Capital Bank in Florida Posts Profit Gain on Asset Quality

Capital Bank Financial Corp. in Coral Gables, Fla., reported higher third quarter earnings driven by lower expenses and asset quality improvements.

The $6.5 billion-asset company's net income rose 16% year over year, to $13.2 million in the third quarter, while earnings per share rose 23%, to 27 cents.

Noninterest income declined 34.8% from a year earlier, to $9.9 million, as fees on mortgages originated and sold fell 19%, to roughly $1.2 million, and service charges on deposit accounts dropped 7.8% to $5.6 million.

Loan quality improvements helped compensate for the decline in noninterest income. Noninterest expenses fell more than 13.2%, to $51.4 million, as loan workout expenses fell 55.8% to roughly $910,000. Expenses on foreclosed loans declined 33.2%, to $845,000.

Total interest bearing deposits also dropped to roughly $4.15 billion, down 6.2% year-over-year.

Net Interest Income was roughly $62.7 million, down 2.6% from a year earlier, due in part to a 6.6% decline in interest and dividend income.

Net interest income benefited, however, from a $1.3 million credit in provision for loan losses mainly due to $4.2 million in reversals, which reflect higher than anticipated payoffs on loan pools the company acquired.

Total loans increased 5.4%, to roughly $4.8 billion, as Capital Bank's new loans increased 53%. Nonetheless, the net interest margin contracted 31 basis points to 4.14%, reflecting lower yields on new loans.

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