C1 Financial Reports 2015 First Quarter Results

ST. PETERSBURG, Fla., April 15, 2015 /PRNewswire/ -- C1 Financial, Inc. (NYSE: BNK) today reported net income and non-GAAP operating net income of $3.2 million, or $0.20 per diluted common share for the first quarter of 2015 ("1Q15"), compared to $1.3 million, or $0.08 per diluted common share (and non-GAAP operating net income of $2.8 million, or $0.17 per diluted common share) for the fourth quarter of 2014 ("4Q14"). Please refer to the last table in this document for the explanation of non-GAAP financial measures discussed in this earnings release.

MESSAGE FROM PRESIDENT & CHIEF EXECUTIVE OFFICER

Trevor Burgess, President & Chief Executive Officer of C1 Financial, Inc. stated, "We originated $176 million in new loans in the first quarter of 2015, over three times the production of 1Q14, resulting in C1 Bank originated loan growth during the quarter of 10% and year-over-year growth of 47%. As a percentage of overall loans, C1 Bank's originated loans grew to 74%, up from 71% at the end of 2014. We are excited by the strong start to the year and by our pipeline for 2015."

1Q15 showed several positive trends in our operating figures:

1. We originated $176 million in new loans in the quarter, resulting in $85 million, or 10.1%, year-to-date growth in C1 Bank originated loans outstanding. Overall loans outstanding (including acquired loans) were $1.257 billion at the end of 1Q15 (up 5.7% from the prior quarter and up 20.3% from one year ago);
2. Unfunded commitments were $245 million at the end of 1Q15, up $56 million (+29.6%) during the quarter and present a clear opportunity for near-term loan funding;
3. The quarter saw $72 million growth in core deposits. Core deposits reached 77.2% of total deposits at the end of 1Q15, compared to 73.2% at the end of 4Q14. Noninterest-bearing deposits represented 26.5% of total deposits at the end of 1Q15, compared to 23.9% at the end of the previous quarter. Cost of total deposits fell 3 basis points ("bps") to 0.47% when compared to 4Q14;
4. Adjusted net interest margin (a non-GAAP measure which excludes the impact of purchase accounting accretion income) improved by 36 bps (from 4.05% for 4Q14 to 4.41% for 1Q15). Once again, strong loan funding took place late in the quarter. We ended the quarter with excess cash of $50 million and had an average excess cash balance (a non-GAAP measure which measures excess liquidity) of $72 million during 1Q15;
5. Net interest income was up $656 thousand when compared to 4Q14, driven mainly by an increase in loan average balances and fees related to loan originations, and helped by improvement in the deposit mix;
6. In 1Q15, sales of other real estate owned ("OREO") were strong, which reduced our OREO balance by $4.6 million. Including the improvement in nonperforming loans, total nonperforming assets declined $5.8 million when compared to the previous quarter;
7. C1 Bank originated nonperforming assets accounted for less than 1% of our total nonperforming assets (with C1 Bank originated nonperforming loans below 0.1% of C1 Bank originated loans outstanding).  Our Texas Ratio was 25.7% at the end of 1Q15, down from 29.3% at the end of 4Q14.

ASSETS

Total assets at the end of 1Q15 were $1.597 billion, $60.0 million higher (+3.9%) than at the end of 4Q14, primarily funded by strong deposit growth ($32.3 million) and additional Federal Home Loan Bank ("FHLB") borrowings ($24.0 million) completed during the quarter.

LOANS

Total loans at the end of 1Q15 were $1.257 billion, up $68.1 million (+5.7%) from the end of 4Q14. Loan growth in 1Q15 was mainly driven by strong loan originations of $176.4 million and funding of unfunded commitments, partially offset by loans paying off in the acquired portfolio, which decreased $17.2 million (-4.9%) from the end of 4Q14 to $331.1 million at the end of 1Q15. The outstanding balance of C1 Bank originated loans grew $85.2 million (+10.1%) during 1Q15. At the end of 1Q15, C1 Bank originated loans represented 74% of the loan portfolio, up from 71% at the end of 4Q14. 

DEPOSITS

Total deposits at the end of 1Q15 were $1.2 billion, an increase of $32.3 million (+2.8%) from the end of 4Q14. Core deposits were $926.3 million, or 77.2% of total deposits at the end of 1Q15, compared to $854.2 million, or 73.2% of total deposits at the end of 4Q14. The shift in the deposit mix provided for a 3 bps decline in the cost of total deposits to 0.47% in 1Q15 from 0.50% in 4Q14.

ASSET QUALITY

Nonperforming assets totaled $50.0 million at the end of 1Q15, declining $5.8 million (-10.4%) when compared to the end of 4Q14. The decline in 1Q15 was driven primarily by a reduction of $4.6 million in OREO balances as we continued to sell properties. As a percentage of total assets, nonperforming assets decreased to 3.13% at the end of 1Q15 when compared to 3.63% at the end of 4Q14. Our Texas Ratio improved to 25.7% at the end of 1Q15 from 29.3% at the end of 4Q14. At the end of 1Q15, only $428 thousand, or less than 1.0% of total nonperforming assets, were related to loans originated by C1 Bank.

Total recoveries of $276 thousand net of charge-offs of $4 thousand resulted in net recoveries of $272 thousand in 1Q15 (0.09% of total average loans on an annualized basis), which reflected our continued effort to collect deficiencies, excellent credit quality on originated loans and a lower level of charge-offs on the acquired portfolio. Net recoveries in 1Q15 helped funding of the allowance for loan losses on net loan growth, which resulted in a provision for loan losses of $191 thousand.

Our allowance for loan losses at the end of 1Q15 was $5.8 million (representing 0.46% of total loans), compared to $5.3 million (representing 0.45% of total loans) at the end of 4Q14. On a non-GAAP basis (including remaining loan discount from acquired performing loans), the allowance plus discount amount totaled $9.0 million (representing 0.72% of total loans) at the end of 1Q15, compared to $8.9 million (representing 0.75% of total loans) at the end of 4Q14. This ratio continues to decline as the loan discount is amortized and is diluted by loan growth in the C1 Bank originated portfolio.

NET INTEREST INCOME AND MARGIN

Net interest income for 1Q15 totaled $15.6 million, up $0.7 million (+4.4%) from 4Q14, mainly driven by growth of our average loans balance combined with an improving deposit mix.

Net interest margin for 1Q15 increased 32 bps to 4.56% from 4.24% in 4Q14, mainly driven by a 33 bps higher yield on average earning assets as we redeployed lower-yielding cash investments into higher-yielding loans, and an improvement in deposit mix (which resulted in a 3 bps decline in the cost of total deposits when compared to the previous quarter), slightly offset by higher FHLB interest expense (as we continue to borrow long term to extend the duration of our liabilities). Strong loan fees and interest income enhanced our yield on loans in the quarter, helping to offset the effect of late quarter loan funding. Adjusted net interest margin (which excludes the effect of purchase accounting) for 1Q15 was 4.41%, or 36 bps higher from 4.05% in 4Q14.

Our average excess cash (defined as our average available cash above our target liquidity level – See explanation of non-GAAP financial measures) was $72.1 million for 1Q15, substantially lower than the $127.1 million for 4Q14. Our excess cash at the end of 1Q15 was $50.0 and continues to present an opportunity for future net interest margin expansion as we deploy these balances into loans.

NONINTEREST INCOME

Noninterest income for 1Q15 was $48 thousand (+3.1%) higher when compared to 4Q14. Included in noninterest income for 1Q15 was $50 thousand growth in income from bank-owned life insurance ("BOLI"), resulting from the December 2014 BOLI investment (which wasn't fully reflected in income as it was still completing the ramp-up investment period during this quarter).

NONINTEREST EXPENSE & TAXES

Noninterest expense totaled $11.8 million in 1Q15, down $2.2 million (-15.5%) from 4Q14, primarily due to a $2.7 million decline in OREO valuation allowance expense. This reduction was partially offset by a $383 thousand increase in salaries and employee benefits, primarily related to seasonal payroll taxes and provisions for incentive compensation based upon our anticipated growth.

Our income tax expense was $2.0 million for 1Q15 and $1.1 million for 4Q14. The effective tax rate for 1Q15 was 38.4%, reflecting the projected effective tax rate for 2015 (which incorporates the effect of the non-taxable BOLI contract funded in December 2014).

EFFICIENCY

Our efficiency ratio (and operating efficiency ratio) improved to 68.9% in 1Q15 from 85.0% (and 72.1% operating efficiency ratio) in 4Q14, mainly as a result of the $2.7 million decline in OREO valuation allowance expense and $656 thousand growth in our net interest income. We also closely track average assets per employee and annualized revenue per employee, as measures of efficiency. Average assets per employee were $6.5 million in 1Q15, compared to $6.4 million in 4Q14, while annualized revenue per employee was $326 thousand in 1Q15, compared to $307 thousand in 4Q14, which reflected our efforts to achieve productivity gains as we grow our balance sheet.

NET INCOME AND OPERATING INCOME

Net income (and net operating income) was $3.2 million for 1Q15, compared to $1.3 million (and $2.8 million operating net income) for 4Q14. This corresponded to a return on average assets of 0.82% and 0.34% for 1Q15 and 4Q14, respectively, and a return on average equity of 6.81% and 2.84% for 1Q15 and 4Q14, respectively.

CAPITAL

Our consolidated Tier 1 leverage ratio was 12.01% and total risk-based capital ratio was 14.01% as of the end of 1Q15, reflecting that we remained well capitalized under Interim Final Basel III rules. Additional capital ratios are presented in the financial tables.

OTHER EVENTS DURING 1Q15

On March 3, C1 Bank opened its North Dale Mabry branch in Tampa.

On March 4, C1 Bank and CenterState Bank announced their partnership to offer Smart Loan Express, an inexpensive mobile relationship profitability model for community bankers to use in the field.

On March 9, C1 Bank closed its Franklin Street branch in Tampa. As planned, it was consolidated with the Hyde Park branch (located within 1 mile).

WEBCAST AND CONFERENCE CALL INFORMATION

C1 Financial, Inc. will host a webcast and conference call at 8:30 a.m. (ET) on April 16, 2015 to discuss first quarter 2015 results and other matters.  To access the conference call, please dial 1-855-209-8212. The live webcast audio can be heard at http://www.videonewswire.com/event.asp?id=102088.

C1 Financial, Inc. Information
Our name expresses our ideals to put our Clients 1^st and our Community 1^st. 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 30 banking centers and one loan production office on the West Coast of Florida and in Miami-Dade and Orange Counties. As of December 31, 2014, we were the 18^th largest bank headquartered in the state of Florida by assets and the 16^th largest by equity, having grown both organically and through acquisitions, and we were the sixth fastest-growing bank in the country as measured by asset growth. Additional information is available at www.c1bank.com.

Forward-Looking Statements
In addition to historical information, this earnings release contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or "may," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. There are a number of potential factors, risks and uncertainties 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. These potential factors, risks and uncertainties are discussed in Item 1A of Part I of the Annual Report of C1 Financial, Inc. on Form 10-K for the year ended December 31, 2014.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this earnings release to conform our prior statements to actual results or revised expectations.