C1 FINANCIAL INC ST. PETERSBURG, Fla., July 16, 2015 /PRNewswire/ -- C1 Financial, Inc. (NYSE: BNK) today reported net income of $4.7 million, or $0.29 per diluted common share for the second quarter of 2015 ("2Q15"), compared to net income of $3.2 million, or $0.20 per diluted common share for the first quarter of 2015 ("1Q15"). The net income for 2Q15 included a $2.6 million pre-tax gain on sale of land, a $1.2 million pre-tax provision for loan loss expense related to the general reserve and in addition to the allowance for net loan growth, a $393 thousand recovery related to a single loan, and a $163 thousand tax adjustment made in conjunction with our 2012 and 2013 tax audit.
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MESSAGE FROM PRESIDENT & CHIEF EXECUTIVE OFFICER
Trevor Burgess, President & Chief Executive Officer of C1 Financial, Inc. stated, "We continue to execute on our plan to build the best business-focused bank in Florida, originating $177 million in new loans in the quarter and making significant progress in reducing the amount of acquired classified assets. Entrepreneurs are choosing C1 Bank because of our speed, our differentiated service, and for our certainty of execution. Extra land purchased around our Wynwood branch appreciated greatly in a very short amount of time and we took the opportunity to book a gain that reflected positively in our tangible book value. In this extraordinary quarter, we also strengthened our balance sheet with an important increase in our allowance for loan losses related to performing loans. With the first half now behind us, we are excited to enter the second half with a strong pipeline of new clients and several great new additions to the C1 Bank management and sales teams."
2Q15 showed several positive trends in our results and included some special events:
1. We originated $177 million in new loans in the quarter, resulting in C1
Bank originated loans outstanding up $121 million (+13%) from the prior
quarter and $381 million (+57%) year-over-year. Overall loans outstanding
(including acquired loans) were $1.361 billion at the end of 2Q15 (up
8.3% from the prior quarter and up 28.1% year-over-year);
2. Unfunded commitments were $238 million at the end of 2Q15, down $7.2
million (-2.9%) during the quarter and continue to present a clear
opportunity for near-term loan funding;
3. The quarter saw $28 million growth in core deposits. Core deposits
reached 78.5% of total deposits at the end of 2Q15, compared to 77.2% at
the end of 1Q15. Noninterest-bearing deposits represented 26.5% of total
deposits at the end of 2Q15, in line with the previous quarter. Cost of
total deposits fell 3 basis points ("bps") to 0.44% when compared to
1Q15;
4. Adjusted net interest margin (a non-GAAP measure which excludes the
impact of purchase accounting accretion income) improved by 19 bps (from
4.41% for 1Q15 to 4.60% for 2Q15), reflecting the use of excess cash and
enhanced by higher loan fees (resulting primarily from loan prepayment
related fees);
5. Net interest income was up $1.2 million when compared to 1Q15, driven
mainly by an increase in average loan balances (despite late funding in
the quarter) and higher loan fees;
6. In 2Q15, sales of other real estate owned ("OREO") reduced our OREO
balance by $2.6 million. Including the improvement in nonperforming
loans, total nonperforming assets declined $4.9 million when compared to
the previous quarter. Our Texas Ratio was 22.4% at the end of 2Q15,
improved from 25.7% at the end of 1Q15;
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);
8. Our allowance for loan losses was up 10 bps to 0.56% of total loans at
the end of 2Q15, from 0.46% at the end of 1Q15;
9. Special events in this quarter included: (i) we sold our excess parking
lots surrounding our Wynwood branch in Miami for a $2.6 million pre-tax
gain; (ii) we booked a $163 thousand tax expense adjustment as a result
of an IRS audit (related primarily to years 2012-2013); and (iii) we
increased the general reserve for performing loans of our allowance for
loan losses approximately $1.2 million in addition to the allowance for
net loan growth, which was partially funded by a $393 thousand large
recovery (related to the shared national credit loan charged off in
2Q14), resulting in an additional net pre-tax provision for loan loss
expense of $808 thousand in 2Q15.
ASSETS
Total assets at the end of 2Q15 were $1.678 billion, $81.1 million higher (+5.1%) than at the end of 1Q15, primarily funded by deposit growth ($16.2 million) and additional longer term Federal Home Loan Bank ("FHLB") borrowings ($59.0 million).
LOANS
Total loans at the end of 2Q15 were $1.361 billion, up $104.9 million (+8.3%) from the end of 1Q15. Loan growth in 2Q15 was mainly driven by strong loan originations of $177.1 million and funding of unfunded commitments, partially offset by loans paying off in the acquired portfolio, which decreased $15.9 million (-4.8%) from the end of 1Q15 to $315.2 million at the end of 2Q15. The outstanding balance of C1 Bank originated loans grew $120.7 million (+13.0%) during 2Q15. At the end of 2Q15, C1 Bank originated loans represented 77% of the loan portfolio, up from 74% at the end of 1Q15.
DEPOSITS
Total deposits at the end of 2Q15 were $1.216 billion, an increase of $16.2 million (+1.3%) from the end of 1Q15. Core deposits were $954.1 million, or 78.5% of total deposits at the end of 2Q15, compared to $926.3 million, or 77.2% of total deposits at the end of 1Q15. The shift in the deposit mix provided for a 3 bps decline in the cost of total deposits to 0.44% in 2Q15 from 0.47% in 1Q15.
ASSET QUALITY
Nonperforming assets totaled $45.1 million at the end of 2Q15, declining $4.8 million (-9.7%) when compared to the end of 1Q15. The decline in 2Q15 was driven primarily by a reduction of $2.6 million in OREO balances as we continued to sell properties. As a percentage of total assets, nonperforming assets decreased to 2.69% at the end of 2Q15 when compared to 3.13% at the end of 1Q15. Our Texas Ratio improved to 22.4% at the end of 2Q15 from 25.7% at the end of 1Q15. At the end of 2Q15, only $340 thousand, or less than 1.0% of total nonperforming assets, were related to loans originated by C1 Bank.
Total recoveries of $681 thousand, net of charge-offs of $69 thousand, resulted in net recoveries of $612 thousand in 2Q15 (0.19% 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. The $1.3 million provision for loan losses was primarily driven by net loan growth and the above mentioned addition to general reserves for existing loans, and partially funded by our net recoveries.
Our allowance for loan losses at the end of 2Q15 was $7.7 million (representing 0.56% of total loans), compared to $5.8 million (representing 0.46% of total loans) at the end of 1Q15. On a non-GAAP basis (including remaining loan discount from acquired performing loans), the allowance plus discount amount totaled $10.7 million (representing 0.79% of total loans) at the end of 2Q15, compared to $9.0 million (representing 0.72% of total loans) at the end of 1Q15.
NET INTEREST INCOME AND MARGIN
Net interest income for 2Q15 totaled $16.8 million, up $1.2 million (+7.9%) from 1Q15, mainly driven by growth of our average loans balance combined with an improvement in our earnings assets mix.
Net interest margin for 2Q15 increased 15 bps to 4.71% from 4.56% in 1Q15, mainly driven by a 15 bps higher yield on average earning assets as we redeployed lower-yielding cash investments into higher-yielding loans, and an improvement in the deposit mix (which resulted in a 3 bps decline in the cost of total deposits when compared to the previous quarter), partially offset by higher FHLB interest expense (as we continue to borrow longer term to extend the duration of our liabilities). Strong loan fees (driven primarily by prepayments) 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 2Q15 was 4.60%, or 19 bps up from 4.41% in 1Q15.
Our excess cash (defined as our average available cash above our target liquidity level - See explanation of non-GAAP financial measures) was down to $5.6 million at the end of 2Q15, as we successfully deployed it into loans during the quarter. However, this was not fully reflected in the quarter's earning assets mix, as our average excess cash was $27.6 million for 2Q15.
NONINTEREST INCOME
Noninterest income for 2Q15 totaled $4.3 million, $2.7 million higher when compared to 1Q15. The increase was primarily due to a $2.6 million gain on the sale of land (included in gains on disposals of premises and equipment). Also impacting the increase were higher gains on sales of loans of $354 thousand (due to a higher volume of Small Business Administration ("SBA") loans sold) and income from bank-owned life insurance ("BOLI") of $166 thousand (the income from which was not fully reflected in 1Q15 as the ramp-up investment period was completed in early 2Q15). Partially offsetting the increase in noninterest income was a $300 thousand decline in gains on sales of OREO.
NONINTEREST EXPENSE & TAXES
Noninterest expense totaled $11.8 million in 2Q15, relatively flat when compared to 1Q15. Included in noninterest expense for 2Q15 were higher occupancy expenses, primarily due to our new Doral branch, and advertising expenses, primarily due to various promotional items and seasonal events. These higher expenses were mainly offset by declines in OREO related expense and professional fees. Lower OREO related expense was due to fewer OREO properties and lower professional fees were mainly due to less activity relating to OREO properties.
Our income tax expense was $3.3 million for 2Q15 and $2.0 million for 1Q15. Included in income tax expense for 2Q15 was a $163 thousand audit related tax adjustment, which increased the effective tax rate to 40.9% from 38.4% for 1Q15. Excluding this adjustment, our effective tax rate for 2Q15 was 38.9%, in line with 1Q15.
EFFICIENCY
Our efficiency ratio improved to 56.0% in 2Q15 from 68.9% in 1Q15. The efficiency ratio for 2Q15 was down from 1Q15 due to the gain on sale of land and our growth in net interest income. We also closely track annualized revenue per employee and average assets per employee, as measures of efficiency. Annualized revenue per employee was $384 thousand in 2Q15, compared to $326 thousand in 1Q15, while average assets per employee were $6.6 million in 2Q15, compared to $6.5 million in 1Q15, which reflected our efforts to achieve productivity gains as we grow our balance sheet.
NET INCOME
Net income was $4.7 million for 2Q15, compared to $3.2 million for 1Q15. This corresponded to a return on average assets of 1.18% and 0.82% for 2Q15 and 1Q15, respectively, and a return on average equity of 9.88% and 6.81% for 2Q15 and 1Q15, respectively.
CAPITAL
Our consolidated Tier 1 leverage ratio was 12.01% and total risk-based capital ratio was 13.60% as of the end of 2Q15, reflecting that we remained well capitalized under Interim Final Basel III rules. Additional capital ratios are presented in the financial tables.
OTHER EVENTS DURING 2Q15
On April 14, C1 Bank opened in Doral, its 31(st) banking center and fourth in Miami-Dade County.
On April 30, C1 Bank unveiled its Client Service Vehicle ("C1 Bankmobile"), primarily to be used for disaster recovery and community outreach, and at sporting and community events throughout Florida.
On June 12, C1 Bank announced that Rita Lowman, C1 Bank's Executive Vice President and Chief Operating Officer, was elected the 2017 Chairwoman elect of the Florida Bankers Association.
WEBCAST AND CONFERENCE CALL INFORMATION
C1 Financial, Inc. will host a webcast and conference call at 8:30 a.m. (ET) on July 17, 2015 to discuss second quarter 2015 results and other matters. To access the conference call, please dial 1-888-317-6016. The live webcast audio can be heard at http://services.choruscall.com/links/bnk150717.
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 31 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 for the five-year period ending June 30, 2014. 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.
C1 Financial, Inc.
Consolidated Balance Sheets - Unaudited
(Dollars in thousands, except per share data)
June 30, March 31, June 30,
2015 2015 2014 (1)
---- ---- -------
ASSETS
Cash and cash equivalents $165,200 $182,824 $258,944
Time deposits in other financial institutions 247 - -
Federal Home Loan Bank stock, at cost 12,476 9,989 8,639
Loans receivable, net 1,348,185 1,245,938 1,054,785
Premises and equipment, net 63,576 64,973 62,938
Other real estate owned, net 27,686 30,321 36,278
Bank-owned life insurance 42,743 43,999 8,825
Accrued interest receivable 3,953 3,668 3,015
Core deposit intangible 824 904 1,190
Prepaid expenses 4,983 5,660 4,792
Other assets 7,933 8,463 9,808
----- ----- -----
Total assets $1,677,806 $1,596,739 $1,449,214
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing $322,173 $318,510 $253,148
Interest bearing 893,815 881,318 882,303
------- ------- -------
Total deposits 1,215,988 1,199,828 1,135,451
Federal Home Loan Bank advances 261,000 202,500 165,500
Other borrowings - - 3,000
Other liabilities 6,263 4,599 5,072
----- ----- -----
Total liabilities 1,483,251 1,406,927 1,309,023
--------- --------- ---------
Stockholders' equity
Common stock, par value $1.00; 100,000,000
shares authorized 16,101 16,101 13,340
Additional paid-in capital 148,122 148,122 108,404
Retained earnings 30,332 25,589 18,447
Accumulated other comprehensive income - - -
--- --- ---
Total stockholders' equity 194,555 189,812 140,191
------- ------- -------
Total liabilities and stockholders' equity $1,677,806 $1,596,739 $1,449,214
========== ========== ==========
Period-end shares outstanding 16,100,966 16,100,966 13,339,837
Book value per share $12.08 $11.79 $10.51
(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.
C1 Financial, Inc.
Consolidated Income Statements -
Unaudited
(Dollars in thousands, except per
share data)
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 30, March 31, June 30, June 30, June 30,
2015 2015 2014 (1) 2015 2014 (1)
---- ---- ------- ---- -------
Interest income
Loans, including fees $18,899 $17,564 $15,468 $36,463 $30,453
Securities 3 3 29 6 57
Federal funds sold and other 213 202 215 415 397
--- --- --- --- ---
Total interest income 19,115 17,769 15,712 36,884 30,907
------ ------ ------ ------ ------
Interest expense
Savings and interest-bearing demand 631 602 518 1,233 1,026
deposits
Time deposits 677 784 984 1,461 1,966
Federal Home Loan Bank advances 996 808 599 1,804 1,143
Other borrowings - - 14 - 29
--- --- --- --- ---
Total interest expense 2,304 2,194 2,115 4,498 4,164
----- ----- ----- ----- -----
Net interest income 16,811 15,575 13,597 32,386 26,743
Provision for loan losses 1,276 191 4,572 1,467 4,608
----- --- ----- ----- -----
Net interest income after provision 15,535 15,384 9,025 30,919 22,135
for loan losses
Noninterest income
Gains on sales of securities - - 241 - 241
Gains on sales of loans 584 230 804 814 1,548
Service charges and fees 581 567 538 1,148 1,132
Bargain purchase gain - - (30) - 11
Gains on sales of other real estate 48 348 375 396 652
owned, net
Bank-owned life insurance 258 92 41 350 77
Mortgage banking fees - - 4 - 47
Gains on disposals of premises and 2,588 2 - 2,590 -
equipment
Other noninterest income 276 363 374 639 679
--- --- --- --- ---
Total noninterest income 4,335 1,602 2,347 5,937 4,387
----- ----- ----- ----- -----
Noninterest expense
Salaries and employee benefits 5,229 5,217 4,282 10,446 8,749
Occupancy expense 1,360 1,212 1,109 2,572 2,172
Furniture and equipment 740 756 641 1,496 1,281
Regulatory assessments 390 361 355 751 705
Network services and data 1,080 1,084 940 2,164 1,791
processing
Printing and office supplies 71 58 88 129 193
Postage and delivery 80 84 74 164 129
Advertising and promotion 1,053 826 939 1,879 1,822
Other real estate owned related 498 593 494 1,091 1,114
expense, net
Other real estate owned - valuation 35 31 185 66 564
allowance expense
Amortization of intangible assets 80 83 141 163 295
Professional fees 509 698 828 1,207 1,424
Loan collection expenses 3 84 175 87 323
Other noninterest expense 717 748 699 1,465 1,385
--- --- --- ----- -----
Total noninterest expense 11,845 11,835 10,950 23,680 21,947
------ ------ ------ ------ ------
Income before income taxes 8,025 5,151 422 13,176 4,575
Income tax expense 3,282 1,977 192 5,259 1,819
----- ----- --- ----- -----
Net Income $4,743 $3,174 $230 $7,917 $2,756
====== ====== ==== ====== ======
Weighted average shares outstanding 16,100,966 16,100,966 13,232,152 16,100,966 12,868,044
- basic
Weighted average shares outstanding 16,100,966 16,100,966 13,232,152 16,100,966 12,868,044
- diluted
Basic net income per share $0.29 $0.20 $0.02 $0.49 $0.21
Diluted net income per share 0.29 0.20 0.02 0.49 0.21
(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.
C1 Financial, Inc.
Average Balance Sheets -
Unaudited
(Dollars in thousands)
For the Three Months Ended
--------------------------
June 30, 2015 March 31, 2015 June 30, 2014
------------- -------------- -------------
Average Average Average
Balances Income/ Yields/ Balances Income/ Yields/ Balances Income/ Yields/
(1) (1) (1)
Expense Rates Expense Rates Expense Rates
------- ----- ------- ----- ------- -----
Interest-earning assets
Loans receivable (2) $1,286,665 $18,899 5.89% $1,207,295 $17,564 5.90% $1,056,231 $15,468 5.87%
Securities available for sale and 250 3 4.56% 250 3 4.56% 1,050 29 10.79%
other securities
Federal funds sold and balances at 132,527 93 0.28% 166,413 97 0.24% 205,689 138 0.27%
Federal Reserve Bank
Time deposits in other financial 147 - 0.43% - - 0.00% - - 0.00%
institutions
FHLB stock 11,300 120 4.26% 10,001 105 4.25% 8,320 77 3.73%
------ --- ------ --- ----- ---
Total interest-earning assets 1,430,889 19,115 5.36% 1,383,959 17,769 5.21% 1,271,290 15,712 4.96%
--------- ------ --------- ------ --------- ------
Noninterest-earning assets
Cash and due from banks 36,213 38,175 33,481
Other assets (3) 148,366 154,285 121,353
------- ------- -------
Total noninterest-earning assets 184,579 192,460 154,834
------- ------- -------
Total assets $1,615,468 $1,576,419 $1,426,124
========== ========== ==========
Interest-bearing liabilities
Interest-bearing deposits:
Time $235,998 677 1.15% $290,695 784 1.09% $365,812 984 1.08%
Money market 440,430 476 0.43% 409,553 445 0.44% 341,248 364 0.43%
Negotiable order of withdrawal 145,027 133 0.37% 145,943 136 0.38% 143,973 132 0.37%
(NOW)
Savings 39,039 22 0.22% 38,788 21 0.22% 38,899 22 0.22%
------ --- ------ --- ------ ---
Total interest-bearing deposits 860,494 1,308 0.61% 884,979 1,386 0.64% 889,932 1,502 0.68%
Other interest-bearing liabilities:
FHLB advances 233,065 996 1.72% 197,000 808 1.66% 159,028 599 1.51%
Other borrowings - - 0.00% - - 0.00% 3,000 14 1.96%
--- --- --- --- ----- ---
Total interest-bearing liabilities 1,093,559 2,304 0.85% 1,081,979 2,194 0.82% 1,051,960 2,115 0.81%
--------- ----- --------- ----- --------- -----
Noninterest-bearing liabilities and
stockholders' equity:
Demand deposits 324,831 301,097 228,491
Other liabilities 4,467 4,289 5,020
Stockholders' equity 192,611 189,054 140,653
------- ------- -------
Total noninterest-bearing liabilities 521,909 494,440 374,164
and stockholder's equity
Total liabilities and stockholders' equity $1,615,468 $1,576,419 $1,426,124
========== ========== ==========
Interest rate spread (taxable- 4.51% 4.39% 4.15%
equivalent basis)
Net interest income (taxable- $16,811 $15,575 $13,597
equivalent basis)
Net interest margin (taxable- 4.71% 4.56% 4.29%
equivalent basis)
Average interest-earning assets to 130.85% 127.91% 120.85%
interest-bearing liabilities
(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 of $1.2 million, $913 thousand and $712 thousand in the three months ended June 30, 2015, March 31, 2015 and June 30, 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 Six Months Ended,
-------------------------
June 30, 2015 June 30, 2014
------------- -------------
Average Average
Balances Income/ Yields/ Balances Income/ Yields/
(1) (1)
Expense Rates Expense Rates
------- ----- ------- -----
Interest-earning assets
Loans receivable (2) $1,247,199 $36,463 5.90% $1,049,220 $30,453 5.85%
Securities available for sale and other securities 250 6 4.56% 657 57 17.63%
Federal funds sold and balances at Federal 149,377 190 0.26% 182,103 226 0.25%
Reserve Bank
Time deposits in other financial institutions 74 - 0.47% - - 0.00%
FHLB stock 10,654 225 4.25% 8,250 171 4.18%
------ --- ----- ---
Total interest-earning assets 1,407,554 36,884 5.28% 1,240,230 30,907 5.03%
--------- ------ --------- ------
Noninterest-earning assets
Cash and due from banks 37,189 42,763
Other assets (3) 151,309 120,025
------- -------
Total noninterest-earning assets 188,498 162,788
------- -------
Total assets $1,596,052 $1,403,018
========== ==========
Interest-bearing liabilities
Interest-bearing deposits:
Time $263,195 1,461 1.12% $366,247 1,966 1.08%
Money market 425,077 921 0.44% 337,181 713 0.43%
NOW 145,482 269 0.37% 144,432 270 0.38%
Savings 38,914 43 0.22% 38,452 43 0.22%
------ --- ------ ---
Total interest-bearing deposits 872,668 2,694 0.62% 886,312 2,992 0.68%
Other interest-bearing liabilities:
FHLB advances 215,132 1,804 1.69% 155,147 1,143 1.49%
Other borrowings - - 0.00% 3,000 29 1.96%
--- --- ----- ---
Total interest-bearing liabilities 1,087,800 4,498 0.83% 1,044,459 4,164 0.80%
--------- ----- --------- -----
Noninterest-bearing liabilities and stockholders'
equity:
Demand deposits 313,030 219,557
Other liabilities 4,379 4,875
Stockholders' equity 190,843 134,127
------- -------
Total noninterest-bearing liabilities and 508,252 358,559
stockholder's equity
Total liabilities and stockholders' equity $1,596,052 $1,403,018
========== ==========
Interest rate spread (taxable-equivalent basis) 4.45% 4.23%
Net interest income (taxable-equivalent basis) $32,386 $26,743
======= =======
Net interest margin (taxable-equivalent basis) 4.64% 4.35%
Average interest-earning assets to interest- 129.39% 118.74%
bearing liabilities
(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 of $2.1 million and $1.1 million in the six months ended June 30, 2015 and June 30, 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)
2Q15 1Q15 4Q14 3Q14 2Q14 (2)
---- ---- ---- ---- -------
Statement of Income Data
Interest income $19,115 $17,769 $17,158 $16,245 $15,712
Interest expense 2,304 2,194 2,239 2,223 2,115
Net interest income 16,811 15,575 14,919 14,022 13,597
Provision (reversal of provision) for loan losses 1,276 191 (1) 207 4,572
Gains on sales of securities - - - - 241
Bargain purchase gain - - - 37 (30)
Total noninterest income 4,335 1,602 1,554 1,797 2,347
Total noninterest expense 11,845 11,835 14,005 11,280 10,950
Income before income taxes 8,025 5,151 2,469 4,332 422
Income tax expense 3,282 1,977 1,127 1,706 192
Net income 4,743 3,174 1,342 2,626 230
Selected Performance Metrics
Return on average assets 1.18% 0.82% 0.34% 0.70% 0.06%
Return on average equity 9.88% 6.81% 2.84% 6.47% 0.66%
Efficiency ratio (1) 56.0% 68.9% 85.0% 71.3% 69.7%
Full-time equivalent employees at period end 247 244 238 246 221
Revenue per average number of employees (1) $384 $326 $307 $305 $343
Average assets per average number of employees (1) 6,594 6,541 6,414 6,356 6,759
Per Share Outstanding Data
Net earnings per share $0.29 $0.20 $0.08 $0.18 $0.02
Diluted net earnings per share $0.29 $0.20 $0.08 $0.18 $0.02
Weighted average shares 16,101 16,101 16,101 14,572 13,232
Weighted average shares - diluted 16,101 16,101 16,101 14,572 13,232
Book value per share $12.08 $11.79 $11.59 $11.51 $10.51
Tangible book value per share (1) $12.02 $11.72 $11.51 $11.43 $10.40
Common shares outstanding at period end 16,101 16,101 16,101 16,101 13,340
Market value per share at period end $19.38 $18.75 $18.29 $18.13 N/A
Market range per share:
High 19.84 19.10 19.70 18.77 N/A
Low 17.81 16.25 15.98 16.66 N/A
Balance Sheet Data
Cash and cash equivalents $165,200 $182,824 $185,703 $283,741 $258,944
Other securities (included in Other assets in 250 250 250 250 250
consolidated balance sheet)
Total loans 1,361,459 1,256,606 1,188,522 1,134,351 1,062,701
Loans originated by C1 Bank (Nonacquired) 1,046,227 925,511 840,275 757,529 665,615
Loans not originated by C1 Bank (Acquired) 315,232 331,095 348,247 376,822 397,086
Net deferred loan fees (5,599) (4,881) (4,142) (3,759) (3,323)
Loans receivable, gross (3) 1,355,860 1,251,725 1,184,380 1,130,592 1,059,378
Allowance for loan losses (7,675) (5,787) (5,324) (5,441) (4,593)
Loans receivable, net 1,348,185 1,245,938 1,179,056 1,125,151 1,054,785
Total assets 1,677,806 1,596,739 1,536,691 1,548,045 1,449,214
Total interest-bearing deposits 893,815 881,318 888,959 870,820 882,303
Total deposits 1,215,988 1,199,828 1,167,502 1,164,964 1,135,451
Borrowings 261,000 202,500 178,500 192,000 168,500
Federal Home Loan Bank 261,000 202,500 178,500 189,000 165,500
Other - - - 3,000 3,000
Total liabilities 1,483,251 1,406,927 1,350,053 1,362,749 1,309,023
Total stockholders' equity 194,555 189,812 186,638 185,296 140,191
Tangible stockholders' equity (1) 193,482 188,659 185,402 183,973 138,752
Selected Average Balance Sheet Data
Loans receivable, gross (3) $1,286,665 $1,207,295 $1,145,230 $1,098,466 $1,056,231
Securities available for sale and other securities 250 250 250 250 1,050
Earning assets 1,430,889 1,383,959 1,395,052 1,330,762 1,271,290
Total assets 1,615,468 1,576,419 1,552,264 1,493,667 1,426,124
Total interest-bearing deposits 860,494 884,979 883,373 877,488 889,932
Total deposits 1,185,325 1,186,076 1,174,001 1,147,816 1,118,423
Borrowings 233,065 197,000 186,306 179,964 162,028
Total stockholders' equity 192,611 189,054 187,270 160,933 140,653
Yields Earned and Rates Paid
Loans receivable, gross (3) 5.89% 5.90% 5.84% 5.79% 5.87%
Adjusted loans receivable, gross (1),(4) 5.79% 5.76% 5.65% 5.65% 5.72%
Securities available for sale and other securities 4.56% 4.56% 4.56% 4.56% 10.79%
Earning assets 5.36% 5.21% 4.88% 4.84% 4.96%
Total interest-bearing deposits 0.61% 0.64% 0.66% 0.68% 0.68%
Total deposits 0.44% 0.47% 0.50% 0.52% 0.54%
Adjusted total deposits (1),(5) 0.45% 0.48% 0.50% 0.53% 0.55%
Borrowings 1.72% 1.66% 1.63% 1.59% 1.52%
Total interest-bearing liabilities 0.85% 0.82% 0.83% 0.83% 0.81%
Net interest margin (NIM) 4.71% 4.56% 4.24% 4.18% 4.29%
Adjusted NIM (1),(6) 4.60% 4.41% 4.05% 4.03% 4.12%
Capital Ratios
Total capital to risk-weighted assets (7) 13.60% 14.01% 14.74% 15.45% 12.42%
Tier 1 capital to risk-weighted assets (7) 13.08% 13.59% 14.33% 14.96% 11.98%
Common equity tier 1 capital to risk-weighted assets (7) 13.08% 13.59% N/A N/A N/A
Tier 1 leverage ratio (7) 12.01% 12.01% 11.95% 12.32% 9.73%
Tangible Equity / Tangible Assets (1) 11.54% 11.82% 12.07% 11.89% 9.58%
Equity / Assets 11.60% 11.89% 12.15% 11.97% 9.67%
Average Equity / Average Assets 11.92% 11.99% 12.06% 10.77% 9.86%
Asset Quality Data
Nonacquired nonperforming assets $340 $428 $487 $567 $507
Nonaccrual loans 340 428 443 523 463
Other real estate owned (OREO) - - 44 44 44
Nonacquired restructured loans (8) - - - - -
Nonacquired nonperforming assets to nonacquired 0.03% 0.05% 0.06% 0.07% 0.08%
loans plus OREO
Acquired nonperforming assets $44,804 $49,597 $55,323 $58,004 $57,224
Nonaccrual loans 17,118 19,276 20,451 20,092 20,990
OREO 27,686 30,321 34,872 37,912 36,234
Acquired restructured loans 891 900 906 913 921
Acquired nonperforming assets to acquired loans plus 13.07% 13.72% 14.44% 13.99% 13.21%
OREO
Total nonperforming assets $45,144 $50,025 $55,810 $58,571 $57,731
Nonaccrual loans 17,458 19,704 20,894 20,615 21,453
OREO 27,686 30,321 34,916 37,956 36,278
Total restructured loans 891 900 906 913 921
Total nonperforming assets to total loans plus OREO 3.25% 3.89% 4.56% 5.00% 5.25%
Net charge-offs (recoveries) $(612) $(272) $116 $(641) $3,605
Charge-offs 69 4 552 157 4,418
Recoveries (681) (276) (436) (798) (813)
Asset Quality Ratios
Total nonperforming loans to loans receivable 1.28% 1.57% 1.76% 1.82% 2.02%
Total nonperforming assets to total assets 2.69% 3.13% 3.63% 3.78% 3.98%
Allowance for loan losses to nonperforming loans 43.96% 29.37% 25.48% 26.39% 21.41%
Annualized net charge-offs (recoveries) to total average (0.19)% (0.09)% 0.04% (0.23)% 1.37%
loans
Annualized nonacquired net charge-offs (recoveries) to (0.14)% (0.01)% 0.02% (0.08)% 2.46%
average nonacquired loans
Allowance for loan losses to total loans receivable 0.56% 0.46% 0.45% 0.48% 0.43%
Allowance for loan losses to nonacquired loans 0.73% 0.63% 0.63% 0.72% 0.69%
Texas ratio (9) 22.4% 25.7% 29.3% 30.9% 40.3%
Loan Composition
Nonacquired loans by type
1-4 family residential real estate $146,192 $132,253 $123,421 $116,244 $94,675
Owner occupied commercial real estate 136,789 139,780 124,067 107,530 97,458
Nonowner occupied commercial real estate 407,654 343,539 311,239 275,598 240,886
Secured by farmland commercial real estate 52,876 54,774 57,825 59,009 60,179
Multifamily commercial real estate 26,721 26,993 27,385 26,256 26,295
Construction 135,586 92,389 88,072 75,126 52,238
Commercial 63,190 57,683 58,809 58,450 55,031
Consumer 77,219 78,100 49,457 39,316 38,853
Acquired loans by type
1-4 family residential real estate $90,516 $96,758 $100,995 $105,083 $110,548
Owner occupied commercial real estate 95,445 99,859 107,169 113,957 118,854
Nonowner occupied commercial real estate 83,227 86,089 88,363 95,549 98,705
Secured by farmland commercial real estate 1,941 1,977 2,013 3,242 5,584
Multifamily commercial real estate 5,040 5,140 5,516 5,941 6,437
Construction 16,985 18,738 19,364 20,069 21,092
Commercial 14,556 14,704 16,551 24,423 26,840
Consumer 7,522 7,830 8,276 8,558 9,026
New loan originations (10) $177,090 $176,356 $139,009 $141,436 $163,611
Unfunded commitments (includes loans, unused lines 237,877 245,051 189,049 181,224 158,557
and standby letters of credit)
Deposit Composition
Noninterest-bearing demand $322,173 $318,510 $278,543 $294,144 $253,148
Interest-bearing demand/NOW 148,724 146,873 140,598 135,623 140,939
Money market and savings 483,157 460,933 435,105 398,000 383,259
Retail time 247,700 251,825 286,979 310,243 330,832
Jumbo time (11) 14,234 21,687 26,277 26,954 27,273
(1) See below for the Generally Accepted Accounting Principles (GAAP) reconciliation and explanation of non-GAAP financial measures.
(2) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.
(3) 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).
(4) Adjusted yield earned on loans receivable excludes loan accretion from the acquired loan portfolio.
(5) Adjusted rate paid on total deposits excludes amortization of premium for acquired time deposits.
(6) 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.
(7) Ratios for 2Q15 and 1Q15 are calculated under Interim Final Basel III rules. Ratios prior to 1Q15 are calculated under Basel I rules.
(8) Restructured loans include accruing and nonaccrual troubled debt restructurings. Nonaccrual restructured loans are included in nonaccrual loans.
(9) Texas ratio is calculated as nonperforming assets divided by tangible stockholders' equity plus allowance for loan losses.
(10) New loan originations represent new loan commitments during the periods presented.
(11) 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.
2Q15 1Q15 4Q14 3Q14 2Q14 (1)
---- ---- ---- ---- -------
Loan loss reserves
------------------
Allowance for loan losses $7,675 $5,787 $5,324 $5,441 $4,593
Acquired performing loans discount 3,047 3,242 3,532 3,811 4,093
----- ----- ----- ----- -----
Total $10,722 $9,029 $8,856 $9,252 $8,686
Loans receivable, gross $1,361,459 $1,256,606 $1,188,522 $1,134,351 $1,062,701
Allowance for loan losses to total loans 0.56% 0.46% 0.45% 0.48% 0.43%
receivable
Allowance plus performing loans discount to 0.79% 0.72% 0.75% 0.82% 0.82%
total loans receivable
Efficiency ratio
----------------
Noninterest expense $11,845 $11,835 $14,005 $11,280 $10,950
Taxable-equivalent net interest income $16,811 $15,575 $14,919 $14,022 $13,597
Noninterest income $4,335 $1,602 $1,554 $1,797 $2,347
Gains on sales of securities - - - - (241)
--- --- --- --- ----
Adjusted noninterest income $4,335 $1,602 $1,554 $1,797 $2,106
Efficiency ratio 56.0% 68.9% 85.0% 71.3% 69.7%
Revenue and average assets per average
number of employees
-------------------
Interest income $19,115 $17,769 $17,158 $16,245 $15,712
Noninterest income 4,335 1,602 1,554 1,797 2,347
----- ----- ----- ----- -----
Total revenue $23,450 $19,371 $18,712 $18,042 $18,059
Total revenue annualized $94,058 $78,560 $74,238 $71,580 $72,434
Total average assets $1,615,468 $1,576,419 $1,552,264 $1,493,667 $1,426,124
Average number of employees 245 241 242 235 211
Revenue per average number of employees $384 $326 $307 $305 $343
Average assets per average number of $6,594 $6,541 $6,414 $6,356 $6,759
employees
Tangible stockholders' equity and Tangible
book value per share
--------------------
Total stockholders' equity $194,555 $189,812 $186,638 $185,296 $140,191
Less: Goodwill (249) (249) (249) (249) (249)
Other intangible assets (824) (904) (987) (1,074) (1,190)
---- ---- ---- ------ ------
Tangible stockholders' equity $193,482 $188,659 $185,402 $183,973 $138,752
Common shares outstanding 16,101 16,101 16,101 16,101 13,340
Book value per share $12.08 $11.79 $11.59 $11.51 $10.51
Tangible book value per share 12.02 11.72 11.51 11.43 10.40
Adjusted yield earned on loans
------------------------------
Reported yield on loans 5.89% 5.90% 5.84% 5.79% 5.87%
Effect of accretion income on acquired loans (0.10)% (0.14)% (0.19)% (0.14)% (0.15)%
------ ------ ------ ------ ------
Adjusted yield on loans 5.79% 5.76% 5.65% 5.65% 5.72%
==== ==== ==== ==== ====
Adjusted rate paid on total deposits
------------------------------------
Reported rate paid on total deposits 0.44% 0.47% 0.50% 0.52% 0.54%
Effect of premium amortization on acquired 0.01% 0.01% 0.00% 0.01% 0.01%
deposits
Adjusted rate paid on total deposits 0.45% 0.48% 0.50% 0.53% 0.55%
==== ==== ==== ==== ====
Adjusted net interest margin
----------------------------
Reported net interest margin 4.71% 4.56% 4.24% 4.18% 4.29%
Effect of accretion income on acquired loans (0.09)% (0.12)% (0.16)% (0.11)% (0.13)%
Effect of premium amortization on acquired (0.02)% (0.03)% (0.03)% (0.04)% (0.04)%
deposits and borrowings
Adjusted net interest margin 4.60% 4.41% 4.05% 4.03% 4.12%
==== ==== ==== ==== ====
Average excess cash
-------------------
Average total deposits $1,185,325 $1,186,076 $1,174,001 $1,147,816 $1,118,423
Borrowings due in one year or less 17,750 25,189 28,940 34,753 33,750
------ ------ ------ ------ ------
Total base for liquidity $1,203,075 $1,211,265 $1,202,941 $1,182,569 $1,152,173
Minimum liquidity level (10% of base) (a) $120,308 $121,127 $120,294 $118,257 $115,217
Average cash and cash equivalents (b) 168,740 204,588 271,827 262,617 239,171
------- ------- ------- ------- -------
Cash above liquidity level (b)-(a) 48,432 83,461 151,533 144,360 123,954
Less estimated short-term deposits (20,823) (11,353) (24,421) (28,440) (24,662)
------- ------- ------- ------- -------
Average excess cash $27,609 $72,108 $127,112 $115,920 $99,292
Tangible equity to tangible assets
----------------------------------
Total stockholders' equity $194,555 $189,812 $186,638 $185,296 $140,191
Less: Goodwill (249) (249) (249) (249) (249)
Other intangible assets (824) (904) (987) (1,074) (1,190)
---- ---- ---- ------ ------
Tangible stockholders' equity $193,482 $188,659 $185,402 $183,973 $138,752
Total assets $1,677,806 $1,596,739 $1,536,691 $1,548,045 $1,449,214
Less: Goodwill (249) (249) (249) (249) (249)
Other intangible assets (824) (904) (987) (1,074) (1,190)
---- ---- ---- ------ ------
Tangible assets $1,676,733 $1,595,586 $1,535,455 $1,546,722 $1,447,775
Equity/Assets 11.60% 11.89% 12.15% 11.97% 9.67%
Tangible Equity/Tangible Assets 11.54% 11.82% 12.07% 11.89% 9.58%
(1) Share and per share amounts have been restated to reflect the 7-for-1 reverse stock split completed on August 13, 2014.
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.
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SOURCE C1 Financial, Inc.
