CapitalMark 2nd Quarter Earnings Remain Strong

Friday, July 25, 2014

CapitalMark Bank & Trust on Friday reported earnings for the second quarter ended June 30, 2014. Net income for the six months ended was $3.3 million, an increase of 39% from the same period in 2013. Net income per fully diluted common share increased 41% from the same six month period last year to $0.41.

“CapitalMark had another quarter of strong results fueled by exceptional loan and non-interest bearing deposit growth.  Loans grew 25% year-over-year while non-interest bearing deposits grew 29% over the same period. With $879 million in total assets, we continue to build core earnings capacity and an operating profile that positions CapitalMark well for the future,” said R. Craig Holley, CapitalMark’s chairman, president and CEO.

“The growth in core earnings noted below was fueled by additional banker teams in the Chattanooga and Knoxville markets and a strategic restructuring of the balance sheet.  Management redeployed assets from lower yielding securities into higher yielding loans. This strategy supported the growth in our markets for high quality business lending. CapitalMark will continue to add experienced bankers to our team. The markets we serve have responded positively to our approach of personal service,” Mr. Holley said.

SECOND QUARTER HIGHLIGHTS:

· Net income was $3.3 million for the six months ended June 30, 2014, compared to net income of $2.4 million for the six months ended June 30, 2013, an increase of 38.8% year-over-year.  Net income for the quarter ended June 30, 2014 was $1.63 million, compared to $1.69 million in the first quarter of 2014 and $1.56 million for the second quarter 2013.

· Net Income per fully diluted common share was $0.41 for the six months ended June 30, 2014, compared to net income per fully diluted common share of $0.29 for the six months ended June 30, 2013, an increase of 41.4% year-over-year.

· Total Assets grew to $879 million, or 13.5% since June 30, 2013.

CORE EARNINGS: 

· Gross loans grew at an annualized rate of 22.5% or $65.7 million for the first six months of 2014.

· Deposits increased to $736 million, or 10.1% year-over-year.

· Non-interest bearing deposits grew to $135 million, a 29.1% increase year-over-year.  Non-interest bearing deposits comprise 18.3% of total deposits at the end of the second quarter 2014. 

· Revenues for the six months ended June 30, 2014 grew to a record $16.7 million, a growth rate of 13.1% year-over-year.  Revenues for the quarter ended June 30, 2014 were also a record $8.5 million, a $190 thousand increase from quarter ended March 31, 2014.  Revenues increased 10.1% from the quarter ended June 30, 2013.

· Return on average assets for the six months ended June 30, 2014 increased 26.2% to 0.77% compared to the same period in 2013.

ASSET QUALITY:

· Ratio of past due loans > 30 days to total loans decreased to 0.07% for the second quarter of 2014 when compared to 0.25% for the first quarter of 2014.  The ratio of past due loans > 30 days to total loans slightly increased when compared to 0.00% for the same period of 2014.

· The ratio of allowance for loan losses to total loans has been steady at 1.25% for June 30, 2014, compared to 1.24% the same period in 2013.

· Non-performing assets to total loans plus foreclosed real estate decreased to 0.83% in the second quarter of 2014, compared to 1.08% on June 30, 2013.

· Net charge offs to average loans decreased at June 30, 2014 to 0.09% from 0.42% in the same period of 2013.  Net charge offs to average loans increased slightly when compared to a negative 0.11% for the first quarter 2014.

OTHER HIGHLIGHTS: 

· Tier 1 Leverage Ratio continues to be strong at 10.52% for the second quarter 2014.

· Non-interest expense decreased $53 thousand or 1.0% from the previous quarter.

· Non-interest revenue from the Wealth and Trust Department has increased 15.1% in the second quarter of 2014 when compared to the first quarter of 2014.

· Non-interest revenue generated from net gains on sale of Mortgages remained flat decreasing $1 thousand when compared to the previous quarter.

· Efficiency ratio has improved 9.9% to 59.79% for the six months ended June 30, 2014 when compared to the same period in 2013.



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