EX-99.1 2 ex99-1.txt EXHIBIT 99.1 News Release CONTACT: ------- B. Grant Yarber Chief Executive Officer Phone: (919) 645-3494 FOR IMMEDIATE RELEASE Email: gyarber@capitalbank-nc.com Increased Earnings for Capital Bank Corporation RALEIGH, N.C. - July 20, 2005 - Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported that its second quarter 2005 net income increased approximately 80% to $1,603,000 compared to $891,000 for the second quarter of 2004. Fully diluted earnings per share were $.23 for the second quarter of 2005 versus $.13 for the second quarter of 2004. For the six months ended June 30, 2005 and 2004, fully diluted earnings per share were $.46 and $.33, respectively. "We are pleased with the profit results and asset growth for the second quarter of 2005. The earnings are a testament to our company-wide focus on maintaining a sound credit culture and core deposit growth," stated B. Grant Yarber, President and Chief Executive Officer. "By remaining committed to improving our deposit mix while engaging in high quality lending, our margin continues to increase. Meanwhile, continued overall improvement in the loan portfolio has resulted in lower reserve levels." Net interest income increased by approximately $929,000 during the second quarter of 2005 compared to 2004. Net interest income totaled approximately $7,160,000 during the second quarter, representing a net interest margin of 3.55% on a tax equivalent basis. The Company's net interest margin, on a tax equivalent basis, remained relatively constant during the second quarter despite market pressures leading to margin compression. The Company continues to concentrate on increasing its margin through core deposit growth and competitive loan pricing. The provision for loan losses for the quarter ended June 30, 2005 was $(156,000) compared to $297,000 for the second quarter of 2004. Annualized net charge-offs for the second quarter of 2005 were 0.09% of average loans compared to 0.06% and 0.06% for the first quarter of 2005 and second quarter of 2004, respectively. The allowance for loan losses as a percentage of total loans at June 30, 2005 was 1.55%. The provision for loan losses for the six months ended June 30, 2005 and June 30, 2004 were $(406,000) and $413,000, respectively. The Company's non-interest income for the second quarter of 2005 increased slightly during the second quarter compared to the second quarter 2004. Non-interest income was $1,579,000 for the second quarter of 2005 compared to $1,544,000 in the second quarter of 2004. For the six months ended June 30, 2005, non-interest income was $2,919,000 compared to $3,145,000 for the first six months of 2004. Mortgage banking revenue for the second quarter of 2005 increased to its highest level since 2003. Non-interest expense in the second quarter of 2005 was $6,489,000 compared to $6,150,000 in the first quarter of 2005. Increases were primarily attributable to additional personnel expense and severance payments. Total deposits increased by $27.8 million during the second quarter reaching $690.0 million at June 30, 2005. Demand account balances increased $17.0 million while savings and money market accounts 6 increased $15.0 million. Consistent with our effort to continue improvement in the net interest margin, certain time deposits maturing during the quarter were not retained as they matured. Total consolidated assets on June 30, 2005 were $917.4 million compared to $882.3 million at the end of 2004. Loans outstanding during the quarter increased by $844,000 from March 31, 2005 balances. Loan demand continues to be strong, and loan balances are anticipated to rise during the second half of 2005. The Company continues to be well capitalized under regulatory capital guidelines. Capital Bank Corporation, headquartered in Raleigh, N.C., with more than $915 million in total assets, offers a broad range of financial services. Capital Bank operates 21 banking offices in Raleigh (4), Sanford (3), Burlington (2), Asheville (3), Cary, Morrisville, Oxford, Wake Forest, Hickory, Greensboro, Graham, Pittsboro and Siler City. 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 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. ### 7 Capital Bank Corporation Summary of Operations
Three Months Three Months Six Months Six Months Ended Ended Ended Ended (In thousands except per share data) June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004 ------------- ------------- ------------- ------------- Interest income $ 12,248 $ 10,163 $ 23,704 $ 20,394 Interest expense 5,088 3,932 9,638 7,894 -------- -------- -------- -------- Net interest income 7,160 6,231 14,066 12,500 Provision for loan losses (156) 297 (406) 413 -------- -------- -------- -------- Net interest income after provision for loan losses 7,316 5,934 14,472 12,087 Non-interest income 1,579 1,544 2,919 3,145 Non-interest expense 6,489 6,070 12,639 11,707 -------- -------- -------- -------- Income before taxes 2,406 1,408 4,752 3,525 Income tax expense 803 517 1,594 1,254 -------- -------- -------- -------- Net income $ 1,603 $ 891 $ 3,158 $ 2,271 ======== ======== ======== ======== Income per share - basic $ 0.24 $ 0.13 $ 0.47 $ 0.34 ======== ======== ======== ======== Income per share - fully diluted $ 0.23 $ 0.13 $ 0.46 $ 0.33 ======== ======== ======== ======== Weighted average shares outstanding: Basic 6,731 6,709 6,743 6,699 Fully diluted 6,871 6,883 6,906 6,885
End of Period Balances
2005 2004 --------------------- ----------------------------------- (In thousands except per share data) June 30 March 31 December 31 September 30 June 30 -------- -------- ----------- ------------ -------- Total Assets $917,392 $887,312 $882,294 $875,713 $885,754 Investment securities 161,822 159,966 160,580 154,694 150,340 Loans (gross) * 648,765 647,922 654,867 657,359 657,537 Allowance for loan losses 10,075 10,372 10,721 11,322 11,417 Total earning assets 840,607 812,868 816,422 815,053 816,465 Deposits 689,997 662,178 654,976 647,037 671,796 Shareholders' equity 79,499 76,965 77,738 76,370 72,615 Book value per share 12.00 11.72 11.76 11.58 11.03 Tangible book value per share 10.04 9.74 9.78 9.59 8.84
Average Balances
2005 2004 --------------------- ----------------------------------- (In thousands) June 30 March 31 December 31 September 30 June 30 -------- -------- ----------- ------------ -------- Total assets 897,178 879,912 883,483 884,853 878,083 Investments (at amortized cost) 160,955 157,963 156,018 152,648 154,244 Loans (gross) * 648,269 652,429 658,518 660,628 652,074 Total earning assets 826,361 812,963 819,867 823,299 818,849 Deposits 671,307 647,787 651,301 669,321 666,862 Shareholders' equity 78,706 78,476 78,468 74,444 74,301
* Includes loans held for sale. 8 Capital Bank Corporation Quarterly Results
2005 2004 ---------------------- ----------------------------------- (In thousands except per share data) June 30 March 31 December 31 September 30 June 30 -------- -------- ----------- ------------ -------- Interest income $ 12,248 $ 11,456 $ 11,201 $ 10,796 $ 10,163 Interest expense 5,088 4,550 4,256 4,107 3,932 -------- -------- -------- -------- -------- Net interest income 7,160 6,906 6,945 6,689 6,231 Provision for loan losses (156) (250) 357 268 297 -------- -------- -------- -------- -------- Net interest income after provision 7,316 7,156 6,588 6,421 5,934 Non-interest income 1,579 1,340 1,480 2,280 1,544 Non-interest expense 6,489 6,150 5,938 6,179 6,070 -------- -------- -------- -------- -------- Income before taxes 2,406 2,346 2,130 2,522 1,408 Income tax expense 803 791 740 872 517 -------- -------- -------- -------- -------- Net income $ 1,603 $ 1,555 $ 1,390 $ 1,650 $ 891 ======== ======== ======== ======== ======== Income per share - basic $ 0.24 $ 0.23 $ 0.21 $ 0.25 $ 0.13 ======== ======== ======== ======== ======== Income per share - fully diluted $ 0.23 $ 0.22 $ 0.20 $ 0.24 $ 0.13 ======== ======== ======== ======== ======== Weighted average shares outstanding: Basic 6,731 6,755 6,729 6,720 6,709 Fully diluted 6,871 6,942 6,886 6,883 6,883
Quarterly Net Interest Margin *
2005 2004 -------------------- ----------------------------------- June 30 March 31 December 31 September 30 June 30 ------- -------- ----------- ------------ ------- Yield on earning assets 6.02% 5.80% 5.51% 5.30% 5.07% Cost of interest bearing liabilities 2.76% 2.53% 2.31% 2.21% 2.15% Net interest spread 3.26% 3.27% 3.20% 3.09% 2.92% Free funds benefit 0.29% 0.26% 0.25% 0.22% 0.22% Net interest margin 3.55% 3.53% 3.45% 3.31% 3.14%
* Annualized and on a fully taxable equivalent basis Nonperforming Assets
2005 2004 --------------------- ----------------------------------- (In thousands) June 30 March 31 December 31 September 30 June 30 ------- -------- ----------- ------------ ------- Commercial and commercial real estate $ 6,094 $ 5,797 $ 3,964 $ 4,401 $ 3,740 Consumer 218 195 312 151 247 Equity lines 427 323 415 363 314 Construction 1,674 2,374 1,622 1,314 580 Mortgage 2,014 1,880 1,898 2,034 1,837 ------- ------- ------- ------- ------- Total nonperforming loans 10,427 10,569 8,211 8,263 6,718 Other real estate owned 1,508 431 418 825 412 ------- ------- ------- ------- ------- Total nonperforming assets $11,935 $11,000 $ 8,629 $ 9,088 $ 7,130 ======= ======= ======= ======= =======
Nonperforming assets include loans that are 90 days or more past due or in nonaccrual status and other real estate owned Key Ratios
2005 2004 ----------------------- ---------------------------------------- (Dollars in thousands) June 30 March 31 December 31 September 30 June 30 ------- -------- ----------- ------------ ------- Past due loans 9,576 14,623 11,609 12,505 11,809 Past due loans as a percent of total loans 1.48% 2.24% 1.76% 1.89% 1.81% Net charge-offs 138 99 647 363 101 Net charge-offs as a percent of average loans (annualized) 0.09% 0.06% 0.39% 0.22% 0.06% Allowance for loan losses as a percent of total loans ** 1.55% 1.60% 1.64% 1.72% 1.74% Nonperforming assets as a percent of total assets 1.30% 1.24% 0.98% 1.04% 0.80% Allowance for loan losses as a percent of nonperforming loans ** 97% 98% 131% 137% 170%
** Effective December 31, 2004, the reserve for off balance sheet credit risk was reclassified from the allowance for loan losses to other liabilities. Prior period balances and ratios involving the allowance for loan losses have not been restated. The reserve reclassified was $311,000 at that time. 9 CAPITAL BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, 2005 and December 31, 2004
June 30, December 31, ASSETS 2005 2004 Changes % Change -------------------------------------------------------------------------------------- --------- ---------- (In thousands) (Unaudited) Cash and due from banks: Interest-earning $ 7,982 $ 971 $ 7,011 722% Non-interest-earning 24,209 22,036 2,173 10% Federal funds sold and short term investments 22,038 4 22,034 NM Investment securities - available for sale, at fair value 147,640 147,244 396 0% Investment securities - held to maturity, at amortized cost 14,182 13,336 846 6% Loans-net of unearned income and deferred fees 648,765 654,867 (6,102) -1% Allowance for loan losses (10,075) (10,721) 646 -6% --------- --------- --------- --------- Net loans 638,690 644,146 (5,456) -1% --------- --------- --------- --------- Premises and equipment, net 16,179 15,608 571 4% Bank owned life insurance 19,280 13,500 5,780 43% Deposit premium and goodwill, net 12,958 13,065 (107) -1% Deferred tax assets 6,131 5,985 146 2% Other assets 8,103 6,399 1,704 27% --------- --------- --------- --------- Total assets $ 917,392 $ 882,294 $ 35,098 4% ========= ========= ========= ========= LIABILITIES Deposits: Demand, non-interest bearing $ 81,778 $ 65,673 $ 16,105 25% Savings, money market accounts and interest checking 217,627 193,435 24,192 13% Time deposits 390,592 395,868 (5,276) -1% --------- --------- --------- --------- Total deposits 689,997 654,976 35,021 5% --------- --------- --------- --------- Repurchase agreements and federal funds purchased 15,326 16,755 (1,429) -9% Borrowings 101,203 102,320 (1,117) -1% Subordinated debentures 20,620 20,620 -- 0% Other liabilities 10,747 9,885 862 9% --------- --------- --------- --------- Total liabilities 837,893 804,556 33,337 4% --------- --------- --------- --------- STOCKHOLDERS' EQUITY Common stock, no par value; 20,000,000 shares authorized; 6,625,870 and 6,612,787 issued and outstanding as of 2005 and 2004, respectively 68,184 68,341 (157) 0% Retained earnings 11,458 9,092 2,366 26% Accumulated other comprehensive income (143) 305 (448) -147% --------- --------- --------- --------- Total stockholders' equity 79,499 77,738 1,761 2% --------- --------- --------- --------- Total liabilities and stockholders' equity $ 917,392 $ 882,294 $ 35,098 4% ========= ========= ========= =========
10 CAPITAL BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Six Months Ended June 30, 2005 and 2004
2005 2004 Changes % Change ----------------------------------------------------------------------------------------- ----------- ------------ (In thousands except per share and share amounts) (Unaudited) Interest income: Loans and loan fees $ 20,147 $ 17,043 $ 3,104 18% Investment securities 3,424 3,270 154 5% Federal funds and other interest income 133 81 52 64% ----------- ----------- ----------- ----------- Total interest income 23,704 20,394 3,310 16% ----------- ----------- ----------- ----------- Interest expense: Deposits 6,858 5,775 1,083 19% Borrowings and repurchase agreements 2,780 2,119 661 31% ----------- ----------- ----------- ----------- Total interest expense 9,638 7,894 1,744 22% ----------- ----------- ----------- ----------- Net interest income 14,066 12,500 1,566 13% Provision for loan losses (406) 413 (819) -198% ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 14,472 12,087 2,385 20% ----------- ----------- ----------- ----------- Noninterest income: Deposit service charges and other fees 1,371 1,495 (124) -8% Mortgage banking revenues 658 702 (44) -6% Net gain on sale of securities 7 13 (6) -46% Other noninterest income 883 935 (52) -6% ----------- ----------- ----------- ----------- Total noninterest income 2,919 3,145 (226) -7% ----------- ----------- ----------- ----------- Noninterest expenses: Salaries and employee benefits 6,628 5,903 725 12% Occupancy 1,240 1,154 86 7% Furniture and equipment 737 839 (102) -12% Data processing 629 623 6 1% Advertising 379 424 (45) -11% Amortization of deposit premiums 107 126 (19) -15% Professional fees 532 405 127 31% Telecommunications 283 239 44 18% Other expenses 2,104 1,994 110 6% ----------- ----------- ----------- ----------- Total noninterest expenses 12,639 11,707 932 8% ----------- ----------- ----------- ----------- Net income before tax expense 4,752 3,525 1,227 35% Income tax expense 1,594 1,254 340 27% ----------- ----------- ----------- ----------- Net income $ 3,158 $ 2,271 $ 887 39% =========== =========== =========== =========== Earnings per share - basic $ 0.47 $ 0.34 $ 0.13 38% =========== =========== =========== =========== Earnings per share - diluted $ 0.46 $ 0.33 $ 0.13 39% =========== =========== =========== =========== Weighted Average Shares: Basic 6,742,712 6,698,844 43,868 1% =========== =========== =========== =========== Fully Diluted 6,906,233 6,884,862 21,371 0% =========== =========== =========== ===========
11 CAPITAL BANK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, 2005 and 2004
2005 2004 Changes % Change --------------------------------------------------------------------------------------------- ----------- ------------ (In thousands except per share and share amounts) (Unaudited) Interest income: Loans and loan fees $ 10,405 $ 8,572 $ 1,833 21% Investment securities 1,727 1,552 175 11% Federal funds and other interest income 116 39 77 197% ----------- ----------- ----------- ----------- Total interest income 12,248 10,163 2,085 21% ----------- ----------- ----------- ----------- Interest expense: Deposits 3,676 2,913 763 26% Borrowings and repurchase agreements 1,412 1,019 393 39% ----------- ----------- ----------- ----------- Total interest expense 5,088 3,932 1,156 29% ----------- ----------- ----------- ----------- Net interest income 7,160 6,231 929 15% Provision for loan losses (156) 297 (453) -153% ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 7,316 5,934 1,382 23% ----------- ----------- ----------- ----------- Noninterest income: Service charges and other fees 714 768 (54) -7% Mortgage banking revenues 386 365 21 6% Net gain on sale of securities 1 -- 1 n/a Other noninterest income 478 411 67 16% ----------- ----------- ----------- ----------- Total noninterest income 1,579 1,544 35 2% ----------- ----------- ----------- ----------- Noninterest expenses: Salaries and employee benefits 3,479 3,061 418 14% Occupancy 626 582 44 8% Furniture and equipment 370 474 (104) -22% Data processing 318 301 17 6% Advertising 163 222 (59) -27% Amortization of deposit premiums 53 61 (8) -13% Professional fees 210 139 71 51% Telecommunications 143 198 (55) -28% Other expenses 1,127 1,032 95 9% ----------- ----------- ----------- ----------- Total noninterest expenses 6,489 6,070 419 7% ----------- ----------- ----------- ----------- Net income before tax expense 2,406 1,408 998 71% Income tax expense 803 517 286 55% ----------- ----------- ----------- ----------- Net income $ 1,603 $ 891 $ 712 80% =========== =========== =========== =========== Earnings per share - basic $ 0.24 $ 0.13 $ 0.11 85% =========== =========== =========== =========== Earnings per share - diluted $ 0.23 $ 0.13 $ 0.10 77% =========== =========== =========== =========== Weighted Average Shares Used for EPS Basic 6,730,979 6,708,742 22,237 0% =========== =========== =========== =========== Fully Diluted 6,870,821 6,883,157 (12,336) 0% =========== =========== =========== ===========
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