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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