additional paid-in capital

148,122

148,122

148,122

Retained earnings

36,758

35,337

22,415

Accumulated other comprehensive income

-

-

-

Total stockholders' equity

200,981

199,560

186,638

Total liabilities and stockholders' equity

$

1,725,520

$

1,712,483

$

1,536,691

Period-end shares outstanding

16,100,966

16,100,966

16,100,966

Book value per share

$

12.48

$

12.39

$

11.59

 

 

 

C1 Financial, Inc.

Consolidated Income Statements - Unaudited

(Dollars in thousands, except per share data)

For the Three Months Ended

For the Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2015

2015

2014

2015

2014

Interest income

Loans, including fees

$

20,058

$

20,340

$

16,870

$

76,861

$

63,351

Securities

3

3

3

12

62

Federal funds sold and other

248

203

285

866

897

Total interest income

20,309

20,546

17,158

77,739

64,310

Interest expense

Savings and interest-bearing demand deposits

697

654

582

2,584

2,154

Time deposits

844

795

890

3,100

3,809

Federal Home Loan Bank advances

1,034

1,057

755

3,895

2,607

Other borrowings

-

-

12

-

56

Total interest expense

2,575

2,506

2,239

9,579

8,626

Net interest income

17,734

18,040

14,919

68,160

55,684

Provision (reversal of provision) for loan losses

(282)

(67)

(1)

1,118

4,814

Net interest income after provision for loan losses

18,016

18,107

14,920

67,042

50,870

Noninterest income

Gains on sales of securities

-

-

-

-

241

Gains on sales of loans

326

79

209

1,219

2,532

Service charges and fees

633

602

582

2,383

2,240

Bargain purchase gain

-

-

-

-

48

Gains on sales of other real estate owned, net

169

177

329

742

1,049

Bank-owned life insurance

267

276

42

893

160

Mortgage banking fees

-

-

-

-

47

Gains (losses) on disposals of premises and equipment, net

-

-

(4)

2,590

(16)

Other noninterest income

355

980

396

1,974

1,437

Total noninterest income

1,750

2,114

1,554

9,801

7,738

Noninterest expense

Salaries and employee benefits

6,470

5,276

4,834

22,192

18,360

Occupancy expense

1,347

1,388

1,195

5,307

4,505

Furniture and equipment

714

779

712

2,989

2,666

Regulatory assessments

405

349

400

1,505

1,467

Network services and data processing

1,186

1,075

995

4,425

3,819

Printing and office supplies

86

54

119

269

389

Postage and delivery

78

78

74

320

255

Advertising and promotion

868

873

912

3,620

3,546

Other real estate owned related expense, net

371

468

543

1,930

2,168

Other real estate owned - valuation allowance expense

206

102

2,722

374

3,331

Amortization of intangible assets

55

70

86

288

498

Professional fees

521

673

746

2,401

2,920

Loan collection expenses

(43)

86

(5)

130

458

Merger related expense

2,626

-

-

2,626

-

Other noninterest expense

830

701

672

2,996

2,850

Total noninterest expense

15,720

11,972

14,005

51,372

47,232

Income before income taxes

4,046

8,249

2,469

25,471

11,376

Income tax expense

2,625

3,244

1,127

11,128

4,652

Net Income

$

1,421

$

5,005

$

1,342

$

14,343

$

6,724

Weighted average shares outstanding - basic

16,100,966

16,100,966

16,100,966

16,100,966

14,112,443

Weighted average shares outstanding - diluted

16,100,966

16,100,966

16,100,966

16,100,966

14,112,443

Basic net income per share

$

0.09

$

0.31

$

0.08

$

0.89

$

0.48

Diluted net income per share

0.09

0.31

0.08

0.89

0.48

 

 

 

C1 Financial, Inc.

Average Balance Sheets - Unaudited

(Dollars in thousands)

For the Three Months Ended

December 31, 2015

September 30, 2015

December 31, 2014

Average Balances (1)

Income/ Expense

Yields/ Rates

Average Balances (1)

Income/ Expense

Yields/ Rates

Average Balances (1)

Income/ Expense

Yields/ Rates

Interest-earning assets

Loans receivable (2)

$

1,402,691

$

20,058

5.67%

$

1,374,425

$

20,340

5.87%

$

1,145,230

$

16,870

5.84%

Securities available for sale and other securities

250

3

4.56%

250

3

4.56%

250

3

4.56%

Federal funds sold and balances at Federal Reserve Bank

145,588

108

0.29%

121,155

68

0.22%

240,126

168

0.28%

Time deposits in other financial institutions

248

1

0.41%

247

-

0.42%

-

-

0.00%

FHLB stock

11,506

139

4.83%

11,824

135

4.51%

9,446

117

4.89%

Total interest-earning assets

1,560,283

20,309

5.16%

1,507,901

20,546

5.41%

1,395,052

17,158

4.88%

Noninterest-earning assets

Cash and due from banks

36,201

38,612

31,701

Other assets (3)

139,308

141,149

125,511

Total noninterest-earning assets

175,509

179,761

157,212

Total assets

$

1,735,792

$

1,687,662

$

1,552,264

Interest-bearing liabilities

Interest-bearing deposits:

Time

$

279,752

844

1.20%

$

274,925

795

1.15%

$

324,347

890

1.09%

Money market

458,114

508

0.44%

443,152

490

0.44%

378,393

423

0.44%

Interest-bearing demand

179,415

168

0.37%

155,418

142

0.36%

142,370

137

0.38%

Savings

38,537

21

0.22%

38,921

22

0.22%

38,263

22

0.22%

Total interest-bearing deposits

955,818

1,541

0.64%

912,416

1,449

0.63%

883,373

1,472

0.66%

Other interest-bearing liabilities:

FHLB advances

238,342

1,034

1.72%

245,847

1,057

1.71%

183,860

755

1.63%

Other borrowings

-

-

0.00%

-

-

0.00%

2,446

12

1.96%

Total interest-bearing liabilities

1,194,160

2,575

0.86%

1,158,263

2,506

0.86%

1,069,679

2,239

0.83%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

334,227

325,044

290,628

Other liabilities

5,214

6,127

4,687

Stockholders' equity

202,191

198,228

187,270

Total noninterest-bearing liabilities and stockholder's equity

541,632

529,399

482,585

Total liabilities and stockholders' equity

$

1,735,792

$

1,687,662

$

1,552,264

Interest rate spread (taxable-equivalent basis)

4.30%

4.55%

4.05%

Net interest income (taxable-equivalent basis)

$

17,734

$

18,040

$

14,919

Net interest margin (taxable-equivalent basis)

4.51%

4.75%

4.24%

Average interest-earning assets to interest-bearing liabilities

130.7%

130.2%

130.4%

 

(1)

Calculated using daily averages.

(2)

Average loans are gross, including nonaccrual loans and overdrafts (net of deferred loan fees and before the allowance for loan losses). Interest on loans includes net deferred fees and costs, and other loan fees of $1.4 million, $1.4 million and $748 thousand in the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, respectively.

(3)

Other assets include bank-owned life insurance, tax lien certificates, OREO, fixed assets, interest receivable, prepaid expense and others.

 

 

 

C1 Financial, Inc.

Average Balance Sheets - Unaudited

(Dollars in thousands)

For the Twelve Months Ended

December 31, 2015

December 31, 2014

Average Balances (1)

Income/ Expense

Yields/ Rates

Average Balances (1)

Income/ Expense

Yields/ Rates

Interest-earning assets

Loans receivable (2)

$

1,318,460

$

76,861

5.83%

$

1,085,832

$

63,351

5.83%

Securities available for sale and other securities

250

12

4.56%

452

62

13.76%

Federal funds sold and balances at Federal Reserve Bank

141,308

367

0.26%

207,010

523

0.25%

Time deposits in other financial institutions

161

1

0.43%

-

-

0.00%

FHLB stock

11,164

498

4.47%

8,779

374

4.26%

Total interest-earning assets

1,471,343

77,739

5.28%

1,302,073

64,310

4.94%

Noninterest-earning assets

Cash and due from banks

37,298

39,209

Other assets (3)

145,724

122,203

Total noninterest-earning assets

183,022

161,412

Total assets

$

1,654,365

$

1,463,485

Interest-bearing liabilities

Interest-bearing deposits:

Time

$

270,325

3,100

1.15%

$

350,592

3,809

1.09%

Money market

437,960

1,919

0.44%

351,844

1,526

0.43%

Interest-bearing demand

156,539

579

0.37%

142,588

542

0.38%

Savings

38,821

86

0.22%

38,323

86

0.22%

Total interest-bearing deposits

903,645

5,684

0.63%

883,347

5,963

0.68%

Other interest-bearing liabilities:

FHLB advances

228,724

3,895

1.70%

167,884

2,607

1.55%

Other borrowings

-

-

0.00%

2,860

56

1.96%

Total interest-bearing liabilities

1,132,369

9,579

0.85%

1,054,091

8,626

0.82%

Noninterest-bearing liabilities and stockholders' equity:

Demand deposits

321,401

250,268

Other liabilities

5,030

4,847

Stockholders' equity

195,565

154,279

Total noninterest-bearing liabilities and stockholder's equity

521,996

409,394

Total liabilities and stockholders' equity

$

1,654,365

$

1,463,485

Interest rate spread (taxable-equivalent basis)

4.43%

4.12%

Net interest income (taxable-equivalent basis)

$

68,160

$

55,684

Net interest margin (taxable-equivalent basis)

4.63%

4.28%

Average interest-earning assets to interest-bearing liabilities

129.9%

123.5%

 

(1)

Calculated using daily averages.

(2)

Average loans are gross, including nonaccrual loans and overdrafts (net of deferred loan fees and before the allowance for loan losses). Interest on loans includes net deferred fees and costs, and other loan fees of $4.9 million and $2.4 million in the twelve months ended December 31, 2015 and December 31, 2014, respectively.

(3)

Other assets include bank-owned life insurance, tax lien certificates, OREO, fixed assets, interest receivable, prepaid expense and others.

 

 

 

C1 Financial, Inc.

Selected Quarterly Financial Data - Unaudited

(In thousands, except per share and employee data)

4Q15

3Q15

2Q15

1Q15

4Q14

Statement of Income Data

Interest income

$

20,309

$

20,546

$

19,115

$

17,769

$

17,158

Interest expense

2,575

2,506

2,304

2,194

2,239

Net interest income

17,734

18,040

16,811

15,575

14,919

Provision (reversal of provision) for loan losses

(282)

(67)

1,276

191

(1)

Total noninterest income

1,750

2,114

4,335

1,602

1,554

Total noninterest expense

15,720

11,972

11,845

11,835

14,005

Income before income taxes

4,046

8,249

8,025

5,151

2,469

Income tax expense

2,625

3,244

3,282

1,977

1,127

Net income

1,421

5,005

4,743

3,174

1,342

Selected Performance Metrics

Return on average assets

0.32%

1.18%

1.18%

0.82%

0.34%

Return on average equity

2.79%

10.02%

9.88%

6.81%

2.84%

Efficiency ratio (1)

80.7%

59.4%

56.0%

68.9%

85.0%

Full-time equivalent employees at period end

229

239

247

244

238

Revenue per average number of employees (1)

$

369

$

367

$

384

$

326

$

307

Average assets per average number of employees (1)

7,324

6,888

6,594

6,541

6,414

Per Share Outstanding Data

Net earnings per share

$

0.09

$

0.31

$

0.29

$

0.20

$

0.08

Diluted net earnings per share

$

0.09

$

0.31

$

0.29

$

0.20

$

0.08

Weighted average shares

16,101

16,101

16,101

16,101

16,101

Weighted average shares - diluted

16,101

16,101

16,101

16,101

16,101

Book value per share

$

12.48

$

12.39

$

12.08

$

11.79

$

11.59

Tangible book value per share (1)

$

12.42

$

12.33

$

12.02

$

11.72

$

11.51

Common shares outstanding at period end

16,101

16,101

16,101

16,101

16,101

Market value per share at period end

$

24.21

$

19.05

$

19.38

$

18.75

$

18.29

Market range per share:

  High

24.49

19.77

19.84

19.10

19.70

  Low

18.40

17.66

17.81

16.25

15.98

Balance Sheet Data

Cash and cash equivalents

$

137,259

$

175,289

$

165,200

$

182,824

$

185,703

Other securities (included in Other assets in consolidated balance sheet)

250

250

250

250

250

Total loans

1,442,644

1,390,275

1,361,459

1,256,606

1,188,522

Loans originated by C1 Bank (Nonacquired)

1,163,212

1,095,247

1,046,227

925,511

840,275

Loans not originated by C1 Bank (Acquired)

279,432

295,028

315,232

331,095

348,247

Net deferred loan fees

(5,482)

(5,726)

(5,599)

(4,881)

(4,142)

Loans receivable, gross (2)

1,437,162

1,384,549

1,355,860

1,251,725

1,184,380

Allowance for loan losses

(8,031)

(7,932)

(7,675)

(5,787)

(5,324)

Loans receivable, net

1,429,131

1,376,617

1,348,185

1,245,938

1,179,056

Total assets

1,725,520

1,712,483

1,677,806

1,596,739

1,536,691

Total interest-bearing deposits

957,231

928,019

893,815

881,318

888,959

Total deposits

1,278,265

1,264,380

1,215,988

1,199,828

1,167,502

Borrowings

242,000

242,000

261,000

202,500

178,500

Federal Home Loan Bank

242,000

242,000

261,000

202,500

178,500

Total liabilities

1,524,539

1,512,923

1,483,251

1,406,927

1,350,053

Total stockholders' equity

200,981

199,560

194,555

189,812

186,638

Tangible stockholders' equity (1)

200,033

198,557

193,482

188,659

185,402

Selected Average Balance Sheet Data

Loans receivable, gross (2)

$

1,402,691

$

1,374,425

$

1,286,665

$

1,207,295

$

1,145,230

Securities available for sale and other securities

250

250

250

250

250

Earning assets

1,560,283

1,507,901

1,430,889

1,383,959

1,395,052

Total assets

1,735,792

1,687,662

1,615,468

1,576,419

1,552,264

Total interest-bearing deposits

955,818

912,416

860,494

884,979

883,373

Total deposits

1,290,045

1,237,460

1,185,325

1,186,076

1,174,001

Borrowings

238,342

245,847

233,065

197,000

186,306

Total stockholders' equity

202,191

198,228

192,611

189,054

187,270

Yields Earned and Rates Paid

Loans receivable, gross (2)

5.67%

5.87%

5.89%

5.90%

5.84%

Adjusted loans receivable, gross (1),(3)

5.57%

5.77%

5.79%

5.76%

5.65%

Securities available for sale and other securities

4.56%

4.56%

4.56%

4.56%

4.56%

Earning assets

5.16%

5.41%

5.36%

5.21%

4.88%

Total interest-bearing deposits

0.64%

0.63%

0.61%

0.64%

0.66%

Total deposits

0.47%

0.46%

0.44%

0.47%

0.50%

Adjusted total deposits (1),(4)

0.47%

0.46%

0.45%

0.48%

0.50%

Borrowings

1.72%

1.71%

1.72%

1.66%

1.63%

Total interest-bearing liabilities

0.86%

0.86%

0.85%

0.82%

0.83%

Net interest margin (NIM) 

4.51%

4.75%

4.71%

4.56%

4.24%

Adjusted NIM (1),(5)

4.40%

4.64%

4.60%

4.41%

4.05%

Capital Ratios

Total capital to risk-weighted assets (6)

13.85%

14.04%

13.60%

14.01%

14.74%

Tier 1 capital to risk-weighted assets (6)

13.32%

13.51%

13.08%

13.59%

14.33%

Common equity tier 1 capital to risk-weighted assets (6)

13.32%

13.51%

13.08%

13.59%

N/A

Tier 1 leverage ratio (6)

11.55%

11.79%

12.01%

12.01%

11.95%

Tangible Equity / Tangible Assets (1)

11.60%

11.60%

11.54%

11.82%

12.07%

Equity / Assets

11.65%

11.65%

11.60%

11.89%

12.15%

Average Equity / Average Assets

11.65%

11.75%

11.92%

11.99%

12.06%

Asset Quality Data

Nonacquired nonperforming assets

$

22,761

$

2,008

$

340

$

428

$

487

Nonaccrual loans

21,285

2,008

340

428

443

Other real estate owned (OREO)

1,476

-

-

-

44

Nonacquired restructured loans (7)

-

-

-

-

-

Nonacquired nonperforming assets to nonacquired loans plus OREO

1.95%

0.18%

0.03%

0.05%

0.06%

Acquired nonperforming assets

$

41,520

$

41,256

$

44,804

$

49,597

$

55,323

Nonaccrual loans

14,666

14,766

17,118

19,276

20,451

OREO

26,854

26,490

27,686

30,321

34,872

Acquired restructured loans

954

961

891

900

906

Acquired nonperforming assets to acquired loans plus OREO

13.56%

12.83%

13.07%

13.72%

14.44%

Total nonperforming assets

$

64,281

$

43,264

$

45,144

$

50,025

$

55,810

Nonaccrual loans

35,951

16,774

17,458

19,704

20,894

OREO

28,330

26,490

27,686

30,321

34,916

Total restructured loans

954

961

891

900

906

Total nonperforming assets to total loans plus OREO

4.37%

3.05%

3.25%

3.89%

4.56%

Net charge-offs (recoveries)

$

(381)

$

(324)

$

(612)

$

(272)

$

116

Charge-offs

93

94

69

4

552

Recoveries

(474)

(418)

(681)

(276)

(436)

Asset Quality Ratios

Total nonperforming loans to loans receivable

2.49%

1.21%

1.28%

1.57%

1.76%

Total nonperforming assets to total assets

3.73%

2.53%

2.69%

3.13%

3.63%

Allowance for loan losses to nonperforming loans

22.34%

47.29%

43.96%

29.37%

25.48%

Annualized net charge-offs (recoveries) to total average loans

(0.11)%

(0.09)%

(0.19)%

(0.09)%

0.04%

Annualized nonacquired net charge-offs (recoveries) to average nonacquired loans

(0.03)%

(0.01)%

(0.14)%

(0.01)%

0.02%

Allowance for loan losses to total loans receivable

0.56%

0.57%

0.56%

0.46%

0.45%

Allowance for loan losses to nonacquired loans

0.69%

0.72%

0.73%

0.63%

0.63%

Texas ratio (8)

30.9%

21.0%

22.4%

25.7%

29.3%

Loan Composition

Nonacquired loans by type

1-4 family residential real estate

$

222,428

$

181,431

$

146,192

$

132,253

$

123,421

Owner occupied commercial real estate

140,330

154,748

136,789

139,780

124,067

Nonowner occupied commercial real estate

399,400

385,605

407,654

343,539

311,239

Secured by farmland commercial real estate

50,426

51,452

52,876

54,774

57,825

Multifamily commercial real estate

29,040

26,812

26,721

26,993

27,385

Construction

180,995

152,442

135,586

92,389

88,072

Commercial

52,717

63,972

63,190

57,683

58,809

Consumer

87,876

78,785

77,219

78,100

49,457

Acquired loans by type

1-4 family residential real estate

$

81,216

$

85,807

$

90,516

$

96,758

$

100,995

Owner occupied commercial real estate

84,084

89,642

95,445

99,859

107,169

Nonowner occupied commercial real estate

73,976

76,579

83,227

86,089

88,363

Secured by farmland commercial real estate

1,608

1,907

1,941

1,977

2,013

Multifamily commercial real estate

4,910

4,924

5,040

5,140

5,516

Construction

16,075

16,381

16,985

18,738

19,364

Commercial

10,918

12,968

14,556

14,704

16,551

Consumer

6,645

6,820

7,522

7,830

8,276

New loan originations (9)

$

101,728

$

93,459

$

177,090

$

176,356

$

139,009

Unfunded commitments (includes loans, unused lines and standby letters of credit)

176,400

210,389

237,877

245,051

189,049

Deposit Composition

Noninterest-bearing demand

$

321,034

$

336,361

$

322,173

$

318,510

$

278,543

Interest-bearing demand

182,212

177,688

148,724

146,873

140,598

Money market and savings

494,943

483,745

483,157

460,933

435,105

Retail time

243,521

246,913

247,700

251,825

286,979

Jumbo time (10)

36,555

19,673

14,234

21,687

26,277

 

(1)

See below for the Generally Accepted Accounting Principles (GAAP) reconciliation and explanation of non-GAAP financial measures.

(2)

Total loans, net of deferred loan fees and before the allowance for loan losses. Yield on gross loans is calculated on a 365-day basis and may differ from regulatory "Uniform Bank Performance Report" (UBPR) yield, which annualizes quarterly data by a factor of 4 (Section II, UBPR User's Guide).

(3)

Adjusted yield earned on loans receivable excludes loan accretion from the acquired loan portfolio.

(4)

Adjusted rate paid on total deposits excludes amortization of premium for acquired time deposits.

(5)

Adjusted net interest margin excludes loan accretion from the acquired loan portfolio, and amortization of premiums for acquired time deposits and Federal Home Loan Bank advances.

(6)

Ratios are calculated under Interim Final Basel III rules beginning in 1Q15. Ratios are calculated under Basel I rules prior to 1Q15.

(7)

Restructured loans include accruing and nonaccrual troubled debt restructurings. Nonaccrual restructured loans are included in nonaccrual loans.

(8)

Texas ratio is calculated as nonperforming assets divided by tangible stockholders' equity plus allowance for loan losses.

(9)

New loan originations represent new loan commitments during the periods presented.

(10)

Jumbo time deposits are deposits over $250 thousand.

 

 

C1 Financial, Inc. Generally Accepted Accounting Principles (GAAP) Reconciliation and   Explanation of Non-GAAP Financial Measures (In thousands, except per share and employee data)

Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition and results of operations computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP measures that other companies use. The following tables provide a more detailed analysis of these non-GAAP financial measures.

 

4Q15

3Q15

2Q15

1Q15

4Q14

Loan loss reserves

Allowance for loan losses

$

8,031

$

7,932

$

7,675

$

5,787

$

5,324

Acquired performing loans discount

2,629

2,830

3,047

3,242

3,532

Total

$

10,660

$

10,762

$

10,722

$

9,029

$

8,856

Loans receivable, gross

$

1,442,644

$

1,390,275

$

1,361,459

$

1,256,606

$

1,188,522

Allowance for loan losses to total loans receivable

0.56%

0.57%

0.56%

0.46%

0.45%

Allowance plus performing loans discount to total loans receivable

0.74%

0.77%

0.79%

0.72%

0.75%

Efficiency ratio 

Noninterest expense

$

15,720

$

11,972

$

11,845

$

11,835

$

14,005

Taxable-equivalent net interest income

$

17,734

$

18,040

$

16,811

$

15,575

$

14,919

Noninterest income

$

1,750

$

2,114

$

4,335

$

1,602

$

1,554

Gains on sales of securities

-

-

-

-

-

Adjusted noninterest income

$

1,750

$

2,114

$

4,335

$

1,602

$

1,554

Efficiency ratio

80.7%

59.4%

56.0%

68.9%

85.0%

Revenue and average assets per average number of employees

Interest income

$

20,309

$

20,546

$

19,115

$

17,769

$

17,158

Noninterest income

1,750

2,114

4,335

1,602

1,554

Total revenue

$

22,059

$

22,660

$

23,450

$

19,371

$

18,712

Total revenue annualized

$

87,517

$

89,901

$

94,058

$

78,560

$

74,238

Total average assets

$

1,735,792

$

1,687,662

$

1,615,468

$

1,576,419

$

1,552,264

Average number of employees

237

245

245

241

242

Revenue per average number of employees

$

369

$

367

$

384

$

326

$

307

Average assets per average number of employees

$

7,324

$

6,888

$

6,594

$

6,541

$

6,414

Tangible stockholders' equity and Tangible book value per share 

Total stockholders' equity

$

200,981

$

199,560

$

194,555

$

189,812

$

186,638

Less:  Goodwill

(249)

(249)

(249)

(249)

(249)

           Other intangible assets

(699)

(754)

(824)

(904)

(987)

Tangible stockholders' equity

$

200,033

$

198,557

$

193,482

$

188,659

$

185,402

Common shares outstanding

16,101

16,101

16,101

16,101

16,101

Book value per share

$

12.48

$

12.39

$

12.08

$

11.79

$

11.59

Tangible book value per share

12.42

12.33

12.02

11.72

11.51

Adjusted yield earned on loans 

Reported yield on loans

5.67%

5.87%

5.89%

5.90%

5.84%

Effect of accretion income on acquired loans

(0.10)%

(0.10)%

(0.10)%

(0.14)%

(0.19)%

Adjusted yield on loans

5.57%

5.77%

5.79%

5.76%

5.65%

Adjusted rate paid on total deposits

Reported rate paid on total deposits

0.47%

0.46%

0.44%

0.47%

0.50%

Effect of premium amortization on acquired deposits

0.00%

0.00%

0.01%

0.01%

0.00%

Adjusted rate paid on total deposits

0.47%

0.46%

0.45%

0.48%

0.50%

Adjusted net interest margin

Reported net interest margin

4.51%

4.75%

4.71%

4.56%

4.24%

Effect of accretion income on acquired loans

(0.10)%

(0.09)%

(0.09)%

(0.12)%

(0.16)%

Effect of premium amortization on acquired deposits and borrowings

(0.01)%

(0.02)%

(0.02)%

(0.03)%

(0.03)%

Adjusted net interest margin

4.40%

4.64%

4.60%

4.41%

4.05%

Average excess cash

Average total deposits

$

1,290,045

$

1,237,460

$

1,185,325

$

1,186,076

$

1,174,001

Borrowings due in one year or less

34,168

16,136

17,750

25,189

28,940

Total base for liquidity

$

1,324,213

$

1,253,596

$

1,203,075

$

1,211,265

$

1,202,941

Minimum liquidity level (10% of base) (a)

$

132,421

$

125,360

$

120,308

$

121,127

$

120,294

Average cash and cash equivalents (b)

181,789

159,767

168,740

204,588

271,827

Cash above liquidity level (b)-(a)

49,368

34,407

48,432

83,461

151,533

Less estimated short-term deposits

(11,978)

(23,834)

(20,823)

(11,353)

(24,421)

Average excess cash

$

37,390

$

10,573

$

27,609

$

72,108

$

127,112

Tangible equity to tangible assets 

Total stockholders' equity

$

200,981

$

199,560

$

194,555

$

189,812

$

186,638

Less:  Goodwill

(249)

(249)

(249)

(249)

(249)

           Other intangible assets

(699)

(754)

(824)

(904)

(987)

Tangible stockholders' equity

$

200,033

$

198,557

$

193,482

$

188,659

$

185,402

Total assets

$

1,725,520

$

1,712,483

$

1,677,806

$

1,596,739

$

1,536,691

Less:  Goodwill

(249)

(249)

(249)

(249)

(249)

           Other intangible assets

(699)

(754)

(824)

(904)

(987)

Tangible assets

$

1,724,572

$

1,711,480

$

1,676,733

$

1,595,586

$

1,535,455

Equity/Assets

11.65%

11.65%

11.60%

11.89%

12.15%

Tangible Equity/Tangible Assets

11.60%

11.60%

11.54%

11.82%

12.07%

 

Definitions of Non-GAAP financial measures

Allowance for loan losses plus performing loans discount to total loans receivable adds the remaining discount on acquired performing loans to the allowance for loan losses to determine the total reserves and loan discounts established against our loans.  Our management believes that this metric provides useful information for investors to analyze the overall level of reserves in banks that have completed acquisitions with no allowance carryover.

Efficiency ratio is defined as total noninterest expense divided by the sum of taxable-equivalent net interest income and noninterest income.  Noninterest income is adjusted for nonrecurring gains and losses on sales of securities.  This ratio is important to investors looking for a measure of efficiency in the Company's productivity measured by the amount of revenue generated for each dollar spent.

Revenue per average number of employees is annualized total interest income and total noninterest income divided by the average number of employees during the period and measures the Company's productivity by calculating the average amount of revenue generated per employee.  Average assets per average number of employees is average assets divided by the average number of employees during the period and measures the average value of assets per employee.

Tangible stockholders' equity is defined as total equity reduced by goodwill and other intangible assets.  Tangible book value per share is tangible stockholders' equity divided by total common shares outstanding.  This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets. We have not considered loan servicing rights as an intangible asset for purposes of this calculation.

Adjusted yield earned on loans is our yield on loans after excluding loan accretion from our acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on yield on loans, as the effect of loan discounts accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet.

Adjusted rate paid on total deposits is our cost of deposits after excluding amortization of premiums for acquired time deposits.  Our management uses this metric to better assess the impact of purchase accounting on cost of deposits, as the effect of amortization of premiums related to deposits is expected to decrease as the acquired deposits mature or roll off of our balance sheet.

Adjusted net interest margin is net interest margin after excluding loan accretion from the acquired loan portfolio and amortization of premiums for acquired time deposits and Federal Home Loan Bank advances.  Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discounts accretion and amortization of premiums related to deposits or borrowings is expected to decrease as the acquired loans and deposits mature or roll off of our balance sheet.

Average excess cash represents the cash and cash equivalents in excess of our minimum liquidity level (defined as 10% of average total deposits plus borrowings due in one year or less), minus Company estimated short-term deposits. In 2015, based on an historical analysis, we changed our methodology for estimating short-term deposits, which reduced the results beginning in 1Q15.

Tangible equity to tangible assets is defined as total equity reduced by goodwill and other intangible assets, divided by total assets reduced by goodwill and other intangible assets.  This measure is important to investors interested in relative changes from period-to-period in total equity and total assets, each exclusive of changes in intangible assets.  We have not considered loan servicing rights as an intangible asset for purposes of this calculation.

 

 

SOURCE C1 Financial, Inc.



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http://www.c1bank.com