EX-99.1 2 exhibit99-1.htm CAPITAL BANK CORP RELEASE 072407 exhibit99-1.htm
Exhibit 99.1
 
CONTACT:
B. Grant Yarber
President and Chief Executive Officer
Phone: (919) 645-3494
Email: gyarber@capitalbank-nc.com

FOR IMMEDIATE RELEASE

Capital Bank Corporation Reports Second Quarter Net Income of $2.7 Million

RALEIGH, N.C. – July 24, 2007 – Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today announced net income for the quarter ended June 30, 2007 of $2.7 million, a decrease of 13% from the $3.1 million earned for the second quarter of 2006. Fully diluted earnings per share were $0.23 for the quarter ended June 30, 2007 compared to $0.26 for the quarter ended June 30, 2006. For the first six months ended June 30, 2007 and 2006, net income was $5.1 million and $5.8 million, respectively, and fully diluted earnings per share were $0.44 and $0.50, respectively.

Commenting on the Company’s results, B. Grant Yarber, President and CEO, stated, “Despite the challenging operating environment, Capital Bank continues to gain market share in the Triangle and continues to invest in people and technology. We anticipate continued loan growth in the Triangle market but slower 2007 loan growth for the remainder of the franchise. Our net interest margin expanded slightly in the second quarter compared to the first quarter of 2007; however, as long as short term interest rates remain flat we anticipate continued margin pressure.”

As of June 30, 2007, total assets were $1.440 billion compared to $1.364 billion at June 30, 2006 and $1.422 billion at December 31, 2006. Gross loans increased 6% to $1.022 billion at June 30, 2007 from $965 million at June 30, 2006. At December 31, 2006, gross loans were $1.008 billion. During the quarter ended June 30, 2007, gross loans decreased $3 million as a result of large commercial loan paydowns near the end of the quarter. During the quarter ended June 30, 2007, average loans and investments increased $9 million and $5 million, respectively, and average short-term investments decreased $14 million, which resulted in flat earning assets for the quarter compared to the immediate preceding quarter. Total deposits at June 30, 2007 were $1.073 billion compared to $1.026 billion at June 30, 2006 and $1.055 billion at December 31, 2006. During the quarter ended June 30, 2007, average core deposits increased $40 million to $523 million while average time deposits decreased $46 million to $555 million.

Net interest income for the quarter ended June 30, 2007 totaled $11.3 million, a decrease of $354,000 compared to the quarter ended June 30, 2006. The net interest margin on a fully taxable equivalent basis was 3.65% for the quarter ended June 30, 2007, up 13 basis points from 3.52% for the quarter ended March 31, 2007 and down 39 basis points from 4.04% for the quarter ended June 30, 2006. The decrease in net interest income for the quarter ended June 30, 2007 compared to the same quarter of 2006 was attributable to a lower net interest margin, which was partially offset by the $121 million growth in earning assets. The decline in net interest margin from June 30, 2006 is primarily because the cost of funds had risen more than the yield on earning assets.

Asset quality improved during the quarter ended June 30, 2007 primarily from the reduction of other real estate owned. The Company’s nonperforming assets decreased $800,000 to $8.5 million, or 0.59% of total assets at June 30, 2007, from $9.3 million, or 0.63% of assets at March 31, 2007, and past due loans decreased to $13.0 million at June 30, 2007 from $16.2 million at March 31, 2007. Included in nonperforming loans at June 30, 2007 are loans totaling $1.2 million to a developer who has been accused of engaging in fraudulent marketing and financing practices in Western North Carolina. The Company believes it has established adequate reserves for losses on these loans.
 
- 1 -
The Company provided a credit provision for loan losses for the quarter ended June 30, 2007 of ($91,000) compared to a provision in the quarter ended June 30, 2006 of $249,000. Net charge-offs for the quarter ended June 30, 2007 were $101,000, or 0.04% of average loans, compared to charge-offs of $523,000, or 0.22% of average loans, for the quarter ended June 30, 2006. Nonperforming loans were $7.6 million at June 30, 2007 compared to $6.1 million at June 30, 2006. Total past due loans were $13.0 million, or 1.27% of average loans, at June 30, 2007 compared to $9.2 million, or 0.96% of average loans, at June 30, 2006. The allowance for loan losses was 1.31% of total loans at June 30, 2007 compared with 1.32% of total loans at December 31, 2006.

The Company’s noninterest income for the quarter ended June 30, 2007 totaled $2.3 million, a decrease of $300,000 from the $2.6 million reported for the quarter ended June 30, 2006. A gain of $138,000 from the sale of former branch real estate was reported in the quarter ended June 30, 2006. Nonsufficient funds fees decreased $114,000, and loan fees decreased $74,000 for the quarter ended June 30, 2007 compared to the prior year but were partially offset by an increase in interchange fees of $72,000.

Noninterest expense increased to $9.8 million for the quarter ended June 30, 2007 compared to $9.3 million for the quarter ended June 30, 2006, primarily in salaries and benefits. Mr. Yarber noted, “Our deposit strategies continue to be successful, and loan demand remains strong in both the Triangle and Western North Carolina regions. Contributing to the increase in salaries and benefits expense, we continue to attract key talent throughout the franchise, recruiting and hiring thirteen additional experienced and proven sales associates thus far in 2007.”

Capital Bank Corporation will hold a quarterly earnings conference call on Wednesday, July 25, 2007 at 11:00 a.m. ET. Persons wishing to access the call may do so via the internet by visiting the Company’s website at www.capitalbank-nc.com.

Capital Bank Corporation, headquartered in Raleigh, N.C., with approximately $1.4 billion in total assets, offers a broad range of financial services. Capital Bank operates 26 banking offices in Asheville (3), Burlington (4), Cary, Graham (2), Greensboro, Hickory, Mebane, Morrisville, Oxford, Pittsboro, Raleigh (5), Sanford (3), Siler City and Wake Forest. 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.

###
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CAPITAL BANK CORPORATION
Summary of Operations
(Unaudited)
  
Three Months Ended
June 30, 2007
    
Three Months Ended
June 30, 2006
    
Six Months Ended
June 30, 2007
    
Six Months Ended
June 30, 2006
  
(In thousands except per share data)
        
 
          
 
  
 
  
 
    
 
    
 
    
 
  
Interest income
   $
23,668
     $
21,109
     $
46,843
     $
40,779
  
Interest expense
    
12,414
      
9,501
      
24,866
      
17,781
  
Net interest income
    
11,254
      
11,608
      
21,977
      
22,998
  
Provision (credit) for loan losses
     (91 )    
249
      
246
      
661
  
Net interest income after provision for loan losses
    
11,345
      
11,359
      
21,731
      
22,337
  
Noninterest income
    
2,307
      
2,612
      
4,497
      
4,627
  
Noninterest expense
    
9,788
      
9,341
      
19,024
      
18,155
  
Income before taxes
    
3,864
      
4,630
      
7,204
      
8,809
  
Income tax expense
    
1,188
      
1,579
      
2,144
      
2,995
  
Net income
   $
2,676
     $
3,051
     $
5,060
     $
5,814
  
                                 
Income per share – basic
   $
0.23
     $
0.26
     $
0.44
     $
0.50
  
Income per share – fully diluted
   $
0.23
     $
0.26
     $
0.44
     $
0.50
  
Weighted average shares outstanding:
                                
Basic
    
11,503
      
11,639
      
11,498
      
11,628
  
Fully diluted
    
11,574
      
11,727
      
11,574
      
11,716
  
 
End of Period Balances
(Unaudited)
  
2007
    
2006
  
 
  
June 30
    
March 31
    
December 31(a)
    
September 30
    
June 30
  
(Dollars in thousands except per share data)
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
Total assets
   $
1,440,240
     $
1,481,141
     $
1,422,384
     $
1,399,673
     $
1,364,030
  
Investment securities
    
241,666
      
248,726
      
239,047
      
200,647
      
189,669
  
Loans (gross)*
    
1,022,147
      
1,025,464
      
1,008,052
      
1,003,835
      
965,484
  
Allowance for loan losses
    
13,339
      
13,531
      
13,347
      
13,894
      
14,007
  
Total earning assets
    
1,285,715
      
1,295,018
      
1,280,301
      
1,240,343
      
1,181,535
  
Deposits
    
1,072,979
      
1,120,332
      
1,055,209
      
1,043,755
      
1,025,949
  
Shareholders’ equity
    
162,402
      
163,855
      
161,681
      
160,871
      
157,770
  
                                         
Book value per share
   $
14.17
     $
14.32
     $
14.19
     $
13.98
     $
13.66
  
Tangible book value per share
   $
8.59
     $
8.71
     $
8.53
     $
8.19
     $
7.86
  
                                         
(a) Derived from audited consolidated financial statements
  
*Includes loans held for sale ($11.1 million at June 30, 2007)
  
 
Average Balances
(Unaudited)
  
2007
    
2006
  
 
  
June 30
    
March 31
    
December 31(a)
    
September 30
    
June 30
  
(Dollars in thousands)
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
Total assets
   $
1,436,584
     $
1,437,234
     $
1,410,668
     $
1,365,832
     $
1,322,781
  
Investments
    
248,850
      
243,732
      
219,765
      
195,323
      
190,045
  
Loans (gross)*
    
1,021,517
      
1,012,483
      
1,008,053
      
982,037
      
954,420
  
Total earning assets
    
1,292,651
      
1,292,811
      
1,258,780
      
1,213,002
      
1,171,648
  
Deposits
    
1,078,430
      
1,084,418
      
1,050,139
      
1,020,143
      
990,037
  
Shareholders’ equity
    
164,877
      
163,291
      
162,525
      
161,901
      
161,321
  
                                         
(a) Derived from audited consolidated financial statements
  
*Includes loans held for sale
  

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CAPITAL BANK CORPORATION
Quarterly Results
(Unaudited)
  
2007
    
2006
  
 
  
June 30
    
March 31
    
December 31(a)
    
September 30
    
June 30
  
(In thousands except per share data)
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
Interest income
   $
23,668
     $
23,175
     $
23,505
     $
22,668
     $
21,109
  
Interest expense
    
12,414
      
12,452
      
11,898
      
11,075
      
9,501
  
Net interest income
    
11,254
      
10,723
      
11,607
      
11,593
      
11,608
  
Provision (credit) for loan losses
     (91 )    
337
      
154
       (215 )    
249
  
Net interest income after provision for loan losses
    
11,345
      
10,386
      
11,453
      
11,808
      
11,359
  
Noninterest income
    
2,307
      
2,190
      
2,448
      
2,258
      
2,612
  
Noninterest expense
    
9,788
      
9,236
      
9,098
      
9,069
      
9,341
  
Income before taxes
    
3,864
      
3,340
      
4,803
      
4,997
      
4,630
  
Income tax expense
    
1,188
      
956
      
1,546
      
1,730
      
1,579
  
Net income
   $
2,676
     $
2,384
     $
3,257
     $
3,267
     $
3,051
  
                                         
Income per share – basic
   $
0.23
     $
0.21
     $
0.28
     $
0.28
     $
0.26
  
Income per share – fully diluted
   $
0.23
     $
0.21
     $
0.28
     $
0.28
     $
0.26
  
Weighted average shares outstanding:
                                        
Basic
    
11,503
      
11,493
      
11,536
      
11,611
      
11,639
  
Fully diluted
    
11,574
      
11,573
      
11,618
      
11,694
      
11,727
  
                                         
(a) Derived from audited consolidated financial statements
  
 
Quarterly Net Interest Margin*
(Unaudited)
  
2007
  
2006
  
 
 
June 30
 
March 31
 
December 31(a)
 
September 30
 
June 30
 
Yield on earning assets
 
7.51%
 
7.43%
 
7.53%
 
7.53% 
 
7.29% 
 
Cost of interest bearing liabilities
 
4.34%
 
4.36%
 
4.18%
 
4.02% 
 
3.63% 
 
Net interest spread
 
3.17%
 
3.07%
 
3.35%
 
3.51% 
 
3.66% 
 
Net interest margin
 
3.65%
 
3.52%
 
3.78%
 
3.91% 
 
4.04% 
 
                       
*Annualized and on a fully taxable equivalent basis
(a) Derived from audited consolidated financial statements
 
Nonperforming Assets
(Unaudited)
  
2007
    
2006
  
 
  
June 30
    
March 31
    
December 31(a)
    
September 30
    
June 30
  
(Dollars in thousands)
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
Commercial and commercial real estate
   $
6,089
     $
5,725
     $
2,783
     $
3,885
     $
3,728
  
Consumer
    
67
      
241
      
50
      
259
      
106
  
Equity lines
    
471
      
433
      
410
      
440
      
418
  
Construction
    
–
      
-
      
616
      
71
      
193
  
Mortgage
    
975
      
957
      
1,043
      
1,453
      
1,695
  
Total nonperforming loans
    
7,602
      
7,356
      
4,902
      
6,108
      
6,140
  
Other real estate owned
    
866
      
1,961
      
1,111
  1    
637
  1    
879
  1
Total nonperforming assets
   $
8,468
     $
9,317
     $
6,013
     $
6,745
     $
7,019
  
                                         
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
  
   
1 Other real estate owned excludes $739, $776 and $776 as of December 31, 2006, September 30, 2006 and June 30, 2006, respectively, related to branch locations that are held for sale.
  
 
- 4 -
CAPITAL BANK CORPORATION
Key Ratios
(Unaudited)
  
2007
    
2006
  
 
  
June 30
    
March 31
    
December 31(a)
    
September 30
    
June 30
  
(Dollars in thousands)
  
 
    
 
    
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
    
 
  
Past due loans
   $
13,008
     $
16,241
     $
11,237
     $
9,491
     $
9,179
  
Past due loans as a percent of average loans
     1.27 %     1.60 %     1.11 %     0.97 %     0.96 %
                                         
Net charge-offs (recoveries)
   $
101
     $
153
     $
701
     $ (102 )   $
523
  
Net charge-offs (recoveries) as a percent of average loans (annualized)
     0.04 %     0.06 %     0.28 %     (0.04 %)     0.22 %
Allowance for loan losses as a percent of total loans
     1.31 %     1.32 %     1.32 %     1.38 %     1.45 %
Nonperforming assets as a percent of total assets
     0.59 %     0.63 %     0.42 %     0.48 %     0.51 %
Allowance for loan losses as a percent of
nonperforming loans
     175 %     184 %     272 %     227 %     228 %
                                         
(a) Derived from audited consolidated financial statements
  
 

- 5 -
CAPITAL BANK CORPORATION
Condensed Consolidated Balance Sheets
June 30, 2007 and December 31, 2006
 
  
June 30, 2007
    
December 31, 2006
  
(Dollars in thousands except share data)
  
(Unaudited)
    
 
  
 
  
 
    
 
  
ASSETS
            
Cash and due from banks:
            
Interest earning
   $
3,794
     $
12,348
  
Noninterest earning
    
32,294
      
33,504
  
Federal funds sold and short term investments
    
18,108
      
8,480
  
Investment securities – available for sale, at fair value
    
231,352
      
228,214
  
Investment securities – held to maturity, at amortized cost
    
10,314
      
10,833
  
Loans – net of unearned income and deferred fees
    
1,022,147
      
1,008,052
  
Allowance for loan losses
     (13,339 )     (13,347 )
Net loans
    
1,008,808
      
994,705
  
Premises and equipment, net
    
24,137
      
23,125
  
Bank owned life insurance
    
21,075
      
20,662
  
Deposit premium and goodwill, net
    
63,943
      
64,543
  
Other assets
    
26,415
      
25,970
  
Total assets
   $
1,440,240
     $
1,422,384
  
                 
LIABILITIES
                
Deposits:
                
Demand, noninterest bearing
   $
123,628
     $
120,945
  
Savings and interest-bearing demand deposits
    
416,898
      
366,243
  
Time deposits
    
532,453
      
568,021
  
Total deposits
    
1,072,979
      
1,055,209
  
Repurchase agreements and federal funds purchased
    
34,243
      
34,238
  
Borrowings
    
125,914
      
125,924
  
Subordinated debentures
    
30,930
      
30,930
  
Other liabilities
    
13,772
      
14,402
  
Total liabilities
    
1,277,838
      
1,260,703
  
                 
SHAREHOLDERS’ EQUITY
                
Common stock, no par value; 20,000,000 authorized; 11,459,530 and 11,393,990 issued and outstanding as of June 30, 2007 and December 31, 2006, respectively
    
140,381
      
139,484
  
Retained earnings
    
26,981
      
23,754
  
Accumulated other comprehensive loss
     (4,960 )     (1,557 )
Total shareholders’ equity
    
162,402
      
161,681
  
Total liabilities and shareholders’ equity
   $
1,440,240
     $
1,422,384
  

- 6 -
CAPITAL BANK CORPORATION
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 2007 and 2006 (Unaudited)

   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
 
  
2007
    
2006
    
2007
    
2006
  
(Dollars in thousands except share and per share data)
  
 
    
 
    
 
  
 
  
 
    
 
    
 
    
 
  
Interest income:
                        
Loans and loan fees
   $
20,519
     $
18,646
     $
40,402
     $
35,664
  
Investment securities
    
2,858
      
2,155
      
5,665
      
4,265
  
Federal funds and other interest income
    
291
      
308
      
776
      
850
  
Total interest income
    
23,668
      
21,109
      
46,843
      
40,779
  
Interest expense:
                                
Deposits
    
9,918
      
7,328
      
19,924
      
13,438
  
Borrowings and repurchase agreements
    
2,496
      
2,173
      
4,942
      
4,343
  
Total interest expense
    
12,414
      
9,501
      
24,866
      
17,781
  
Net interest income
    
11,254
      
11,608
      
21,977
      
22,998
  
Provision (credit) for loan losses
     (91 )    
249
      
246
      
661
  
Net interest income after provision (credit) for loan losses
    
11,345
      
11,359
      
21,731
      
22,337
  
Noninterest income:
                                
Service charges and other fees
    
998
      
1,061
      
1,926
      
2,026
  
Mortgage fees and revenues
    
580
      
654
      
1,121
      
1,018
  
Net gain on sale of securities
    
–
      
–
      
–
      
–
  
Other noninterest income
    
729
      
897
      
1,450
      
1,583
  
Total noninterest income
    
2,307
      
2,612
      
4,497
      
4,627
  
Noninterest expense:
                                
Salaries and employee benefits
    
5,314
      
4,851
      
10,408
      
9,393
  
Occupancy
    
973
      
938
      
1,971
      
1,716
  
Furniture and equipment
    
647
      
562
      
1,262
      
1,054
  
Director fees
    
229
      
283
      
497
      
659
  
Data processing
    
326
      
111
      
622
      
600
  
Advertising
    
250
      
324
      
499
      
579
  
Amortization of deposit premiums
    
300
      
343
      
600
      
686
  
Professional fees
    
378
      
354
      
587
      
566
  
Other expenses
    
1,371
      
1,575
      
2,578
      
2,902
  
Total noninterest expense
    
9,788
      
9,341
      
19,024
      
18,155
  
Net income before tax expense
    
3,864
      
4,630
      
7,204
      
8,809
  
Income tax expense
    
1,188
      
1,579
      
2,144
      
2,995
  
Net income
   $
2,676
     $
3,051
     $
5,060
     $
5,814
  
 
                                
Earnings per share – basic
   $
0.23
     $
0.26
     $
0.44
     $
0.50
  
Earnings per share – diluted
   $
0.23
     $
0.26
     $
0.44
     $
0.50
  
 
                                
Weighted average shares:
                                
Basic
    
11,503,441
      
11,639,014
      
11,498,125
      
11,628,015
  
Fully diluted
    
11,574,110
      
11,726,584
      
11,573,632
      
11,715,510
  

- 7 -
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended June 30, 2007, June 30, 2006 and March 31, 2007 (Unaudited)
Tax Equivalent Basis 1
   
Quarter Ended June 30, 2007
  
Quarter Ended June 30, 2006
  
Quarter Ended March 31, 2007
  
(Dollars in thousands)
  
Average Balance
  
Amount Earned
  
Average Rate
  
Average Balance
  
Amount Earned
  
Average Rate
  
Average Balance
  
Amount Earned
  
Average Rate
  
Assets
                                                        
Loans receivable: 2
                                                        
Commercial
 
$
615,200
 
$
12,136
 
 
7.91
%
$
612,402
 
$
11,198
 
 
7.33
%
$
589,892
 
$
11,261
 
 
7.74
%
Construction
 
 
246,672
 
 
5,223
 
 
8.49
%
 
169,287
 
 
4,044
 
 
9.58
%
 
262,236
 
 
5,495
 
 
8.50
%
Consumer
 
 
31,300
 
 
677
 
 
8.68
%
 
21,159
 
 
495
 
 
9.38
%
 
30,822
 
 
652
 
 
8.58
%
Home equity lines
 
 
81,736
 
 
1,727
 
 
8.47
%
 
96,151
 
 
1,967
 
 
8.21
%
 
82,298
 
 
1,727
 
 
8.51
%
Mortgage 3
 
 
46,609
 
 
756
 
 
6.51
%
 
55,421
 
 
944
 
 
6.83
%
 
47,235
 
 
748
 
 
6.42
%
Total loans
 
 
1,021,517
 
 
20,519
 
 
8.06
%
 
954,420
 
 
18,648
 
 
7.84
%
 
1,012,483
 
 
19,883
 
 
7.96
%
Investment securities 4 
 
 
248,850
 
 
3,382
 
 
5.45
%
 
190,045
 
 
2,345
 
 
4.95
%
 
243,732
 
 
3,303
 
 
5.50
%
Federal funds sold and other interest on short-term investments
 
 
22,284
 
 
291
 
 
5.24
%
 
27,183
 
 
308
 
 
4.94
%
 
36,596
 
 
485
 
 
5.37
%
Total interest earning assets
 
 
1,292,651
 
$
24,192
 
 
7.51
%
 
1,171,648
 
$
21,301
 
 
7.29
%
 
1,292,811
 
$
23,671
 
 
7.43
%
Cash and due from banks
 
 
27,489
 
 
 
 
 
 
 
 
32,202
 
 
 
 
 
 
 
 
27,593
 
 
 
 
 
 
 
Other assets
 
 
129,972
 
 
 
 
 
 
 
 
133,222
 
 
 
 
 
 
 
 
130,126
 
 
 
 
 
 
 
Allowance for loan losses
 
 
(13,528
)
 
 
 
 
 
 
 
(14,291
)
 
 
 
 
 
 
 
(13,296
)
 
 
 
 
 
 
Total assets
 
$
1,436,584
 
 
 
 
 
 
 
$
1,322,781
 
 
 
 
 
 
 
$
1,437,234
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings deposits
 
$
33,664
 
$
44
 
 
0.52
%
$
41,477
 
$
52
 
 
0.50
%
$
34,370
 
$
42
 
 
0.50
%
Interest-bearing demand deposits
 
 
377,274
 
 
3,264
 
 
3.47
%
 
279,029
 
 
1,981
 
 
2.85
%
 
342,814
 
 
2,922
 
 
3.46
%
Time deposits
 
 
554,979
 
 
6,610
 
 
4.78
%
 
564,025
 
 
5,296
 
 
3.77
%
 
600,865
 
 
7,042
 
 
4.75
%
Total interest-bearing deposits
 
 
965,917
 
 
9,918
 
 
4.12
%
 
884,531
 
 
7,329
 
 
3.32
%
 
978,049
 
 
10,006
 
 
4.15
%
Borrowed funds
 
 
119,978
 
 
1,567
 
 
5.24
%
 
107,724
 
 
1,287
 
 
4.79
%
 
113,686
 
 
1,503
 
 
5.36
%
Subordinated debt
 
 
30,930
 
 
592
 
 
7.68
%
 
30,930
 
 
596
 
 
7.73
%
 
30,930
 
 
586
 
 
7.68
%
Repurchase agreements
 
 
31,696
 
 
337
 
 
4.26
%
 
26,884
 
 
289
 
 
4.31
%
 
34,328
 
 
357
 
 
4.22
%
Total interest-bearing liabilities
 
 
1,148,521
 
$
12,414
 
 
4.34
%
 
1,050,069
 
$
9,501
 
 
3.63
%
 
1,156,993
 
$
12,452
 
 
4.36
%
Noninterest-bearing deposits
 
 
112,513
 
 
 
 
 
 
 
 
105,506
 
 
 
 
 
 
 
 
106,369
 
 
 
 
 
 
 
Other liabilities
 
 
10,673
 
 
 
 
 
 
 
 
5,885
 
 
 
 
 
 
 
 
10,581
 
 
 
 
 
 
 
Total liabilities
 
 
1,271,707
 
 
 
 
 
 
 
 
1,161,460
 
 
 
 
 
 
 
 
1,273,943
 
 
 
 
 
 
 
Shareholders’ equity
 
 
164,877
 
 
 
 
 
 
 
 
161,321
 
 
 
 
 
 
 
 
163,291
 
 
 
 
 
 
 
Total liabilities and shareholders’ equity
 
$
1,436,584
 
 
 
 
 
 
 
$
1,322,781
 
 
 
 
 
 
 
$
1,437,234
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread 5 
 
 
 
 
 
 
 
 
3.17
%
 
 
 
 
 
 
 
3.66
%
 
 
 
 
 
 
 
3.07
%
Tax equivalent adjustment
 
 
 
 
$
524
 
 
 
 
 
 
 
$
192
 
 
 
 
 
 
 
$
496
 
 
 
 
Net interest income and net interest margin 6 
 
 
 
 
$
11,778
 
 
3.65
%
 
 
 
$
11,800
 
 
4.04
%
 
 
 
$
11,219
 
 
3.52
%
 
1
The tax equivalent basis is computed using a blended federal and state tax rate of approximately 36% and 38% in 2007 and 2006, respectively.
2
Loans receivable include nonaccrual loans for which accrual of interest has not been recorded.
3
Includes loans held for sale.
4
The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
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.
- 8 -