Capital Bank Corporation Announces Financial Results for the Fourth Quarter and Full Year of 2011

RALEIGH, N.C., April 9, 2012 /PRNewswire/ -- Capital Bank Corporation (the "Company") (Nasdaq: CBKN), a majority-owned subsidiary of Capital Bank Financial Corp. ("CBF"; formerly North American Financial Holdings, Inc.), today reported financial results for the fourth quarter and full year of 2011. Operating and financial highlights include the following:

• Net income totaled $1.5 million, or $0.02 per share, in the fourth quarter of 2011 and totaled $5.3 million, or $0.06 per share, in the successor period from January 29 to December 31, 2011; and

• Following the merger of GreenBank, the wholly-owned subsidiary of Green Bankshares, Inc. ("Green Bankshares"), into Capital Bank, NA, the Company held a 26% ownership interest in Capital Bank, NA, which has $6.5 billion in assets and operates 143 branches in Florida, North Carolina, South Carolina, Tennessee and Virginia.

"Thanks to the hard work of team mates across the company, I am very proud to be able to say that today, Capital Bank, NA is a single bank, with 143 branches operating under one brand, offering a common set of products and processing on one IT system. That is a huge accomplishment for us in such a short period of time," stated Gene Taylor, Chairman and Chief Executive Officer of CBF and Capital Bank Corporation.

"We are pleased with continued success in generating new loans and core deposits. These activities are helping customers achieve their goals and will lead to higher profitability for the company," commented Chris Marshall, Chief Financial Officer of CBF and Capital Bank Corporation.

Bank Mergers

On June 30, 2011, Capital Bank, formerly a wholly-owned subsidiary of the Company ("Old Capital Bank"), merged with and into NAFH National Bank, a national banking association, with NAFH National Bank as the surviving entity (the "Bank Merger"). In connection with the Bank Merger, NAFH National Bank changed its name to Capital Bank, NA. On September 7, 2011, CBF acquired a controlling interest in Green Bankshares and merged its banking subsidiary, GreenBank, with and into Capital Bank, NA. Following the GreenBank merger, Capital Bank, NA is now owned by the Company, CBF, TIB Financial Corp. ("TIB Financial") and Green Bankshares. CBF is the owner of approximately 83% of the Company's common stock, approximately 94% of TIB Financial's common stock and approximately 90% of Green Bankshares' common stock. Previously, on April 29, 2011, Capital Bank, NA merged with TIB Bank, then a wholly-owned subsidiary of TIB Financial.

The Bank Merger occurred pursuant to the terms of an Agreement of Merger entered into by and between Old Capital Bank and Capital Bank, NA, dated as of June 30, 2011. In the Bank Merger, each share of Old Capital Bank common stock was converted into the right to receive shares of Capital Bank, NA common stock based on each entity's relative tangible book value on March 31, 2011. Following the GreenBank merger, the Company now owns approximately 26% of Capital Bank, NA, with CBF having a direct ownership of 19%, TIB Financial owning 21%, and Green Bankshares owning the remaining 34%.

The Bank Merger, the preceding merger of TIB Bank and Capital Bank, NA, and the succeeding merger of GreenBank and Capital Bank, NA were restructuring transactions between commonly-controlled entities. At the time of the Bank Merger, due to the deconsolidation of Old Capital Bank, the balance of accumulated other comprehensive income was reclassified to common stock within shareholders' equity. Immediately following the Bank Merger, on June 30, 2011, CBF, the Company and TIB Financial made cash contributions of additional capital to Capital Bank, NA of $4.7 million, $6.1 million and $5.2 million, respectively, in proportion to their respective ownership interests in Capital Bank, NA. On September 30, 2011, the Company made a $10.0 million contribution of additional capital to Capital Bank, NA in exchange for additional shares of Capital Bank, NA. These capital contributions were made to provide additional capital support for the general business

operations of Capital Bank, NA. As of December 31, 2011, Capital Bank, NA operated 143 branches in Florida, North Carolina, South Carolina, Tennessee and Virginia and had total assets of $6.5 billion, total deposits of $5.1 billion and shareholders' equity of $939.8 million.

The Company reports its investment in Capital Bank, NA on the Consolidated Balance Sheet as an equity method investment in that entity. As of December 31, 2011, the Company's investment in Capital Bank, NA totaled $243.7 million, which reflected the Company's pro rata ownership of Capital Bank, NA's total shareholders' equity. The Company also had an advance to Capital Bank, NA totaling $3.4 million as of December 31, 2011. In the quarter ended December 31, 2011, the Company increased the equity investment balance by $1.8 million based on its equity in Capital Bank, NA's net income and decreased the equity investment balance by $148 thousand based on its equity in Capital Bank, NA's other comprehensive income.

The following table presents summarized financial information for the Company's equity method investee, Capital Bank, NA, for each period presented:

	(Dollars in thousands)			Three Months Ended Dec. 31, 2011			Jun. 30, 2011 to Dec. 31, 2011
	Interest income		$	74,163		$	137,508
	Interest expense			9,266			17,810
	Net interest income			64,897			119,698
	Provision for loan losses			16,790			28,636
	Noninterest income			16,105			28,710
	Noninterest expense			53,271			97,754
	Net income		$	6,797		$	13,984

Potential Merger of the Company and CBF

On September 1, 2011, the Boards of Directors of CBF and the Company approved and adopted a merger agreement. The merger agreement provides for the merger, following the receipt of shareholder approval by the Company's shareholders (including CBF), of the Company with and into CBF, with CBF continuing as the surviving entity. In the merger, each share of the Company's common stock issued and outstanding immediately prior to the completion of the merger, except for shares for which appraisal rights are properly exercised and certain shares held by CBF or the Company, will be converted into the right to receive 0.1354 of a share of CBF Class A common stock. No fractional shares of Class A common stock will be issued in connection with the merger, and holders of the Company's common stock will be entitled to receive cash in lieu thereof.

Since CBF is the majority shareholder of the Company, CBF will be able to determine the outcome of the shareholder vote needed to approve the merger.

Net Interest Income

Net interest income in the fourth quarter of 2011 was significantly impacted by the Bank Merger, upon which Old Capital Bank's earning assets and interest-bearing liabilities were deconsolidated from the Company. Following the Bank Merger on June 30, 2011, the Company's interest-bearing liabilities, which consisted of subordinated debentures, significantly exceeded interest-earning assets, thus creating negative net interest income and a negative net interest margin. Net interest income for the quarter ended December 31, 2011 (Successor) and the quarter ended December 31, 2010 (Predecessor) totaled ($277) thousand and $12.3 million, respectively. Net interest margin decreased from 3.16% in the fourth quarter of 2010 (Predecessor) to (32.39)% in the fourth quarter of 2011 (Successor) primarily due to the Bank Merger.

Further, net interest income for the period of January 29 to December 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the year ended December 31, 2010 (Predecessor) totaled $24.9 million, $4.0 million and $51.0 million, respectively. Net interest margin increased from 3.27% in the year ended December 31, 2010 (Predecessor) to 4.13% for the period of January 29 to December 31, 2011 (Successor) primarily due to a decline in funding costs as the average rate on total interest-bearing liabilities fell from 1.88% to 1.17% over that period. Average earning assets decreased from $1.60 billion in the year ended December 31, 2010 (Predecessor) to $1.54 billion in the period of January 1 to January 28, 2011 (Predecessor) to $670.7 million in the period of January 29 to December 31, 2011 (Successor). The decline in average earning assets in the successor period was primarily related to the Bank Merger.

Provision for Loan Losses

Due to the Bank Merger, there was no provision for loan losses in the quarter ended December 31, 2011 (Successor). Provision for loan losses for the quarter ended December 31, 2010 (Predecessor) totaled $20.0 million. In addition, provision for loan losses for the period of January 29 to December 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the year ended December 31, 2010 (Predecessor) totaled $1.5 million, $40 thousand and $58.5 million, respectively. The loan loss provision in the successor period reflects $752 thousand of estimated losses inherent in loans originated subsequent to the CBF investment date, $359 thousand of impairment related to probable decreases in cash flows expected to be collected on certain purchase credit-impaired loan pools, and $339 thousand of losses on acquired non-PCI loans.

Noninterest Income

Noninterest income for the quarter ended December 31, 2011 (Successor) and the quarter ended December 31, 2010 (Predecessor) totaled $1.8 million and $8.0 million, respectively. Noninterest income in the fourth quarter of 2011 (Successor) was solely related to the Company's equity income from its investment in Capital Bank, NA.

Further, noninterest income for the period of January 29 to December 31, 2011 (Successor), the period of January 1 to January 28, 2011 (Predecessor), and the year ended December 31, 2010 (Predecessor) totaled $7.4 million, $832 thousand and $15.5 million, respectively. Noninterest income in the successor period was significantly impacted by the Company's $4.0 million of equity income from its investment in Capital Bank, NA. Additionally, noninterest income in the year ended December 31, 2010 (Predecessor) benefited from $5.9 million of gains recorded on the sale of investment securities while no gains or losses were recognized in the period from January 29 to December 31, 2011 (Successor) or the period from January 1 to January 28, 2011 (Predecessor).

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2011 (Successor) and the quarter ended December 31, 2010 (Predecessor) totaled $175 thousand and $15.1 million, respectively. Expenses in the successor period were significantly reduced by the Bank Merger and related deconsolidation of Old Capital Bank.

Further, noninterest expense for the period from January 29 to December 31, 2011 (Successor), the period from January 1 to January 28, 2011 (Predecessor) and the year ended December 31, 2010 (Predecessor) totaled $25.3 million, $4.2 million and $54.3 million, respectively. Additionally, expenses in the year ended December 31, 2011 were significantly reduced by the Bank Merger and related deconsolidation of Old Capital Bank. Expenses in the period from January 29 to December 31, 2011 (Successor) were impacted by a $4.0 million contract termination fee related to the conversion and integration of the Company's operations onto a common technology platform utilized across the CBF enterprise. This system conversion is intended to create operating efficiencies and better position the Company for future growth.

Measurement Period Adjustments

Financial results for the year ended 2011 were significantly impacted by the controlling investment in the Company by CBF. The Company elected to apply push-down accounting. Accordingly, the Company's assets and liabilities were adjusted to estimated fair value at the CBF investment date. During the fourth quarter of 2011, the Company was still in the process of completing its fair value analysis (not to exceed one year from the acquisition date) of assets and liabilities, and the Company made adjustments which are retrospectively reflected herein.

The measurement period adjustments were primarily due to a $30.7 million decrease in the acquisition date estimated fair values of certain acquired loans based on further analysis of estimated credit losses and other relevant facts and circumstances existing as of the acquisition date. This adjustment resulted in the Company retrospectively increasing net income by $1.0 million, net of tax, for the second quarter of 2011 (Successor) and retrospectively increasing the equity income from the investment in Capital Bank, NA by $114,000 in the third quarter of 2011 (Successor).

Forward-looking Statements

Information in this press release contains forward-looking statements. Such forward looking statements can be identified by the use of forward looking terminology such as "may," "will," "expect," "anticipate," "estimate," "believe," or "continue," or the negative thereof or other variations thereof or comparable terminology. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, market and economic conditions, the management of our growth, the risks associated with Capital Bank, NA's loan portfolio and real estate holdings, local economic conditions affecting retail and commercial real estate, ability to integrate our new management and directors without encountering potential difficulties, the Company's geographic concentration in the southeastern region of the United States, ability to integrate the operations of Old Capital Bank with those of Capital Bank, NA, the potential for the interests of the other shareholders of Capital Bank, NA to differ from those of the Company, restrictions imposed by Capital Bank, NA's loss sharing agreements with the FDIC, the assumptions and judgments required by loss share accounting and the acquisition method of accounting, competition within the industry, dependence on key personnel, government legislation and regulation, the risks associated with identification, completion and integration of any future acquisitions, risks related to Capital Bank, NA's technology and information systems, the fact that the Company has experienced net losses during the last three fiscal years, risks associated with the controlling interest of CBF in the Company, and risks associated with the limited liquidity of the Company's common stock. 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 Results of Operations
		Successor Company													Predecessor Company
(Dollars in thousands except per share data)		Three Months Ended Dec. 31, 2011			Three Months Ended Sep. 30, 2011			Three Months Ended Jun. 30, 2011			Jan. 29, 2011 to Mar. 31, 2011				Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Dec. 31, 2010
Interest income		$	85		$	85		$	18,990		$	12,281			$	5,955		$	18,327
Interest expense			362			355			3,551			2,260				1,996			6,040
Net interest income (loss)			(277)			(270)			15,439			10,021				3,959			12,287
Provision for loan losses			–			–			1,283			167				40			20,011
Net interest income (loss) after    provision			(277)			(270)			14,156			9,854				3,919			(7,724)
Noninterest income			1,762			2,283			2,065			1,252				832			8,004
Noninterest expense			175			76			12,797			12,229				4,155			15,129
Net income (loss) before taxes			1,310			1,937			3,424			(1,123)				596			(14,849)
Income tax expense (benefit)			(168)			(117)			1,115			(549)				–			18,634
Net income (loss)			1,478			2,054			2,309			(574)				596			(33,483)
Dividends and accretion on    preferred stock			–			–			–			–				861			589
Net income (loss) attributable to    common shareholders		$	1,478		$	2,054		$	2,309		$	(574)			$	(265)		$	(34,072)
Earnings (loss) per share – basic    and diluted		$	0.02		$	0.02		$	0.03		$	(0.01)			$	(0.02)		$	(2.59)

End of Period Balances
		Successor Company													Predecessor Company
(Dollars in thousands except per share data)		Dec. 31, 2011			Sep. 30, 2011			Jun. 30, 2011			Mar. 31, 2011				Dec. 31, 2010
Total assets		$	249,742		$	248,249		$	248,562		$	1,702,798			$	1,585,547
Total earning assets			3,393			3,393			3,393			1,500,664				1,537,863
Cash and cash equivalents			2,163			2,435			12,477			116,650				66,745
Investment securities			–			–			–			304,902				223,292
Loans			–			–			–			1,094,558				1,254,479
Allowance for loan losses			–			–			–			167				36,061
Investment in and advance to Capital Bank, NA			247,121			245,506			235,657			–				–
Intangible assets			–			–			–			53,525				1,774
Deposits			–			–			–			1,349,661				1,343,286
Borrowings			–			–			–			93,513				121,000
Subordinated debentures			19,163			19,099			19,036			19,905				34,323
Shareholders' equity			224,864			223,532			229,419			228,760				76,688
Per Share Data
Book value		$	2.62		$	2.61		$	2.67		$	2.68			$	2.75
Tangible book value			2.23			2.22			2.25			2.07				2.67
Common shares outstanding			85,802,164			85,802,164			85,802,164			85,489,260				12,877,846

CAPITAL BANK CORPORATION Average Balances and Yields/Rates
			Successor Company												Predecessor Company
(Dollars in thousands)			Three Months Ended Dec. 31, 2011			Three Months Ended Sep. 30, 2011			Three Months Ended Jun. 30, 2011			Jan. 29, 2011 to Mar. 31, 2011				Jan. 1, 2011 to Jan. 28, 2011			Three Months Ended Dec. 31, 2010
Average Balances
Total assets			$	244,291		$	248,183		$	1,701,071		$	1,692,347			$	1,592,750		$	1,648,467
Total earning assets				3,393			3,393			1,488,645			1,490,146				1,542,617			1,577,651
Investment securities				–			–			338,035			242,622				223,854			198,524
Loans				–			–			1,097,413			1,107,666				1,249,787			1,295,748
Deposits				–			–			1,343,599			1,340,741				1,350,336			1,366,905
Borrowings				–			–			93,349			98,599				120,032			126,130
Subordinated debentures				19,142			19,078			19,323			19,563				34,323			34,323
Shareholders' equity				224,843			228,961			231,742			226,423				78,724			110,788
Yields/Rates 1
Yield on earning assets				9.94%			9.94%			5.19%			5.17%				4.61%			4.68%
Cost of interest-bearing liabilities				7.50			7.38			1.07			1.04				1.69			1.71
Net interest spread				2.44			2.56			4.12			4.13				2.92			2.97
Net interest margin				(32.39)			(31.57)			4.23			4.23				3.09			3.16
1	Annualized and on a fully taxable equivalent basis.

CAPITAL BANK CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited)
		Successor Company				Predecessor Company
(Dollars in thousands)		Dec. 31, 2011				Dec. 31, 2010
Assets
Cash and cash equivalents:
Cash and due from banks		$	2,163			$	13,646
Interest-bearing deposits with banks			–				53,099
Total cash and cash equivalents			2,163				66,745
Investment securities:
Investment securities – available for sale, at fair value			–				214,991
Other investments			–				8,301
Total investment securities			–				223,292
Mortgage loans held for sale			–				6,993
Loans:
Loans – net of unearned income and deferred fees			–				1,254,479
Allowance for loan losses			–				(36,061)
Net loans			–				1,218,418
Investment in and advance to Capital Bank, NA			247,121				–
Other real estate			–				18,334
Premises and equipment, net			–				25,034
Other intangible assets, net			–				1,774
Other assets			458				24,957
Total assets		$	249,742			$	1,585,547
Liabilities
Deposits:
Demand deposits		$	–			$	116,113
NOW accounts			–				185,782
Money market accounts			–				137,422
Savings deposits			–				30,639
Time deposits			–				873,330
Total deposits			–				1,343,286
Borrowings			–				121,000
Subordinated debentures			19,163				34,323
Other liabilities			5,715				10,250
Total liabilities			24,878				1,508,859
Shareholders' Equity
Preferred stock, $1,000 par value; 100,000 shares authorized; 41,279 shares issued    and outstanding (liquidation preference of $41,279) at December 31, 2010			–				40,418
Common stock, no par value; 300,000,000 shares authorized; 85,802,164 and    12,877,846 shares issued and outstanding			218,826				145,594
Retained earnings (accumulated deficit)			5,267				(108,027)
Accumulated other comprehensive income (loss)			771				(1,297)
Total shareholders' equity			224,864				76,688
Total liabilities and shareholders' equity		$	249,742			$	1,585,547

CAPITAL BANK CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Successor Company				Predecessor Company			Successor Company				Predecessor Company
(Dollars in thousands except per share data)		Three Months Ended Dec. 31, 2011				Three Months Ended Dec. 31, 2010			Jan. 29, 2011 to Dec. 31, 2011				Jan. 1, 2011 to Jan. 28, 2011			Year Ended Dec. 31, 2010
Interest income:
Loans and loan fees		$	–			$	16,394		$	27,521			$	5,479		$	68,474
Investment securities:
Taxable interest income			–				1,632			3,206				391			7,483
Tax-exempt interest income			–				227			398				74			1,596
Dividends			–				22			59				–			80
Federal funds and other interest income			85				52			257				11			89
Total interest income			85				18,327			31,441				5,955			77,722
Interest expense:
Deposits			–				4,644			4,560				1,551			21,082
Borrowings and subordinated debentures			362				1,396			1,968				445			5,677
Total interest expense			362				6,040			6,528				1,996			26,759
Net interest income (loss)			(277)				12,287			24,913				3,959			50,963
Provision for loan losses			–				20,011			1,450				40			58,545
Net interest income (loss) after    provision for loan losses			(277)				(7,724)			23,463				3,919			(7,582)
Noninterest income:
Service charges and other fees			–				843			1,355				291			3,311
Bank card services			–				541			847				174			2,020
Mortgage origination and other loan fees			–				753			518				210			1,861
Brokerage fees			–				220			308				78			963
Bank-owned life insurance			–				67			134				10			699
Equity income from investment in Capital    Bank, NA			1,762				–			4,045				–			–
Net gain on sale of investment securities			–				5,344			–				–			5,855
Other			–				236			155				69			840
Total noninterest income			1,762				8,004			7,362				832			15,549
Noninterest expense:
Salaries and employee benefits			–				6,038			9,525				1,977			22,675
Occupancy			–				1,488			2,970				548			5,906
Furniture and equipment			–				871			1,401				275			3,183
Data processing and telecommunications			–				562			911				180			2,092
Advertising and public relations			–				423			325				131			1,887
Office expenses			–				320			498				93			1,260
Professional fees			–				729			543				190			2,514
Business development and travel			–				413			550				87			1,350
Amortization of other intangible assets			–				232			478				62			937
ORE losses and miscellaneous loan costs			–				1,148			1,608				176			5,006
Directors' fees			–				233			93				68			1,061
FDIC deposit insurance			–				1,818			1,076				266			3,846
Contract termination fees			–				–			3,955				–			–
Other			175				854			1,344				102			2,592
Total noninterest expense			175				15,129			25,277				4,155			54,309
Net income (loss) before taxes			1,310				(14,849)			5,548				596			(46,342)
Income tax expense (benefit)			(168)				18,634			281				–			15,124
Net income (loss)			1,478				(33,483)			5,267				596			(61,466)
Dividends and accretion on preferred stock			–				589			–				861			2,355
Net income (loss) attributable to common shareholders		$	1,478			$	(34,072)		$	5,267			$	(265)		$	(63,821)
Earnings (loss) per common share – basic		$	0.02			$	(2.59)		$	0.06			$	(0.02)		$	(4.98)
Earnings (loss) per common share – diluted		$	0.02			$	(2.59)		$	0.06			$	(0.02)		$	(4.98)

CAPITAL BANK CORPORATION Average Balances, Interest Earned or Paid, and Interest Yields/Rates Tax Equivalent Basis 1
				Successor Company																				Predecessor Company
(Dollars in thousands)				Three Months Ended Dec. 31, 2011									Three Months Ended Sep. 30, 2011											Three Months Ended Dec. 31, 2010
				Average Balance			Amount Earned			Average Rate			Average Balance			Amount Earned			Average Rate					Average Balance			Amount Earned			Average Rate
Assets
Loans 2				$	–		$	–			–%		$	–		$	–			–%				$	1,303,147		$	16,545			5.04%
Investment securities 3					–			–			–			–			–			–					191,877			1,999			4.17
Interest-bearing deposits					–			–			–			–			–			–					82,627			52			0.25
Advance to Capital Bank, NA					3,393			85			9.94			3,393			85			9.94					–			–			–
Total interest-earning assets					3,393		$	85			9.94%			3,393		$	85			9.94%					1,577,651		$	18,596			4.68%
Cash and due from banks					2,318									9,268											18,044
Other assets					238,580									235,522											52,772
Total assets				$	244,291								$	248,183										$	1,648,467
Liabilities and Equity
NOW and money market accounts				$	–		$	–			–%		$	–		$	–			–%				$	319,250		$	626			0.78%
Savings accounts					–			–			–			–			–			–					30,913			10			0.13
Time deposits					–			–			–			–			–			–					889,153			4,008			1.79
Total interest-bearing deposits					–			–			–			–			–			–					1,239,316			4,644			1.49
Borrowings					–			–			–			–			–			–					126,130			1,095			3.44
Subordinated debentures					19,142			362			7.50			19,078			355			7.38					34,323			301			3.48
Total interest-bearing liabilities					19,142		$	362			7.50%			19,078		$	355			7.38%					1,399,769		$	6,040			1.71%
Noninterest-bearing deposits					–									–											127,589
Other liabilities					306									144											10,321
Total liabilities					19,448									19,222											1,537,679
Shareholders' equity					224,843									228,961											110,788
Total liabilities and shareholders' equity				$	244,291								$	248,183										$	1,648,467
Net interest spread 4											2.44	%								2.56%											2.97%
Tax equivalent adjustment							$	–								$	–										$	269
Net interest income and net interest margin 5							$	(277)			(32.39)%					$	(270)			(31.57)%							$	12,556			3.16%
1	The tax equivalent adjustment is computed using a federal tax rate of 34% and is applied to interest income from tax exempt municipal loans and investment securities.
2	Loans include mortgage loans held for sale in addition to nonaccrual loans for which accrual of interest has not been recorded.
3	The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
4	Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
5	Net interest margin represents net interest income divided by average interest-earning assets.

CAPITAL BANK CORPORATION Average Balances, Interest Earned or Paid, and Interest Yields/Rates Tax Equivalent Basis 1
				Successor Company										Predecessor Company
(Dollars in thousands)				Period of Jan. 29 to Dec. 31, 2011										Period of Jan. 1 to Jan. 28, 2011									Year Ended Dec. 31, 2010
				Average Balance			Amount Earned			Average Rate				Average Balance			Amount Earned			Average Rate			Average Balance			Amount Earned			Average Rate
Assets
Loans 2				$	495,129		$	27,734			6.12%			$	1,253,296		$	5,530			5.20%		$	1,353,191		$	69,084			5.11%
Investment securities 3					133,960			3,893			3.17				225,971			504			2.68			213,402			9,986			4.68
Interest-bearing deposits					39,730			87			0.24				63,350			11			0.20			38,003			89			0.23
Advance to Capital Bank, NA					1,869			170			9.94				–			–			–			–			–			–
Total interest-earning assets					670,688		$	31,884			5.20%				1,542,617		$	6,045			4.61%			1,604,596		$	79,159			4.93%
Cash and due from banks					10,603										16,112									18,149
Other assets					214,626										34,021									68,910
Total assets				$	895,917									$	1,592,750								$	1,691,655
Liabilities and Equity
NOW and money market accounts				$	154,880		$	1,084			0.76%			$	334,668		$	211			0.74%		$	327,811		$	2,794			0.85%
Savings accounts					14,352			16			0.12				30,862			3			0.11			30,555			41			0.13
Time deposits					380,278			3,460			0.99				870,146			1,337			1.81			878,068			18,247			2.08
Total interest-bearing deposits					549,510			4,560			0.91				1,235,676			1,551			1.48			1,236,434			21,082			1.71
Borrowings					42,851			664			1.69				120,032			343			3.36			150,207			4,541			3.02
Subordinated debentures					19,248			1,304			7.40				34,323			102			3.50			33,550			1,131			3.37
Repurchase agreements					–			–			–				–			–			–			1,564			5			0.32
Total interest-bearing liabilities					611,609		$	6,528			1.17%				1,390,031		$	1,996			1.69%			1,421,755		$	26,759			1.88%
Noninterest-bearing deposits					53,397										114,660									130,944
Other liabilities					4,922										9,635									10,519
Total liabilities					669,928										1,514,326									1,563,218
Shareholders' equity					225,989										78,424									128,437
Total liabilities and shareholders' equity				$	895,917									$	1,592,750								$	1,691,655
Net interest spread 4											4.03%										2.92%									3.05%
Tax equivalent adjustment							$	443									$	90								$	1,437
Net interest income and net interest margin 5							$	25,356			4.13%						$	4,049			3.09%					$	52,400			3.27%
1	The tax equivalent adjustment is computed using a federal tax rate of 34% and is applied to interest income from tax exempt municipal loans and investment securities.
2	Loans include mortgage loans held for sale in addition to nonaccrual loans for which accrual of interest has not been recorded.
3	The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
4	Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
5	Net interest margin represents net interest income divided by average interest-earning assets.

SOURCE Capital Bank Corporation

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