Capital Bank Announces Financial Results for First Quarter of 2010

RALEIGH, N.C., April 27 /PRNewswire-FirstCall/ -- Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported financial results for the first quarter of 2010.

First Quarter 2010 Financial Highlights:

  • Increased total regulatory capital through an $8.5 million private placement offering of common stock and subordinated debt to qualified investors;
  • Net interest margin increased to 3.22% in the first quarter 2010 from 2.72% in the first quarter 2009;
  • Nonperforming loans were 4.23% of total loans as of March 31, 2010 compared with 2.84% of total loans as of December 31, 2009;
  • Nonperforming assets were 4.24% of total assets as of March 31, 2010 compared with 2.90% of total assets as of December 31, 2009;
  • Allowance for loan losses increased to 2.12% of total loans as of March 31, 2010 from 1.88% of total loans as of December 31, 2009;
  • Allowance for loan losses increased to 132% of nonperforming loans, net of loans charged down to market value, as of March 31, 2010 from 115% of nonperforming loans, net of loans charged down to market value, as of December 31, 2009;
  • Annualized first quarter 2010 net charge-offs were 2.48% of average loans compared with 0.73% of average loans for the first quarter 2009;
  • Provision for loan losses increased to $11.7 million in first quarter 2010 from $6.0 million in first quarter 2009, an increase of $5.7 million; and
  • Net loss attributable to common shareholders was $5.9 million, or $0.49 per diluted share, in first quarter 2010 compared with net loss attributable to common shareholders of $5.1 million, or $0.45 per diluted share, in first quarter 2009.

The Company's results of operations in the first quarter of 2010 compared with the same quarter last year primarily reflect a significant increase in provision for loan losses, partially offset by an improved net interest income and a higher income tax benefit.

"Capital Bank was very pleased to announce the completion of an $8.5 million private placement offering during the first quarter of 2010," stated B. Grant Yarber, president and CEO. "We remain committed to capital preservation and to remaining above well capitalized levels as we work through the significant headwinds that community banks and the commercial real estate markets have been facing these past two years. This successful capital raise allowed us to increase our preliminary total risk-based capital ratio despite continuing elevated loan losses. We remain confident in the overall strength of our franchise and look forward to an improving economy."

Net Interest Income

Net interest income increased by $2.4 million, rising from $10.2 million in the first quarter of 2009 to $12.6 million in the first quarter of 2010. This improvement was due to an increase in net interest margin from 2.72% in the first quarter of 2009 to 3.22% in the first quarter of 2010, coupled with a 4.1% growth in average earning assets over the same period. Net interest margin benefited from a significant decline in funding costs as rates on total interest-bearing liabilities fell 70 basis points, from 2.80% for the quarter ended March 31, 2009 to 2.10% for the quarter ended March 31, 2010. The Company's interest rate swap on prime-indexed commercial loans, which expired in October 2009, increased loan interest income by $1.1 million in the first quarter of 2009, representing a benefit to net interest margin of 29 basis points in that quarter. Since the swap expired in 2009, the Company received no benefit in the first quarter of 2010.

A significant increase in loans placed on nonaccrual status during the first quarter of 2010 negatively affected net interest income during the quarter. When loans are placed on nonaccrual status, any accrued but unpaid interest is immediately reversed and has a direct impact on net interest income and net interest margin. During the first quarter of 2010, reversal of accrued interest on loans placed on nonaccrual reduced net interest income by approximately $750 thousand, representing a negative impact to net interest margin of 18 basis points.

"Despite a slight decline in loan yields from increased levels of nonaccrual loans and expiration of our prime swap in 2009, Capital Bank realized substantial net interest income improvement during the past year," stated Mr. Yarber. "Management remains primarily focused on capital preservation and asset quality but also considers margin management a key priority. Through disciplined margin controls in a more favorable interest rate environment, our net interest margin increased to 3.22% in the first quarter of 2010 from 2.72% in the first quarter of 2009. We are pleased by the positive trends in our net interest margin."

Provision for Loan Losses and Asset Quality

Provision for loan losses for the quarter ended March 31, 2010 totaled $11.7 million, an increase from $6.0 million for the quarter ended March 31, 2009. The increase in the loan loss provision was driven by continued difficult economic conditions and weakness in local real estate markets which resulted in significantly higher levels of nonperforming assets and impaired loans as well as downgrades to the credit ratings of certain loans in the portfolio. Further, a significant decline in commercial real estate values contributed to higher levels of specific reserves or charge-offs on impaired loans. Net charge-offs increased from $2.3 million, or 0.73% of average loans, in the first quarter of 2009 to $8.7 million, or 2.48% of average loans, in the first quarter of 2010.

Nonperforming assets, which include loans on nonaccrual and other real estate, increased to 4.24% of total assets as of March 31, 2010 compared to 2.90% as of December 31, 2009 and 1.24% as of March 31, 2009. Past due loans, which include all loans past due 30 days or more, increased to 4.96% of total loans as of March 31, 2010 compared to 2.80% as of December 31, 2009 and 1.34% as of March 31, 2009.

As a result of the deteriorating credit quality, the Company increased the allowance for loan losses to 2.12% of total loans as of March 31, 2010 compared to 1.88% as of December 31, 2009 and 1.45% as of March 31, 2009. The allowance for loan losses was 50% of nonperforming loans as of March 31, 2010, which was a decline from 66% as of December 31, 2009 and 109% as of March 31, 2009. The allowance for loan losses was 132% of nonperforming loans, net of loans charged down to market value, which was an increase from 115% as of December 31, 2009 and a decline from 155% as of March 31, 2009.

Noninterest Income

Noninterest income decreased by $444 thousand, or 21%, declining from $2.1 million in the first quarter of 2009 to $1.7 million in the first quarter of 2010. This decrease was primarily related to write-downs to the values of real estate owned totaling $646 thousand in the quarter ended March 31, 2010. Management continues to proactively monitor the market values of its real estate owned by obtaining updated appraisals, and reduces other noninterest income by any decline in valuations during the period. Other noninterest income was further reduced by $229 thousand in losses on the sale of certain real estate owned during the first quarter of 2010. Mortgage origination and other loan fees also declined by $200 thousand in the quarter ended March 31, 2010 compared with the quarter ended March 31, 2009. The lower noninterest income was partially offset by gains of $263 thousand on the sale of certain debt securities and recognized appreciation of $65 thousand in the market value of an equity security in the quarter ended March 31, 2010 compared with a $320 thousand loss on an investment in Silverton Bank stock in the quarter ended March 31, 2009.

Noninterest Expense

Noninterest expense increased $157 thousand, or 1%, rising from $11.6 million in the first quarter of 2009 to $11.7 million in the first quarter of 2010. This increase was primarily due to higher FDIC deposit insurance expense, which rose by $436 thousand during the quarter. Increased deposit insurance expense reflects higher deposit insurance assessment rates to cover losses incurred by the FDIC's deposit insurance fund. Growth in core deposits during the past year also partially contributed to the increase in FDIC deposit insurance expense. Additionally, miscellaneous loan handling costs increased $278 thousand as higher loan workout, appraisal and foreclosure costs were incurred in the quarter ended March 31, 2010. Partially offsetting the increase in noninterest expense, salaries and employee benefits expense fell by $561 thousand partially due to suspension of the Company's 401(k) match in 2009 and partially due to higher deferred loan costs which reduced expense.

Income tax benefit increased from $800 thousand in the first quarter of 2009 to $3.9 million in the first quarter of 2010. This increase was primarily due to a larger net loss before taxes over the same period.

Balance Sheet

Loan balances declined by $14.2 million in the first quarter of 2010 partially due to net charge-offs in the quarter and partially due to an effort by the Company to slow balance sheet growth to preserve its regulatory capital ratios and reduce its exposure to commercial real estate lending. Total deposits increased by $2.6 million in the quarter ended March 31, 2010. Checking and savings accounts decreased by $8.3 million during the quarter ended March 31, 2010 primarily due to a decline in average balances held by depositors. As the economy continues to stabilize and consumer spending rises, the Company expects to experience a decline in average customer checking account balances. Time deposits, which include brokered deposits, increased $35.0 million in the first quarter of 2010 while money market accounts decreased by $24.1 million in the same period.

The Company increased regulatory capital during the quarter ended March 31, 2010 through an $8.5 million private placement offering to qualified investors. The offering was structured in the form of investment units consisting of a subordinated promissory note with a principal balance of $3,997 and shares of the Company's common stock valued at $6,003. As a result of the offering, the Company sold subordinated promissory notes with an aggregate principal amount of approximately $3.4 million and shares of the Company's common stock valued at approximately $5.1 million. The Company may elect to sell additional units in one or more subsequent closings on or prior to June 16, 2010, unless the Company elects to extend the offering, provided that the aggregate number of all units sold does not exceed 1,500. The Company may redeem some or all of the promissory notes at any time beginning on March 18, 2015 at a price equal to 100% of the principal amount of the redeemed promissory notes plus accrued but unpaid interest to the redemption date.

Capital Bank Corporation, headquartered in Raleigh, N.C., with approximately $1.7 billion in total assets, offers a broad range of financial services. Capital Bank operates 32 banking offices in Asheville (4), Burlington (3), Cary (2), Clayton, Fayetteville (4), Graham, Hickory, Holly Springs, Mebane, Morrisville, Oxford, Pittsboro, Raleigh (5), Sanford (3), Siler City, Wake Forest and Zebulon. The Company's website is http://www.capitalbank-us.com.

This press release does not constitute an offer to sell or a solicitation to buy the investment units described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Information in this press release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the management of our growth, the risks associated with Capital Bank's loan portfolio, local economic conditions affecting retail and commercial real estate, competition within the industry, dependence on key personnel, government regulation and the risks associated with possible or completed acquisitions. Additional factors that could cause actual results to differ materially are discussed in Capital Bank Corporation's filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Capital Bank Corporation does not undertake a duty to update any forward-looking statements in this press release.

Capital Bank Corporation

Quarterly Results

(Unaudited)


2010


2009



March 31


December 31


September 30


June 30


March 31


(Dollars in thousands)


































Interest income


$

20,066


$

20,863


$

21,858


$

20,755


$

19,668


Interest expense



7,516



7,885



8,303



8,591



9,487


Net interest income



12,550



12,978



13,555



12,164



10,181


Provision for loan losses



11,734



11,822



3,564



1,692



5,986


Net interest income after provision for loan losses



816



1,156



9,991



10,472



4,195


Noninterest income



1,655



1,243



2,476



3,699



2,099


Noninterest expense



11,714



14,096



11,067



12,440



11,557


Net income (loss) before taxes



(9,243)



(11,697)



1,400



1,731



(5,263)


Income tax expense (benefit)



(3,909)



(4,452)



(2,143)



382



(800)


Net income (loss)


$

(5,334)


$

(7,245)


$

3,543


$

1,349


$

(4,463)


Dividends and accretion on preferred stock



589



588



590



587



587


Net income (loss) attributable to common shareholders


$

(5,923)


$

(7,833)


$

2,953


$

762


$

(5,050)





End of Period Balances

(Unaudited)


2010


2009



March 31


December 31


September 30


June 30


March 31


(Dollars in thousands)


































Total assets


$

1,739,857


$

1,734,668


$

1,734,950


$

1,695,342


$

1,665,611


Total earning assets



1,639,864



1,640,305



1,634,119



1,615,164



1,580,140


Cash and cash equivalents



53,341



29,513



52,694



72,694



39,917


Investment securities



232,780



245,492



262,499



268,224



286,310


Loans



1,376,085



1,390,302



1,357,243



1,293,340



1,277,064


Allowance for loan losses



29,160



26,081



19,511



18,602



18,480


Intangible assets



2,475



2,711



2,995



3,282



3,569


Deposits



1,380,539



1,377,965



1,385,250



1,380,842



1,340,974


Borrowings



172,000



167,000



147,000



117,000



127,000


Subordinated debentures



34,323



30,930



30,930



30,930



30,930


Shareholders' equity



138,792



139,785



149,525



143,306



142,674


Tangible common equity



95,038



95,795



105,251



98,745



97,826





Average Quarterly Balances

(Unaudited)


2010


2009



March 31


December 31


September 30


June 30


March 31


(Dollars in thousands)


































Total assets


$

1,732,940


$

1,736,421


$

1,705,290


$

1,665,387


$

1,659,767


Total earning assets



1,639,214



1,648,872



1,632,707



1,588,502



1,574,017


Investment securities



231,916



254,383



265,976



279,607



289,368


Loans



1,393,169



1,384,285



1,330,199



1,285,571



1,265,438


Deposits



1,374,520



1,379,554



1,375,931



1,324,507



1,307,827


Borrowings



170,956



155,989



130,098



140,682



146,233


Subordinated debentures



31,232



30,930



30,930



30,930



30,930


Shareholders' equity



140,907



150,007



145,487



145,216



149,285





CAPITAL BANK CORPORATION

Nonperforming Assets (1)

(Unaudited)


2010


2009



March 31


December 31


September 30


June 30


March 31


(Dollars in thousands)


































Commercial real estate


$

44,086


$

25,593


$

14,991


$

12,888


$

11,475


Consumer real estate



3,809



3,330



2,235



2,566



2,573


Commercial owner occupied



6,085



6,607



710



1,997



2,308


Commercial and industrial



4,217



3,974



586



1,060



652


Consumer



8



8





19




Total nonperforming loans



58,205



39,512



18,522



18,530



17,008


Other real estate (2)



15,635



10,732



8,441



5,170



3,616


Total nonperforming assets


$

73,840


$

50,244


$

26,963


$

23,700


$

20,624



1

Represents loans that are 90 days or more past due or in nonaccrual status in addition to other real estate.

2

Balance as of March 31, 2010 includes $1.3 million of real estate from a closed branch office held for sale and $4.4 million of residential properties sold to individuals prior to March 31, 2010 where the Company financed 100% of the purchase price at closing.




Other Financial Data and Ratios

(Unaudited)


2010


2009



March 31


December 31


September 30


June 30


March 31



















Per Share Data

















Net income (loss) – basic and diluted


$

(0.49)


$

(0.68)


$

0.26


$

0.07


$

(0.45)


Book value



7.57



8.68



9.58



9.03



8.97


Tangible book value



7.38



8.44



9.31



8.74



8.66



















Common shares outstanding



12,881,354



11,348,117



11,300,369



11,300,369



11,300,369


Average diluted shares outstanding



12,014,430



11,528,693



11,469,064



11,447,619



11,293,480


Average basic shares outstanding



12,014,430



11,528,693



11,469,064



11,447,619



11,293,480



















Net Interest Margin (1)

















Yield on earning assets



5.08

%


5.15

%


5.43

%


5.34

%


5.17

%

Cost of interest-bearing liabilities



2.10



2.18



2.33



2.50



2.80


Net interest spread



2.98



2.96



3.10



2.84



2.37


Net interest margin



3.22



3.25



3.41



3.17



2.72



















Capital Ratios

















Tangible equity to tangible assets



7.85

%


7.91

%


8.46

%


8.28

%


8.37

%

Tangible common equity to tangible assets




5.47



5.53



6.08



5.84



5.89


Average shareholders' equity to average total assets



8.13



8.64



8.53



8.72



8.99


Tier 1 leverage (2)



8.80



8.94



9.87



9.94



10.01


Tier 1 risk-based capital(2)



10.24



10.16



11.17



11.52



11.82


Total risk-based capital(2)



11.73



11.41



12.42



12.77



13.07



















Asset Quality Ratios

















Nonperforming loans to total loans



4.23

%


2.84

%


1.36

%


1.43

%


1.33

%

Nonperforming assets to total assets



4.24



2.90



1.55



1.40



1.24


Allowance for loan losses to total loans



2.12



1.88



1.44



1.44



1.45


Allowance to nonperforming loans



50



66



105



100



109


Allowance to nonperforming loans, net of loans charged down to market value



132



115



182



167



155


Net charge-offs to average loans



2.48



1.52



0.80



0.49



0.73


Past due loans to total loans



4.96



2.80



1.86



1.17



1.34



1

Annualized and on a fully taxable equivalent basis.

2

Regulatory capital ratios as of March 31, 2010 are preliminary and subject to change pending filing of regulatory financial reports.



CAPITAL BANK CORPORATION

Supplemental Loan Portfolio Analysis

(Unaudited)



As of March 31, 2010




Loans
Outstanding


Nonaccrual
Loans


Nonaccrual Loans
to Loans
Outstanding


Allowance for
Loan Losses


Allowance to Loans
Outstanding


(Dollars in thousands)


































Commercial real estate:


















   Residential construction and land development


$

247,476


$

39,552



15.98

%

$

9,654



3.90

%

   Commercial construction and land development



208,972



466



0.22



3,540



1.69


   Other commercial real estate



240,177



4,068



1.69



3,848



1.60


      Total commercial real estate



696,625



44,086



6.33



17,042



2.45


Consumer real estate:

















   Residential mortgages



165,362



3,630



2.20



2,522



1.53


   Home equity lines



96,556



179



0.19



637



0.66


      Total consumer real estate



261,918



3,809



1.45



3,159



1.21


Commercial owner occupied real estate



186,812



6,085



3.26



4,650



2.49


Commercial and industrial



181,111



4,217



2.33



3,801



2.10


Consumer



7,617



8



0.11



315



4.14


Other loans



42,002







193



0.46


      Total


$

1,376,085


$

58,205



4.23

%

$

29,160



2.12

%




Supplemental Commercial Real Estate Analysis

Residential Acquisition, Development and Construction Loan Analysis by Type

(Unaudited)



As of and for the quarter ended March 31, 2010




Residential Land /
Development


Residential
Construction


Total


(Dollars in thousands)
















Loans outstanding


$

146,163


$

101,313


$

247,476


Loans outstanding to total loans



10.62

%


7.36

%


17.98

%

Nonaccrual loans


$

32,287


$

7,265


$

39,552


Nonaccrual loans to loans in category



22.09

%


7.17

%


15.98

%












Allowance for loan losses


$

6,968


$

2,686


$

9,654


Allowance to loans in category



4.77

%


2.65

%


3.90

%

Net charge-offs


$

5,120


$

1,489


$

6,609


Net charge-offs to average loans in category



13.26

%


5.90

%


10.35

%





CAPITAL BANK CORPORATION

Supplemental Commercial Real Estate Analysis

Residential Acquisition, Development and Construction Loan Analysis by Region

(Unaudited)



As of March 31, 2010




Loans
Outstanding


Percent of
Total Loans
Outstanding


Nonaccrual
Loans


Nonaccrual
Loans to
Loans
Outstanding


Allowance for
Loan Losses


Allowance to
Loans
Outstanding


(Dollars in thousands)


































Triangle


$

171,255



69.20

%

$

31,872



18.61

%

$

7,274



4.25

%

Sandhills



34,167



13.81



885



2.59



908



2.66


Triad



5,372



2.17







121



2.25


Western



36,682



14.82



6,795



18.52



1,351



3.68


   Total


$

247,476



100.00

%

$

39,552



15.98

%

$

9,654



3.90

%




Supplemental Commercial Real Estate Analysis

Other Commercial Real Estate Loan Analysis by Type

(Unaudited)



As of and for the quarter ended March 31, 2010




Commercial Land /
Development


Commercial
Construction


Multifamily


Other Non-
Residential CRE


Total


(Dollars in thousands)






























Loans outstanding


$

130,298


$

78,674


$

43,631


$

196,546


$

449,149


Loans outstanding to total loans



9.47

%


5.72

%


3.17

%


14.28

%


32.64

%

Nonaccrual loans


$

466


$


$

314


$

3,754


$

4,534


Nonaccrual loans to loans in category



0.36

%


%


0.72

%


1.91

%


1.01

%


















Allowance for loan losses


$

2,473


$

1,067


$

561


$

3,287


$

7,388


Allowance to loans in category



1.90

%


1.36

%


1.29

%


1.67

%


1.64

%

Net charge-offs


$

2


$


$

11


$

211


$

224


Net charge-offs to average loans in category



0.01

%


%


0.10

%


0.42

%


0.20

%




Supplemental Commercial Real Estate Analysis

Other Commercial Real Estate Loan Analysis by Region

(Unaudited)



As of March 31, 2010




Loans
Outstanding


Percent of
Total Loans
Outstanding


Nonaccrual
Loans


Nonaccrual
Loans to
Loans
Outstanding


Allowance for
Loan Losses


Allowance to
Loans
Outstanding


(Dollars in thousands)


































Triangle


$

294,987



65.68

%

$

3,404



1.15

%

$

4,954



1.68

%

Sandhills



61,894



13.78



604



0.98



1,188



1.92


Triad



37,147



8.27



41



0.11



581



1.56


Western



55,121



12.27



485



0.88



665



1.21


   Total


$

449,149



100.00

%

$

4,534



1.01

%

$

7,388



1.64

%




CAPITAL BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

March 31, 2010 and December 31, 2009



March 31, 2010


December 31, 2009


(Dollars in thousands)


(Unaudited)










Assets






Cash and due from banks:






   Interest-earning


$

30,999


$

4,511


   Noninterest-earning



22,342



25,002


      Total cash and cash equivalents



53,341



29,513


Investment securities:








   Investment securities – available for sale, at fair value



220,955



235,426


   Investment securities  – held to maturity, at amortized cost



3,344



3,676


   Other investments



8,481



6,390


      Total investment securities



232,780



245,492


Loans – net of unearned income and deferred fees



1,376,085



1,390,302


Allowance for loan losses



(29,160)



(26,081)


      Net loans



1,346,925



1,364,221


Premises and equipment, net



24,580



23,756


Bank-owned life insurance



22,997



22,746


Deposit premium, net



2,475



2,711


Deferred income tax



11,690



12,096


Accrued interest receivable



6,479



6,590


Other assets



38,590



27,543


           Total assets


$

1,739,857


$

1,734,668










Liabilities








Deposits:








   Demand, noninterest-bearing


$

132,411


$

141,069


   Savings and interest-bearing checking



204,358



204,042


   Money market deposit accounts



160,087



184,146


   Time deposits less than $100,000



531,508



507,348


   Time deposits $100,000 and greater



352,175



341,360


      Total deposits



1,380,539



1,377,965


Repurchase agreements and federal funds purchased



3,227



6,543


Borrowings



172,000



167,000


Subordinated debentures



34,323



30,930


Other liabilities



10,976



12,445


           Total liabilities



1,601,065



1,594,883










Shareholders' Equity








Preferred stock, $1,000 par value; 100,000 shares authorized; 41,279 shares issued and outstanding (liquidation preference of $41,279)



40,200



40,127


Common stock, no par value; 50,000,000 shares authorized; 12,881,354 and 11,348,117 shares issued and outstanding



145,136



139,909


Accumulated deficit



(50,129)



(44,206)


Accumulated other comprehensive income



3,585



3,955


           Total shareholders' equity



138,792



139,785


           Total liabilities and shareholders' equity


$

1,739,857


$

1,734,668





CAPITAL BANK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2010 and 2009

(Unaudited)


Three Months Ended
March 31,




2010


2009


(Dollars in thousands except per share data)
















Interest income:








   Loans and loan fees


$

17,411


$

16,092


   Investment securities:








      Taxable interest income



2,026



2,799


      Tax-exempt interest income



601



764


      Dividends



18




   Federal funds and other interest income



10



13


           Total interest income



20,066



19,668


Interest expense:








   Deposits



6,151



7,769


   Borrowings and repurchase agreements



1,365



1,718


      Total interest expense



7,516



9,487


      Net interest income



12,550



10,181


   Provision for loan losses



11,734



5,986


      Net interest income after provision for loan losses



816



4,195


Noninterest income:








   Service charges and other fees



868



952


   Bank card services



415



339


   Mortgage origination and other loan fees



327



527


   Brokerage fees



187



163


   Bank-owned life insurance



239



258


   Net gain (loss) on investment securities



328



(320)


   Loss on other real estate



(876)



(7)


   Other



167



187


           Total noninterest income



1,655



2,099


Noninterest expense:








   Salaries and employee benefits



5,400



5,961


   Occupancy



1,502



1,373


   Furniture and equipment



745



830


   Data processing and telecommunications



517



631


   Advertising and public relations



430



323


   Office expenses



332



335


   Professional fees



475



379


   Business development and travel



267



328


   Amortization of deposit premiums



235



288


   Miscellaneous loan handling costs



441



163


   Directors fees



298



359


   FDIC deposit insurance



665



229


   Other



407



358


           Total noninterest expense



11,714



11,557


           Net loss before tax benefit



(9,243)



(5,263)


Income tax benefit



(3,909)



(800)


           Net loss


$

(5,334)


$

(4,463)


Dividends and accretion on preferred stock



589



587


           Net loss attributable to common shareholders


$

(5,923)


$

(5,050)










Net loss per common share – basic


$

(0.49)


$

(0.45)


Net loss per common share – diluted


$

(0.49)


$

(0.45)





Capital Bank Corporation

Average Balances, Interest Earned or Paid, and Interest Yields/Rates

For the Three Months Ended March 31, 2010, December 31, 2009 and March 31, 2009

Tax Equivalent Basis(1)




March 31, 2010


December 31, 2009


March 31, 2009


(Dollars in thousands)


Average Balance


Amount Earned


Average Rate


Average Balance


Amount Earned


Average Rate


Average Balance


Amount Earned


Average Rate


Assets





























Loans receivable(2):





























Commercial


$

1,187,760


$

15,089



5.15

%

$

1,190,645


$

15,668



5.22

%

$

1,095,804


$

13,942



5.16

%

Consumer



205,409



2,473



4.88



193,640



2,431



4.98



169,634



2,150



5.14


Total loans



1,393,169



17,562



5.11



1,384,285



18,099



5.19



1,265,438



16,092



5.16


Investment securities(3)



225,819



2,956



5.24



247,253



3,283



5.31



288,679



3,957



5.48


Federal funds sold and interest-earning cash



20,226



10



0.20



17,334



8



0.18



19,900



13



0.26


Total interest-earning assets



1,639,214


$

20,528



5.08

%


1,648,872


$

21,390



5.15

%


1,574,017


$

20,062



5.17

%

Cash and due from banks



19,450









18,169









22,116








Other assets



102,321









90,303









78,814








Allowance for loan losses



(28,045)









(20,923)









(15,180)








Total assets


$

1,732,940








$

1,736,421








$

1,659,767





































Liabilities and Equity





























Savings deposits


$

28,992


$

10



0.14

%

$

29,012


$

11



0.15

%

$

28,793


$

13



0.18

%

Interest-bearing demand deposits



342,048



886



1.05



365,889



1,078



1.17



353,262



1,205



1.38


Time deposits



871,507



5,255



2.45



844,776



5,352



2.51



800,879



6,551



3.32


Total interest-bearing deposits



1,242,547



6,151



2.01



1,239,677



6,441



2.06



1,182,934



7,769



2.66


Borrowed funds



170,956



1,145



2.72



155,989



1,224



3.11



146,233



1,389



3.85


Subordinated debt



31,232



218



2.83



30,930



216



2.77



30,930



322



4.22


Repurchase agreements and fed funds purchased



4,667



2



0.17



7,246



4



0.22



13,849



7



0.20


Total interest-bearing liabilities



1,449,402


$

7,516



2.10

%


1,433,842


$

7,885



2.18

%


1,373,946


$

9,487



2.80

%

Noninterest-bearing deposits



131,973









139,877









124,893








Other liabilities



10,658









12,695









11,643








Total liabilities



1,592,033









1,586,414









1,510,482








Shareholders' equity



140,907









150,007









149,285








Total liabilities and shareholders' equity


$

1,732,940








$

1,736,421








$

1,659,767





































Net interest spread(4)









2.98

%








2.96

%








2.37

%

Tax equivalent adjustment





$

462








$

527








$

394





Net interest income and net interest margin(5)





$

13,012



3.22

%




$

13,505



3.25

%




$

10,575



2.72

%

































1

The tax equivalent basis is computed using a federal tax rate of 34%.

2

Loans receivable include nonaccrual loans for which accrual of interest has not been recorded.

3

The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.

4

Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

5

Net interest margin represents net interest income divided by average interest-earning assets.




SOURCE Capital Bank Corporation



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