EX-99.1 2 cb5525ex991.htm EXHIBIT 99.1

Exhibit 99.1

Capital Bank Reports 75% Increase in First Quarter Net Income to $2.8 Million

          RALEIGH, N.C., April 25 /PRNewswire-FirstCall/ -- Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported that its first quarter 2006 net income increased 75% to $2.8 million compared to $1.6 million for the first quarter of 2005. Fully diluted earnings per share were $0.24 for the quarter ended March 31, 2006 compared to $0.22 for the quarter ended March 31, 2005. The Company completed its acquisition of 1st State Bancorp, Inc., the parent company of 1st State Bank, on January 3, 2006, which accounts for a large portion of the quarter-over-quarter net income, asset and deposit growth presented in the quarterly results. The merger was accounted for as a purchase business combination and, accordingly, there was no restatement of prior period financial information. In conjunction with this merger, the Company issued 4,882,630 shares of common stock, increasing its common shares outstanding to 11.6 million shares at March 31, 2006 compared to 6.9 million shares at December 31, 2005. Shareholders’ equity increased to $158.1 million at March 31, 2006 compared to $83.5 million at December 31, 2005.

          Commenting on the Company’s results, B. Grant Yarber, President and CEO, stated, “We began the year and quarter by successfully closing the 1st State merger transaction in Alamance County. We are very proud of all our associates as they fully integrated the two banks and brought our operations in-house with a newly completed state-of-the-art data and item processing facility. All the while, first quarter earnings performance was solid given net loan growth, continued improvement in the deposit mix, and margin expansion.”

          As of March 31, 2006, total assets were $1.3 billion, representing growth of $348 million, or 36%, from December 31, 2005. The increase in total assets for the quarter ended March 31, 2006 is primarily due to a $271 million increase in Capital Bank’s loan portfolio, net of the allowance for losses from December 31, 2005, which includes $230 million of net loans acquired in the 1st State merger transaction. Total deposits as of March 31, 2006 were $972 million, which represents growth of $274 million from December 31, 2005 and includes $267 million of total deposits acquired in the 1st State merger transaction.

          Net interest income for the quarter ended March 31, 2006 rose to record levels as the net interest margin widened to 4.06%, a 33 basis point increase over the fourth quarter of 2005 and an increase of 53 basis points over the net interest margin for the quarter ended March 31, 2005. Net interest income rose to $11.4 million, a 65% increase over the $6.9 million reported in the first quarter of 2005, primarily as a result of the infusion of 1st State’s interest-earning assets but also due to the continued growth of the loan portfolio and the continued increase in short term rates by the Federal Reserve. During the quarter ended March 31, 2006, net loans increased $270.7 million, which includes $230 million of net loans acquired with the 1st State merger transaction. The Company continues to concentrate on increasing its margin through core deposit growth and competitive loan pricing.

          The Company’s allowance for loan losses equaled $14.2 million, or 1.50% of total loans and 177% of nonperforming loans at March 31, 2006, compared to 1.60% of total loans and 98% of nonperforming loans at March 31, 2005. The provision for loan losses for the quarter ended March 31, 2006 was $412,000 compared to a credit in the quarter ended March 31, 2005 of $250,000. The increase in the provision for loan losses is primarily due to an increase in the specific allocation for one loan relationship and the estimated inherent losses associated with the net growth in the loan portfolio during the quarter ended March 31, 2006. Net charge-offs for the quarter ended March 31, 2006 were $3.4 million, or 1.45% of average loans, compared to $99,000, or 0.06% of average loans for the quarter ended March 31, 2005. Charge-offs for the quarter ended March 31, 2006 includes $3.2 million related to one loan relationship that had been fully reserved by 1st State as of December 31, 2005 and had no impact on Capital Bank’s loan loss provision for the first quarter of 2006. Nonperforming loans were $8.0 million at March 31, 2006 compared to $10.6 million at March 31, 2005. Total past due loans were $11.7 million, or 1.26% of total loans, at March 31, 2006, compared to $14.6 million, or 2.24% of total loans, at March 31, 2005. Of the $14.2 million allowance for loan losses, $3.1 million has been allocated to specific loans at March 31, 2006, which the Company believes is adequate to absorb probable future losses inherent in the existing loan portfolio.


          The Company’s non-interest income for the quarter ended March 31, 2006 increased $674,000 to $2.0 million compared to the quarter ended March 31, 2005. This increase is primarily due to higher service charges and other fees as a result of a higher volume of transaction accounts, which were acquired in the 1st State merger transaction.

          Non-interest expenses were $8.8 million for the quarter ended March 31, 2006 compared to $6.2 million for the quarter ended March 31, 2005. The increase in non-interest expenses is primarily due to the consummation of the 1st State merger transaction as well as higher costs associated with the Company’s growth. Synergies from the acquisition are expected to begin being realized in the second quarter of 2006.

          Capital Bank Corporation, headquartered in Raleigh, N.C., with approximately $1.3 billion in total assets, offers a broad range of financial services. Capital Bank operates 26 banking offices in Raleigh (5), Burlington (4), Sanford (3), Asheville (3), Graham (2), Cary, Greensboro, Hickory, Mebane, Morrisville, Oxford, Pittsboro, 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.

Capital Bank Corporation
Summary of Operations

(In thousands except per share data)

 

Three Months Ended
March 31,2006

 

Three Months Ended
March 30, 2005

 

 

 

 

Interest income

 

$

19,670

 

$

11,456

 

Interest expense

 

 

8,280

 

 

4,550

 
 

 

 

 

Net interest income

 

 

11,390

 

 

6,906

 

Provision (credit) for loan losses

 

 

412

 

 

(250

)

 

 

 

Net interest income after provision for loan losses

 

 

10,978

 

 

7,156

 

Non-interest income

 

 

2,015

 

 

1,340

 

Non-interest expense

 

 

8,814

 

 

6,150

 
 

 

 

 

Income before taxes

 

 

4,179

 

 

2,346

 

Income tax expense

 

 

1,416

 

 

791

 
 

 

 

 

Net income

 

$

2,763

 

$

1,555

 
 

 

 

 

Income per share - basic

 

$

0.24

 

$

0.23

 
 

 

 

 

Income per share - fully diluted

 

$

0.24

 

$

0.22

 
 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

11,617

 

 

6,755

 

Fully diluted

 

 

11,704

 

 

6,942

 


End of Period Balances

 

 

 

2006

 

2005

 

 

 

 

 

(In thousands except per share data)

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

Total assets

 

$

1,308,567

 

$

960,906

 

$

927,077

 

$

917,392

 

$

887,312

 

Investment securities

 

 

181,032

 

 

161,600

 

 

161,389

 

 

161,822

 

 

159,966

 

Loans (gross) *

 

 

944,325

 

 

668,982

 

 

646,448

 

 

648,765

 

 

647,922

 

Allowance for loan losses

 

 

14,209

 

 

9,592

 

 

9,844

 

 

10,075

 

 

10,372

 

Total earning assets

 

 

1,151,739

 

 

843,942

 

 

847,296

 

 

840,607

 

 

812,868

 

Deposits

 

 

972,232

 

 

698,480

 

 

703,183

 

 

689,997

 

 

662,178

 

Shareholders’ equity

 

 

158,095

 

 

83,492

 

 

82,268

 

 

79,499

 

 

76,965

 

Book value per share

 

 

13.60

 

 

12.18

 

 

12.11

 

 

12.00

 

 

11.72

 

Tangible book value per share

 

 

7.82

 

 

10.31

 

 

10.21

 

 

10.04

 

 

9.74

 

Average Balances

 

 

 

2006

 

2005

 

 

 

 

 

(In thousands)

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

Total assets

 

 

1,311,145

 

 

932,332

 

 

922,142

 

 

897,178

 

 

879,912

 

Investments (at amortized cost)

 

 

194,535

 

 

160,928

 

 

162,282

 

 

160,955

 

 

157,963

 

Loans (gross) *

 

 

923,950

 

 

653,475

 

 

637,743

 

 

648,269

 

 

652,429

 

Total earning assets

 

 

1,158,324

 

 

846,780

 

 

843,992

 

 

826,361

 

 

812,963

 

Deposits

 

 

957,693

 

 

696,335

 

 

697,311

 

 

671,307

 

 

647,787

 

Shareholders’ equity

 

 

159,841

 

 

83,380

 

 

81,606

 

 

78,706

 

 

78,476

 

 

*  Includes loans held for sale.

Capital Bank Corporation
Quarterly Results

 

 

 

2006

 

2005

 

 

 

 

 

(In thousands except per share data)

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

Interest income

 

$

19,670

 

$

13,967

 

$

13,078

 

$

12,248

 

$

11,456

 

Interest expense

 

 

8,280

 

 

6,172

 

 

5,649

 

 

5,088

 

 

4,550

 
 

 

 

 

 

 

 

Net interest income

 

 

11,390

 

 

7,795

 

 

7,429

 

 

7,160

 

 

6,906

 

Provision (credit) for loan losses

 

 

412

 

 

38

 

 

(28

)

 

(156

)

 

(250

)
 

 

 

 

 

 

 

Net interest income after provision

 

 

10,978

 

 

7,757

 

 

7,457

 

 

7,316

 

 

7,156

 

Non-interest income

 

 

2,015

 

 

2,022

 

 

1,790

 

 

1,579

 

 

1,340

 

Non-interest expense

 

 

8,814

 

 

7,171

 

 

6,644

 

 

6,489

 

 

6,150

 
 

 

 

 

 

 

 

Income before taxes

 

 

4,179

 

 

2,608

 

 

2,603

 

 

2,406

 

 

2,346

 

Income tax expense

 

 

1,416

 

 

801

 

 

869

 

 

803

 

 

791

 
 

 

 

 

 

 

 

Net income

 

$

2,763

 

$

1,807

 

$

1,734

 

$

1,603

 

$

1,555

 
 

 

 

 

 

 

 

Income per share - basic

 

$

0.24

 

$

0.26

 

$

0.26

 

$

0.24

 

$

0.23

 
 

 

 

 

 

 

 

Income per share - fully  diluted

 

$

0.24

 

$

0.26

 

$

0.25

 

$

0.23

 

$

0.22

 
 

 

 

 

 

 

 

Weighted average shares  outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,617

 

 

6,875

 

 

6,801

 

 

6,731

 

 

6,755

 

Fully diluted

 

 

11,704

 

 

6,962

 

 

6,904

 

 

6,871

 

 

6,942

 


Quarterly Net Interest Margin *

 

 

 

2006

 

2005

 

 

 

 

 

 

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

 

Yield on earning assets

 

 

6.96

%

 

6.62

%

 

6.22

%

 

6.02

%

 

5.80

%

Cost of interest bearing liabilities

 

 

3.27

%

 

3.26

%

 

2.97

%

 

2.76

%

 

2.53

%

Net interest spread

 

 

3.69

%

 

3.36

%

 

3.25

%

 

3.26

%

 

3.27

%

Net interest margin

 

 

4.06

%

 

3.73

%

 

3.57

%

 

3.55

%

 

3.53

%

 

*  Annualized and on a fully taxable equivalent basis

Nonperforming Assets

 

 

 

2006

 

2005

 

 

 

 

 

(In thousands)

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

Commercial and commercial real estate

 

$

5,149

 

$

5,040

 

$

3,915

 

$

6,094

 

$

5,797

 

Consumer

 

 

100

 

 

176

 

 

239

 

 

218

 

 

195

 

Equity lines

 

 

398

 

 

497

 

 

592

 

 

427

 

 

323

 

Construction

 

 

807

 

 

737

 

 

1,302

 

 

1,674

 

 

2,374

 

Mortgage

 

 

1,588

 

 

1,628

 

 

1,711

 

 

2,014

 

 

1,880

 

 

 

 

 

 

 

 

Total nonperforming loans

 

 

8,042

 

 

8,078

 

 

7,759

 

 

10,427

 

 

10,569

 

Other real estate owned

 

 

888

(1)

 

771

 

 

1,608

 

 

1,508

 

 

431

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

8,930

 

$

8,849

 

$

9,367

 

$

11,935

 

$

11,000

 

 

 

 

 

 

 

 

Nonperforming assets include loans that are 90 days or more past due or in nonaccrual status and other real estate owned.

(1)  Other real estate owned excludes $1,854 related to four branch locations that are held for sale.


Key Ratios

 

 

 

2006

 

2005

 

 

 

 

 

(In thousands)

 

March 31

 

Dec. 31

 

Sept. 30

 

June 30

 

March 31

 

 

 

 

 

 

 

Past due loans

 

 

11,678

 

 

7,008

 

 

10,089

 

 

9,576

 

 

14,623

 

Past due loans as a percent of total loans

 

 

1.26

%

 

1.07

%

 

1.58

%

 

1.48

%

 

2.24

%

Net charge-offs

 

 

3,360

(2)

 

433

 

 

117

 

 

138

 

 

99

 

Net charge-offs as a  percent of average loans (annualized)

 

 

1.45%

(2)

 

0.27

%

 

0.07

%

 

0.09

%

 

0.06

%

Allowance for loan losses as a percent of total loans

 

 

1.50

%

 

1.43

%

 

1.52

%

 

1.55

%

 

1.60

%

Nonperforming assets as a percent of total assets

 

 

0.68

%

 

0.92

%

 

1.01

%

 

1.30

%

 

1.24

%

Allowance for loan losses as a percent of nonperforming loans

 

 

177

%

 

119

%

 

127

%

 

97

%

 

98

%

 

(2)  Includes $3.2 million related to one 1st State Bank loan relationship that was fully reserved as of 12/31/05.

CAPITAL BANK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 2006 and December 31, 2005

(In thousands, except share data)

 

March 31,
2006

 

Dec. 31,
2005

 

Changes

 

% Change

 

 

 

 

 

 
 

 

 (Unaudited) 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning

 

$

6,938

 

$

4,603

 

$

2,335

 

 

51

%

Non-interest-earning

 

 

33,435

 

 

30,544

 

 

2,891

 

 

9

%

Cash held in escrow

 

 

—  

 

 

33,185

 

 

(33,185

)

 

-100

%

Federal funds sold and short term investments

 

 

19,444

 

 

8,757

 

 

10,687

 

 

NM

 

Investment securities - available for sale, at fair value

 

 

168,894

 

 

149,266

 

 

19,628

 

 

13

%

Investment securities - held to maturity, at amortized cost

 

 

12,138

 

 

12,334

 

 

(196

)

 

-2

%

Loans-net of unearned income and deferred fees

 

 

944,325

 

 

668,982

 

 

275,343

 

 

41

%

Allowance for loan losses

 

 

(14,209

)

 

(9,592

)

 

(4,617

)

 

48

%

 

 

 

 

 

 

Net loans

 

 

930,116

 

 

659,390

 

 

270,726

 

 

41

%
 

 

 

 

 

 

Premises and equipment, net

 

 

21,594

 

 

14,868

 

 

6,726

 

 

45

%

Bank owned life insurance

 

 

20,088

 

 

19,857

 

 

231

 

 

1

%

Deposit premium and goodwill, net

 

 

67,149

 

 

12,853

 

 

54,296

 

 

422

%

Deferred tax assets

 

 

11,158

 

 

6,305

 

 

4,853

 

 

77

%

Other assets

 

 

17,613

 

 

8,944

 

 

8,669

 

 

97

%
 

 

 

 

 

 

Total assets

 

$

1,308,567

 

$

960,906

 

$

347,661

 

 

36

%
 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

 

$

107,425

 

$

77,847

 

$

29,578

 

 

38

%

Savings, money market accounts and interest checking

 

 

315,933

 

 

237,005

 

 

78,928

 

 

33

%

Time deposits

 

 

548,874

 

 

383,628

 

 

165,246

 

 

43

%
 

 

 

 

 

 

Total deposits

 

 

972,232

 

 

698,480

 

 

273,752

 

 

39

%
 

 

 

 

 

 

Repurchase agreements and federal funds purchased

 

 

26,305

 

 

14,514

 

 

11,791

 

 

81

%

Borrowings

 

 

107,798

 

 

93,173

 

 

14,625

 

 

16

%

Short-term debt

 

 

—  

 

 

30,000

 

 

(30,000

)

 

-100

%

Subordinated debentures

 

 

30,930

 

 

30,930

 

 

—  

 

 

0

%

Other liabilities

 

 

13,207

 

 

10,317

 

 

2,890

 

 

28

%
 

 

 

 

 

 

Total liabilities

 

 

1,150,472

 

 

877,414

 

 

273,058

 

 

31

%

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value; 20,000,000 shares authorized; 11,623,629 and 6,852,156 issued and outstanding as of 2006 and 2005, respectively

 

 

143,669

 

 

70,985

 

 

72,684

 

 

102

%

Retained earnings

 

 

16,245

 

 

14,179

 

 

2,066

 

 

15

%

Accumulated other comprehensive income

 

 

(1,819

)

 

(1,672

)

 

(147

)

 

n/a

 
 

 

 

 

 

 

Total shareholders’ equity

 

 

158,095

 

 

83,492

 

 

74,603

 

 

89

%
 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,308,567

 

$

960,906

 

$

347,661

 

 

36

%
 

 

 

 

 

 


CAPITAL BANK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2006 and 2005

(In thousands, except share and per share data)

 

2006

 

2005

 

Changes

 

%
Change

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and loan fees

 

$

17,018

 

$

9,742

 

$

7,276

 

 

75

%

Investment securities

 

 

2,110

 

 

1,697

 

 

413

 

 

24

%

Federal funds and other interest income

 

 

542

 

 

17

 

 

525

 

 

3088

%

 

 

 

 

 

 

Total interest income

 

 

19,670

 

 

11,456

 

 

8,214

 

 

72

%

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

6,110

 

 

3,182

 

 

2,928

 

 

92

%

Borrowings and repurchase agreements

 

 

2,170

 

 

1,368

 

 

802

 

 

59

%

 

 

 

 

 

 

Total interest expense

 

 

8,280

 

 

4,550

 

 

3,730

 

 

82

%

 

 

 

 

 

 

Net interest income

 

 

11,390

 

 

6,906

 

 

4,484

 

 

65

%

Provision for loan losses

 

 

412

 

 

(250

)

 

662

 

 

n/a

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

10,978

 

 

7,156

 

 

3,822

 

 

53

%

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit service charges and other fees

 

 

965

 

 

657

 

 

308

 

 

47

%

Mortgage banking revenues

 

 

364

 

 

272

 

 

92

 

 

34

%

Net gain on sale of securities

 

 

—  

 

 

6

 

 

(6

)

 

-100

%

Bank owned life insurance

 

 

169

 

 

101

 

 

68

 

 

67

%

Other noninterest income

 

 

517

 

 

304

 

 

213

 

 

70

%

 

 

 

 

 

 

Total noninterest income

 

 

2,015

 

 

1,340

 

 

675

 

 

50

%

 

 

 

 

 

 

Noninterest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,542

 

 

3,149

 

 

1,393

 

 

44

%

Occupancy

 

 

778

 

 

614

 

 

164

 

 

27

%

Furniture and equipment

 

 

492

 

 

367

 

 

125

 

 

34

%

Director fees

 

 

376

 

 

171

 

 

205

 

 

120

%

Data processing

 

 

489

 

 

311

 

 

178

 

 

57

%

Advertising

 

 

255

 

 

216

 

 

39

 

 

18

%

Amortization of deposit premiums

 

 

343

 

 

54

 

 

289

 

 

535

%

Professional fees

 

 

212

 

 

322

 

 

(110

)

 

-34

%

Telecommunications

 

 

176

 

 

140

 

 

36

 

 

26

%

Other expenses

 

 

1,151

 

 

806

 

 

345

 

 

43

%

 

 

 

 

 

 

Total noninterest expenses

 

 

8,814

 

 

6,150

 

 

2,664

 

 

43

%

 

 

 

 

 

 

Net income before tax expense

 

 

4,179

 

 

2,346

 

 

1,833

 

 

78

%

Income tax expense

 

 

1,416

 

 

791

 

 

625

 

 

79

%

 

 

 

 

 

 

Net income

 

$

2,763

 

$

1,555

 

$

1,208

 

 

78

%

 

 

 

 

 

 

Earnings per share - basic

 

$

0.24

 

$

0.23

 

$

0.01

 

 

4

%

 

 

 

 

 

 

Earnings per share - diluted

 

$

0.24

 

$

0.22

 

$

0.02

 

 

9

%

 

 

 

 

 

 

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,616,894

 

 

6,754,576

 

 

4,862,318

 

 

72

%

 

 

 

 

 

 

Fully Diluted

 

 

11,704,315

 

 

6,941,776

 

 

4,762,539

 

 

69

%

 

 

 

 

 

 

SOURCE     Capital Bank Corporation
          -0-                                                  04/25/2006
          /CONTACT:  B. Grant Yarber, President and Chief Executive Officer of Capital Bank Corporation, +1-919-645-3494, or gyarber@capitalbank-nc.com /
          /Web site:  http://www.capitalbank-nc.com /
           (CBKN)