Operating and financial highlights since the start of the quarter include the following:
- Substantially concurrent with the Company's initial public offering, which raised net proceeds for the Company of approximately $90 million, we reorganized our former subsidiaries, TIB Financial Corp., Capital Bank Corporation and Green Bankshares, Inc., into a single holding company.
- New loan originations for the quarter totaled $172.5 million, 60.1% of which were commercial loans, demonstrating continued execution of our organic growth and portfolio diversification strategies. In addition to our originations, planned reductions occurred in both criticized and classified loans and in non-strategic commercial real estate portfolios totaling $112.2 million. Commercial real estate represented 32% of our portfolio as of September 30, 2012, a decrease of 15% from December 31, 2011. In total, loans decreased by $118.8 million from the end of the second quarter to $4.1 billion at the end of the third quarter.
- Core deposits (total deposits minus time deposits) were flat during the third quarter as strong growth in Florida and the Carolinas was offset by reductions in the Tennessee market, where branch operations and product offerings are being realigned to meet Capital Bank strategies and objectives. Core deposits now represent 63% of total deposit funding and total deposits increased to 96.4% of total funding compared to 95.1% the prior quarter.
- Capital Bank, N.A. ended the third quarter with a tier 1 leverage ratio of 12.0%, in excess of regulatory requirements, and Capital Bank Financial Corporation held $234.5 million in cash and cash equivalents at the holding company.
- Subsequent to the end of the third quarter, on October 1, 2012, we acquired Southern Community, repaid approximately $47 million in outstanding TARP preferred stock and warrants, and merged Southern Community Bank and Trust into our bank subsidiary, Capital Bank, N.A. Southern Community's 22 branches are now operating under the Capital Bank brand, and systems conversion will take place in the fourth quarter of this year. At the end of the third quarter, Southern Community had total assets of $1.4 billion, gross loans of $0.9 billion and total deposits of $1.1 billion.
"Our third-quarter results reflected some seasonal softness in loan demand compared with the second quarter and the impact of historically low interest rates on asset yields," remarked Chris Marshall, Chief Financial Officer of Capital Bank. "As a result of our diligent emphasis on credit quality, we remain confident in our overall credit loss estimates, although continued refinement of specific problem asset resolution plans resulted in third-quarter charges including $7.2 million in OREO expenses and valuation adjustments (net of gains on disposition and FDIC indemnification income) and $4.7 million of impairments to legacy loans.