Bank Watch

Capital Bank profits rise as regulators mull pending deal

Capital Bank Financial Corp. CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall pose in this Observer file photo.
Capital Bank Financial Corp. CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall pose in this Observer file photo.

Charlotte-based Capital Bank Financial said Thursday its profits in the second quarter rose about 34 percent from a year earlier, as it continues to pursue regulatory approval for its planned purchase of another Charlotte bank.

On Thursday, executives said the acquisition of CommunityOne Bancorp, originally projected to close in March, has faced delays connected to Capital Bank’s change in regulators late last year.

In a conference call with analysts, Capital Bank CEO, Gene Taylor said regulatory review of the deal is ongoing but the bank expects word on the transaction “in the near term.”

Capital Bank reported $17.4 million in net income during the quarter, compared with $12.9 million for the same period last year. Earnings per share were 40 cents, 12 cents higher than the same quarter last year.

The bank grew net interest income and non-interest income, a category that includes fees, while boosting loans and deposits. Capital Bank, which like peers is looking to lower costs, also cited cost-saving initiatives as helping bring down expenses compared with a year ago.

But its net interest margin, a key measure of lending profitability, fell to 3.62 percent from 3.94 percent. Banks everywhere have been challenged to grow their margins at a time when interest rates remain low.

The CommunityOne purchase is expected to add $2.4 billion in assets to Capital Bank’s $7.6 billion total. Bank of America is the biggest Charlotte-based bank, with $2.18 trillion in assets.

Capital Bank, which had pushed back the deal’s expected closure to the second quarter, said Thursday the purchase has encountered delays because of the bank’s November change in regulators.

At that time, the company’s bank subsidiary switched from being regulated by the Office of the Comptroller of the Currency to the Federal Deposit Insurance Corp. and N.C. Office of the Commissioner of Banks. The Federal Reserve remains the regulator of the holding company.

“We made the mistake of not forecasting the need to go through a full safety and soundness examination from the FDIC, and we should have known that,” Chief Financial Officer, Chris Marshall said.

The FDIC began the exam in February, he said, adding that “it is in no way a reflection” of Capital Bank’s planning for its integration with CommunityOne.

Marshall and Taylor, former Bank of America executives, launched their company in 2009, when it was then known as North American Financial Holdings.

According to the FDIC, Capital Bank Financial Corp. last year changed headquarters to Charlotte from Coral Gables, Fla., the state where it acquired some of its first failed banks.

In February, the headquarters of its bank subsidiary, Capital Bank Corp., moved from Coral Gables to Raleigh, according to the FDIC.

Although Coral Gables was headquarters on paper, Charlotte has remained home for Marshall and Taylor since the company’s formation seven years ago.

Capital Bank has three branches in the Charlotte metropolitan area, where it ranks 32 for deposits, the latest FDIC data show. CommunityOne has 14 branches and is 10th in deposits in the metro area.

Deon Roberts: 704-358-5248, @DeonERoberts