Capital Bank Announces Financial Results for First Quarter of 2010

Apr 27, 2010, 08:16 ET from Capital Bank Corporation

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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