Capital Bank Announces Financial Results for 2009
RALEIGH, N.C., Feb. 1 /PRNewswire-FirstCall/ -- Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported a net loss of $7.2 million for the quarter ended December 31, 2009 compared to a net loss of $62.1 million for the quarter ended December 31, 2008. After dividends and accretion on preferred stock issued under the Capital Purchase Program, net loss attributable to common shareholders was $7.8 million, or $0.68 per diluted share, for the fourth quarter of 2009 compared with net loss attributable to common shareholders of $62.2 million, or $5.50 per diluted share, for the fourth quarter of 2008. The fourth quarter 2008 results include a goodwill impairment charge of $62.0 million, net of taxes. The Company's financial results reflect a significant increase in provision for loan losses, higher FDIC insurance costs, and nonrecurring expenses related to the Company's recent proposed public stock offering, partially offset by improved net interest income and a larger income tax benefit.
The Company reported a net loss of $6.8 million for the year ended December 31, 2009 compared to a net loss of $55.7 million for the year ended December 31, 2008. Net loss attributable to common shareholders was $9.2 million, or $0.80 per diluted share, for 2009 compared with net loss attributable to common shareholders of $55.8 million, or $4.94 per diluted share, for 2008. The full-year 2008 results also include the goodwill impairment charge of $62.0 million, net of taxes.
Capital Bank Corporation also announced today that its Board of Directors voted to suspend payment of the Company's quarterly cash dividend. The Board will continue to evaluate the payment of a cash dividend on a quarterly basis.
"Weakness in local residential and commercial real estate markets continues to severely impact the financial health and stability of many businesses within the communities we serve," stated B. Grant Yarber, president and CEO. "The Company took steps in 2009 to significantly increase its provision for loan losses in response to the deteriorating financial condition of certain borrowers and declining real estate values underlying certain impaired loans. We believe increased nonperforming assets, net charge-offs and the allowance for loan losses reflect the economic climate in our markets and consistent application of our policy to recognize losses as they occur. Despite elevated problem loans and increased loan losses, Capital Bank remains well capitalized and maintains credit quality ratios which are better than reported regional and national peer averages have been in recent quarters. We remain confident in the overall strength of our franchise and believe that as the economy begins to recover, these trends will begin to reverse."
"The suspension of our quarterly dividend, while disappointing, is a prudent step in preserving our capital during this protracted economic crisis," continued Mr. Yarber. "We proactively took this step and believe that cash dividends should be paid from current and expected earnings, preserving our capital."
Net Interest Income
For the quarterly period, net interest income increased by $3.0 million, rising from $9.9 million in the fourth quarter of 2008 to $13.0 million in the fourth quarter of 2009. This improvement was due to an increase in net interest margin from 2.75% in the fourth quarter of 2008 to 3.25% in the fourth quarter of 2009, coupled with 11% 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 87 basis points, from 3.05% for the quarter ended December 31, 2008 to 2.18% for the quarter ended December 31, 2009. Partially offsetting declining funding costs was a rapid decline in the prime lending rate late in 2008 which contributed to a decrease in loan yields from 5.56% in the fourth quarter of 2008 to 5.19% in the fourth 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 its commercial loan portfolio. The swap, which expired in October 2009, increased loan interest income by $114 thousand and $906 thousand for the quarters ended December 31, 2009 and 2008, respectively, representing a benefit to net interest margin of 3 and 24 basis points, respectively.
For 2009, net interest income increased by $6.3 million, rising from $42.6 million in 2008 to $48.9 million in 2009. This improvement was due to an increase in net interest margin from 3.07% in 2008 to 3.14% in 2009, coupled with 11% growth in average earning assets over the same period. The prime swap increased loan interest income by $3.5 million and $2.6 million for the years ended December 31, 2009 and 2008, respectively, representing a benefit to net interest margin of 21 and 18 basis points, respectively.
"Despite a decline in loan yields from the dramatic reduction to market interest rates in 2008, increased levels of nonaccrual loans in 2009, and expiration of our prime swap in October 2009, Capital Bank realized substantial net interest income improvement during the year," stated Mr. Yarber. "Management remains primarily focused on asset quality but also considers margin management a key priority. Through highly disciplined margin controls in a favorable interest rate environment, our net interest margin increased to 3.25% in the fourth quarter of 2009 from 2.75% in the fourth quarter of 2008. While we continue to face a difficult economy, we are encouraged by the positive trends in our net interest margin."
Provision for Loan Losses and Asset Quality
Provision for loan losses for the quarter ended December 31, 2009 totaled $11.8 million, an increase from $1.7 million in the fourth quarter of 2008. The increase in the loan loss provision was driven by continued deteriorating 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 $1.8 million, or 0.58% of average loans, in the fourth quarter of 2008 to $5.3 million, or 1.52% of average loans, in the fourth quarter of 2009.
Provision for loan losses for the year ended December 31, 2009 totaled $23.1 million, an increase of $19.2 million from 2008. Net charge-offs increased from $3.5 million, or 0.30% of average loans, during 2008 to $11.8 million, or 0.89% of average loans, during 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 2.90% of total assets at December 31, 2009 compared to 0.63% at December 31, 2008. Past due loans, which include all loans past due 30 days or more, increased to 2.80% of total loans at December 31, 2009 compared to 1.09% at December 31, 2008. As a result of the deteriorating credit quality, the Company increased the allowance for loan losses to 1.88% of total loans at December 31, 2009 compared to 1.18% at December 31, 2008. The allowance for loan losses was 66% of nonperforming loans at December 31, 2009, which was a decline from 162% at December 31, 2008.
Loans grew by $135.9 million during 2009 while deposits increased by $62.7 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 $46.1 million during the year ended December 31, 2009 as Capital Bank continued to realize success in attracting low-cost, core deposits. Time deposits also increased $45.2 million over the same period while money market accounts declined by $28.6 million.
Noninterest Income
Noninterest income decreased $1.1 million, or 48%, declining from $2.2 million in the fourth quarter of 2008 to $1.2 million in the fourth quarter of 2009. The Company recorded an other-than-temporary impairment charge of $498 thousand during the quarter ended December 31, 2009 related to an investment in trust preferred securities issued by a financial institution. Following an analysis of the financial condition of the issuer and a decision by the issuer to suspend interest payments on the securities, management determined the unrealized loss to be credit related and therefore wrote the securities down to estimated fair market value with the loss charged to earnings. The Company also recorded an aggregate write down of $217 thousand on certain foreclosed properties reflecting declining real estate market values and recognized a loss of $361 thousand on the repurchase of a mortgage loan previously sold to an investor in the secondary market. Both of these collateral-related losses were recorded as reductions to other noninterest income in the fourth quarter of 2009.
For 2009, noninterest income decreased $1.5 million, or 14%, declining from $11.0 million in 2008 to $9.5 million in 2009. Included in this decrease was a gain of $374 thousand recorded on the sale of the Company's Greensboro branch in 2008 as well as the other-than-temporary impairment charge and collateral-related losses recorded in the fourth quarter of 2009. Service charge income, which includes overdraft and non-sufficient funds charges, fell by $662 thousand primarily from a decline in consumer spending during the recent economic recession. Other loan fees declined by $543 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 the noninterest income decline was an $878 thousand increase in bank-owned life insurance ("BOLI") income, which was primarily due to collection of BOLI policy proceeds during 2009. Additionally, mortgage fees increased by $330 thousand, which was primarily a result of higher levels of brokered mortgage originations benefited by a continued favorable interest rate environment for residential mortgage refinancing and home purchase activity.
Noninterest Expense
Noninterest expense decreased $62.2 million, or 82%, declining from $76.2 million in the fourth quarter of 2008 to $14.0 million in the fourth quarter of 2009, primarily due to a goodwill impairment charge of $65.2 million in 2008. The remaining increase in noninterest expense included higher FDIC deposit insurance expense of $596 thousand, which was primarily due to increases in deposit insurance assessment rates to cover losses incurred by the FDIC's deposit insurance fund. Growth in core deposits during 2009 also partially contributed to the increase in FDIC deposit insurance expense. The Company incurred $1.9 million of direct nonrecurring expenses related to its recent proposed public stock offering. These expenses are recorded in other noninterest expense and represent investment banking, legal and accounting costs as well as other miscellaneous filing and printing costs related to the proposed offering.
For 2009, noninterest expense decreased $57.5 million, or 54%, declining from $106.6 million in 2008 to $49.2 million in 2009, primarily due to the goodwill impairment charge in 2008. The remaining increase in noninterest expense included higher FDIC deposit insurance expense of $2.0 million, which included the FDIC's special assessment of $765 thousand in 2009, and the $1.9 million of direct nonrecurring expenses related to its recent proposed public stock offering. Salaries and employee benefits also increased $1.2 million primarily due to increased staffing requirements as new branches were opened during 2008 and 2009 in addition to the four branches purchased in the Fayetteville market during December 2008. Partially offsetting increased costs from personnel requirements at new branches was a reduction in bonus expense as the Company suspended its incentive plan in light of market conditions and paid no bonuses for 2009. Occupancy expense increased $1.2 million from higher levels of facilities costs related to the new branch locations.
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.
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) 2009 2008
------------------------------------------------ ---------
December September June March December
31 30 30 31 31(a)
--------- ---------- ------- -------- ---------
(In thousands
except per share
data)
Interest
income $20,863 $21,858 $20,755 $19,668 $20,088
Interest
expense 7,885 8,303 8,591 9,487 10,156
----- ----- ----- ----- ------
Net interest
income 12,978 13,555 12,164 10,181 9,932
Provision for
loan losses 11,822 3,564 1,692 5,986 1,701
------ ----- ----- ----- -----
Net interest
income after
provision for
loan losses 1,156 9,991 10,472 4,195 8,231
Noninterest
income 1,180 2,507 3,724 2,106 2,247
Noninterest
expense 14,033 11,098 12,465 11,564 76,236
------ ------ ------ ------ ------
Net (loss)
income before
taxes (11,697) 1,400 1,731 (5,263) (65,758)
Income tax
(benefit)
expense (4,452) (2,143) 382 (800) (3,680)
------ ------ --- ---- ------
Net (loss)
income $(7,245) $3,543 $1,349 $(4,463) $(62,078)
======= ====== ====== ======= ========
Earnings (loss)
per common
share –
basic $(0.68) $0.26 $0.07 $(0.45) $(5.50)
====== ===== ===== ====== ======
Earnings (loss)
per common
share –
fully
diluted $(0.68) $0.26 $0.07 $(0.45) $(5.50)
====== ===== ===== ====== ======
Weighted
average shares
outstanding:
Basic 11,529 11,469 11,448 11,293 11,309
Fully
diluted 11,529 11,469 11,448 11,293 11,309
(a) Includes a goodwill impairment charge to noninterest expense
of $65.2 million
End of Period Balances
(Unaudited) 2009 2008
------------------------------------------------ ---------
December September June March December
31 30 30 31 31(a)
--------- ---------- ------- -------- ---------
(Dollars in
thousands
except per
share data)
Total assets $1,734,668 $1,734,950 $1,695,342 $1,665,611 $1,654,232
Investment
securities 245,492 262,499 268,224 286,310 278,138
Loans (gross) 1,390,302 1,357,243 1,293,340 1,277,064 1,254,368
Allowance for
loan losses 26,081 19,511 18,602 18,480 14,795
Total earning
assets 1,640,305 1,634,119 1,615,164 1,580,140 1,559,256
Deposits 1,377,965 1,385,250 1,380,842 1,340,974 1,315,314
Shareholders'
equity 139,785 149,525 143,306 142,674 148,514
Book value per
common share $8.68 $9.58 $9.03 $8.97 $9.54
Tangible book
value per
common share $8.44 $9.31 $8.74 $8.66 $9.20
(a) Derived from audited consolidated financial statements
Average Quarterly Balances
(Unaudited) 2009 2008
------------------------------------------------ ---------
December September June March December
31 30 30 31 31
--------- ---------- ------- -------- ---------
(Dollars in
thousands)
Total assets $1,736,421 $1,705,290 $1,665,387 $1,659,767 $1,620,817
Investments 254,383 265,976 279,607 289,368 246,658
Loans (gross) 1,384,285 1,330,199 1,285,571 1,265,438 1,213,027
Total earning
assets 1,648,872 1,632,707 1,588,502 1,574,017 1,484,680
Deposits 1,379,554 1,375,931 1,324,507 1,307,827 1,238,343
Shareholders'
equity 150,007 145,487 145,216 149,285 171,227
Capital Bank Corporation
Quarterly Net Interest Margin (a)
(Unaudited) 2009 2008
-------------------------------------------- ---------
December September June March December
31 30 30 31 31
--------- ---------- ------- ------- ---------
Yield on earning
assets 5.15% 5.43% 5.34% 5.17% 5.47%
Cost of
interest-bearing
liabilities 2.18 2.33 2.50 2.80 3.05
Net interest
spread 2.96 3.10 2.84 2.37 2.42
Net interest
margin 3.25 3.41 3.17 2.72 2.75
(a) Annualized and on a fully taxable equivalent basis
Asset Quality – Nonperforming Assets (a)
(Unaudited) 2009 2008
------------------------------------------------ ---------
December September June March December
31 30 30 31 31(b)
--------- ---------- ------- -------- ---------
(Dollars in
thousands)
Commercial
real estate $32,200 $15,701 $14,885 $13,783 $6,754
Commercial 3,974 586 1,060 652 348
Residential
mortgage 3,170 1,905 2,426 2,477 1,738
Home
equity lines 160 330 140 96 275
Consumer
– other 8 – 19 – –
--- --- --- --- ---
Total
nonperforming
loans 39,512 18,522 18,530 17,008 9,115
Other
real estate
owned (c)(d) 10,732 8,441 5,170 3,616 1,347
------ ----- ----- ----- -----
Total
nonperforming
assets $50,244 $26,963 $23,700 $20,624 $10,462
======= ======= ======= ======= =======
Nonperforming
loans to
total loans 2.84% 1.36% 1.43% 1.33% 0.73%
Nonperforming
assets to
total assets 2.90% 1.55% 1.40% 1.24% 0.63%
(a) Represents loans that are 90 days or more past due or in nonaccrual
status in addition to other real estate owned
(b) Derived from audited consolidated financial statements
(c) Includes $1.3 million of real estate from a closed branch office that
was held for sale at December 31, 2009
(d) Includes $3.3 million of residential properties sold to individuals
prior to December 31, 2009 where the Company financed 100% of the
purchase price of the home at closing
Asset Quality – Other Key Ratios
((Unaudited) 2009 2008
------------------------------------------- ---------
December September June March December
31 30 30 31 31
--------- ---------- ------- ------- ---------
(Dollars in
thousands)
Past due loans (a) $38,984 $25,245 $15,196 $17,064 $13,642
Past due loans
to total loans 2.80% 1.86% 1.17% 1.34% 1.09%
Net charge-offs $5,252 $2,655 $1,570 $2,301 $1,768
Net charge-offs
to average loans 1.52% 0.80% 0.49% 0.73% 0.58%
Provision for
loan losses $11,822 $3,564 $1,692 $5,986 $1,701
Provision for
loan losses
to average loans 3.42% 1.07% 0.53% 1.89% 0.56%
Allowance for
loan losses
to total loans 1.88% 1.44% 1.44% 1.45% 1.18%
Allowance for
loan losses
to nonperforming
loans 66% 105% 100% 109% 162%
(a) Represents all loans 30 days or more past due
Capital Bank Corporation
Asset Quality – Loan Portfolio Analysis
(Unaudited)
As of December 31, 2009
-----------------------
Nonaccrual
Loans to Allowance ALLL to
Loans Nonaccrual Loans for Loan Loans
Outstanding Loans Outstanding Losses Outstanding
----------- ---------- ----------- ---------- -----------
(Dollars in
thousands)
Commercial
real estate:
Residential
ADC $263,457 $24,037 9.12% $9,276 3.52%
Other
commercial
real estate 434,337 1,556 0.36 5,711 1.31
------- ----- ---- ----- ----
Total non-
owner
occupied
CRE 697,794 25,593 3.67 14,987 2.15
------- ------ ---- ------ ----
Commercial
owner
occupied
real estate 194,729 6,607 3.39 2,650 1.36
Commercial:
Commercial
and
industrial 183,733 3,974 2.16 5,536 3.01
Municipal 24,826 – – 25 0.10
Agriculture 15,089 – – 148 0.98
Other 1,936 – – 26 1.34
----- --- --- --- ----
Total
commercial 225,584 3,974 1.76 5,735 2.54
------- ----- ---- ----- ----
Residential
mortgage:
First lien,
closed-end 149,033 2,868 1.92 1,575 1.06
Junior lien,
closed-end 16,341 302 1.85 298 1.82
------ --- ---- --- ----
Total
residential
mortgage 165,374 3,170 1.92 1,873 1.13
------- ----- ---- ----- ----
Home equity
lines 97,129 160 0.16 510 0.53
Consumer –
other 9,692 8 0.08 326 3.36
----- --- ---- --- ----
Total gross
loans $1,390,302 $39,512 2.84% $26,081 1.88%
========== ======= ==== ======= ====
Asset Quality – Commercial Real Estate
Residential Acquisition, Development and Construction Portfolio
Analysis by Type
(Unaudited)
As of December 31, 2009
------------------------------------------
Residential
Land / Residential
Development Construction Total
------------ ------------ -----
(Dollars in
thousands)
Loans outstanding $162,733 $100,724 $263,457
Loans outstanding
to total loans 11.70% 7.24% 18.95%
Nonaccrual loans $16,935 $7,102 $24,037
Nonaccrual loans
to loans in
category 10.41% 7.05% 9.12%
Allowance for loan
losses $7,569 $1,707 $9,276
ALLL to loans in
category 4.65% 1.69% 3.52%
Capital Bank Corporation
Asset Quality – Commercial Real Estate
Residential Acquisition, Development and Construction Portfolio
Analysis by Region
(Unaudited)
As of December 31, 2009
-----------------------
Percent of Nonaccrual Allowance ALLL
Total Loans to for to
Loans Loans Nonaccrual Loans Loan Loans
Outstanding Outstanding Loans Outstanding Losses Outstanding
----------- ----------- ----- ----------- ------ -----------
(Dollars
in thousands)
Triangle $185,319 70.34% $14,349 7.74% $7,325 3.95%
Sandhills 31,257 11.86 – – 412 1.32
Triad 5,509 2.09 106 1.92 86 1.56
Western 41,372 15.70 9,582 23.16 1,453 3.51
------ ----- ----- ----- ----- ----
Total $263,457 100.00% $24,037 9.12% $9,276 3.52%
======== ====== ======= ==== ====== ====
Asset Quality – Commercial Real Estate
Other Commercial Real Estate Portfolio Analysis by Type
(Unaudited)
As of December 31, 2009
-----------------------
Commercial Other Non-
Land / Commercial Residential
Development Construction Multifamily CRE Total
----------- ------------ ----------- ----------- -----
(Dollars in
thousands)
Loans
outstanding $128,745 $59,918 $43,379 $202,295 $434,337
Loans
outstanding
to total
loans 9.26% 4.31% 3.12% 14.55% 31.24%
Nonaccrual
loans $529 $ – $325 $702 $1,556
Nonaccrual
loans to
loans in
category 0.41% – 0.75% 0.35% 0.36%
Allowance
for loan
losses $1,732 $462 $474 $3,043 $5,711
ALLL to
loans in
category 1.35% 0.77% 1.09% 1.50% 1.31%
Asset Quality – Commercial Real Estate
Other Commercial Real Estate Portfolio Analysis by Region
(Unaudited)
As of December 31, 2009
-----------------------
Percent of Nonaccrual Allowance ALLL
Total Loans to for to
Loans Loans Nonaccrual Loans Loan Loans
Outstanding Outstanding Loans Outstanding Losses Outstanding
----------- ----------- ----- ----------- ------ -----------
(Dollars in
thousands)
Triangle $281,664 64.85% $361 0.13% $3,653 1.30%
Sandhills 60,593 13.95 605 1.00 937 1.55
Triad 35,987 8.29 41 0.11 576 1.60
Western 56,093 12.91 549 0.98 545 0.97
------ ----- --- ---- --- ----
Total $434,337 100.00% $1,556 0.36% $5,711 1.31%
======== ====== ====== ==== ====== ====
CAPITAL BANK CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2009 and 2008
December 31, December 31,
2009 2008
------------- -------------
(Dollars in thousands except (Unaudited)
share data)
Assets
Cash and due from banks:
Interest-earning $4,511 $26,621
Noninterest-earning 25,002 27,705
Federal funds sold and short term
investments – 129
--- ---
Total cash and cash equivalents 29,513 54,455
Investment securities:
Investment securities – available
for sale, at fair value 235,426 266,656
Investment securities – held to
maturity, at amortized cost 3,676 5,194
Other investments 6,390 6,288
----- -----
Total investment securities 245,492 278,138
Loans – net of unearned income
and deferred fees 1,390,302 1,254,368
Allowance for loan losses (26,081) (14,795)
------- -------
Net loans 1,364,221 1,239,573
Premises and equipment, net 23,756 24,640
Bank-owned life insurance 22,746 22,368
Deposit premium, net 2,711 3,857
Accrued interest receivable 6,590 6,225
Other assets 39,639 24,976
------ ------
Total assets $1,734,668 $1,654,232
========== ==========
Liabilities
Deposits:
Demand, noninterest-bearing $141,069 $125,281
Savings and interest-bearing
checking 204,042 173,711
Money market deposit accounts 184,146 212,780
Time deposits less than $100,000 507,348 509,231
Time deposits $100,000 and
greater 341,360 294,311
------- -------
Total deposits 1,377,965 1,315,314
Repurchase agreements and federal
funds purchased 6,543 15,010
Borrowings 167,000 132,000
Subordinated debentures 30,930 30,930
Other liabilities 12,445 12,464
------ ------
Total liabilities 1,594,883 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) 40,127 39,839
Common stock, no par value;
50,000,000 shares authorized;
11,348,117 and 11,238,085 shares
issued and outstanding 139,909 139,209
Retained deficit (44,206) (31,420)
Accumulated other comprehensive
income 3,955 886
----- ---
Total shareholders' equity 139,785 148,514
------- -------
Total liabilities and
shareholders' equity $1,734,668 $1,654,232
========== ==========
CAPITAL BANK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Year Ended December 31, 2009 and 2008
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands
except per share data)
Interest income:
Loans and
loan fees $17,954 $17,009 $70,178 $72,494
Investment
securities:
Taxable
interest
income 2,141 2,319 9,849 8,935
Tax-
exempt
interest
income 740 734 3,026 3,169
Dividends 20 1 46 294
Federal
funds and
other interest
income 8 25 42 128
--- --- --- ---
Total
interest
income 20,863 20,088 83,141 85,020
------ ------ ------ ------
Interest expense:
Deposits 6,441 8,107 28,037 33,042
Borrowings
and repurchase
agreements 1,444 2,049 6,226 9,382
----- ----- ----- -----
Total
interest
expense 7,885 10,156 34,263 42,424
----- ------ ------ ------
Net
interest
income 12,978 9,932 48,878 42,596
Provision
for loan
losses 11,822 1,701 23,064 3,876
------ ----- ------ -----
Net interest
income after
provision
for loan
losses 1,156 8,231 25,814 38,720
----- ----- ------ ------
Noninterest
income:
Service charges
and other fees 982 1,082 3,883 4,545
Bank card
services 406 322 1,539 1,332
Mortgage
origination
and other
loan fees 415 488 1,935 2,148
Brokerage fees 230 162 698 732
Bank-owned
Life insurance 167 135 1,830 952
Gain on sale of
branch – (52) – 374
Net gain on
investment
securities (61) – 103 249
Total
other-than-
temporary
impairment
losses (1,082) – (1,082) –
Portion of
impairment
losses
recognized
in other
comprehensive
loss 584 – 584 –
--- --- --- ---
Net
impairment
losses
recognized
in earnings (498) – (498) –
Other (461) 110 27 669
---- --- --- ---
Total
noninterest
income 1,180 2,247 9,517 11,001
----- ----- ----- ------
Noninterest
expense:
Salaries
and employee
benefits 5,167 5,714 22,112 20,951
Occupancy 1,438 1,161 5,630 4,458
Furniture
and equipment 815 817 3,155 3,135
Data
processing
and
telecommunications 558 610 2,317 2,135
Advertising 670 515 1,610 1,515
Office
expenses 340 339 1,383 1,317
Professional
fees 317 466 1,488 1,479
Business
development
and travel 401 360 1,244 1,393
Amortization
of deposit
premiums 284 267 1,146 1,037
Miscellaneous
loan handling
costs 482 278 1,356 848
Directors
fees 287 95 1,418 1,044
FDIC
deposit
insurance 839 243 2,721 685
Goodwill
impairment
charge – 65,191 – 65,191
Other 2,435 180 3,580 1,424
----- --- ----- -----
Total
noninterest
expense 14,033 76,236 49,160 106,612
------ ------ ------ -------
Net (loss)
income
before
tax
(benefit)
expense (11,697) (65,758) (13,829) (56,891)
Income tax
(benefit)
expense (4,452) (3,680) (7,013) (1,207)
------ ------ ------ ------
Net (loss)
income $(7,245) $(62,078) $(6,816) $(55,684)
======= ======== ======= ========
Dividends
and accretion
on preferred
stock 588 124 2,352 124
Net (loss)
income
attributable
to common
shareholders $(7,833) $(62,202) $(9,168) $(55,808)
======= ======== ======= ========
Earnings (loss)
per common
share – basic $(0.68) $(5.50) $(0.80) $(4.94)
====== ====== ====== ======
Earnings (loss)
per common
share – diluted $(0.68) $(5.50) $(0.80) $(4.94)
====== ====== ====== ======
Capital Bank Corporation
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended December 31, 2009, September 30, 2009 and
December 31, 2008
Tax Equivalent Basis (1)
December 31, 2009
-----------------
(Dollars in Average Amount Average
thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans
receivable: (2)
Commercial $1,190,645 $15,668 5.22%
Home equity 93,765 985 4.17
Consumer and
residential
mortgage 99,875 1,446 5.79
------ ----- ----
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
(4) 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 (5) 2.96%
Tax equivalent
adjustment $527
Net interest
income and net
interest margin (6) $13,505 3.25%
======= ====
September 30, 2009
------------------
(Dollars in Average Amount Average
thousands) 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%
======= ====
December 31, 2008
-----------------
(Dollars in Average Amount Average
thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans
receivable: (2)
Commercial $1,052,172 $14,719 5.55%
Home equity 89,125 1,047 4.66
Consumer and
residential
mortgage 71,730 1,243 6.93
------ ----- ----
Total loans 1,213,027 17,009 5.56
Investment
securities (3) 253,412 3,430 5.41
Federal funds
sold and
interest-
earning cash
(4) 18,241 25 0.54
------ --- ----
Total interest-
earning assets 1,484,680 $20,464 5.47%
======= ====
Cash and due
from banks 20,514
Other assets 129,633
Allowance for
loan losses (14,010)
-------
Total assets $1,620,817
==========
Liabilities and
Equity
Savings deposits $27,948 $11 0.16%
Interest-
bearing demand
deposits 336,011 1,363 1.61
Time deposits 758,491 6,733 3.52
------- ----- ----
Total interest-
bearing
deposits 1,122,450 8,107 2.87
Borrowed funds 145,962 1,605 4.36
Subordinated
debt 30,930 424 5.44
Repurchase
agreements and
fed funds
purchased 22,050 20 0.36
------ --- ----
Total interest-
bearing
liabilities 1,321,392 $10,156 3.05%
======= ====
Noninterest-
bearing
deposits 115,893
Other
liabilities 12,305
------
Total liabilities 1,449,590
Shareholders'
equity 171,227
-------
Total
liabilities and
shareholders'
equity $1,620,817
==========
Net interest
spread (5) 2.42%
Tax equivalent
adjustment $376
Net interest
income and net
interest margin (6) $10,308 2.75%
======= ====
(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) 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 Years Ended December 31, 2009 and 2008
Tax Equivalent Basis (1)
December 31, 2009
-----------------
Average Amount Average
(Dollars in thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans receivable: (2)
Commercial $1,139,042 $61,403 5.39%
Home equity 93,832 3,908 4.16
Consumer and residential
mortgage 83,863 5,101 6.08
------ ----- ----
Total loans 1,316,737 70,412 5.35
Investment securities (3) 269,240 14,483 5.38
Federal funds sold and
interest-earning cash
(4) 25,312 42 0.17
------ --- ----
Total interest-earnings
assets 1,611,289 $84,937 5.27%
======= ====
Cash and due from banks 15,927
Other assets 83,283
Allowance for loan losses (18,535)
-------
Total assets $1,691,964
==========
Liabilities and Equity
Savings deposits $29,171 $47 0.16%
Interest-bearing demand
deposits 363,522 4,527 1.25
Time deposits 822,003 23,463 2.85
------- ------ ----
Total interest-bearing
deposits 1,214,696 28,037 2.31
Borrowed funds 143,241 5,147 3.59
Subordinated debt 30,930 1,055 3.41
Repurchase agreements and
fed funds purchased 10,919 24 0.22
------ --- ----
Total interest-bearing
liabilities 1,399,786 $34,263 2.45%
======= ====
Noninterest-bearing
deposits 132,535
Other liabilities 12,148
------
Total liabilities 1,544,469
Shareholders' equity 147,495
-------
Total liabilities and
shareholders' equity $1,691,964
==========
Net interest spread (5) 2.82%
Tax equivalent adjustment $1,796
Net interest income and
net interest margin (6) $50,674 3.14%
======= ====
December 31, 2008
-----------------
Average Amount Average
(Dollars in thousands) Balance Earned Rate
-------- ------- --------
Assets
Loans receivable: (2)
Commercial $1,017,157 $62,678 6.16%
Home equity 83,511 4,602 5.51
Consumer and residential
mortgage 74,202 5,214 7.03
------ ----- ----
Total loans 1,174,870 72,494 6.17
Investment securities (3) 254,216 14,026 5.52
Federal funds sold and
interest-earning cash
(4) 11,293 128 1.13
------ --- ----
Total interest-earnings
assets 1,440,379 $86,648 6.02%
======= ====
Cash and due from banks 22,477
Other assets 133,566
Allowance for loan losses (13,846)
-------
Total assets $1,582,576
==========
Liabilities and Equity
Savings deposits $29,756 $122 0.41%
Interest-bearing demand
deposits 336,899 6,655 1.98
Time deposits 691,140 26,265 3.80
------- ------ ----
Total interest-bearing
deposits 1,057,795 33,042 3.12
Borrowed funds 168,501 7,234 4.29
Subordinated debt 30,930 1,761 5.69
Repurchase agreements and
fed funds purchased 29,929 387 1.29
------ --- ----
Total interest-bearing
liabilities 1,287,155 $42,424 3.30%
======= ====
Noninterest-bearing
deposits 114,982
Other liabilities 11,352
------
Total liabilities 1,413,489
Shareholders' equity 169,087
-------
Total liabilities and
shareholders' equity $1,582,576
==========
Net interest spread (5) 2.72%
Tax equivalent adjustment $1,628
Net interest income and
net interest margin (6) $44,224 3.07%
======= ====
(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) 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
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