Oct. 20, 2009 (PR Newswire) --
RALEIGH, N.C., Oct. 20 /PRNewswire-FirstCall/ -- Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported net income of $3.5 million for the quarter ended September 30, 2009 compared to net income of $2.0 million for the quarter ended September 30, 2008. After dividends and accretion on preferred stock issued under the Capital Purchase Program, net income available to common shareholders was $3.0 million, or $0.26 per diluted share, for the third quarter of 2009 compared with $2.0 million, or $0.18 per diluted share, for the same period one year ago. The third quarter results reflect further improvement in net interest margin coupled with recognized tax benefits.
"Capital Bank continued to realize significant margin improvement and positive earnings during the third quarter," stated B. Grant Yarber, president and CEO. "Management remains focused on asset quality but also considers margin management a key priority. Through highly disciplined margin controls and continued repricing of customer deposits in an increasingly favorable interest rate environment, our net interest margin increased to 3.41% in the third quarter of 2009 from 3.17% in the second quarter. While we continue to face a difficult economy, we are encouraged by the positive trends in our net interest margin and core earnings."
Net Interest Income
Net interest income increased by $2.7 million for the quarter ended September 30, 2009 from the same quarter one year ago. This improvement was due to an increase in net interest margin by 30 basis points, from 3.11% for the third quarter of 2008 to 3.41% for the third quarter of 2009, coupled with a 14% 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 customer deposits fell 79 basis points, from 2.96% for the third quarter of 2008 to 2.17% for the third quarter of 2009. Partially offsetting declining funding costs was a rapid decline in market interest rates late in 2008 which contributed to a decrease in loan yields from 6.03% for the third quarter of 2008 to 5.61% for the third quarter of 2009. In October 2006, the Company entered into a three-year, $100 million (notional) interest rate swap to help mitigate its exposure to interest rate volatility in the prime-based portion of the commercial loan portfolio. The swap, which expired on October 9, 2009, increased loan interest income by $1.1 million and $675 thousand for the quarters ended September 30, 2009 and 2008, respectively, representing a benefit to net interest margin of 27 and 19 basis points, respectively, during the quarters.
Provision for Loan Losses and Asset Quality
Provision for loan losses for the quarter ended September 30, 2009 totaled $3.6 million, an increase of $2.8 million from the same period one year ago. The increase in the provision was partially due to loan growth of $163.1 million, or 14%, from September 30, 2008, but the increase was also driven by continued deteriorating economic conditions and weakness in the local real estate markets which resulted in higher net charge-offs and downgrades to the credit ratings of certain loans in the portfolio. Net charge-offs increased from $653 thousand during the third quarter of 2008 to $2.7 million during the third quarter of 2009. Management continues to thoroughly review its loan portfolio and the adequacy of its allowance for loan losses.
Nonperforming assets, which include loans on nonaccrual and other real estate owned, increased to 1.55% as a percent of total assets at September 30, 2009 compared to 0.63% at December 31, 2008 and 0.47% at September 30, 2008. Past due loans, which include loans at least 30 days past due, increased to 1.86% as a percent of total loans at September 30, 2009 compared to 1.09% at December 31, 2008 and 0.75% at September 30, 2008. As a result of the deteriorating credit quality, the Company increased the allowance for loan losses to 1.44% of total loans at September 30, 2009 compared to 1.18% at December 31, 2008 and 1.17% at September 30, 2008. The allowance for loan losses was 105% of nonperforming loans at September 30, 2009, which was a decline from 162% at December 31, 2008 and 219% at September 30, 2008.
"Weakness in the residential and commercial real estate markets from the global recession and credit crisis continues to severely impact the financial health and stability of many businesses within the communities we serve. While we believe our markets represent some of the most resilient in the country, the Company again took steps to increase the provision for loan losses compared to the same quarter one year ago," commented Mr. Yarber. "Despite the difficult economic conditions, our practice of working proactively with borrowers and dealing with problem loans has enabled Capital Bank to maintain credit quality that is superior to peer banks and other banks across the country. In fact, our nonperforming assets to total assets ratio of 1.55% at September 30, 2009 is significantly better than reported regional and national averages have been in recent quarters. While higher loan loss provisions have negatively impacted our earnings in recent quarters, we continue to believe our focused approach to managing asset quality will position us well to take advantage of a future market recovery."
Loans grew by $102.9 million during the first nine months of 2009 while deposits increased by $69.9 million. Much of the loan growth occurred in the Triangle region of North Carolina, which we believe continues to present quality growth opportunities in certain sectors. On the deposit side, checking and savings accounts increased $37.0 million during the nine months ended September 30, 2009 as Capital Bank continued to emphasize growth in these critical product areas. Time deposits also increased $45.7 million over the same period while money market accounts declined by $12.7 million. Reliance on brokered and wholesale funding remained low as the Company executed successful strategies to attract customer deposits through its branch network. Customer deposits, which exclude brokered deposits, increased to 77% of total assets at September 30, 2009 from 75% of total assets at December 31, 2008 and 68% of total assets at September 30, 2008. Brokered deposits and borrowed funds, which include customer repurchase agreements and subordinated debt, decreased to 14% of total assets at September 30, 2009 from 15% of total assets at December 31, 2008 and 21% of total assets at September 30, 2008.
Noninterest Income
Noninterest income decreased $760 thousand, or 23%, in the third quarter of 2009 compared to the same period one year ago. Included in this decrease was a nonrecurring gain of $426 thousand recorded on the sale of the Company's Greensboro branch in the third quarter of 2008. Service charge income, which includes overdraft and non-sufficient funds charges, fell by $248 thousand primarily from a decline in consumer spending during the current economic recession. Other loan fees declined by $335 thousand due to a drop in prepayment penalties charged as fewer business loans were prepaid given the current interest rate and economic environment. Partially offsetting these declines was a $211 thousand increase in mortgage fees, which rose primarily as a result of higher mortgage origination volume that was benefited by a continued favorable interest rate environment for residential mortgage refinancing and home purchase activity.
Noninterest Expense
Noninterest expense increased $581 thousand, from $10.5 million during the third quarter of 2008 to $11.1 million during the third quarter of 2009. This increase included higher FDIC deposit insurance expense of $260 thousand due to increases in deposit insurance assessment rates in order to cover higher monitoring costs and claims from the increasing number of failed insured depository institutions. On September 29, 2009, the FDIC announced its intention to require insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for the following three years. This announcement had no impact on our financial results for the quarter ended September 30, 2009, and if the prepaid assessment is charged as announced, the cost will be recognized as expense ratably over the three year assessment period. Additionally, occupancy expense increased $374 thousand as new branches were opened during the past year in addition to the four branches purchased in the Fayetteville market during December 2008.
Income Taxes
Income taxes represented a benefit of $2.1 million for the quarter ended September 30, 2009 compared to tax expense of $805 thousand for the quarter ended September 30, 2008. Contributing to the benefit during the third quarter of 2009 was a nonrecurring benefit of $504 thousand related to income tax refunds to be received from federal and state tax authorities upon the amendment of multiple tax returns from previous years. These amended returns were filed during the third quarter following a thorough review by the Company's tax professionals of previously filed federal and state tax returns. These refunds do not represent uncertain tax positions. The majority of the remaining decline in income taxes was related to a change in the Company's estimated annual effective tax rate given higher than normal levels of nontaxable income, which include municipal bond and loan income and bank-owned life insurance income, as well as higher levels of loan loss provisions over the year to date period. The change in estimated annual effective tax rate increased the tax benefit by $1.8 million for the third quarter of 2009.
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-nc.com.
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, 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) 2009 2008
September June March December September
30 30 31 31(a) 30
(In thousands except per share data)
Interest income $21,858 $20,755 $19,668 $20,088 $20,931
Interest expense 8,303 8,591 9,487 10,156 10,104
Net interest income 13,555 12,164 10,181 9,932 10,827
Provision for loan losses 3,564 1,692 5,986 1,701 760
Net interest income after
provision for loan losses 9,991 10,472 4,195 8,231 10,067
Noninterest income 2,507 3,724 2,106 2,297 3,267
Noninterest expense 11,098 12,465 11,564 76,286 10,517
Net income (loss) before
taxes 1,400 1,731 (5,263) (65,758) 2,817
Income tax (benefit)
Expense (2,143) 382 (800) (3,680) 805
Net income (loss) $3,543 $1,349 $(4,463) $(62,078) $2,012
Earnings (loss) per common
share - basic $0.26 $0.07 $(0.45) $(5.50) $0.18
Earnings (loss) per common
share - fully diluted $0.26 $0.07 $(0.45) $(5.50) $0.18
Weighted average shares
outstanding:
Basic 11,469 11,448 11,293 11,309 11,302
Fully diluted 11,469 11,448 11,293 11,309 11,313
(a) Results of operations for the quarter ended December 31, 2008
includes a goodwill impairment charge of $65,191.
End of Period Balances
(Unaudited)
2009 2008
September June March December September
30 30 31 31(a) 30
(Dollars in thousands except per share data)
Total assets $1,734,950 $1,695,342 $1,665,611 $1,654,232 $1,594,402
Investment
Securities 262,499 268,224 286,310 278,138 244,310
Loans (gross) 1,357,243 1,293,340 1,277,064 1,254,368 1,194,149
Allowance for
loan losses 19,511 18,602 18,480 14,795 14,017
Total earning
Assets 1,663,271 1,615,164 1,580,140 1,559,256 1,444,727
Deposits 1,385,250 1,380,842 1,340,974 1,315,314 1,197,721
Shareholders'
equity 149,525 143,306 142,674 148,514 166,521
Book value per
common share $9.58 $9.03 $8.97 $9.54 $14.83
Tangible book value
per common share $9.31 $8.74 $8.66 $9.20 $9.26
(a) Derived from audited consolidated financial statements.
Average Quarterly Balances
(Unaudited)
2009 2008
September June March December September
30 30 31 31 30
(Dollars in thousands)
Total assets $1,705,290 $1,665,387 $1,659,767 $1,620,817 $1,574,810
Investments 265,976 279,607 289,368 246,658 245,408
Loans (gross) 1,330,199 1,285,571 1,265,438 1,213,027 1,176,491
Total earning
Assets 1,632,707 1,588,502 1,574,017 1,473,422 1,434,041
Deposits 1,375,931 1,324,507 1,307,827 1,238,343 1,164,362
Shareholders'
equity 145,487 145,216 149,285 171,227 166,570
CAPITAL BANK CORPORATION
Quarterly Net Interest Margin (a)
(Unaudited)
2009 2008
September June March December September
30 30 31 31 30
Yield on earning assets 5.43% 5.34% 5.17% 5.51% 5.90%
Cost of interest-bearing
Liabilities 2.33 2.50 2.80 3.05 3.12
Net interest spread 3.10 2.84 2.37 2.46 2.78
Net interest margin 3.41 3.17 2.72 2.78 3.11
(a) Annualized and on a fully taxable equivalent basis.
Asset Quality - Nonperforming Assets (a)
(Unaudited)
2009 2008
September June March December September
30 30 31 31(b) 30
(Dollars in thousands)
Commercial and industrial $586 $1,060 $652 $348 $440
Commercial real estate 15,701 14,885 13,783 6,754 5,072
Residential mortgage 1,905 2,426 2,477 1,738 620
Home equity 330 140 96 275 275
Consumer - 19 - - 4
Total nonperforming loans 18,522 18,530 17,008 9,115 6,411
Other real estate owned (c) 8,441 5,170 3,616 1,347 1,019
Total nonperforming assets $26,963 $23,700 $20,624 $10,462 $7,430
Nonperforming loans to
total loans 1.36% 1.43% 1.33% 0.73% 0.54%
Nonperforming assets to
total assets 1.55% 1.40% 1.24% 0.63% 0.47%
(a) Nonperforming assets include loans that are 90 days or more past due
or in nonaccrual status and other real estate owned.
(b) Derived from audited consolidated financial statements.
(c) Other real estate owned at September 30, 2009 includes $1,297 of real
estate from a closed branch office that is held for sale.
Asset Quality and Funding Sources - Other Key Ratios
(Unaudited)
2009 2008
September June March December September
30 30 31 31 30
(Dollars in thousands)
Past due loans (a) $25,245 $15,196 $17,064 $13,642 $8,933
Past due loans to total
loans 1.86% 1.17% 1.34% 1.09% 0.75%
Net charge-offs $2,655 $1,570 $2,301 $1,768 $653
Net charge-offs to average
loans (annualized) 0.80% 0.49% 0.73% 0.58% 0.22%
Provision for loan
losses $3,564 $1,692 $5,986 $1,701 $760
Provision for loan losses
to average loans
(annualized) 1.07% 0.53% 1.89% 0.56% 0.26%
Allowance for loan losses
to total loans 1.44% 1.44% 1.45% 1.18% 1.17%
Allowance for loan losses
to nonperforming loans 105% 100% 109% 162% 219%
Customer deposits to total
assets 77% 77% 77% 75% 68%
Brokered deposits and borrowed
funds to total assets (b) 14% 13% 14% 15% 21%
(a) Past due loans include loans that are 30 days or more past due.
(b) Borrowed funds include customer repurchase agreements and
subordinated debt.
CAPITAL BANK CORPORATION
Asset Quality - Loan Portfolio Analysis
(Unaudited)
As of September 30, 2009
Nonaccrual Allowance
Loans to for ALLL to
Loans Nonaccrual Loans Loan Loans
Outstanding Loans Outstanding Losses Outstanding
(Dollars in thousands)
Commercial:
Commercial and
industrial $178,879 $586 0.33% $2,222 1.24%
Municipal 18,382 - - 10 0.05
Agriculture 15,670 - - 112 0.71
Other 1,967 - - 12 0.61
Total
commercial 214,898 586 0.27 2,356 1.10
Commercial real
estate:
Residential
acquisition,
development and
construction 288,016 13,254 4.60 8,394 2.91
Other commercial
real estate 410,729 1,737 0.42 4,243 1.03
Owner occupied 191,112 710 0.37 2,434 1.27
Total commercial
real estate 889,857 15,701 1.76 15,071 1.69
Consumer 9,749 - - 303 3.11
Residential:
First lien,
closed-end 129,355 1,809 1.40 1,028 0.79
Junior lien,
closed-end 16,498 96 0.58 303 1.84
Home equity
lines 96,886 330 0.34 450 0.46
Total
residential 242,739 2,235 0.92 1,781 0.73
Total loans $1,357,243 $18,522 1.36% $19,511 1.44%
Asset Quality - Commercial Real Estate
Residential Acquisition, Development and Construction
Portfolio Analysis by Type
(Unaudited)
As of September 30, 2009
Residential
Land / Residential
Development Construction Total
(Dollars in thousands )
Loans outstanding $170,206 $117,810 $288,016
Loans outstanding in category
to total loans 12.54% 8.68% 21.22%
Nonaccrual loans $9,238 $4,016 $13,254
Nonaccrual loans to total loans
in category 5.43% 3.41% 4.60%
Allowance for loan losses $6,365 $2,029 $8,394
Allowance for loan losses to
total loans in category 3.74% 1.72% 2.91%
CAPITAL BANK CORPORATION
Asset Quality - Commercial Real Estate
Residential Acquisition, Development and Construction Portfolio
Analysis by Region
(Unaudited)
Percent Nonaccrual Allow- ALLL
Total Loans to ance to
Loans Loans Non- Loans for Loans
Outst- Outst- accrual Outst- Loan Outst-
anding anding Loans anding Losses anding
(Dollars in thousands)
Triangle $213,382 74.09% $7,657 3.59% $6,630 3.11%
Sandhills 19,900 6.91 - - 481 2.42
Triad 5,732 1.99 - - 61 1.06
Western 49,002 17.01 5,597 11.42 1,222 2.49
Total $288,016 100.00% $13,254 4.60% $8,394 2.91%
Asset Quality - Commercial Real Estate
Other Commercial Real Estate Portfolio Analysis by Type
(Unaudited)
As of September 30, 2009
Commercial C&I
Land/ Commercial Real Estate
Development Construction Multifamily Secured Total
(Dollars in thousands)
Loans
outstanding $121,479 $57,261 $43,583 $188,406 $410,729
Loans outstanding in
category to total
loans 8.95% 4.22% 3.21% 13.88% 30.26%
Nonaccrual loans $32 $- $- $1,705 $1,737
Nonaccrual loans
to total
loans category 0.03% 0.00% 0.00% 0.90% 0.42%
Allowance for loan
losses $1,361 $367 $356 $2,159 $4,243
Allowance for
loan losses
to total loans
in category 1.12% 0.64% 0.82% 1.15% 1.03%
Asset Quality - Commercial Real Estate
Other Commercial Real Estate Portfolio Analysis by Region
(Unaudited)
As of September 30, 2009
Percent Nonaccrual Allow- ALLL
Total Loans to ance to
Loans Loans Non- Loans for Loans
Outst- Outst- accrual Outst- Loan Outst-
anding anding Loans anding Losses anding
(Dollars in thousands)
Triangle $283,002 8.90% $37 0.01% $2,929 1.03%
Sandhills 37,920 9.23 709 1.87 510 1.34
Triad 33,751 8.22 971 2.88 384 1.14
Western 56,056 13.65 20 0.04 420 0.75
Total $410,729 100.00% $1,737 0.42% $4,243 1.03%
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2009 and December 31, 2008
September 30, 2009 December 31, 2008
(Dollars in thousands except (Unaudited)
share data)
Assets
Cash and due from banks:
Interest-earning $43,529 $26,621
Noninterest-earning 9,165 27,705
Federal funds sold and short term investments - 129
Total cash and cash equivalents 52,694 54,455
Investment securities - available for sale,
at fair value 258,619 272,944
Investment securities - held to maturity,
at amortized cost 3,880 5,194
Loans - net of unearned income and
deferred fees 1,357,243 1,254,368
Allowance for loan losses (19,511) (14,795)
Net loans 1,337,732 1,239,573
Premises and equipment, net 23,762 24,640
Bank-owned life insurance 22,571 22,368
Deposit premium, net 2,995 3,857
Deferred income tax 5,733 9,342
Accrued interest receivable 6,910 6,225
Other assets 20,054 15,634
Total assets $1,734,950 $1,654,232
Liabilities
Deposits:
Demand, noninterest-bearing $136,228 $125,281
Savings and interest-bearing checking 199,726 173,711
Money market deposit accounts 200,052 212,780
Time deposits less than $100,000 503,628 509,231
Time deposits $100,000 and greater 345,616 294,311
Total deposits 1,385,250 1,315,314
Repurchase agreements and federal funds
purchased 9,464 15,010
Borrowings 147,000 132,000
Subordinated debentures 30,930 30,930
Other liabilities 12,781 12,464
Total liabilities 1,585,425 1,505,718
Commitments and contingencies
Shareholders' Equity
Preferred stock, $1,000 par value;
100,000 shares authorized;
41,279 shares issued and
outstanding (liquidation
preference of $41,279) 40,055 39,839
Common stock, no par value;
20,000,000 shares authorized;
11,300,369 and 11,238,085 shares
issued and outstanding 139,784 139,209
Retained deficit (35,465) (31,420)
Accumulated other comprehensive income 5,151 886
Total shareholders' equity 149,525 148,514
Total liabilities and
shareholders' equity $1,734,950 $1,654,232
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2009 and 2008
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(Dollars in thousands except per share data)
Interest income:
Loans and loan fees $18,720 $17,875 $52,224 $55,485
Investment securities:
Taxable interest
income 2,348 2,182 7,708 6,616
Tax-exempt interest
income 759 801 2,286 2,435
Dividends 13 58 26 293
Federal funds and other
interest income 18 15 34 103
Total interest
income 21,858 20,931 62,278 64,932
Interest expense:
Deposits 6,797 7,837 21,596 24,935
Borrowings and
repurchase
agreements 1,506 2,267 4,782 7,333
Total interest
expense 8,303 10,104 26,378 32,268
Net interest
income 13,555 10,827 35,900 32,664
Provision for
loan losses 3,564 760 11,242 2,175
Net interest income
after provision
for loan losses 9,991 10,067 24,658 30,489
Noninterest income:
Service charges and
other fees 990 1,238 2,901 3,463
Mortgage fees and
revenues 353 142 971 768
Other loan fees 57 392 549 892
Brokerage fees 155 169 468 570
Bank card services 409 357 1,133 1,010
Bank-owned life insurance 240 255 1,663 817
Net gain on investment
securities 148 109 164 249
Gain on sale of branch - 426 - 426
Other 155 179 488 559
Total noninterest
income 2,507 3,267 8,337 8,754
Noninterest expense:
Salaries and employee
benefits 5,128 5,065 16,945 15,237
Occupancy 1,471 1,097 4,192 3,297
Furniture and equipment 771 778 2,340 2,318
Data processing and
telecommunications 555 565 1,759 1,525
Advertising 394 480 940 1,000
Office expenses 386 298 1,043 978
Professional fees 358 362 1,171 1,013
Business development
and travel 268 360 843 1,033
Amortization of deposit
premiums 287 256 862 770
Miscellaneous loan
handling costs 339 252 874 570
Directors fees 295 360 1,131 949
Insurance 121 138 365 336
FDIC deposit insurance 474 214 1,882 442
Other 251 292 780 908
Total noninterest
expense 11,098 10,517 35,127 30,376
Net income (loss)
before tax
(benefit) expense 1,400 2,817 (2,132) 8,867
Income tax (benefit)
expense (2,143) 805 (2,561) 2,473
Net income $3,543 $2,012 $429 $6,394
Dividends and
accretion on
preferred stock 590 - 1,764 -
Net income (loss)
attributable to
common
shareholders $2,953 $2,012 $(1,335) $6,394
Earnings (loss) per
common share -
basic $0.26 $0.18 $(0.12) $0.57
Earnings (loss) per
common share -
diluted $0.26 $0.18 $(0.12) $0.57
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended September 30, 2009, June 30, 2009 and
September 30, 2008
Tax Equivalent Basis (1)
September 30, 2009
(Dollars in thousands)
Average Amount Average
Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,153,514 $16,550 5.69%
Home equity 93,651 983 4.16
Consumer and residential mortgage 83,034 1,276 6.15
Total loans 1,330,199 18,809 5.61
Investment securities (3) 263,513 3,512 5.33
Federal funds sold and interest-
-earning cash (4) 38,995 18 0.18
Total interest-earning assets 1,632,707 $22,339 5.43%
Cash and due from banks 8,256
Other assets 83,589
Allowance for loan losses (19,262)
Total assets $1,705,290
Liabilities and Equity
Savings deposits $29,267 $11 0.15%
Interest-bearing demand deposits 366,632 1,095 1.18
Time deposits 845,311 5,691 2.67
Total interest-bearing deposits 1,241,210 6,797 2.17
Borrowed funds 130,098 1,260 3.84
Subordinated debt 30,930 240 3.08
Repurchase agreements and fed
funds purchased 10,646 6 0.22
Total interest-bearing liabilities 1,412,884 $8,303 2.33%
Noninterest-bearing deposits 134,721
Other liabilities 12,198
Total liabilities 1,559,803
Shareholders' equity 145,487
Total liabilities and
shareholders' equity $1,705,290
Net interest spread (5) 3.10%
Tax equivalent adjustment $481
Net interest income and net
interest margin (6) $14,036 3.41%
June 30, 2009
Average Amount Average
Balance Earned Rate
(Dollars in thousands)
Assets
Loans receivable: (2)
Commercial $1,115,003 $15,244 5.48%
Home equity 94,054 974 4.15
Consumer and residential mortgage 76,514 1,194 6.24
Total loans 1,285,571 17,412 5.43
Investment securities (3) 278,033 3,731 5.37
Federal funds sold and interest-
-earning cash (4) 24,898 6 0.10
Total interest-earning assets 1,588,502 $21,149 5.34%
Cash and due from banks 15,294
Other assets 80,296
Allowance for loan losses (18,705)
Total assets $1,665,387
Liabilities and Equity
Savings deposits $29,609 $13 0.18%
Interest-bearing demand deposits 368,132 1,152 1.26
Time deposits 796,306 5,868 2.96
Total interest-bearing deposits 1,194,047 7,033 2.36
Borrowed funds 140,682 1,273 3.63
Subordinated debt 30,930 278 3.61
Repurchase agreements and fed
funds purchased 12,010 7 0.23
Total interest-bearing liabilities 1,377,669 $8,591 2.50%
Noninterest-bearing deposits 130,460
Other liabilities 12,042
Total liabilities 1,520,171
Shareholders' equity 145,216
Total liabilities and
shareholders' equity $1,665,387
Net interest spread (5) 2.84%
Tax equivalent adjustment $394
Net interest income and net
interest margin (6) $12,558 3.17%
September 30, 2008
(Dollars in thousands) Average Amount Average
Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,018,947 $15,469 6.02%
Home equity 84,441 1,133 5.32
Consumer and residential
mortgage 73,103 1,273 6.97
Total loans 1,176,491 17,875 6.03
Investment
securities (3) 250,896 3,452 5.50
Federal funds sold
and interest-
earning cash (4) 6,654 15 0.89
Total interest-earning
assets 1,434,041 $21,342 5.90%
Cash and due from banks 22,517
Other assets 132,304
Allowance for
loan losses (14,052)
Total assets $1,574,810
Liabilities and Equity
Savings deposits $30,169 $30 0.39%
Interest-bearing
demand deposits 342,575 1,802 2.09
Time deposits 679,162 6,005 3.51
Total interest-bearing
deposits 1,051,906 7,837 2.96
Borrowed funds 174,735 1,786 4.06
Subordinated debt 30,930 407 5.22
Repurchase agreements and
fed funds purchased 27,039 74 1.09
Total interest-bearing
liabilities 1,284,610 $10,104 3.12%
Noninterest-bearing
deposits 112,456
Other liabilities 11,174
Total liabilities 1,408,240
Shareholders' equity 166,570
Total liabilities
and shareholders'
equity $1,574,810
Net interest spread (5) 2.78%
Tax equivalent adjustment $411
Net interest income and net
interest margin (6) $11,238 3.11%
(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) The Federal Reserve began paying interest on cash balances in the
quarter ended December 31, 2008. For comparison purposes, average
balances have been adjusted for all periods presented to include cash
held at the Federal Reserve as interest earning.
(5) Net interest spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(6) Net interest margin represents net interest income divided by average
interest-earning assets.
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Nine Months Ended September 30, 2009 and 2008
Tax Equivalent Basis (1)
September 30, 2009 September 30, 2008
(Dollars in thousands)
Average Amount Average Average Amount Average
Balance Earned Rate Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,121,652 $45,736 5.45 %$1,005,400 $47,959 6.35%
Home equity 93,855 2,923 4.16 81,626 3,555 5.80
Consumer and
residential
mortgage 78,467 3,654 6.21 75,032 3,971 7.06
Total loans 1,293,974 52,313 5.41 1,162,058 55,485 6.36
Investment
securities (3) 276,649 11,200 5.40 251,028 10,596 5.63
Federal funds sold
and interest-
earning
cash (4) 28,001 34 0.16 9,203 103 1.49
Total interest-
earnings
assets 1,598,624 $63,547 5.31% 1,422,289 $66,184 6.20%
Cash and due
From banks 15,171 22,893
Other assets 80,917 138,346
Allowance for
loan losses (17,731) (13,791)
Total assets $1,676,981 $1,569,737
Liabilities and
Equity
Savings
deposits $29,225 $37 0.17% $30,363 $112 0.49%
Interest-bearing
demand deposits 362,724 3,449 1.27 337,198 5,291 2.09
Time deposits 814,328 18,110 2.97 668,526 19,532 3.89
Total interest-
bearing
deposits 1,206,277 21,596 2.39 1,036,087 24,935 3.21
Borrowed funds 138,945 3,923 3.77 176,069 5,628 4.26
Subordinated
debt 30,930 839 3.63 30,930 1,336 5.75
Repurchase
agreements
and fed funds
purchased 12,156 20 0.22 32,575 369 1.51
Total interest-
bearing
liabilities 1,388,308 $26,378 2.54% 1,275,661 $32,268 3.37%
Noninterest-
bearing
deposits 130,061 114,676
Other liabilities 11,963 11,032
Total
liabilities 1,530,332 1,401,369
Shareholders'
equity 146,649 168,368
Total liabilities
and shareholders'
equity $1,676,981 $1,569,737
Net interest spread (5) 2.77% 2.83%
Tax equivalent
adjustment $1,269 $1,252
Net interest
income and
net interest
margin (6) $37,169 3.11% $33,916 3.18%
(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
heir mark-to-market adjustment, if any.
(4) The Federal Reserve began paying interest on cash balances in the
quarter ended December 31, 2008. For comparison purposes, average
balances have been adjusted for all periods presented to include cash
held at the Federal Reserve as interest earning.
(5) Net interest spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(6) Net interest margin represents net interest income divided by average
interest-earning assets.
SOURCE Capital Bank Corporation
