CAPITAL BANK CORPORATION 
By 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 December
31 31 September 30
------ --------- ------------
(Dollars in
thousands)
Interest income $20,066 $20,863 $21,858
Interest expense 7,516 7,885 8,303
----- ----- -----
Net interest income 12,550 12,978 13,555
Provision for loan
losses 11,734 11,822 3,564
------ ------ -----
Net interest income
after provision for
loan losses 816 1,156 9,991
Noninterest income 1,655 1,243 2,476
Noninterest expense 11,714 14,096 11,067
------ ------ ------
Net income (loss)
before taxes (9,243) (11,697) 1,400
Income tax expense
(benefit) (3,909) (4,452) (2,143)
------ ------ ------
Net income (loss) $(5,334) $(7,245) $3,543
======= ======= ======
Dividends and
accretion on
preferred stock 589 588 590
--- --- ---
Net income (loss)
attributable to
common shareholders $(5,923) $(7,833) $2,953
======= ======= ======
(Unaudited) 2009
----
June 30 March 31
------- --------
(Dollars in
thousands)
Interest income $20,755 $19,668
Interest expense 8,591 9,487
----- -----
Net interest income 12,164 10,181
Provision for loan
losses 1,692 5,986
----- -----
Net interest income
after provision for
loan losses 10,472 4,195
Noninterest income 3,699 2,099
Noninterest expense 12,440 11,557
------ ------
Net income (loss)
before taxes 1,731 (5,263)
Income tax expense
(benefit) 382 (800)
--- ----
Net income (loss) $1,349 $(4,463)
====== =======
Dividends and
accretion on
preferred stock 587 587
--- ---
Net income (loss)
attributable to
common shareholders $762 $(5,050)
==== =======
End of Period Balances
(Unaudited) 2010 2009
---- ----
March 31 December 31 September 30
-------- ----------- ------------
(Dollars in
thousands)
Total assets $1,739,857 $1,734,668 $1,734,950
Total earning assets 1,639,864 1,640,305 1,634,119
Cash and cash
equivalents 53,341 29,513 52,694
Investment
securities 232,780 245,492 262,499
Loans 1,376,085 1,390,302 1,357,243
Allowance for loan
losses 29,160 26,081 19,511
Intangible assets 2,475 2,711 2,995
Deposits 1,380,539 1,377,965 1,385,250
Borrowings 172,000 167,000 147,000
Subordinated
debentures 34,323 30,930 30,930
Shareholders' equity 138,792 139,785 149,525
Tangible common
equity 95,038 95,795 105,251
(Unaudited) 2009
----
June 30 March 31
------- --------
(Dollars in
thousands)
Total assets $1,695,342 $1,665,611
Total earning assets 1,615,164 1,580,140
Cash and cash
equivalents 72,694 39,917
Investment
securities 268,224 286,310
Loans 1,293,340 1,277,064
Allowance for loan
losses 18,602 18,480
Intangible assets 3,282 3,569
Deposits 1,380,842 1,340,974
Borrowings 117,000 127,000
Subordinated
debentures 30,930 30,930
Shareholders' equity 143,306 142,674
Tangible common
equity 98,745 97,826
Average Quarterly Balances
(Unaudited) 2010 2009
---- ----
March December September June March
31 31 30 30 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
-------- ----------- ------------
Per Share Data
Net income (loss) -
basic and diluted $(0.49) $(0.68) $0.26
Book value 7.57 8.68 9.58
Tangible book value 7.38 8.44 9.31
Common shares
outstanding 12,881,354 11,348,117 11,300,369
Average diluted
shares outstanding 12,014,430 11,528,693 11,469,064
Average basic shares
outstanding 12,014,430 11,528,693 11,469,064
Net Interest Margin
(1)
Yield on earning
assets 5.08% 5.15% 5.43%
Cost of interest-
bearing liabilities 2.10 2.18 2.33
Net interest spread 2.98 2.96 3.10
Net interest margin 3.22 3.25 3.41
Capital Ratios
Tangible equity to
tangible assets 7.85% 7.91% 8.46%
Tangible common
equity to tangible
assets 5.47 5.53 6.08
Average
shareholders'
equity to average
total assets 8.13 8.64 8.53
Tier 1 leverage(2) 8.80 8.94 9.87
Tier 1 risk-based
capital(2) 10.24 10.16 11.17
Total risk-based
capital(2) 11.73 11.41 12.42
Asset Quality Ratios
Nonperforming loans
to total loans 4.23% 2.84% 1.36%
Nonperforming assets
to total assets 4.24 2.90 1.55
Allowance for loan
losses to total
loans 2.12 1.88 1.44
Allowance to
nonperforming loans 50 66 105
Allowance to
nonperforming
loans, net of loans
charged down to
market value 132 115 182
Net charge-offs to
average loans 2.48 1.52 0.80
Past due loans to
total loans 4.96 2.80 1.86
(Unaudited) 2009
----
June 30 March 31
------- --------
Per Share Data
Net income (loss) -
basic and diluted $0.07 $(0.45)
Book value 9.03 8.97
Tangible book value 8.74 8.66
Common shares
outstanding 11,300,369 11,300,369
Average diluted
shares outstanding 11,447,619 11,293,480
Average basic shares
outstanding 11,447,619 11,293,480
Net Interest Margin
(1)
Yield on earning
assets 5.34% 5.17%
Cost of interest-
bearing liabilities 2.50 2.80
Net interest spread 2.84 2.37
Net interest margin 3.17 2.72
Capital Ratios
Tangible equity to
tangible assets 8.28% 8.37%
Tangible common
equity to tangible
assets 5.84 5.89
Average
shareholders'
equity to average
total assets 8.72 8.99
Tier 1 leverage(2) 9.94 10.01
Tier 1 risk-based
Capital(2) 11.52 11.82
Total risk-based
Capital(2) 12.77 13.07
Asset Quality Ratios
Nonperforming loans
to total loans 1.43% 1.33%
Nonperforming assets
to total assets 1.40 1.24
Allowance for loan
losses to total
loans 1.44 1.45
Allowance to
nonperforming loans 100 109
Allowance to
nonperforming
loans, net of loans
charged down to
market value 167 155
Net charge-offs to
average loans 0.49 0.73
Past due loans to
total loans 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
--------------------
Nonaccrual
Loans Nonaccrual Loans
Outstanding Loans to Loans
----------- ----- Outstanding
-----------
(Dollars in
thousands)
Commercial real
estate:
Residential
construction and
land development $247,476 $39,552 15.98%
Commercial
construction and
land development 208,972 466 0.22
Other commercial
real estate 240,177 4,068 1.69
------- ----- ----
Total commercial
real estate 696,625 44,086 6.33
------- ------ ----
Consumer real
estate:
Residential
mortgages 165,362 3,630 2.20
Home equity lines 96,556 179 0.19
------ --- ----
Total consumer real
estate 261,918 3,809 1.45
Commercial owner
occupied real
estate 186,812 6,085 3.26
Commercial and
industrial 181,111 4,217 2.33
Consumer 7,617 8 0.11
Other loans 42,002 - -
------ --- ---
Total $1,376,085 $58,205 4.23%
========== ======= =====
As of March 31, 2010
--------------------
Allowance Allowance
for to Loans
Loan
Losses Outstanding
------- -----------
(Dollars in
thousands)
Commercial real
estate:
Residential
construction and
land development $9,654 3.90%
Commercial
construction and
land development 3,540 1.69
Other commercial
real estate 3,848 1.60
----- ----
Total commercial
real estate 17,042 2.45
------ ----
Consumer real
estate:
Residential
mortgages 2,522 1.53
Home equity lines 637 0.66
--- ----
Total consumer real
estate 3,159 1.21
Commercial owner
occupied real
estate 4,650 2.49
Commercial and
industrial 3,801 2.10
Consumer 315 4.14
Other loans 193 0.46
--- ----
Total $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 / Residential Total
Development Construction -----
----------- ------------
(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
--------------------
Percent
of
Loans Total Nonaccrual
Outstanding Loans Loans
----------- Outstanding -----
-----------
(Dollars in
thousands)
Triangle $171,255 69.20% $31,872
Sandhills 34,167 13.81 885
Triad 5,372 2.17 -
Western 36,682 14.82 6,795
------ ----- -----
Total $247,476 100.00% $39,552
======== ====== =======
As of March 31, 2010
--------------------
Allowance Allowance
Nonaccrual for to
Loan
Loans to Losses Loans
Loans ------- Outstanding
Outstanding -----------
-----------
(Dollars in
thousands)
Triangle 18.61% $7,274 4.25%
Sandhills 2.59 908 2.66
Triad - 121 2.25
Western 18.52 1,351 3.68
----- ----- ----
Total 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 / Commercial Multifamily
Development Construction -----------
----------- ------------
(Dollars in
thousands)
Loans outstanding $130,298 $78,674 $43,631
Loans outstanding to
total loans 9.47% 5.72% 3.17%
Nonaccrual loans $466 $ - $314
Nonaccrual loans to
loans in category 0.36% - % 0.72%
Allowance for loan
losses $2,473 $1,067 $561
Allowance to loans
in category 1.90% 1.36% 1.29%
Net charge-offs $2 $ - $11
Net charge-offs to
average loans in
category 0.01% - % 0.10%
As of and for the quarter ended March 31, 2010
----------------------------------------------
Other
Non- Total
Residential
CRE -----
------------
(Dollars in
thousands)
Loans outstanding $196,546 $449,149
Loans outstanding to
total loans 14.28% 32.64%
Nonaccrual loans $3,754 $4,534
Nonaccrual loans to
loans in category 1.91% 1.01%
Allowance for loan
losses $3,287 $7,388
Allowance to loans
in category 1.67% 1.64%
Net charge-offs $211 $224
Net charge-offs to
average loans in
category 0.42% 0.20%
Supplemental Commercial Real Estate Analysis
Other Commercial Real Estate Loan Analysis by Region
(Unaudited)
As of March 31, 2010
--------------------
Percent
Loans of Nonaccrual
Total
Outstanding Loans Loans
----------- Outstanding -----
-----------
(Dollars in
thousands)
Triangle $294,987 65.68% $3,404
Sandhills 61,894 13.78 604
Triad 37,147 8.27 41
Western 55,121 12.27 485
------ ----- ---
Total $449,149 100.00% $4,534
======== ====== ======
As of March 31, 2010
--------------------
Allowance Allowance
Nonaccrual for to
Loan
Loans to Losses Loans
Loans ------- Outstanding
Outstanding -----------
-----------
(Dollars in
thousands)
Triangle 1.15% $4,954 1.68%
Sandhills 0.98 1,188 1.92
Triad 0.11 581 1.56
Western 0.88 665 1.21
---- --- ----
Total 1.01% $7,388 1.64%
==== ====== ====
CAPITAL BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 2010 and December 31, 2009
March 31, December 31,
2010 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
--------------
(Dollars in Average Amount Average
thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans
receivable(2):
Commercial $1,187,760 $15,089 5.15%
Consumer 205,409 2,473 4.88
------- ----- ----
Total loans 1,393,169 17,562 5.11
Investment
securities(3) 225,819 2,956 5.24
Federal funds
sold and
interest-
earning cash 20,226 10 0.20
------ --- ----
Total interest-
earning assets 1,639,214 $20,528 5.08%
======= ====
Cash and due
from banks 19,450
Other assets 102,321
Allowance for
loan losses (28,045)
-------
Total assets $1,732,940
==========
Liabilities and
Equity
Savings deposits $28,992 $10 0.14%
Interest-
bearing demand
deposits 342,048 886 1.05
Time deposits 871,507 5,255 2.45
------- ----- ----
Total interest-
bearing
deposits 1,242,547 6,151 2.01
Borrowed funds 170,956 1,145 2.72
Subordinated
debt 31,232 218 2.83
Repurchase
agreements and
fed funds
purchased 4,667 2 0.17
----- --- ----
Total interest-
bearing
liabilities 1,449,402 $7,516 2.10%
====== ====
Noninterest-
bearing
deposits 131,973
Other
liabilities 10,658
------
Total
liabilities 1,592,033
Shareholders'
equity 140,907
-------
Total
liabilities and
shareholders'
equity $1,732,940
==========
Net interest
spread(4) 2.98%
Tax equivalent
adjustment $462
Net interest
income and net
interest
margin(5) $13,012 3.22%
======= ====
December 31, 2009
-----------------
(Dollars in Average Amount Average
thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans
receivable(2):
Commercial $1,190,645 $15,668 5.22%
Consumer 193,640 2,431 4.98
------- ----- ----
Total loans 1,384,285 18,099 5.19
Investment
securities(3) 247,253 3,283 5.31
Federal funds
sold and
interest-
earning cash 17,334 8 0.18
------ --- ----
Total interest-
earning assets 1,648,872 $21,390 5.15%
======= ====
Cash and due
from banks 18,169
Other assets 90,303
Allowance for
loan losses (20,923)
-------
Total assets $1,736,421
==========
Liabilities and
Equity
Savings deposits $29,012 $11 0.15%
Interest-
bearing demand
deposits 365,889 1,078 1.17
Time deposits 844,776 5,352 2.51
------- ----- ----
Total interest-
bearing
deposits 1,239,677 6,441 2.06
Borrowed funds 155,989 1,224 3.11
Subordinated
debt 30,930 216 2.77
Repurchase
agreements and
fed funds
purchased 7,246 4 0.22
----- --- ----
Total interest-
bearing
liabilities 1,433,842 $7,885 2.18%
====== ====
Noninterest-
bearing
deposits 139,877
Other
liabilities 12,695
------
Total
liabilities 1,586,414
Shareholders'
equity 150,007
-------
Total
liabilities and
shareholders'
equity $1,736,421
==========
Net interest
spread(4) 2.96%
Tax equivalent
adjustment $527
Net interest
income and net
interest
margin(5) $13,505 3.25%
======= ====
March 31, 2009
--------------
(Dollars in Average Amount Average
thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans
receivable(2):
Commercial $1,095,804 $13,942 5.16%
Consumer 169,634 2,150 5.14
------- ----- ----
Total loans 1,265,438 16,092 5.16
Investment
securities(3) 288,679 3,957 5.48
Federal funds
sold and
interest-
earning cash 19,900 13 0.26
------ --- ----
Total interest-
earning assets 1,574,017 $20,062 5.17%
======= ====
Cash and due
from banks 22,116
Other assets 78,814
Allowance for
loan losses (15,180)
-------
Total assets $1,659,767
==========
Liabilities and
Equity
Savings deposits $28,793 $13 0.18%
Interest-
bearing demand
deposits 353,262 1,205 1.38
Time deposits 800,879 6,551 3.32
------- ----- ----
Total interest-
bearing
deposits 1,182,934 7,769 2.66
Borrowed funds 146,233 1,389 3.85
Subordinated
debt 30,930 322 4.22
Repurchase
agreements and
fed funds
purchased 13,849 7 0.20
------ --- ----
Total interest-
bearing
liabilities 1,373,946 $9,487 2.80%
====== ====
Noninterest-
bearing
deposits 124,893
Other
liabilities 11,643
------
Total
liabilities 1,510,482
Shareholders'
equity 149,285
-------
Total
liabilities and
shareholders'
equity $1,659,767
==========
Net interest
spread(4) 2.37%
Tax equivalent
adjustment $394
Net interest
income and net
interest
margin(5) $10,575 2.72%
======= ====
The tax equivalent basis is computed using a federal tax rate
1 of 34%.
Loans receivable include nonaccrual loans for which accrual of
2 interest has not been recorded.
The average balance for investment securities excludes the
3 effect of their mark-to-market adjustment, if any.
Net interest spread represents the difference between the
average yield on interest-earning assets and the average
4 cost of interest-bearing liabilities.
Net interest margin represents net interest income divided by
5 average interest-earning assets.
SOURCE Capital Bank Corporation
