CAPITAL BANK CORP - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - CAPITAL BANK CORP	form8-k.htm

Exhibit 99.1

CONTACT:

Chris Marshall

Chief Financial Officer

Phone: (704) 554-5901

Email: cmarshall@nafhinc.com

FOR IMMEDIATE RELEASE

Capital Bank Corporation Announces Financial Results for First Quarter of 2011

RALEIGH, N.C., May 12, 2011 – Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported unaudited financial results for the first quarter of 2011.

Highlights for the quarter include the following:

	•	North American Financial Holdings, Inc. (“NAFH”) completed its investment of approximately $181 million in the Company through the purchase of 71,000,000 shares of the Company’s common stock on January 28, 2011 (the “NAFH Investment”);

	•	In connection with the NAFH Investment, the Company’s Series A Preferred Stock and warrant to purchase shares of the Company’s common stock issued to the U.S. Treasury through the TARP were repurchased in full;

	•	The Company raised an additional $4.1 million of common equity through completion of a rights offering to shareholders of record as of January 27, 2011;

	•	As a result of the NAFH Investment, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio increased to 9.99%, 13.18% and 13.57%, respectively, as of March 31, 2011; and

	•	Net loss to common shareholders for the period of January 29 to March 31, 2011 (Successor) totaled ($574) thousand, or ($0.01) per share, and after dividends and accretion on preferred stock of $861 thousand, net loss to common shareholders for the period of January 1 to January 28, 2011 (Predecessor) totaled ($265) thousand, or ($0.02) per share.

“With the investment from North American Financial Holdings, Inc., Capital Bank is one of the most strongly capitalized banks in the Southeast and has the financial resources to do business with customers across North Carolina. We are working diligently to generate growth in core deposits and high quality loans, provide first-class service to our customers, and improve the bank’s profitability to levels expected of a high performing financial institution,” stated Gene Taylor, Chairman and CEO of the Company and NAFH.

Chris Marshall, CFO of the Company and NAFH commented, “We have received regulatory permission to combine the Company’s bank subsidiary with NAFH National Bank, which we believe will improve efficiency and profitability across the entire enterprise, and which we expect to accomplish in June. In July, we plan to convert Capital Bank to NAFH’s technology platform. Capital Bank employees will continue to serve their North Carolina customers, and over time they will have new and enhanced products to offer.”

Discussion of Financial Results

NAFH Investment

On January 28, 2011, the Company completed the issuance and sale of 71,000,000 shares of its common stock to NAFH for approximately $181 million in cash. As a result of the NAFH Investment and the Rights Offering on March 11, 2011, NAFH currently owns approximately 83% of the Company’s common stock. Also in connection with the NAFH Investment, the Company’s Series A Preferred Stock and warrant to purchase shares of common stock issued to the U.S. Treasury through the TARP were repurchased. Following the TARP Repurchase, the Series A Preferred Stock and warrant are no longer outstanding, and accordingly, the Company is no longer subject to the restrictions imposed by the terms of the Series A Preferred Stock or certain regulatory provisions that are imposed on TARP recipients.

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Financial results for the first quarter of 2011 were significantly impacted by the controlling investment in the Company by NAFH. The Company is required to apply push-down accounting rules to the NAFH Investment. Accordingly, the Company’s assets and liabilities were adjusted to estimated fair value at the acquisition date, and the allowance for loan losses was eliminated at that date. Further, the Company’s operating results in periods subsequent to the acquisition date have been and will continue to be impacted by these fair value adjustments as the underlying assets and liabilities are converted in the normal course of business. The Company is still in the process of completing its fair value analysis of assets and liabilities, and final fair value adjustments may differ significantly from the preliminary estimates recorded to date.

Net Interest Income

Net interest income for the period of January 29 to March 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the quarter ended March 31, 2010 (Predecessor) totaled $10.0 million, $4.0 million and $12.6 million, respectively. Average earning assets decreased from $1.64 billion in the quarter ended March 31, 2010 (Predecessor) to $1.54 billion in the period of January 1 to January 28, 2011 (Predecessor) to $1.52 billion in the period of January 29 to March 31, 2011 (Successor), while net interest margin was 3.22%, 3.09% and 4.15%, respectively. Among other things, fair value adjustments, principal paydowns and charge-offs on the loan portfolio contributed to the reduction in earning assets over these periods.

Net interest margin for the period of January 1 to January 28, 2011 (Predecessor) was negatively affected by a decline in asset yields, partially offset by a decline in funding costs. Yields on earning assets fell from 5.08% for the quarter ended March 31, 2010 (Predecessor) to 4.61% for the period of January 1 to January 28, 2011 (Predecessor), and rates on total interest-bearing liabilities fell from 2.10% for the quarter ended March 31, 2010 (Predecessor) to 1.69% for the period of January 1 to January 28, 2011 (Predecessor). Net interest margin for the period of January 29 to March 31, 2011 (Successor) was primarily affected by fair value adjustments to earning assets and liabilities at acquisition. Yields and rates in the successor period reflect prevailing market yields and rates on the acquisition date in addition to subsequent activity.

Provision for Loan Losses and Asset Quality

Provision for loan losses for the period of January 29 to March 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the quarter ended March 31, 2010 (Predecessor) totaled $167 thousand, $40 thousand and $11.7 million, respectively. The loan loss provision in the successor period reflects estimated losses inherent in loans originated subsequent to the NAFH Investment date. Acquired loans were marked to fair value, and no provision was recorded on those loans during the successor period. As of January 28, 2011, the total fair value discount recorded exceeded 8% of outstanding loan balances at acquisition.

There were no net charge-offs recorded in the period of January 29 to March 31, 2011 (Successor). Net charge-offs totaled $40 thousand, or 0.01% of average loans, in the period of January 1 to January 28, 2011 (Predecessor) and $8.7 million, or 2.48% of average loans, in the quarter ended March 31, 2010 (Predecessor).

Loans acquired in the NAFH Investment where there was evidence of credit deterioration since origination and where it is probable that the Company will not collect all contractually required principal and interest payments are accounted for as purchased credit-impaired (“PCI”) loans. For these loans, the excess of the cash flows initially expected to be collected over the fair value of the loans at the acquisition date (i.e., the accretable yield) is accreted into interest income over the estimated remaining life of the PCI loans using the effective yield method, provided that the timing and amount of future cash flows is reasonably estimable. Accordingly, such loans are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The Company identified approximately 93% of its acquisition-date loan portfolio as PCI.

Noninterest Income

Noninterest income for the period of January 29 to March 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the quarter ended March 31, 2010 (Predecessor) totaled $1.3 million, $832 thousand and $2.5 million, respectively. Noninterest income in the first quarter of 2010 (Predecessor) benefited from $263 thousand of gains recorded on the sale of investment securities, while no such gains were recorded in either the successor or predecessor period in the first quarter of 2011. Additionally, income from bank-owned life insurance (“BOLI”) in the first quarter of 2010 (Predecessor) was elevated due to a higher balance and number of BOLI contracts owned during that period. The Company surrendered certain BOLI contracts on former employees and directors late in 2010. Other noninterest income for the successor period of January 29 to March 31, 2011 was negatively impacted by a $63 thousand loss recorded from a decline in stock price of an equity security that the Company marks to market through noninterest income, while the Company recorded a gain of $65 thousand from appreciation in value of this security in the first quarter of 2010 (Predecessor). Mortgage origination and other loan fees in the predecessor period of January 1 to January 28, 2011 benefited from strong demand and favorable interest rates for residential mortgage refinancing late in 2010.

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Noninterest Expense

Noninterest expense for the period of January 29 to March 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the quarter ended March 31, 2010 (Predecessor) totaled $12.2 million, $4.2 million and $12.6 million, respectively. Expenses in the successor period were significantly impacted by a nonrecurring $3.6 million charge for contract termination fees related to the conversion and integration of the Company’s operations into a common technology platform utilized by all NAFH-owned banks. This system conversion is intended to create operating efficiencies and better position the Company for future growth.

Additionally, salaries and benefits expense increased in the successor period from the accelerated vesting of stock options and restricted shares at closing of the NAFH Investment. Salaries expense also increased in the successor period and period of January 1 to January 28, 2011 (Predecessor) from declining deferred loan costs due to lower loan origination volume. Occupancy expense was impacted in the successor period and period of January 1 to January 28, 2011 (Predecessor) from the relocation of two previously existing branch offices into larger facilities that were opened early in the first quarter of 2011. Other real estate losses and miscellaneous loan costs in the successor period were decreased by an adjustment to reduce the value of certain bank-owned properties at the NAFH Investment date. Directors’ fees were reduced significantly in the successor period as the Company’s board of directors was reconstituted post-acquisition and the Capital Bank Corporation Deferred Compensation Plan for Outside Directors was terminated. FDIC deposit insurance expense increased in the successor period and period of January 1 to January 28, 2011 (Predecessor) as Capital Bank’s assessment rate was raised in the third quarter of 2010.

Income Taxes

The income tax benefit recorded in the period of January 29 to March 31, 2011 (Successor) totaled $549 thousand and represented a 48.89% effective tax rate based on the Company’s pre-tax loss. The effective tax rate is higher than the Company’s blended federal and state statutory rates due primarily to the impact of nontaxable income from BOLI earnings and municipal bond interest. No income tax expense was recorded in the period of January 1 to January 28, 2011 (Predecessor) as prior net operating losses with a full valuation allowance were carried forward and used to offset income in the predecessor period.

***

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.

Forward-looking Statements

Information in this press release contains forward-looking statements. Such forward looking statements can be identified by the use of forward looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “believe,” or “continue,” or the negative thereof or other variations thereof or comparable terminology. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, market and economic conditions, the management of our growth, the risks associated with Capital Bank’s loan portfolio and real estate holdings, the inability to comply with the requirements in our informal memorandum of understanding with the FDIC and the North Carolina Office of the Commissioner of Banks, local economic conditions affecting retail and commercial real estate, ability to integrate our new management and directors without encountering potential difficulties, competition within the industry, dependence on key personnel, government legislation and regulation, the risks associated with identification, completion and integration of any future acquisitions, risks related to Capital Bank’s technology and information systems, the fact that the Company has experienced net losses during the last three fiscal years, risks associated with the controlling interest of NAFH in the Company, and risks associated with the limited liquidity of the Company’s common stock. 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.

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CAPITAL BANK CORPORATION

Results of Operations

	Successor Company			Predecessor Company
	Jan. 29, 2011 to Mar. 31, 2011			Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Dec. 31, 2010			Three Months Ended Sep. 30, 2010			Three Months Ended Jun. 30, 2010			Three Months Ended Mar. 31, 2010
(Dollars in thousands except per share data)

Interest income	$	12,281		$	5,955		$	18,327		$	19,535		$	19,794		$	20,066
Interest expense		2,260			1,996			6,040			6,153			7,050			7,516
Net interest income		10,021			3,959			12,287			13,382			12,744			12,550
Provision for loan losses		167			40			20,011			6,763			20,037			11,734
Net interest income (loss) after provision		9,854			3,919			(7,724	)		6,619			(7,293	)		816
Noninterest income		1,252			832			8,004			2,500			2,514			2,531
Noninterest expense		12,229			4,155			15,129			14,210			12,380			12,590
Net income (loss) before taxes		(1,123	)		596			(14,849	)		(5,091	)		(17,159	)		(9,243	)
Income tax expense (benefit)		(549	)		–			18,634			3,975			(3,576	)		(3,909	)
Net income (loss)		(574	)		596			(33,483	)		(9,066	)		(13,583	)		(5,334	)
Dividends and accretion on preferred stock		–			861			589			588			589			589
Net income (loss) attributable to common shareholders	$	(574	)	$	(265	)	$	(34,072	)	$	(9,654	)	$	(14,172	)	$	(5,923	)

Earnings (loss) per share – basic and diluted	$	(0.01	)	$	(0.02	)	$	(2.59	)	$	(0.74	)	$	(1.09	)	$	(0.49	)

End of Period Balances

	Successor Company		Predecessor Company
	Mar. 31, 2011		Dec. 31, 2010		Sep. 30, 2010		Jun. 30, 2010		Mar. 31, 2010
(Dollars in thousands except per share data)

Total assets	$	1,704,656	$	1,585,547	$	1,649,699	$	1,694,336	$	1,739,857
Total earning assets		1,531,366		1,537,863		1,579,489		1,602,891		1,639,864
Cash and cash equivalents		116,650		66,745		68,069		41,417		53,341
Investment securities		304,902		223,292		196,046		228,812		232,780
Loans		1,125,260		1,254,479		1,324,932		1,351,101		1,376,085
Allowance for loan losses		167		36,061		36,249		35,762		29,160
Intangible assets		48,095		1,774		2,006		2,241		2,475
Deposits		1,349,661		1,343,286		1,359,411		1,370,777		1,380,539
Borrowings		93,513		121,000		129,000		153,000		172,000
Subordinated debt		19,431		34,323		34,323		34,323		34,323
Shareholders’ equity		228,760		76,688		116,103		125,479		138,792

Per Share Data
Book value	$	2.68	$	2.75	$	5.81	$	6.54	$	7.57
Tangible book value		2.11		2.61		5.65		6.36		7.38

Common shares outstanding		85,489,260		12,877,846		12,880,954		12,880,954		12,881,354

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CAPITAL BANK CORPORATION

Average Balances and Yields/Rates

	Successor Company			Predecessor Company
	Jan. 29, 2011 to Mar. 31, 2011			Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Dec. 31, 2010			Three Months Ended Sep. 30, 2010			Three Months Ended Jun. 30, 2010			Three Months Ended Mar. 31, 2010
(Dollars in thousands)

Average Balances
Total assets	$	1,693,890		$	1,592,750		$	1,648,467		$	1,665,975		$	1,719,240		$	1,732,940
Total earning assets		1,520,847			1,542,617			1,577,651			1,578,241			1,623,279			1,639,214
Investment securities		242,622			223,854			198,524			218,883			230,138			231,916
Loans		1,138,367			1,249,787			1,295,748			1,342,835			1,373,613			1,393,169
Deposits		1,340,741			1,350,336			1,366,905			1,345,562			1,382,527			1,374,520
Borrowings		98,599			120,032			126,130			150,478			153,264			170,956
Subordinated debt		19,313			34,323			34,323			34,323			34,323			31,232
Shareholders’ equity		226,423			78,724			110,788			125,103			136,949			140,907

Yields/Rates 1
Yield on earning assets		5.07	%		4.61	%		4.68	%		5.04	%		4.99	%		5.08	%
Cost of interest-bearing liabilities		1.04			1.69			1.71			1.76			1.97			2.10
Net interest spread		4.03			2.92			2.97			3.28			3.02			2.98
Net interest margin		4.15			3.09			3.16			3.48			3.25			3.22

1	Annualized and on a fully taxable equivalent basis.

Loan Portfolio and Asset Quality

	Successor Company			Predecessor Company
	Mar. 31, 2011			Dec. 31, 2010			Sep. 30, 2010			Jun. 30, 2010			Mar. 31, 2010
(Dollars in thousands)

Commercial real estate:
Construction and land development	$	274,541		$	350,587		$	391,749		$	471,297		$	456,448
Real estate – non-owner occupied		275,005			283,943			274,635			211,234			240,177
Real estate – owner occupied		163,934			170,470			178,920			179,979			186,067
Total commercial real estate		713,480			805,000			845,304			862,510			882,692
Consumer real estate:
Residential mortgage		172,574			173,777			171,792			169,983			165,362
Home equity lines		79,253			89,178			92,944			93,717			96,556
Total consumer real estate		251,827			262,955			264,736			263,700			261,918
Commercial and industrial		118,510			145,435			165,526			175,247			181,111
Consumer		6,416			6,163			6,683			6,962			7,617
Other		33,759			33,742			41,601			41,757			42,002
		1,123,992			1,253,295			1,323,850			1,350,176			1,375,340
Deferred loan fees and origination costs, net		1,268			1,184			1,082			925			745
	$	1,125,260		$	1,254,479		$	1,324,932		$	1,351,101		$	1,376,085

Asset Quality Ratios
Nonperforming loans to total loans		6.61	%		5.73	%		5.28	%		5.54	%		4.23	%
Nonperforming assets to total assets		5.22			5.69			5.32			5.37			4.24
Allowance for loan losses to total loans, predecessor		N/A			2.87			2.74			2.65			2.12
Allowance to nonperforming loans, predecessor		N/A			50.12			51.84			47.76			50.10

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CAPITAL BANK CORPORATION

Allowance for Loan Losses

	Successor Company		Predecessor Company
	Jan. 29, 2011 to Mar. 31, 2011		Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Dec. 31, 2010			Three Months Ended Sep. 30, 2010			Three Months Ended Jun. 30, 2010			Three Months Ended Mar. 31, 2010
(Dollars in thousands)

Balance at beginning of period	$	–	$	36,061		$	36,249		$	35,762		$	29,160		$	26,081
Loans charged off		–		(49	)		(20,316	)		(6,863	)		(13,483	)		(8,758	)
Recoveries		–		9			117			587			48			103
Net charge-offs		–		(40	)		(20,199	)		(6,276	)		(13,435	)		(8,655	)
Provision for loan losses		167		40			20,011			6,763			20,037			11,734
Balance at end of period, predecessor	$	–	$	36,061		$	36,061		$	36,249		$	35,762		$	29,160

Acquisition adjustment		–		(36,061	)		–			–			–			–
Balance at end of period, successor	$	167	$	–		$	–		$	–		$	–		$	–

Net charge-offs to average loans		N/A		0.01	%		6.24	%		1.87	%		3.91	%		2.48	%

Capital Ratios

	Successor Company			Predecessor Company
	Mar. 31, 2011			Dec. 31, 2010			Sep. 30, 2010			Jun. 30, 2010			Mar. 31, 2010

Tangible equity to tangible assets		11.56	%		4.73	%		6.92	%		7.28	%		7.85	%
Tangible common equity to tangible assets		11.56			2.12			4.42			4.84			5.47
Tier 1 leverage 1		9.99			6.39			7.56			7.75			8.80
Tier 1 risk-based capital 1		13.18			8.02			8.99			9.10			10.24
Total risk-based capital 1		13.57			9.55			10.50			10.60			11.73

1	Regulatory capital ratios as of March 31, 2011 are estimated.

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CAPITAL BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

	Successor Company			Predecessor Company
	Mar. 31, 2011			Dec. 31, 2010
(Dollars in thousands)	(Unaudited)

Assets
Cash and cash equivalents:
Cash and due from banks	$	16,870		$	13,646
Interest-bearing deposits with banks		99,780			53,099
Total cash and cash equivalents		116,650			66,745
Investment securities:
Investment securities – available for sale, at fair value		296,632			214,991
Other investments		8,270			8,301
Total investment securities		304,902			223,292
Mortgage loans held for sale		1,424			6,993
Loans:
Loans – net of unearned income and deferred fees		1,125,260			1,254,479
Allowance for loan losses		(167	)		(36,061	)
Net loans		1,125,093			1,218,418
Other real estate		14,535			18,334
Premises and equipment, net		27,098			25,034
Goodwill		30,994			–
Other intangible assets, net		4,813			1,774
Deferred tax asset		54,529			–
Other assets		24,618			24,957
Total assets	$	1,704,656		$	1,585,547

Liabilities
Deposits:
Demand, noninterest checking	$	119,742		$	116,113
NOW accounts		189,340			185,782
Money market accounts		146,543			137,422
Savings accounts		31,794			30,639
Time deposits		862,242			873,330
Total deposits		1,349,661			1,343,286
Borrowings		93,513			121,000
Subordinated debt		19,431			34,323
Other liabilities		13,291			10,250
Total liabilities		1,475,896			1,508,859

Shareholders’ Equity
Preferred stock, $1,000 par value; 100,000 shares authorized; 41,279 shares issued and outstanding (liquidation preference of $41,279) at December 31, 2010		–			40,418
Common stock, no par value; 300,000,000 shares authorized; 85,489,260 and 12,877,846 shares issued and outstanding		227,961			145,594
Accumulated deficit		(574	)		(108,027	)
Accumulated other comprehensive income (loss)		1,373			(1,297	)
Total shareholders’ equity		228,760			76,688
Total liabilities and shareholders’ equity	$	1,704,656		$	1,585,547

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CAPITAL BANK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Successor Company			Predecessor Company
	Jan. 29, 2011 to Mar. 31, 2011			Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Mar. 31, 2010
(Dollars in thousands except per share data)

Interest income:
Loans and loan fees	$	11,056		$	5,479		$	17,411
Investment securities:
Taxable interest income		990			391			2,026
Tax-exempt interest income		159			74			601
Dividends		29			–			18
Federal funds and other interest income		47			11			10
Total interest income		12,281			5,955			20,066
Interest expense:
Deposits		1,774			1,551			6,151
Borrowings and repurchase agreements		486			445			1,365
Total interest expense		2,260			1,996			7,516
Net interest income		10,021			3,959			12,550
Provision for loan losses		167			40			11,734
Net interest income after provision for loan losses		9,854			3,919			816
Noninterest income:
Service charges and other fees		548			291			868
Bank card services		300			174			415
Mortgage origination and other loan fees		263			210			327
Brokerage fees		96			78			187
Bank-owned life insurance		20			10			239
Net gain on sale of investment securities		–			–			263
Other		25			69			232
Total noninterest income		1,252			832			2,531
Noninterest expense:
Salaries and employee benefits		3,957			1,977			5,400
Occupancy		1,140			548			1,502
Furniture and equipment		544			275			745
Data processing and telecommunications		276			180			517
Advertising and public relations		181			131			430
Office expenses		229			93			332
Professional fees		335			190			475
Business development and travel		246			87			267
Amortization of other intangible assets		191			62			235
ORE losses and miscellaneous loan costs		523			176			1,317
Directors’ fees		40			68			298
FDIC deposit insurance		563			266			665
Contract termination fees		3,581			–			–
Other		423			102			407
Total noninterest expense		12,229			4,155			12,590
Net income (loss) before income taxes		(1,123	)		596			(9,243	)
Income tax benefit		(549	)		–			(3,909	)
Net income (loss)		(574	)		596			(5,334	)
Dividends and accretion on preferred stock		–			861			589
Net loss attributable to common shareholders	$	(574	)	$	(265	)	$	(5,923	)

Net loss per common share – basic	$	(0.01	)	$	(0.02	)	$	(0.49	)
Net loss per common share – diluted	$	(0.01	)	$	(0.02	)	$	(0.49	)

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CAPITAL BANK CORPORATION

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

Tax Equivalent Basis 1

	Successor Company								Predecessor Company
	Period of Jan. 29 to Mar. 31, 2011								Period of Jan. 1 to Jan. 28, 2011								Three Months Ended Mar. 31, 2010
(Dollars in thousands)	Average Balance			Amount Earned		Average Rate			Average Balance			Amount Earned		Average Rate			Average Balance			Amount Earned		Average Rate
Assets
Loans 2	$	1,139,698		$	11,155		6.06	%	$	1,253,296		$	5,530		5.20	%	$	1,393,169		$	17,562		5.11	%
Investment securities 3		242,840			1,254		3.10			225,971			504		2.68			225,819			2,956		5.24
Interest-bearing deposits		138,309			47		0.21			63,350			11		0.20			20,226			10		0.20
Total interest-earning assets		1,520,847		$	12,456		5.07	%		1,542,617		$	6,045		4.61	%		1,639,214		$	20,528		5.08	%
Cash and due from banks		16,373								16,112								19,450
Other assets		156,724								70,195								102,321
Allowance for loan losses		(54	)							(36,174	)							(28,045	)
Total assets	$	1,693,890							$	1,592,750							$	1,732,940

Liabilities and Equity
NOW and money market accounts	$	344,189		$	418		0.75	%	$	334,668		$	211		0.74	%	$	342,048		$	886		1.05	%
Savings accounts		31,521			6		0.12			30,862			3		0.11			28,992			10		0.14
Time deposits		851,424			1,350		0.98			870,146			1,337		1.81			871,507			5,255		2.45
Total interest-bearing deposits		1,227,134			1,774		0.89			1,235,676			1,551		1.48			1,242,547			6,151		2.01
Borrowed funds		98,599			254		1.59			120,032			343		3.36			170,956			1,145		2.72
Subordinated debt		19,313			232		7.43			34,323			102		3.50			31,232			218		2.83
Repurchase agreements		–			–		–			–			–		–			4,667			2		0.17
Total interest-bearing liabilities		1,345,046		$	2,260		1.04	%		1,390,031		$	1,996		1.69	%		1,449,402		$	7,516		2.10	%
Noninterest-bearing deposits		113,607								114,660								131,973
Other liabilities		8,814								9,635								10,658
Total liabilities		1,467,467								1,514,326								1,592,033
Shareholders’ equity		226,423								78,424								140,907
Total liabilities and shareholders’ equity	$	1,693,890							$	1,592,750							$	1,732,940

Net interest spread 4							4.03	%							2.92	%							2.98	%
Tax equivalent adjustment				$	175							$	90							$	462
Net interest income and net interest margin 5				$	10,196		4.15	%				$	4,049		3.09	%				$	13,012		3.22	%

1	The tax equivalent basis is computed using a federal tax rate of 34%.
2	Loans include mortgage loans held for sale in addition to 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.

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Attached files

CAPITAL BANK CORP Reports

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