WESTON, Fla.--(BUSINESS WIRE)--

FCB Financial Holdings, Inc. (NYSE:FCB) (the "Company") today reported second quarter 2017 net income of $35.1 million, or $0.76 per share on a fully diluted basis, and adjusted net income of $32.5 million, or $0.71 per share on a fully diluted basis. Net income rose 49% year-over-year and net income per diluted share rose 39%. Adjusted net income rose 34% year-over-year and adjusted net income per diluted share rose 25%. This resulted in a ROA of 147 basis points and an adjusted ROA of 136 basis points.

• Fully tax equivalent net revenue of $83.0 million;
• Reported and Adjusted EPS of $0.76 and $0.71 per share, respectively, on a fully diluted basis;
• New loan portfolio grew sequentially at an annualized rate of 25% when excluding the impact of reducing the syndicated loan portfolio and mortgage sales;
• New loan fundings of $536.1 million during the quarter and reduction of syndicated loan portfolio of $24.9 million;
• Demand deposits grew by $125.9 million, or 24% annualized, during the quarter;
• Reported and Adjusted Efficiency ratio of 43.3% and 42.0%, respectively;
• Reported and Adjusted ROA of 147 and 136 basis points, respectively; and
• Tangible book value per share was $23.88.

The Company views certain non-operating items, including but not limited to merger related and restructuring charges, gain/(loss) on investment securities and their corresponding tax effect, as adjustments to net income. Non-operating adjustments for the second quarter of 2017 include $223 thousand of severance expense, $21 thousand of other operating expense and $255 thousand gain on sale of investment securities. Additionally, the Company expects its 2017 annual GAAP tax rate to be between 20-25% due to the accounting impact of option and warrant exercises in concordance with ASU 2016-09 which was effective January 1, 2017.

The reconciliation of non-GAAP measures (including adjusted net income, adjusted efficiency ratio, adjusted ROA, tangible book value and tangible book value per share), which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.

Kent Ellert, Chief Executive Officer and President of FCB Financial Holdings, Inc., commented, “The second quarter was another strong quarter for FCB, as we are knocking on the door of $10 billion in assets and continuing to generate record and improving profitability. Moving forward, we remain committed to being the leading independent bank in Florida and continuing to make FCB better for its shareholders, customers and employees.”

Loan Portfolio and Composition

During the quarter, the total loan portfolio, gross of the allowance for loan losses, grew by $333.0 million to $7.3 billion as of June 30, 2017, an increase of 5% from $6.9 billion as of March 31, 2017, and 21% from $6.0 billion as of June 30, 2016.

The Bank’s new loan portfolio totaled $6.9 billion as of June 30, 2017, an increase of 5% from $6.6 billion as of March 31, 2017 and 25% from $5.5 billion as of June 30, 2016. Loan growth during the quarter was a result of $536.1 million of organic new loan fundings, consisting of $184.3 million of commercial and industrial, $205.7 million of commercial real estate and $146.1 million of residential and consumer. Additionally, during the quarter the Company reduced its syndicated loan portfolio by $24.9 million and sold $34.2 million of residential loans. As of June 30, 2017, new loans made up 95% of the total loan portfolio as compared to 95% and 92% as of March 31, 2017 and June 30, 2016, respectively.

The Bank’s acquired loan portfolio totaled $351.0 million as of June 30, 2017, a decrease of 4% from $366.2 million as of March 31, 2017 and a decrease of 26% from $474.1 million as of June 30, 2016. The decrease in the current quarter was driven by the resolution of $5.9 million of loans as well as scheduled loan amortization. As of June 30, 2017, acquired loans made up 5% of our total loan portfolio as compared to 5% and 8% as of March 31, 2017 and June 30, 2016, respectively.

Asset Quality

The provision for loan losses of $2.1 million recorded for the second quarter of 2017 includes a $2.3 million provision for new loans and net recoupment of valuation allowance of $0.2 million for the acquired loan portfolio. The provision for new loans served to increase the related allowance to $37.6 million, or 0.55% of the $6.9 billion in new loans outstanding. The nonperforming new loan ratio as of June 30, 2017 was 0.02%.

Deposits and Borrowings

Deposits totaled $7.7 billion as of June 30, 2017, in line with $7.7 billion as of March 31, 2017 and an increase of 19% from $6.5 billion as of June 30, 2016. During the second quarter of 2017, demand deposits increased by $125.9 million, or 6%, from March 31, 2017 and increased by $738.3 million, or 49%, from June 30, 2016. Demand deposits represent 29% of total deposits as of June 30, 2017 as compared to 28% and 23% as of March 31, 2017 and June 30, 2016, respectively. The cost of deposits was 82 basis points for the quarter, representing a seven basis points increase from the first quarter of 2017 and a 13 basis points increase from the second quarter of 2016. The primary driver of the increase over the periods is attributable to the Federal Reserve rate hikes in December 2016, March 2017 and June 2017.

Net Interest Margin and Net Interest Income

The net interest margin for the second quarter of 2017 was 3.16%, a decrease of 8 basis points from the first quarter of 2017 and a decrease of 35 basis points from the second quarter of 2016. The decrease from the first quarter of 2017 was due primarily to increase in funding costs associated with extending the duration of our FHLB borrowings.

Net interest income totaled $71.9 million in the second quarter of 2017, an increase of 3% from $69.7 million in the first quarter of 2017 and an increase of 11% from $64.9 million in the second quarter of 2016. Interest income totaled $90.6 million for the second quarter of 2017, an increase of 6% from $85.2 million in the first quarter of 2017 and an increase of 17% from $77.2 million in the second quarter of 2016. Interest income from new loans increased by $5.9 million, or 10%, from the first quarter of 2017 due to yield expansion and continued growth in the new loan portfolio. Interest income on acquired loans decreased by $1.0 million, or 12%, from the first quarter due to balance runoff and a reduction in loan resolutions. Interest expense was $18.7 million for the second quarter of 2017, an increase of 20% from $15.6 million in the first quarter of 2017 and an increase of 52% from $12.3 million in the second quarter of 2016. The increase from the first quarter of 2017 was a result of a 51 basis point increase on cost of borrowings associated with increased duration as well as the impact of the March 2017 and June 2017 Federal Reserve rate hikes on deposit costs.

Noninterest Income and Noninterest Expense

Noninterest income totaled $8.9 million for the second quarter of 2017 as compared to $10.0 million for the first quarter of 2017 and $8.2 million for the second quarter of 2016. The primary components of noninterest income for the quarter were loan and other fees, bank-owned life insurance income and other noninterest income of $3.0 million, $1.4 million and $3.0 million, respectively.

Noninterest expense totaled $35.3 million for the second quarter of 2017, an increase of 1% from $35.1 million in the first quarter of 2017 and an increase of 4% from $34.0 million in the second quarter of 2016. For the quarter, the Company recorded non-operating expenses of $244 thousand consisting of $223 thousand of severance expense and $21 thousand of other operating expense.

Financial Position

Capital ratios continue to be strong and well in excess of regulatory requirements. Our tangible common equity, Tier 1 leverage, and total risk-based capital ratios were 10.5%, 10.6% and 12.9% for the second quarter of 2017 respectively, compared to 10.3%, 10.5% and 12.8% for the first quarter of 2017, respectively. Stockholders’ equity totaled $1.12 billion as of June 30, 2017, an increase of 5.9% from $1.06 billion as of March 31, 2017 due to net income of $35.1 million, $18.0 million of additional paid-in capital and an increase in accumulated other comprehensive income of $9.0 million. The Company did not repurchase common stock during the quarter. Tangible book value per common share is $23.88 as of June 30, 2017.

Conference Call

The Company will host a conference call today, Tuesday, July 25, 2017 at 5:00 p.m. Eastern Time. Presentation materials related to the conference call are available on the Company's website, www.floridacommunitybank.com, by navigating to Investor Relations.

The number to call for this interactive teleconference is (855) 238-8125, and please ask to join the FCB Financial Holdings, Inc. or FCB teleconference. Please dial in 10 minutes prior to the beginning of the call.

A telephonic replay of the conference call will be available through August 25, 2017, by dialing (877) 344-7529 and entering pass code 10108288.

The live broadcast of the conference call will also be available online at the Company's website by following the link to Investor Relations. An on-line replay of the call will be available at the Company’s website for 90 days.

Forward-Looking Statements

This release may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, strategies, predictions, forecasts, objectives or assumptions of future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “expects,” “can,” “could,” “may,” “predicts,” “potential,” “opportunity,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “seeks,” “intends” and similar words or phrases. Accordingly, these statements involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual strategies, actions or results to differ materially from those expressed in them, and are not guarantees of timing, future results or other events or performance. Because forward-looking statements are necessarily only estimates of future strategies, actions or results, based on management’s current expectations, assumptions and estimates on the date hereof, and there can be no assurance that actual strategies, actions or results will not differ materially from expectations, you are cautioned not to place undue reliance on such statements. Additional information regarding certain risks, uncertainties and other factors that could cause actual strategies, actions and results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including under the heading “Risk Factors” in our most recent Annual Report on Form 10-K. Any forward-looking statement speaks only as of the date on which it is made, and FCB Financial Holdings, Inc. undertakes no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise.

Use of Non-GAAP Financial Measures

Adjusted net income, adjusted efficiency ratio, adjusted return-on-assets ("adjusted ROA"), tangible book value and tangible book value per share are each non-GAAP financial measures used in this release. A reconciliation to what we believe to be the most directly comparable GAAP financial measures - net income in the case of adjusted net income and adjusted ROA, total net interest income, total noninterest income and total noninterest expense in the case of adjusted efficiency ratio, and total shareholders' equity in the case of tangible book value and tangible book value per share - appears in tabular form at the end of this release. The Company believes each of adjusted net income, adjusted efficiency ratio, and adjusted ROA is useful for both investors and management to understand the effects of certain noninterest items and provides additional perspective on the Company’s performance over time and in comparison to the Company's competitors. Neither Adjusted net income nor Adjusted ROA should be viewed as a substitute for net income, nor should Adjusted efficiency ratio be viewed as a substitute for total net interest income, total noninterest income and total noninterest expense. The Company believes that tangible book value and tangible book value per share are useful for both investors and management, among other things, as these are measures commonly used by financial institutions, regulators and investors to measure the capital adequacy of financial institutions. The Company believes these measures facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. These measures should not be viewed as a substitute for total stockholders' equity.

These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for financial results and analyses of results reported under GAAP, and should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

About FCB Financial Holdings, Inc.

FCB Financial Holdings, Inc., parent company of Florida Community Bank, N.A., (NYSE: FCB) is the second largest Florida-based independent bank, and among the most highly capitalized banks in the state. Awarded a five-star rating from Bauer Financial™, FCB assets are more than $9.9 billion, with capital ratios that exceed regulatory standards. Since its founding in 2010, FCB has been steadfast in its commitment to delivering personalized service, innovation, and products and services equal to those offered by the national banks. Similarly, FCB recognizes the importance of community, fostering a corporate culture that promotes employee volunteerism at all levels, while supporting community-based programs and partnerships that help promote greater financial independence and improved quality of life for families. FCB serves individuals, businesses and communities across the state with 46 full-service banking centers from east to west, and from Daytona Beach to Miami-Dade. For more information, visit FloridaCommunityBank.com. Equal Housing Lender, Member FDIC.

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