Capital Bank Financial
Capital Bank Financial Corp. (Form: 10-Q, Received: 08/07/2014 16:59:45)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from              to             

Commission File Number 001-35655

 

 

 

LOGO

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   27-1454759

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

121 Alhambra Plaza Suite 1601 Coral Gables, Florida 33134

(Address of principal executive offices) (Zip Code)

(305) 670-0200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     x   Yes     ¨   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x   Yes     ¨   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

 

Large accelerated filer   ¨    Accelerated filer   x
Non-accelerated filer   ¨    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ¨   Yes   x     No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

Class A Common Stock, $0.01 Par Value

  30,669,525

Class B Non-Voting Common, $0.01 Par Value

  18,224,977

Class

  Outstanding as of July 31, 2014

 

 

 


Table of Contents

Table of Contents

CAPITAL BANK FINANCIAL CORP.

INDEX

 

PART I. FINANCIAL INFORMATION

  

ITEM 1. FINANCIAL STATEMENTS

     1   

CONSOLIDATED BALANCE SHEETS

     3   

CONSOLIDATED STATEMENTS OF INCOME

     4   

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

     5   

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

     6   

CONSOLIDATED STATEMENTS OF CASH FLOWS

     7   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     8   

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     39   

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     65   

ITEM 4. CONTROLS AND PROCEDURES

     66   

PART II. OTHER INFORMATION

     66   

ITEM 1. LEGAL PROCEEDINGS

     66   

ITEM 1A. RISK FACTORS

     67   

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     67   

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     67   

ITEM 4. MINE SAFETY DISCLOSURES

     67   

ITEM 5. OTHER INFORMATION

     67   

ITEM 6. EXHIBITS

     68   

 

2


Table of Contents

Capital Bank Financial Corp.

Consolidated Balance Sheets

(Unaudited)

 

(Dollars and shares in thousands)    June 30, 2014     December 31, 2013  

Assets

    

Cash and due from banks

   $ 109,963      $ 118,937   

Interest-bearing deposits with banks

     31,070        45,504   
  

 

 

   

 

 

 

Total cash and cash equivalents

     141,033        164,441   

Trading securities

     6,515        6,348   

Investment securities available-for-sale at fair value (amortized cost $591,668 and $688,717, respectively)

     594,745        685,441   

Investment securities held-to-maturity at amortized cost (fair value $480,971 and $459,693, respectively)

     475,167        465,098   

Loans held for sale

     9,926        8,012   

Loans, net of deferred loan costs and fees

     4,712,249        4,544,017   

Less: Allowance for loan losses

     55,307        56,851   
  

 

 

   

 

 

 

Loans, net

     4,656,942        4,487,166   
  

 

 

   

 

 

 

Other real estate owned

     96,283        129,396   

FDIC indemnification asset

     25,529        33,610   

Receivable from FDIC

     4,578        7,624   

Premises and equipment, net

     177,568        179,855   

Goodwill

     134,522        131,987   

Intangible assets, net

     20,876        23,365   

Deferred income tax asset, net

     148,432        166,762   

Other assets

     131,890        128,456   
  

 

 

   

 

 

 

Total Assets

   $ 6,624,006      $ 6,617,561   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Liabilities

    

Deposits:

    

Noninterest-bearing demand

   $ 1,000,049      $ 923,993   

Negotiable order of withdrawal accounts

     1,319,667        1,321,903   

Money market

     953,446        961,526   

Savings

     528,567        530,144   

Time deposits

     1,359,727        1,447,497   
  

 

 

   

 

 

 

Total deposits

     5,161,456        5,185,063   
  

 

 

   

 

 

 

Federal Home Loan Bank advances

     161,185        96,278   

Short-term borrowings

     32,814        24,850   

Long-term borrowings

     139,116        138,561   

Accrued expenses and other liabilities

     55,877        60,021   
  

 

 

   

 

 

 

Total liabilities

     5,550,448        5,504,773   
  

 

 

   

 

 

 

Shareholders’ equity

    

Preferred stock $0.01 par value: 50,000 shares authorized, 0 shares issued

     —          —     

Common stock-Class A $0.01 par value: 200,000 shares authorized, 36,653 issued and 30,925 outstanding and 36,212 issued and 33,051 outstanding, respectively.

     367        362   

Common stock-Class B $0.01 par value: 200,000 shares authorized, 19,025 issued and 18,225 outstanding and 19,647 issued and 19,047 outstanding, respectively.

     190        196   

Additional paid in capital

     1,080,735        1,082,235   

Retained earnings

     131,324        107,485   

Accumulated other comprehensive loss

     (3,212     (7,528

Treasury stock, at cost, 6,528 and 3,761 shares, respectively

     (135,846     (69,962
  

 

 

   

 

 

 

Total shareholders’ equity

     1,073,558        1,112,788   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 6,624,006      $ 6,617,561   
  

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Capital Bank Financial Corp.

Consolidated Statements of Income

(Unaudited)

 

(Dollars in thousands, except per share data)    Three Months Ended     Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  

Interest and dividend income

        

Loans, including fees

   $ 61,667      $ 68,188      $ 124,886      $ 139,972   

Investment securities:

        

Taxable interest income

     4,393        4,263        8,940        7,542   

Tax-exempt interest income

     155        160        311        326   

Dividends

     15        15        30        30   

Interest-bearing deposits in other banks

     38        101        63        473   

Other earning assets

     578        462        1,159        952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest and dividend income

     66,846        73,189        135,389        149,295   

Interest expense

        

Deposits

     4,245        5,928        8,561        12,406   

Long-term borrowings

     1,719        1,894        3,423        4,394   

Federal Home Loan Bank advances

     41        1        102        2   

Other borrowings

     10        14        19        27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     6,015        7,837        12,105        16,829   

Net Interest Income

     60,831        65,352        123,284        132,466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Provision for loan losses

     1,404        4,467        1,380        9,869   

Net interest income after provision for loan losses

     59,427        60,885        121,904        122,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-Interest Income

        

Service charges on deposit accounts

     5,672        6,335        11,108        12,677   

Debit card income

     3,103        2,979        5,947        5,815   

Fees on mortgage loans originated and sold

     1,123        1,601        1,882        2,842   

Investment advisory and trust fees

     910        357        2,171        640   

FDIC indemnification asset expense

     (2,064     (1,108     (4,229     (3,277

Investment securities (losses) gains, net

     (28     205        146        205   

Other income

     3,171        3,137        6,231        5,513   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest income

     11,887        13,506        23,256        24,415   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-Interest Expense

        

Salaries and employee benefits

     23,449        22,638        46,947        43,422   

Stock-based compensation expense

     1,020        1,364        1,748        2,941   

Net occupancy and equipment expense

     8,723        8,686        17,322        17,593   

Computer services

     3,389        3,541        6,642        6,641   

Software expense

     1,940        1,817        3,808        3,640   

Telecomunication expense

     1,628        1,631        3,236        3,385   

OREO valuation expense

     3,022        6,209        6,595        12,799   

Gain on sales of OREO

     (3,192     (2,205     (3,913     (3,392

Foreclosed asset related expense

     991        2,225        2,450        3,644   

Loan workout expense

     1,117        2,236        2,294        4,300   

Conversion and merger related expense

     —          140        —          253   

Professional fees

     2,038        2,344        4,042        4,992   

Loss on extinguishment of debt

     —          —          —          308   

Contingent value right expense

     327        428        1,094        3,311   

FDIC assessments

     1,648        1,763        3,277        3,566   

Other expense

     5,173        6,565        10,955        13,292   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest expense

     51,273        59,382        106,497        120,695   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     20,041        15,009        38,663        26,317   

Income tax expense

     7,616        5,580        14,824        11,123   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 12,425      $ 9,429      $ 23,839      $ 15,194   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.25      $ 0.18      $ 0.48      $ 0.28   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.25      $ 0.17      $ 0.47      $ 0.28   
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Capital Bank Financial Corp.

Consolidated Statements of Comprehensive Income

(Unaudited)

 

(Dollars in thousands)    Three Months Ended     Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  

Net Income

   $ 12,425      $ 9,429      $ 23,839      $ 15,194   

Other comprehensive income before tax:

        

Unrealized holding gains (losses) on investment securities available-for-sale

     4,286        (34,590     6,674        (33,518

Reclassification adjustment for gains realized in net income on securities available-for-sale

     (26     (205     (322     (205

Reclassification adjustment for losses amortized in net income on securities held-to-maturity

     367        —          705        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), before tax:

     4,627        (34,795     7,057        (33,723

Tax effect

     (1,797     13,415        (2,741     12,982   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of tax:

     2,830        (21,380     4,316        (20,741
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 15,255      $ (11,951   $ 28,155      $ (5,547
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

Capital Bank Financial Corp.

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

 

(Dollars and shares in thousands)                                                      
    Shares
Common
Stock Class A
Outstanding
    Class A
Stock
    Shares
Common
Stock Class B
Outstanding
    Class B
Stock
    Additional
Paid in
Capital
    Retained
Earnings
    Accumulated
Other
Comprehensive
Income (Loss)
    Treasury
Stock
    Total
Shareholder’s
Equity
 

Balance, December 31, 2013

    33,051      $ 362        19,047      $ 196      $ 1,082,235      $ 107,485      $ (7,528   $ (69,962   $ 1,112,788   

Net income

    —          —          —          —          —          23,839        —          —          23,839   

Other comprehensive income, net of tax expense of $2,741

    —          —          —          —          —          —          4,316        —          4,316   

Stock-based compensation

    —          —          —          —          1,748        —          —          —          1,748   

Full value stock awards

    11        —          —          —          —          —          —          —          —     

Excess tax benefit from share-based payment

    —          —          —          —          1,603              1,603   

Restricted stock cancelled

    (192     (1     —          —          (4,851     —          —          —          (4,852

Purchase of treasury stock

    (2,567     —          (200     —          —          —          —          (65,884     (65,884

Conversion of shares

    622        6        (622     (6     —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2014

    30,925      $ 367        18,225      $ 190      $ 1,080,735      $ 131,324      $ (3,212   $ (135,846   $ 1,073,558   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2012

    33,025        330        22,821        228        1,076,797        68,641        9,347        —          1,155,343   

Net income

    —          —          —          —          —          15,194        —          —          15,194   

Other comprehensive income, net of tax benefit of $12,982

    —          —          —          —          —          —          (20,741     —          (20,741

Stock-based compensation

    —          —          —          —          2,941        —          —          —          2,941   

Fractional shares

    —          —          8        —          (2     —          —          —          (2

Restricted stock grants

    4        —          —          —          —          —          —          —          —     

Purchase of treasury stock

    (2,839     —          —          —          —          —          —          (49,984     (49,984

Conversion of shares

    3,046        30        (3,046     (30     —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2013

    33,236      $ 360        19,783      $ 198      $ 1,079,736      $ 83,835      $ (11,394   $ (49,984   $ 1,102,751   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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Table of Contents

Capital Bank Financial Corp.

Consolidated Statements of Cash Flows

(Unaudited)

 

(Dollars in thousands)    Six Months Ended  
     June 30, 2014     June 30, 2013  

Cash flows from operating activities

    

Net income

   $ 23,839      $ 15,194   

Adjustments to reconcile net income to net cash used in operating activities:

    

Accretion of purchased credit impaired loans

     (64,183     (87,009

Depreciation and amortization

     9,664        10,577   

Provision for loan losses

     1,380        9,869   

Deferred income tax

     13,054        8,725   

Net amortization of investment securities premium/discount

     4,272        6,720   

Net realized gains on sales of investment securities

     (146     (205

Stock-based compensation expense

     1,748        2,941   

Gain on sales of OREO

     (3,913     (3,392

OREO valuation expenses

     6,595        12,799   

Other

     21        (46

Net deferred loan origination fees

     (3,022     (1,293

Loss on extinguishment of debt

     —          308   

Mortgage loans originated for sale

     (68,141     (98,748

Proceeds from sales of mortgage loans originated for sale

     68,109        92,164   

Fees on mortgage loans originated and sold

     (1,882     (2,842

FDIC indemnification asset expense

     4,229        3,277   

Gain on sale/disposal of premises and equipment

     (44     (407

Proceeds from FDIC loss share agreements

     7,327        8,358   

Change in other assets

     (3,364     4,959   

Change in accrued expenses and other liabilities

     (8,919     1,618   
  

 

 

   

 

 

 

Net cash used in operating activities

     (13,376     (16,433
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of investment securities available-for-sale

     (108,257     (436,272

Purchases of investment securities held-to-maturity

     (44,143     —     

Sales of investment securities available-for-sale

     150,328        225   

Repayments of principal and maturities of investment securities available-for-sale

     51,660        143,787   

Repayments of principal and maturities of investment securities held-to-maturity

     33,804        —     

Net purchases of FHLB and FRB stock

     (498     (978

Net (increase) decrease in loans

     (121,816     180,975   

Purchases of premises and equipment

     (4,503     (1,631

Proceeds from sales of premises and equipment

     115        6,647   

Proceeds from sales of OREO

     48,295        44,716   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     4,985        (62,531
  

 

 

   

 

 

 

Cash flows from financing activities

    

Net increase (decrease) in demand, money market and savings accounts

     64,163        (111,831

Net decrease in time deposits

     (87,769     (290,497

Net increase (decrease) in federal funds purchased and securities sold under agreement to repurchase

     7,963        (12,545

Net decrease in short term FHLB advances

     (55,000     —     

Net increase (decrease) in long term FHLB advances

     119,907        (90

Prepayments of long term borrowings

     —          (34,500

Excess tax benefit from share-based payment

     1,603        —     

Purchases of treasury stock

     (65,884     (49,984
  

 

 

   

 

 

 

Net cash used in financing activities

     (15,017     (499,447
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (23,408     (578,411

Cash and cash equivalents at beginning of period

     164,441        734,874   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 141,033      $ 156,463   
  

 

 

   

 

 

 

Supplemental disclosures of cash:

    

Interest paid

   $ 10,556      $ 19,764   

Cash collections of contractual interest on purchased credit impaired loans

     44,245        61,570   

Income taxes paid

     705        1,538   

Supplemental disclosures of noncash transactions:

    

OREO acquired through loan transfers and acquisitions

   $ 17,864      $ 42,822   

The accompanying notes are an integral part of these financial statements.

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

Principles of Consolidation and Nature of Operations

Capital Bank Financial Corp. (“CBF” or the “Company”; formerly known as North American Financial Holdings, Inc.) is a bank holding company incorporated in Delaware and headquartered in Florida whose business is conducted primarily through Capital Bank, National Association (“Capital Bank, NA” or the “Bank”). CBF has a total of 162 full service banking offices located in Florida, North and South Carolina, Tennessee and Virginia.

In September 2012, Capital Bank Corporation (“CBKN”), Green Bankshares Inc. (“GRNB”) and TIB Financial Corp. (“TIBB”), majority owned subsidiaries of the Company, merged with and into Capital Bank Financial Corp. with CBF continuing as the surviving corporation (the “Reorganization”). Upon completion of the Reorganization, the outstanding common shares held by the minority shareholders were converted into an aggregate of 3.7 million shares of CBF’s Class A common stock. The Reorganization was accounted for as a merger with CBF as the acquirer (which is the surviving entity for legal purposes).

On October 1, 2012, the Company completed its acquisition of Southern Community Financial Corporation (“SCMF” or “Southern Community”), a publicly held bank holding company headquartered in Winston Salem, North Carolina.

The accompanying consolidated financial statements (Unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Regulation S-X. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete financial statement presentation. In the opinion of management, all adjustments consisting of normal recurring accruals and disclosures considered necessary for a fair interim presentation have been included. All significant inter-company accounts and transactions have been eliminated in consolidation. For further information refer to the Company’s consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2013.

Out of Period Adjustments

During the three months ended March 31, 2014, the Company recorded a correction of an error resulting from the state net operating loss that the Company was not entitled to subsequent to the 2011 Green Bankshares acquisition. The impact of this correction decreased deferred tax assets and increased goodwill by $2.5 million. After evaluating the quantitative and qualitative aspects of this error, the Company concluded that its prior period financial statements were not materially misstated.

Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-12, “Compensation- Stock Compensation (Topic 718)—Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period”. This update provides specific guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the grant-date fair value of an award. This ASU is effective for fiscal years and interim periods beginning after December 15, 2015. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In June 2014, the FASB issued ASU No. 2014-11, “Transfers and Servicing (topic 860)—Repurchase-to-Maturity Transactions, Repurchase Financing, and Disclosures”. This update changes the accounting for repurchase-to-maturity transactions and linked repurchase financings to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The amendments also require two new disclosures. The first disclosure requires an entity to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. The second disclosure provides increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This update clarifies the principles for recognizing revenue from contracts with customers. This ASU, which does not apply to financial instruments, is effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

In January 2014, the FASB issued ASU 2014-04, “Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” This update clarifies that when an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed-in-lieu of foreclosure or through a similar legal agreement. This ASU is effective for fiscal years and interim periods beginning after December 15, 2014. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In January 2014, the FASB issued ASU 2014-01, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force).” This ASU allows for use of the proportional amortization method for qualified affordable housing projects if certain conditions are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized in the income statement as a component of income tax expense. This ASU provides for a practical expedient, which allows for amortization of only expected tax credits over the period tax credits are expected to be received. This method is permitted if it produces a measurement that is substantially similar to the measurement that would result from using both tax credits and other tax benefits. This ASU is effective for fiscal years and interim periods beginning after December 15, 2014. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. This update requires an unrecognized tax benefit related to a net operating loss carryforward, a similar tax loss or a tax credit carryforward to be presented as a reduction to a deferred tax asset, unless the tax benefit is not available at the reporting date to settle any additional income taxes under the tax law of the applicable tax jurisdiction. For public entities, this ASU is effective for fiscal years and interim periods beginning after December 15, 2013, with early adoption permitted. The adoption on January 1, 2014 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

2. Earnings Per Common Share

Basic earnings per share are net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of additional potential common shares issuable under stock options and unvested restricted shares computed using the treasury stock method. Earnings per share have been computed based on the following:

 

(Shares in thousands)    Three Months Ended      Six Months Ended  
     June 30, 2014      June 30, 2013      June 30, 2014      June 30, 2013  

Weighted average number of shares outstanding:

           

Basic

     49,090         53,108         49,800         53,865   

Dilutive effect of options outstanding

     527         —           486         —     

Dilutive effect of restricted shares

     644         954         806         912   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     50,261         54,062         51,092         54,777   
  

 

 

    

 

 

    

 

 

    

 

 

 

The dilutive effect of stock options and unvested restricted shares are the only common stock equivalents for purposes of calculating diluted earnings per common share.

Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows:

 

(Shares in thousands)    Three Months Ended      Six Months Ended  
     June 30, 2014      June 30, 2013      June 30, 2014      June 30, 2013  

Anti-dilutive stock options

     14         3,000         14         2,942   

Anti-dilutive restricted shares

     —           —           —           —     

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

3. Investment Securities

Trading securities totaled $6.5 million and $6.3 million at June 30, 2014 and December 31, 2013, respectively.

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at June 30, 2014, and December 31, 2013 are presented below:

 

(Dollars in thousands)    June 30, 2014  
     Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Estimated
Fair Value
 

Available-for-Sale

           

Marketable equity securities

   $ 946       $ 3       $ —         $ 949   

Mortgage-backed securities—residential issued by government sponsored entities

     587,142         3,965         1,047         590,060   

Industrial revenue bonds

     3,580         156         —           3,736   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 591,668       $ 4,124       $ 1,047       $ 594,745   
  

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-Maturity

           

U.S. Government agencies

   $ 14,567       $ 2       $ 4       $ 14,565   

Corporate bonds

     25,000         —           —           25,000   

State and political subdivisions—tax exempt

     13,599         433         —           14,032   

State and political subdivisions—taxable

     541         20         —           561   

Mortgage-backed securities—residential issued by government sponsored entities

     421,460         5,353         —           426,813   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 475,167       $ 5,808       $ 4       $ 480,971   
  

 

 

    

 

 

    

 

 

    

 

 

 
(Dollars in thousands)    December 31, 2013  
     Amortized
Cost
     Unrealized
Gains
     Unrealized
Losses
     Estimated
Fair Value
 

Available-for-Sale

           

Asset-backed securities

   $ 133,647       $ 363       $ 785       $ 133,225   

Marketable equity securities

     946         —           15         931   

Mortgage-backed securities—residential issued by government sponsored entities

     549,869         2,337         5,580         546,626   

Industrial revenue bonds

     3,750         109         —           3,859   

Collateralized debt obligations

     505         295         —           800   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 688,717       $ 3,104       $ 6,380       $ 685,441   
  

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-Maturity

           

U.S. Government agencies

   $ 14,972       $ —         $ 401       $ 14,571   

State and political subdivisions—tax exempt

     14,201         27         129         14,099   

State and political subdivisions—taxable

     545         —           12         533   

Mortgage-backed securities—residential issued by government sponsored entities

     435,380         328         5,218         430,490   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 465,098       $ 355       $ 5,760       $ 459,693   
  

 

 

    

 

 

    

 

 

    

 

 

 

Proceeds from sales and calls of securities were $149.5 million and $150.3 million for the three and six months ended June 30, 2014, respectively. Gross gains and losses of $0.8 million and $(0.8) million, respectively, and $1.1 million and $(0.8) million, respectively, were realized on these sales and calls for the three and six months ended June 30, 2014, respectively.

Proceeds from sales and calls of securities were $0.2 million and $1.2 million for the three and six months ended June 30, 2013, respectively. Gross gains of $0.2 million were realized on these sales and calls for the three and six months ended June 30, 2013.

The estimated fair value of investment securities at June 30, 2014, by contractual maturity, is shown in the table that follows. Expected maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations without call or prepayment penalties. Debt securities not due at a single maturity date are shown separately.

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

(Dollars in thousands)    June 30, 2014  
     Amortized
Cost
     Estimated
Fair Value
     Yield  

Available-for-sale

        

Due in one year or less

   $ —         $ —           —     

Due after one year through five years

     —           —           —     

Due after five years through ten years

     —           —           —     

Due after ten years

     3,580         3,736         2.23

Mortgage-backed securities—residential issued by government sponsored entities

     587,142         590,060         1.80
  

 

 

    

 

 

    
     590,722         593,796         1.80

Marketable equity securities

     946         949      
  

 

 

    

 

 

    

Total

   $ 591,668       $ 594,745      
  

 

 

    

 

 

    
     Amortized
Cost
     Estimated
Fair Value
     Yield  

Held-to-maturity

        

Due in one year or less

   $ 205       $ 205         0.76

Due after one year through five years

     919         934         2.30

Due after five years through ten years

     34,991         35,258         4.59

Due after ten years

     17,592         17,761         3.04

Mortgage-backed securities—residential issued by government sponsored entities

     421,460         426,813         2.39
  

 

 

    

 

 

    

Total

   $ 475,167       $ 480,971         2.58 %  
  

 

 

    

 

 

    

Securities with unrealized losses not recognized in income, and the period of time they have been in an unrealized loss position, are as follows:

 

(Dollars in thousands)    Less than 12 Months      12 Months or Longer      Total  
     Estimated
Fair Value
     Unrealized
Losses
     Estimated
Fair Value
     Unrealized
Losses
     Estimated
Fair Value
     Unrealized
Losses
 

June 30, 2014

                 

Available-for-Sale

                 

Mortgage-backed securities—residential issued by government sponsored entities

   $ 193,239       $ 820       $ 47,426       $ 227       $ 240,665       $ 1,047   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 193,239       $ 820       $ 47,426       $ 227       $ 240,665       $ 1,047   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-Maturity

                 

U.S. Government agencies

   $ 7,662       $ 4       $ —         $ —         $ 7,662       $ 4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 7,662       $ 4       $ —         $ —         $ 7,662       $ 4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
(Dollars in thousands)    Less than 12 Months      12 Months or Longer      Total  
     Estimated
Fair Value
     Unrealized
Losses
     Estimated
Fair Value
     Unrealized
Losses
     Estimated
Fair Value
     Unrealized
Losses
 

December 31, 2013

                 

Available-for-Sale

                 

Asset-backed securities

   $ 102,835       $ 785       $ —         $ —         $ 102,835       $ 785   

Marketable equity securities

     931         15         —           —           931         15   

Mortgage-backed securities—residential issued by government sponsored entities

     339,565         5,580         —           —           339,565         5,580   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 443,331       $ 6,380       $ —         $ —         $ 443,331       $ 6,380   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-Maturity

                 

U.S. Government agencies

   $ 14,571       $ 401       $ —         $ —         $ 14,571       $ 401   

State and political subdivisions—tax exempt

     10,489         129         —           —           10,489         129   

State and political subdivisions—taxable

     533         12         —           —           533         12   

Mortgage-backed securities—residential issued by government sponsored entities

     342,333         5,218         —           —           342,333         5,218   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 367,926       $ 5,760       $ —         $ —         $ 367,926       $ 5,760   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

As of June 30, 2014, the Company’s security portfolio consisted of 132 securities, 21 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities.

The majority of the mortgage-backed securities at June 30, 2014 and December 31, 2013 were issued by U.S. government-sponsored entities and agencies, which the government has affirmed its commitment to support. Unrealized losses associated with these securities are attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2014 or December 31, 2013.

Investment securities having carrying values of approximately $305.3 million and $313.5 million at June 30, 2014 and December 31, 2013, respectively, were pledged to secure public funds on deposit, securities sold under agreements to repurchase, and for other purposes as required by law.

4. Loans

Major classifications of loans, including loans held for sale, are as follows:

 

(Dollars in thousands)    June 30, 2014      December 31, 2013  

Non-owner occupied commercial real estate

   $ 793,733       $ 775,733   

Other commercial construction and land

     243,671         300,494   

Multifamily commercial real estate

     62,793         67,688   

1-4 family residential construction and land

     80,160         71,351   
  

 

 

    

 

 

 

Total commercial real estate

     1,180,357         1,215,266   

Owner occupied commercial real estate

     1,040,533         1,058,148   

Commercial and industrial loans

     932,800         803,736   

Lease financing

     2,346         2,676   
  

 

 

    

 

 

 

Total commercial

     1,975,679         1,864,560   

1-4 family residential

     863,897         804,322   

Home equity loans

     380,767         386,366   

Other consumer loans

     213,639         170,526   
  

 

 

    

 

 

 

Total consumer

     1,458,303         1,361,214   

Other

     107,836         110,989   
  

 

 

    

 

 

 

Total loans

   $ 4,722,175       $ 4,552,029   
  

 

 

    

 

 

 

Total loans include $9.9 million and $8.0 million of 1-4 family residential loans held for sale and $6.8 million and $3.8 million of net deferred loan origination costs and fees as of June 30, 2014 and December 31, 2013, respectively.

As of June 30, 2014, other loans include $44.8 million, $39.8 million and $1.9 million of farm land, state and political subdivision obligations and deposit customer overdrafts, respectively. As of December 31, 2013, other loans include $49.7 million, $36.2 million and $2.2 million of farm land, state and political subdivision obligations and deposit customer overdrafts, respectively.

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

Covered loans represent loans acquired from the FDIC subject to loss sharing agreements. Covered loans are further broken out into (i) loans acquired with evidence of credit impairment (“Purchased Credit Impaired or PCI Loans”) and (ii) non-PCI loans. Loans originated or purchased by the Company (“New Loans”) and loans acquired through the purchase of CBKN, GRNB, SCMF and TIBB, are not subject to the loss sharing agreements and are classified as “non covered.” Additionally, certain consumer loans acquired through the acquisition of First National Bank of the South, Metro Bank and Turnberry Bank (collectively, the “Failed Banks”) from the FDIC, are specifically excluded from the loss sharing agreements.

The Company designates loans as PCI by evaluating both qualitative and quantitative factors. At the time of acquisition, the Company accounted for the PCI loans by segregating each portfolio into loan pools with similar risk characteristics. Over the lives of the acquired PCI loans, the Company continues to estimate cash flows expected to be collected on each loan pool. The Company evaluates, at each balance sheet date, whether its estimates of the present value of the cash flows from the loan pools, determined using the effective interest rates, has decreased, such that the present value of such cash flows is less than the recorded investment of the pool, and if so, recognizes a provision for loan loss in its consolidated statement of income, unless interest rate driven. Additionally, if we have favorable changes in our estimates of cash flows expected to be collected for a loan pool such that the then-present value exceeds the recorded investment of that pool, we will first reverse any previously established allowance for loan losses for the pool. If such estimate exceeds the amount of any previously established allowance, we will accrete future interest income over the remaining life of the pool at a rate which, when used to discount the expected cash flows, results in the then-present value of such cash flows equaling the recorded investment of the pool at the time of the revised estimate.

The table below presents a rollforward of accretable yield and income expected to be earned related to PCI loans and the amount of non-accretable difference at the end of the period. Nonaccretable difference represents estimated contractually required payments in excess of estimated cash flows expected to be collected. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the PCI loans. Other represents reductions of accretable yield due to non-credit events such as interest rate reductions on variable rate PCI loans and prepayment activity on PCI loans.

 

(Dollars in thousands)    Three Months Ended     Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  

Accretable Yield

        

Balance at beginning of period

   $ 346,995      $ 491,237      $ 383,775      $ 553,348   

Accretion of income

     (31,021     (42,023     (64,183     (87,009

Reclassification from nonaccretable difference

     29,229        20,826        35,896        31,099   

Other

     (15,782     (25,559     (26,067     (52,957
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 329,421      $ 444,481      $ 329,421      $ 444,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

Nonaccretable Difference

        

Balance at end of period

   $ 232,776      $ 358,810      $ 232,776      $ 358,810   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table represents the periods we estimate the remaining accretable yield will accrete into income based on the Company’s most recent estimates of cash flows for PCI loans:

 

(Dollars in thousands)       

Periods ending December 31,

  

2014

   $ 54,928   

2015

     87,936   

2016

     61,438   

2017

     41,080   

2018

     27,909   

Thereafter

     56,130   
  

 

 

 

Total

   $ 329,421   
  

 

 

 

 

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Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

The accretable yield is accreted into interest income over the estimated life of the PCI loans using the level yield method. The accretable yield will change due to changes in:

 

    The estimate of the remaining life of PCI loans which may change the amount of future interest income, and possibly principal, expected to be collected;

 

    The estimate of the amount of contractually required principal and interest payments over the estimated life that will not be collected (the nonaccretable difference); and

 

    Indices for PCI loans with variable rates of interest.

For PCI loans, the impact of loan modifications is included in the evaluation of expected cash flows for subsequent decreases or increases of cash flows. For variable rate PCI loans, expected future cash flows will be recalculated as the rates adjust over the lives of the loans. At acquisition, the expected future cash flows were based on the variable rates that were in effect at that time.

Because of the loss protection provided by the FDIC, the risks of covered loans and foreclosed real estate are significantly different from those assets not covered under the loss share agreement. Refer to Note 7 – Other Real Estate Owned for the covered balances of other real estate owned.

As a result of overall improvement of credit loss expectations in our most recent estimates of cash flows, substantially related to the Company’s legacy Southern Community and Green Bankshares portfolios, the Company recognized $0.3 million and $0.4 million in Contingent Value Right (“CVR”) expense for the three months ended June 30, 2014 and 2013, respectively and $1.1 million and $3.3 million for the six months ended June 30, 2014 and 2013, respectively.

Non-covered Loans

The following is a summary of the major categories of non-covered loans outstanding as of June 30, 2014 and December 31, 2013:

 

(Dollars in thousands)    Non-PCI Loans                

June 30, 2014

   New      Acquired      PCI Loans      Total
Non-covered
Loans
 

Non-owner occupied commercial real estate

   $ 295,756       $ 68,261       $ 389,203       $ 753,220   

Other commercial construction and land

     62,754         246         163,498         226,498   

Multifamily commercial real estate

     17,179         14,061         26,720         57,960   

1-4 family residential construction and land

     66,334         —           13,826         80,160   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     442,023         82,568         593,247         1,117,838   

Owner occupied commercial real estate

     687,303         42,236         250,346         979,885   

Commercial and industrial loans

     795,315         17,081         111,785         924,181   

Lease financing

     2,346         —           —           2,346   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     1,484,964         59,317         362,131         1,906,412   

1-4 family residential

     448,315         48,126         306,825         803,266   

Home equity loans

     73,749         168,109         91,814         333,672   

Other consumer loans

     200,024         5,383         8,167         213,574   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     722,088         221,618         406,806         1,350,512   

Other

     60,186         3,739         43,043         106,968   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 2,709,261       $ 367,242       $ 1,405,227       $ 4,481,730   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

14


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

                                                                           
(Dollars in thousands)    Non-PCI Loans                

December 31, 2013

   New      Acquired      PCI Loans      Total
Non-covered
Loans
 

Non-owner occupied commercial real estate

   $ 219,482       $ 68,080       $ 432,437       $ 719,999   

Other commercial construction and land

     67,537         252         213,543         281,332   

Multifamily commercial real estate

     12,537         16,650         29,392         58,579   

1-4 family residential construction and land

     56,978         1         14,372         71,351   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     356,534         84,983         689,744         1,131,261   

Owner occupied commercial real estate

     642,794         48,459         299,593         990,846   

Commercial and industrial loans

     643,044         20,519         129,961         793,524   

Lease financing

     2,676         —           —           2,676   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     1,288,514         68,978         429,554         1,787,046   

1-4 family residential

     332,585         52,078         349,060         733,723   

Home equity loans

     52,918         181,138         100,995         335,051   

Other consumer loans

     151,584         6,407         12,433         170,424   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     537,087         239,623         462,488         1,239,198   

Other

     57,320         3,959         47,888         109,167   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 2,239,455       $ 397,543       $ 1,629,674       $ 4,266,672   
  

 

 

    

 

 

    

 

 

    

 

 

 

Covered Loans

The following is a summary of the major categories of covered loans outstanding as of June 30, 2014 and December 31, 2013:

 

                                                                           
(Dollars in thousands)    Non-PCI Loans                

June 30, 2014

   New      Acquired      PCI Loans      Total Covered
Loans
 

Non-owner occupied commercial real estate

   $ —         $ —         $ 40,513       $ 40,513   

Other commercial construction and land

     —           —           17,173         17,173   

Multifamily commercial real estate

     —           —           4,833         4,833   

1-4 family residential construction and land

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     —           —           62,519         62,519   

Owner occupied commercial real estate

     —           —           60,648         60,648   

Commercial and industrial loans

     —           195         8,424         8,619   

Lease financing

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     —           195         69,072         69,267   

1-4 family residential

     —           1,423         59,208         60,631   

Home equity loans

     —           33,049         14,046         47,095   

Other consumer loans

     —           —           65         65   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     —           34,472         73,319         107,791   

Other

     —           —           868         868   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ —         $ 34,667       $ 205,778       $ 240,445   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

15


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

(Dollars in thousands)    Non-PCI Loans                

December 31, 2013

   New      Acquired      PCI Loans      Total Covered
Loans
 

Non-owner occupied commercial real estate

   $ —         $ —         $ 55,734       $ 55,734   

Other commercial construction and land

     —           —           19,162         19,162   

Multifamily commercial real estate

     —           —           9,109         9,109   

1-4 family residential construction and land

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     —           —           84,005         84,005   

Owner occupied commercial real estate

     —           —           67,302         67,302   

Commercial and industrial loans

     —           356         9,856         10,212   

Lease financing

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     —           356         77,158         77,514   

1-4 family residential

     —           1,017         69,582         70,599   

Home equity loans

     —           36,114         15,201         51,315   

Other consumer loans

     —           —           102         102   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     —           37,131         84,885         122,016   

Other

     —           —           1,822         1,822   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ —         $ 37,487       $ 247,870       $ 285,357   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following tables present the aging of the recorded investment in past due loans, based on contractual terms, as of June 30, 2014:

 

(Dollars in thousands)   30-89 Days Past Due     Greater than 90 Days Past Due
and Still Accruing/Accreting
    Non-accrual        

Non-purchased credit impaired loans

  Non-Covered     Covered     Non-Covered     Covered     Non-Covered     Covered     Total  

Non-owner occupied commercial real estate

  $ —        $ —        $ —        $ —        $ 1,250      $ —        $ 1,250   

Other commercial construction and land

    10        —          —          —          314        —          324   

Multifamily commercial real estate

    —          —          —          —          —          —          —     

1-4 family residential construction and land

    —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

    10        —          —          —          1,564        —          1,574   

Owner occupied commercial real estate

    15        —          —          —          1,648        —          1,663   

Commercial and industrial loans

    211        —          —          —          2,424        66        2,701   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    226        —          —          —          4,072        66        4,364   

1-4 family residential

    359        45        —          —          1,628        28        2,060   

Home equity loans

    1,188        291        —          —          2,186        1,086        4,751   

Other consumer loans

    2,546        —          —          —          728        —          3,274   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    4,093        336        —          —          4,542        1,114        10,085   

Other

    —          —          —          —          10        —          10   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 4,329      $ 336      $ —        $ —        $ 10,188      $ 1,180      $ 16,033   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(Dollars in thousands)   30-89 Days Past Due     Greater than 90 Days Past Due
and Still Accruing/Accreting
    Non-accrual        

Purchased credit impaired loans

  Non-Covered     Covered     Non-Covered     Covered     Non-Covered     Covered     Total  

Non-owner occupied commercial real estate

  $ 444      $ —        $ 32,945      $ 4,124      $ —        $ —        $ 37,513   

Other commercial construction and land

    162        312        36,046        9,434        —          —          45,954   

Multifamily commercial real estate

    —          —          2,100        208        —          —          2,308   

1-4 family residential construction and land

    126        —          2,219        —          —          —          2,345   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

    732        312        73,310        13,766        —          —          88,120   

Owner occupied commercial real estate

    2,574        13        26,661        2,955        —          —          32,203   

Commercial and industrial loans

    410        1        30,072        182        —          —          30,665   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    2,984        14        56,733        3,137        —          —          62,868   

1-4 family residential

    3,583        482        32,461        8,460        —          —          44,986   

Home equity loans

    1,599        86        5,301        4,343        —          —          11,329   

Other consumer loans

    255        —          203        27        —          —          485   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    5,437        568        37,965        12,830        —          —          56,800   

Other

    17        —          3,014        —          —          —          3,031   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 9,170      $ 894      $ 171,022      $ 29,733      $ —        $ —        $ 210,819   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

16


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

The following tables present the aging of the recorded investment in past due loans, based on contractual terms, as of December 31, 2013:

 

(Dollars in thousands)   30-89 Days Past Due     Greater than 90 Days Past Due
and Still Accruing/Accreting
    Non-accrual        

Non-purchased credit impaired loans

  Non-Covered     Covered     Non-Covered     Covered     Non-Covered     Covered     Total  

Non-owner occupied commercial real estate

  $ —        $ —        $ —        $ —        $ 90      $ —        $ 90   

Other commercial construction and land

    —          —          —          —          563        —          563   

Multifamily commercial real estate

    305        —          —          —          —          —          305   

1-4 family residential construction and land

    —          —          —          —          1        —          1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

    305        —          —          —          654        —          959   

Owner occupied commercial real estate

    20        —          —          —          3,394        —          3,414   

Commercial and industrial loans

    2        —          —          —          1,879        66        1,947   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    22        —          —          —          5,273        66        5,361   

1-4 family residential

    862        —          —          —          1,417        —          2,279   

Home equity loans

    1,046        146        —          —          2,324        1,270        4,786   

Other consumer loans

    1,800        —          —          —          806        —          2,606   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    3,708        146        —          —          4,547        1,270        9,671   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 4,035      $ 146      $ —        $ —        $ 10,474      $ 1,336      $ 15,991   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(Dollars in thousands)   30-89 Days Past Due     Greater than 90 Days Past Due
and Still Accruing/Accreting
    Non-accrual        

Purchased credit impaired loans

  Non-Covered     Covered     Non-Covered     Covered     Non-Covered     Covered     Total  

Non-owner occupied commercial real estate

  $ 1,463      $ 107      $ 35,563      $ 10,658      $ —        $ —        $ 47,791   

Other commercial construction and land

    1,105        —          58,633        8,479        —          —          68,217   

Multifamily commercial real estate

    —          —          2,641        —          —          —          2,641   

1-4 family residential construction and land

    5        —          1,796        —          —          —          1,801   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

    2,573        107        98,633        19,137        —          —          120,450   

Owner occupied commercial real estate

    4,626        260        33,974        6,631        —          —          45,491   

Commercial and industrial loans

    249        —          29,819        1,597        —          —          31,665   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

    4,875        260        63,793        8,228        —          —          77,156   

1-4 family residential

    6,696        227        37,646        10,824        —          —          55,393   

Home equity loans

    1,733        59        7,313        1,227        —          —          10,332   

Other consumer loans

    344        —          1,249        67        —          —          1,660   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

    8,773        286        46,208        12,118        —          —          67,385   

Other

    433        —          4,745        954        —          —          6,132   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  $ 16,654      $ 653      $ 213,379      $ 40,437      $ —        $ —        $ 271,123   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pooled PCI loans are not classified as nonaccrual as they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for purchased credit-impaired loans and not to contractual interest payments.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed at origination and upon identification of a material change for all loans, on an annual basis for commercial loans exceeding $0.5 million and at least quarterly for loans not rated Pass. The Company uses the following definitions for risk ratings:

 

    Pass —These loans range from superior quality with minimal credit risk to loans requiring heightened management attention but that are still an acceptable risk and continue to perform as contracted.

 

    Special Mention —Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

17


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

    Substandard —Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

    Doubtful —Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following table summarizes loans, excluding purchased credit-impaired loans by internal rating at June 30, 2014:

 

                   Substandard                
(Dollars in thousands)    Pass      Special Mention      Accruing/
Accreting
     Non-accrual      Doubtful      Total  

Non-owner occupied commercial real estate

   $ 361,677       $ 122       $ 968       $ 1,250       $ —         $ 364,017   

Other commercial construction and land

     62,274         412         —           314         —           63,000   

Multifamily commercial real estate

     31,240         —           —           —           —           31,240   

1-4 family residential construction and land

     62,404         2,283         1,647         —           —           66,334   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     517,595         2,817         2,615         1,564         —           524,591   

Owner occupied commercial real estate

     714,139         5,425         8,327         1,648         —           729,539   

Commercial and industrial loans

     804,329         374         5,398         2,490         —           812,591   

Lease financing

     2,346         —           —           —           —           2,346   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     1,520,814         5,799         13,725         4,138         —           1,544,476   

1-4 family residential

     496,054         154         —           1,656         —           497,864   

Home equity loans

     269,656         434         1,545         3,272         —           274,907   

Other consumer loans

     204,660         —           19         728         —           205,407   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     970,370         588         1,564         5,656         —           978,178   

Other

     63,653         —           262         10         —           63,925   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 3,072,432       $ 9,204       $ 18,166       $ 11,368       $ —         $ 3,111,170   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following table summarizes loans, excluding purchased credit-impaired loans by internal rating at December 31, 2013:

 

                   Substandard                
(Dollars in thousands)    Pass      Special Mention      Accruing/
Accreting
     Non-accrual      Doubtful      Total  

Non-owner occupied commercial real estate

   $ 285,919       $ 568       $ 985       $ 90       $ —         $ 287,562   

Other commercial construction and land

     67,178         48         —           563         —           67,789   

Multifamily commercial real estate

     28,882         —           305         —           —           29,187   

1-4 family residential construction and land

     53,224         1,958         1,796         1         —           56,979   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     435,203         2,574         3,086         654         —           441,517   

Owner occupied commercial real estate

     681,571         4,093         2,195         3,394         —           691,253   

Commercial and industrial loans

     651,585         1,183         9,206         1,945         —           663,919   

Lease financing

     2,676         —           —           —           —           2,676   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     1,335,832         5,276         11,401         5,339         —           1,357,848   

1-4 family residential

     384,235         28         —           1,417         —           385,680   

Home equity loans

     263,490         37         3,050         3,593         —           270,170   

Other consumer loans

     157,157         —           28         806         —           157,991   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     804,882         65         3,078         5,816         —           813,841   

Other

     61,006         —           273         —           —           61,279   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 2,636,923       $ 7,915       $ 17,838       $ 11,809       $ —         $ 2,674,485   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

18


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

5. Allowance for Loan Losses

Activity in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013 is as follows:

 

(Dollars in thousands)    Three Months Ended     Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  

Balance, beginning of period

   $ 55,606      $ 57,171      $ 56,851      $ 57,262   

(Reversal) provision for loan losses on PCI loans

     (940     2,517        (3,428     (631

Provision for loan losses on non-PCI loans

     2,344        1,950        4,808        10,500   

Non-PCI loans charged-off

     (2,176     (6,069     (4,132     (13,390

Recoveries of non-PCI loans previously charged-off

     473        1,263        1,208        3,091   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of periods

   $ 55,307      $ 56,832      $ 55,307      $ 56,832   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table presents the roll forward of the allowance for loan losses for the three and six months ended June 30, 2014 by the class of loans against which the allowance is allocated:

 

(Dollars in thousands)    March 31, 2014      Provision/
(Reversals)
    Net (Charge-offs)/
Recoveries
    June 30, 2014  

Non-owner occupied commercial real estate

   $ 3,829       $ 785      $ (127   $ 4,487   

Other commercial construction and land

     8,892         2,605        5        11,502   

Multifamily commercial real estate

     403         77        —          480   

1-4 family residential construction and land

     1,559         69        3        1,631   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial real estate

     14,683         3,536        (119     18,100   

Owner occupied commercial real estate

     3,530         (206     (7     3,317   

Commercial and industrial loans

     8,198         519        (72     8,645   

Lease financing

     1         —          —          1   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial

     11,729         313        (79     11,963   

1-4 family residential

     20,383         (3,169     (76     17,138   

Home equity loans

     4,875         (153     (432     4,290   

Other consumer loans

     3,063         1,003        (635     3,431   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total consumer

     28,321         (2,319     (1,143     24,859   

Other

     873         (126     (362     385   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total loans

   $ 55,606       $ 1,404      $ (1,703   $ 55,307   
  

 

 

    

 

 

   

 

 

   

 

 

 
(Dollars in thousands)    December 31, 2013      Provision/
(Reversals)
    Net(Charge-offs)/
Recoveries
    June 30, 2014  

Non-owner occupied commercial real estate

   $ 4,635       $ (34   $ (114   $ 4,487   

Other commercial construction and land

     8,217         3,480        (195     11,502   

Multifamily commercial real estate

     320         160        —          480   

1-4 family residential construction and land

     1,558         71        2        1,631   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial real estate

     14,730         3,677        (307     18,100   

Owner occupied commercial real estate

     4,450         (1,013     (120     3,317   

Commercial and industrial loans

     8,310         330        5        8,645   

Lease financing

     3         (2     —          1   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial

     12,763         (685     (115     11,963   

1-4 family residential

     21,724         (4,492     (94     17,138   

Home equity loans

     3,869         901        (480     4,290   

Other consumer loans

     2,682         2,023        (1,274     3,431   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total consumer

     28,275         (1,568     (1,848     24,859   

Other

     1,083         (44     (654     385   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total loans

   $ 56,851       $ 1,380      $ (2,924   $ 55,307   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

19


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

The following tables present the roll forward of the allowance for loan losses for the three and six months ended June 30, 2013 by the class of loans against which the allowance is allocated:

 

(Dollars in thousands)    March 31, 2013      Provision/
(Reversals)
    Net (Charge-offs)/
Recoveries
    June 30, 2013  

Non-owner occupied commercial real estate

   $ 3,449       $ 871      $ 9      $ 4,329   

Other commercial construction and land

     12,880         (646     76        12,310   

Multifamily commercial real estate

     192         66        —          258   

1-4 family residential construction and land

     1,559         245        2        1,806   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial real estate

     18,080         536        87        18,703   

Owner occupied commercial real estate

     4,114         360        222        4,696   

Commercial and industrial loans

     10,515         1,757        (3,984     8,288   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial

     14,629         2,117        (3,762     12,984   

1-4 family residential

     16,800         780        (8     17,572   

Home equity loans

     4,615         (449     (229     3,937   

Other consumer loans

     2,170         712        (521     2,361   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total consumer

     23,585         1,043        (758     23,870   

Other

     877         771        (373     1,275   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total loans

   $ 57,171       $ 4,467      $ (4,806   $ 56,832   
  

 

 

    

 

 

   

 

 

   

 

 

 
(Dollars in thousands)    December 31, 2012      Provision/
(Reversals)
    Net(Charge-offs)/
Recoveries
    June 30, 2013  

Non-owner occupied commercial real estate

   $ 3,764       $ 592      $ (27   $ 4,329   

Other commercial construction and land

     12,711         (919     518        12,310   

Multifamily commercial real estate

     348         (131     41        258   

1-4 family residential construction and land

     1,716         67        23        1,806   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial real estate

     18,539         (391     555        18,703   

Owner occupied commercial real estate

     4,055         375        266        4,696   

Commercial and industrial loans

     7,490         9,149        (8,351     8,288   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total commercial

     11,545         9,524        (8,085     12,984   

1-4 family residential

     15,740         1,812        20        17,572   

Home equity loans

     8,670         (3,821     (912     3,937   

Other consumer loans

     2,082         1,363        (1,084     2,361   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total consumer

     26,492         (646     (1,976     23,870   

Other

     686         1,382        (793     1,275   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total loans

   $ 57,262       $ 9,869      $ (10,299   $ 56,832   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

20


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

The following tables present the roll forward of the allowance for loan losses for PCI and Non-PCI loans for the three and six months ended June 30, 2014 and 2013, by the class of loans against which the allowance is allocated:

 

     Three Months Ended  
(Dollars in thousands)    June 30, 2014     June 30, 2013  
     Non-PCI     PCI     Total     Non-PCI     PCI     Total  

Allowance for loan losses at the beginning of the period

   $ 20,194      $ 35,412      $ 55,606      $ 20,496      $ 36,675      $ 57,171   

Charge-offs:

            

Non-owner occupied commercial real estate

     204        —          204        11        —          11   

Other commercial construction and land

     (1     —          (1     28        —          28   

1-4 family residential construction and land

     (1     —          (1     —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     202        —          202        39        —          39   

Owner occupied commercial real estate

     8        —          8        —          —          —     

Commercial and industrial loans

     106        —          106        4,107        —          4,107   

Lease financing

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     114        —          114        4,107        —          4,107   

1-4 family residential

     80        —          80        28        —          28   

Home equity loans

     465        —          465        587        —          587   

Other consumer loans

     781        —          781        680        —          680   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     1,326        —          1,326        1,295        —          1,295   

Other

     534        —          534        628        —          628   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total charge-offs

     2,176        —          2,176        6,069        —          6,069   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Recoveries:

            

Non-owner occupied commercial real estate

     77        —          77        20        —          20   

Other commercial construction and land

     4        —          4        104        —          104   

1-4 family residential construction and land

     2        —          2        2        —          2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     83        —          83        126        —          126   

Owner occupied commercial real estate

     1        —          1        222        —          222   

Commercial and industrial loans

     34        —          34        123        —          123   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     35        —          35        345        —          345   

1-4 family residential

     4        —          4        20        —          20   

Home equity loans

     33        —          33        358        —          358   

Other consumer loans

     146        —          146        159        —          159   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     183        —          183        537        —          537   

Other

     172        —          172        255        —          255   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total recoveries

     473        —          473        1,263        —          1,263   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs (recoveries)

     1,703        —          1,703        4,806        —          4,806   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Provision for loan losses:

            

Non-owner occupied commercial real estate

     159        626        785        (222     1,093        871   

Other commercial construction and land

     (1     2,606        2,605        (346     (300     (646

Multifamily commercial real estate

     (13     90        77        (6     72        66   

1-4 family residential construction and land

     (36     105        69        6        239        245   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     109        3,427        3,536        (568     1,104        536   

Owner occupied commercial real estate

     (183     (23     (206     (277     637        360   

Commercial and industrial loans

     347        172        519        1,057        700        1,757   

Lease financing

     (1     1        —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     163        150        313        780        1,337        2,117   

1-4 family residential

     303        (3,472     (3,169     115        665        780   

Home equity loans

     473        (626     (153     359        (808     (449

Other consumer loans

     899        104        1,003        750        (38     712   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     1,675        (3,994     (2,319     1,224        (181     1,043   

Other

     397        (523     (126     514        257        771   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total provision for loan losses

     2,344        (940     1,404        1,950        2,517        4,467   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses at the end of the period

   $ 20,835      $ 34,472      $ 55,307      $ 17,640      $ 39,192      $ 56,832   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

21


Table of Contents

Capital Bank Financial Corp.

Notes to Consolidated Financial Statements (Unaudited)

 

(Dollars in thousands)    Six Months Ended  
     June 30, 2014     June 30, 2013  
     Non-PCI     PCI     Total     Non-PCI     PCI     Total  

Allowance for loan losses at the beginning of the period

   $ 18,951      $ 37,900      $ 56,851      $ 17,439      $ 39,823      $ 57,262   

Charge-offs:

            

Non-owner occupied commercial real estate

     204        —          204        92        —          92   

Other commercial construction and land

     207        —          207        102        —          102   

1-4 family residential construction and land

     2        —          2        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     413        —          413        194        —          194   

Owner occupied commercial real estate

     144        —          144        —          —          —     

Commercial and industrial loans

     161        —          161        9,011        —          9,011   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     305        —          305        9,011        —          9,011   

1-4 family residential

     101        —          101        28        —          28   

Home equity loans

     594        —          594        1,367        —          1,367   

Other consumer loans

     1,588        —          1,588        1,381        —          1,381   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     2,283        —          2,283        2,776        —          2,776   

Other

     1,131        —          1,131        1,409        —          1,409   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total charge-offs

     4,132        —          4,132        13,390        —          13,390   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Recoveries:

            

Non-owner occupied commercial real estate

     90        —          90        65        —          65   

Other commercial construction and land

     12        —          12        620        —          620   

Multifamily commercial real estate

     —          —          —          41        —          41   

1-4 family residential construction and land

     4        —          4        23        —          23   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     106        —          106        749        —          749   

Owner occupied commercial real estate

     24        —          24        266        —          266   

Commercial and industrial loans

     166        —          166        660        —          660   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     190        —          190        926        —          926   

1-4 family residential

     7        —          7        48        —          48   

Home equity loans

     114        —          114        455        —          455   

Other consumer loans

     314        —          314        297        —          297   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

     435        —          435        800        —          800   

Other

     477        —          477        616        —          616   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total recoveries

     1,208        —          1,208        3,091        —          3,091   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs (recoveries)

     2,924        —          2,924        10,299        —          10,299   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Provision for loan losses:

            

Non-owner occupied commercial real estate

     181        (215     (34     (199     791        592   

Other commercial construction and land

     499        2,981        3,480        (527     (392     (919

Multifamily commercial real estate

     (24     184        160        (47     (84     (131

1-4 family residential construction and land

     (70     141        71        107        (40     67   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     586        3,091        3,677        (666     275        (391

Owner occupied commercial real estate

     39        (1,052     (1,013     (555     930        375   

Commercial and industrial loans

     382        (52     330        8,179        970        9,149   

Lease financing

     (2     —          (2     —          —          —     
  

 

  <