CAPITAL BANK CORPORATION 
By "Further weakening in the residential and commercial real estate markets from the global recession and credit crisis has severely impacted the financial health and stability of many businesses within the communities we serve. While our markets continue to remain some of the most resilient in the country, the Company took steps to significantly increase the provision for loan losses in the first quarter in response to softening experienced in the loan portfolio as reflected by certain credit quality ratios," stated
Past due loans as a percent of total loans increased to 1.34% at
Provision for loan losses increased
Partially contributing to lower profitability during the first quarter of 2009 was a decline in net interest income. Net interest income decreased
"While our net interest margin has been negatively impacted by dramatic cuts to the prime lending rate and intense competition for retail deposits in late 2008, we have seen positive trends in the margin in recent months and experienced positive growth in net interest income from the fourth quarter," stated Mr. Yarber. "Additionally, earnings before taxes and loan provision, excluding securities gains/losses, were
Loans grew by
"Despite tremendous economic uncertainty, we have continued lending to qualified borrowers within the communities we serve as evidenced by our first quarter loan growth," commented Mr. Yarber. "We are committed to doing our part to ensure that capital continues to remain available to qualified borrowers in our markets while maintaining prudent lending standards that we believe to be in the best interests of the Company and its shareholders. We were well capitalized last year but still accepted a capital investment from the Federal Government so that we could continue lending and be part of the economic recovery in our local markets. While the significant provision increase negatively impacted our profitability this quarter, we remain far above the well capitalized threshold and still have the balance sheet strength necessary to further our lending initiatives."
Noninterest income declined
Noninterest expense increased from
Capital Bank Corporation, headquartered in
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 effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, and the effects of competition. 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
Summary of Operations
(Unaudited) Three Months Ended Three Months Ended
March 31, 2009 March 31, 2008
(In thousands except per share data)
Interest income $19,668 $22,718
Interest expense 9,487 11,809
Net interest income 10,181 10,909
Provision for loan losses 5,986 565
Net interest income after provision
for loan losses 4,195 10,344
Noninterest income 2,106 2,240
Noninterest expense 11,564 9,618
(Loss) income before taxes (5,263) 2,966
Income tax (benefit) expense (800) 799
Net (loss) income $(4,463) $2,167
(Loss) earnings per common share - basic $(0.45) $0.19
(Loss) earnings per common share -
fully diluted $(0.45) $0.19
Weighted average shares outstanding:
Basic 11,293 11,289
Fully diluted 11,293 11,306
End of Period Balances
(Unaudited) 2009 2008
March 31 December 31(a) September 30 June 30 March 31
(Dollars in thousands
except per share data)
Total assets $1,665,611 $1,654,232 $1,594,402 $1,592,034 $1,575,301
Investment
securities 286,310 278,138 244,310 246,468 258,086
Loans (gross) 1,277,064 1,254,368 1,194,149 1,178,157 1,150,497
Allowance for
loan losses 18,480 14,795 14,017 13,910 13,563
Total earning
assets 1,563,777 1,533,354 1,444,727 1,435,020 1,419,174
Deposits 1,340,974 1,315,314 1,197,721 1,182,615 1,150,897
Shareholders'
equity 142,674 148,514 166,521 165,731 167,967
Book value per
common share $8.97 $9.54 $14.83 $14.76 $14.95
Tangible book value
per common share $8.66 $9.20 $9.26 $9.16 $9.33
(a) Derived from audited consolidated financial statements
Average Quarterly Balances
(Unaudited) 2009 2008
March 31 December 31 September 30 June 30 March 31
(Dollars in
thousands)
Total assets $1,659,767 $1,620,817 $1,574,810 $1,578,357 $1,555,986
Investment
securities 289,368 246,658 245,408 256,406 256,538
Loans (gross) 1,265,438 1,213,027 1,176,491 1,166,795 1,142,728
Total earning
assets 1,556,243 1,473,422 1,425,516 1,429,301 1,407,345
Deposits 1,308,960 1,238,343 1,164,362 1,148,671 1,139,106
Shareholders'
equity 149,285 171,227 166,570 170,945 167,610
CAPITAL BANK CORPORATION
Quarterly Results
(Unaudited) 2009 2008
March 31 December 31 September 30 June 30 March 31
(In thousands
except per
share data)
Net interest
income $10,181 $9,932 $10,827 $10,928 $10,909
Provision for
loan losses 5,986 1,701 760 850 565
Net interest
income after
provision for
loan losses 4,195 8,231 10,067 10,078 10,344
Noninterest
income 2,106 2,297 3,513 3,001 2,240
Noninterest
expense 11,564 76,286 10,763 9,995 9,618
(Loss) income
before taxes (5,263) (65,758) 2,817 3,084 2,966
Income tax
(benefit) expense (800) (3,680) 805 869 799
Net (loss)
income $(4,463) $(62,078) $2,012 $2,215 $2,167
(Loss) earnings
per common
share - basic $(0.45) $(5.50) $0.18 $0.20 $0.19
(Loss) earnings
per common
share - fully
diluted $(0.45) $(5.50) $0.18 $0.20 $0.19
Weighted average
shares
outstanding:
Basic 11,293 11,309 11,302 11,310 11,289
Fully diluted 11,293 11,309 11,313 11,324 11,306
Quarterly Net Interest Margin*
(Unaudited) 2009 2008
March 31 December 31 September 30 June 30 March 31
Yield on
earning assets 5.23% 5.51% 5.94% 6.09% 6.60%
Cost of
interest-bearing
liabilities 2.80 3.05 3.12 3.24 3.76
Net interest
spread 2.43 2.46 2.82 2.85 2.83
Net interest
margin 2.76 2.78 3.13 3.18 3.23
*Annualized and on a fully taxable equivalent basis
Nonperforming Assets
(Unaudited) 2009 2008
March 31 December 31(a) September 30 June 30 March 31
(Dollars in
thousands)
Commercial $6,231 $4,682 $4,343 $3,650 $2,919
Construction 10,259 3,843 1,570 418 230
Consumer 33 92 25 42 61
Home equity 96 275 275 515 579
Residential
mortgage 389 223 198 582 463
Total
nonperforming
loans 17,008 9,115 6,411 5,207 4,252
Other real
estate owned 3,616 1,347 1,019 663 890
Total
nonperforming
assets $20,624 $10,462 $7,430 $5,870 $5,142
Nonperforming assets include loans that are 90 days or more past due or
in nonaccrual status and other real estate owned.
(a) Derived from audited consolidated financial statements
CAPITAL BANK CORPORATION
Key Ratios
(Unaudited) 2009 2008
March 31 December 31 September 30 June 30 March 31
(Dollars in
thousands)
Past due
loans $17,064 $13,642 $8,933 $9,239 $9,380
Past due loans
as a percent
of total loans 1.34% 1.09% 0.75% 0.78% 0.82%
Net charge-offs $2,301 $1,768 $653 $503 $573
Net charge-offs
as a percent
of average loans
(annualized) 0.73% 0.58% 0.22% 0.17% 0.20%
Allowance for loan
losses as a percent
of total loans 1.45% 1.18% 1.17% 1.18% 1.18%
Nonperforming assets
as a percent of
total assets 1.24% 0.63% 0.47% 0.37% 0.33%
Allowance for loan
losses as a percent
of nonperforming
loans 109% 162% 219% 267% 319%
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2009 and December 31, 2008
March 31, 2009 December 31, 2008
(Dollars in thousands (Unaudited)
except share data)
Assets
Cash and due from banks:
Interest-earning $378 $719
Noninterest-earning 39,514 53,607
Federal funds sold and short term
investments 25 129
Total cash and cash equivalents 39,917 54,455
Investment securities - available for
sale, at fair value 281,505 272,944
Investment securities - held to
maturity, at amortized cost 4,805 5,194
Loans - net of unearned income and
deferred fees 1,277,064 1,254,368
Allowance for loan losses (18,480) (14,795)
Net loans 1,258,584 1,239,573
Premises and equipment, net 24,810 24,640
Bank-owned life insurance 22,646 22,368
Deposit premium, net 3,569 3,857
Deferred income tax 9,462 9,342
Accrued interest receivable 6,114 6,225
Other assets 14,199 15,634
Total assets $1,665,611 $1,654,232
Liabilities
Deposits:
Demand, noninterest-bearing $127,062 $125,281
Savings and interest-bearing checking 205,402 173,711
Money market deposit accounts 206,194 212,780
Time deposits less than $100,000 499,063 509,231
Time deposits $100,000 and greater 303,253 294,311
Total deposits 1,340,974 1,315,314
Repurchase agreements and federal
funds purchased 11,650 15,010
Borrowings 127,000 132,000
Subordinated debentures 30,930 30,930
Other liabilities 12,383 12,464
Total liabilities 1,522,937 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) 39,910 39,839
Common stock, no par value; 20,000,000
shares authorized; 11,300,369 and
11,238,085 shares issued and
outstanding 139,495 139,209
Retained deficit (37,373) (31,420)
Accumulated other comprehensive income 642 886
Total shareholders' equity 142,674 148,514
Total liabilities and
shareholders' equity $1,665,611 $1,654,232
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2009 and 2008 (Unaudited)
March 31, 2009 March 31, 2008
(Dollars in thousands except
per share data)
Interest income:
Loans and loan fees $16,092 $19,499
Investment securities:
Taxable interest income 2,799 2,218
Tax-exempt interest income 764 829
Dividends - 117
Federal funds and other interest income 13 55
Total interest income 19,668 22,718
Interest expense:
Deposits 7,769 9,072
Borrowings and repurchase agreements 1,718 2,737
Total interest expense 9,487 11,809
Net interest income 10,181 10,909
Provision for loan losses 5,986 565
Net interest income after provision
for loan losses 4,195 10,344
Noninterest income:
Service charges and other fees 952 959
Mortgage fees and revenues 233 272
Other loan fees 294 113
Brokerage fees 163 156
Bank card services 339 299
Bank-owned life insurance 258 302
Net gain (loss) on investment securities (320) 71
Other 187 68
Total noninterest income 2,106 2,240
Noninterest expense:
Salaries and employee benefits 6,013 5,036
Occupancy 1,373 997
Furniture and equipment 830 747
Data processing and telecommunications 631 432
Advertising 323 315
Office expenses 335 365
Professional fees 379 370
Business development and travel 328 333
Amortization of deposit premiums 288 257
Miscellaneous loan handling costs 163 94
Directors fees 307 267
Insurance 104 95
FDIC deposit insurance 229 47
Other 261 263
Total noninterest expense 11,564 9,618
Net (loss) income before tax
(benefit) expense (5,263) 2,966
Income tax (benefit) expense (800) 799
Net (loss) income $(4,463) $2,167
Dividends and accretion on
preferred stock 587 -
Net (loss) income attributable to
common shareholders $(5,050) $2,167
(Loss) earnings per common share - basic $(0.45) $0.19
(Loss) earnings per common share - diluted $(0.45) $0.19
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended March 31, 2009, December 31, 2008 and
March 31, 2008 (Unaudited)
Tax Equivalent Basis (1)
March 31, 2009 December 31, 2008
(Dollars in Average Amount Average Average Amount Average
thousands) Balance Earned Rate Balance Earned Rate
Assets
Loans
receivable:(2)
Commercial $1,095,804 $13,942 5.16% $1,052,172 $14,719 5.55%
Consumer 52,873 910 6.98 47,537 888 7.41
Home equity 93,861 966 4.17 89,125 1,047 4.66
Residential
mortgages 22,900 274 4.79 24,193 355 5.87
Total loans 1,265,438 16,092 5.16 1,213,027 17,009 5.56
Investment
securities (3) 289,368 3,957 5.47 246,658 3,430 5.56
Federal funds
sold and other
interest on
short-term
investments 1,437 13 3.67 13,737 25 0.72
Total
interest-earning
assets 1,556,243 $20,062 5.23% 1,473,422 $20,464 5.51%
Cash and due
from banks 40,578 25,018
Other assets 78,126 136,387
Allowance for
loan losses (15,180) (14,010)
Total
assets $1,659,767 $1,620,817
Liabilities and
Equity
Savings deposits $28,793 $13 0.18% $27,948 $11 0.16%
Interest-bearing
demand deposits 353,262 1,205 1.38 336,011 1,363 1.61
Time deposits 800,879 6,551 3.32 758,491 6,733 3.52
Total
interest-bearing
deposits 1,184,067 7,769 2.66 1,122,450 8,107 2.87
Borrowed funds 146,233 1,389 3.85 145,962 1,605 4.36
Subordinated debt 30,930 322 4.22 30,930 424 5.44
Repurchase
agreements and
fed funds
purchased 13,849 7 0.20 22,050 20 0.36
Total
interest-bearing
liabilities 1,373,946 $9,487 2.80% 1,321,392 $10,156 3.05%
Noninterest-bearing
deposits 124,893 115,893
Other
liabilities 11,643 12,305
Total
liabilities 1,510,482 1,449,590
Shareholders'
equity 149,285 171,227
Total
liabilities and
shareholders'
equity $1,659,767 $1,620,817
Net interest
spread (4) 2.43% 2.46%
Tax equivalent
adjustment $394 $376
Net interest
income and net
interest margin(5) $10,575 2.76% $10,308 2.78%
March 31, 2008
Average Amount Average
Balance Earned Rate
Assets
Loans
receivable:(2)
Commercial $986,205 $16,777 6.82%
Consumer 46,700 910 7.82
Home equity 79,564 1,321 6.66
Residential mortgages 30,259 491 6.49
Total loans 1,142,728 19,499 6.84
Investment securities (3) 256,538 3,590 5.60
Federal funds sold and other
interest on short-term
investments 8,079 55 2.73
Total interest-earning assets 1,407,345 $23,144 6.60%
Cash and due from banks 26,232
Other assets 136,071
Allowance for loan losses (13,662)
Total assets $1,555,986
Liabilities and Equity
Savings deposits $30,382 $46 0.61%
Interest-bearing demand deposits 333,108 1,855 2.23
Time deposits 657,609 7,171 4.37
Total interest-bearing
deposits 1,021,099 9,072 3.56
Borrowed funds 171,645 2,022 4.72
Subordinated debt 30,930 526 6.82
Repurchase agreements and
fed funds purchased 35,563 189 2.13
Total interest-bearing
liabilities 1,259,237 $11,809 3.76%
Noninterest-bearing deposits 118,007
Other liabilities 11,132
Total liabilities 1,388,376
Shareholders' equity 167,610
Total liabilities and
shareholders' equity $1,555,986
Net interest spread (4) 2.83%
Tax equivalent adjustment $426
Net interest income and net
interest margin(5) $11,335 3.23%
(1) The tax equivalent basis is computed using a blended federal and
state tax rate of approximately 34%.
(2) Loans receivable include nonaccrual loans for which accrual of
interest has not been recorded.
(3) The average balance for investment securities excludes the effect of
their mark-to-market adjustment, if any.
(4) Net interest spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(5) Net interest margin represents net interest income divided by average
interest-earning assets.
SOURCE Capital Bank Corporation
