Exhibit 99.1
![](https://capedge.com/proxy/8-K/0001071992-09-000018/release.jpg)
CONTACT:
B. Grant Yarber
President and Chief Executive Officer
Phone: (919) 645-3494
Email: gyarber@capitalbank-nc.com
FOR IMMEDIATE RELEASE
Capital Bank Announces Profitable Second Quarter
RALEIGH, N.C., July 21, 2009 – Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported net income of $1.3 million for the quarter ended June 30, 2009 compared to net income of $2.2 million for the quarter ended June 30, 2008. After dividends and accretion on preferred stock issued under the Capital Purchase Program of $0.6 million, net income available to common shareholders was $0.8 million, or $0.07 per diluted share, for the second quarter of 2009 compared with $2.2 million, or $0.20 per diluted share, for the same period one year ago. The second quarter results reflect improved net interest income and increased noninterest income which partially offset a higher provision for loan losses and increased noninterest expense.
“Despite the current recessionary environment, Capital Bank realized significant net interest margin improvement and a return to profitability during the second quarter,” stated B. Grant Yarber, president and CEO. “Capital Bank management continues to focus on asset quality and margin management. Through highly disciplined margin controls and a more rational competitive pricing landscape for customer deposits, our taxable equivalent net interest margin increased 45 basis points from the prior quarter in 2009. While we continue to face a difficult economy, we are encouraged by the positive trends in our net interest margin. We remain cautiously optimistic that an improved net interest margin will have a positive impact on future earnings.”
Net interest income increased by $1.2 million for the quarter ended June 30, 2009 from the same quarter one year ago. This improvement was due to an increase in net interest margin by 3 basis points, from 3.14% for the second quarter of 2008 to 3.17% for the second quarter of 2009, coupled with an 11% growth in average earning assets over the same periods. Net interest margin benefited from a significant decline in the cost of interest-bearing liabilities. Rates on total interest-bearing customer deposits fell 75 basis points, from 3.11% for the second quarter of 2008 to 2.36% for the second quarter of 2009. Additionally, rates on borrowed funds dropped 38 basis points, from 4.01% to 3.63% over the same period. Partially offsetting declining funding costs was a drop in loan yields largely due to steps taken by the Federal Reserve to revive an ailing national economy last year. One result of the many policy actions taken by the Federal Reserve was a cut in the prime rate by 400 basis points during 2008, which negatively impacted yields on Capital Bank’s prime-based loan portfolio. This rapid decline in rates decreased loan yields from 6.23% for the second quarter of 2008 to 5.43% for the second quarter of 2009.
Provision for loan losses for the quarter ended June 30, 2009 totaled $1.7 million, an increase of $842 thousand from the same period one year ago. The increase in the provision was partially due to loan growth of $115.2 million, or 10%, from June 30, 2008, but the increase was also driven by continued deteriorating economic conditions and weakness in the local real estate markets which resulted in downgrades to the credit ratings of certain loans in the portfolio. Management continues to thoroughly review its loan portfolio and the adequacy of its allowance for loan losses.
Past due loans as a percent of total loans increased to 1.17% at June 30, 2009 from 1.09% at December 31, 2008 and 0.78% at June 30, 2008. However, this past due ratio decreased during the second quarter of 2009, falling from 1.34% at March 31, 2009 to 1.17% at June 30, 2009. Nonperforming assets, which include loans on nonaccrual and other real estate owned, increased to 1.40% as a percent of total assets at June 30, 2009 compared to 0.63% at December 31, 2008 and 0.37% at June 30, 2008. As a result of the weakening credit quality experienced, the Company increased the allowance for loan losses to 1.44% of total loans at June 30, 2009 compared to 1.18% at both December 31, 2008 and June 30, 2008. The allowance for loan losses was 100% of nonperforming loans at June 30, 2009, a decline from 162% at December 31, 2008 and 267% at June 30, 2008.
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“Weakness in the residential and commercial real estate markets from the global recession and credit crisis continues to severely impact the financial health and stability of many businesses within the communities we serve. While we believe our markets remain some of the most resilient in the country, the Company again took steps to increase the provision for loan losses compared to the same quarter one year ago,” commented Mr. Yarber. “Despite the difficult economic conditions, our practice of working proactively with borrowers and dealing with problem loans has enabled Capital Bank to maintain credit quality that is superior to peer banks and other banks across the country. In fact, our nonperforming assets to total assets ratio of 1.40% at June 30, 2009 is significantly better than reported regional and national averages. While higher loan loss provisions have negatively impacted our earnings in recent quarters, we continue to believe our asset quality will position us well to take advantage of a future market recovery.”
Loans grew by $39.0 million during the first half of 2009 while deposits increased by $65.5 million. Much of the loan growth occurred in the Triangle region of North Carolina, which we believe continues to present quality growth opportunities in certain sectors. On the deposit side, checking and savings accounts increased $41.2 million during the six months ended June 30, 2009 as Capital Bank continued to emphasize growth in these critical product areas. Time deposits also increased $30.9 million over the same period while money market accounts declined by $6.5 million.
“Despite significant economic uncertainty, we have continued lending to qualified borrowers within the communities we serve as evidenced by our loan growth in the first half of 2009,” stated Mr. Yarber. “We are committed to doing our part to ensure that capital remains available to qualified borrowers in our markets while maintaining prudent lending standards that we believe to be in the best interests of the Company and its shareholders.”
Noninterest income increased $722 thousand, or 24%, in the second quarter of 2009 compared to the same period one year ago. Included in this increase was a nonrecurring gain recorded during the quarter of $913 thousand from the collection of bank-owned life insurance policy proceeds. Additionally, the Company recorded a $336 thousand net gain from the sale of certain debt securities in the second quarter of 2009 compared to a $69 thousand net gain on the sale of debt securities in the same quarter one year ago. Partially offsetting these gains was a $307 thousand decrease in service charge income and a $189 thousand decrease in other loan fees. Service charge income, which includes overdraft and non-sufficient funds charges, dropped primarily from a decline in consumer spending during the current economic recession.
Noninterest expense increased $2.5 million, from $10.0 million during the second quarter of 2008 to $12.5 million during the second quarter of 2009. This increase included higher FDIC deposit insurance expense of $998 thousand over the quarters under comparison, of which $750 thousand was related to accrual of the FDIC’s mandatory special assessment imposed on all insured financial institutions for the purpose of re-funding its reserves. The majority of the remaining $248 thousand increase in deposit insurance expense was due to increases in rates as the FDIC continued to increase insurance premiums to cover higher monitoring costs and claims. Further, salaries and employee benefits as well as occupancy costs increased a combined $978 thousand primarily due to additional costs incurred as new branches were opened during the past year in Asheville and Clayton in addition to the four branches purchased in the Fayetteville market in December 2008. Also partially contributing to this increase were nonrecurring costs incurred for the planned closing of two branches as part of a consolidation strategy in the Triad market as the Company continues to improve the efficiency of its branch network. The planned branch consolidation added $68 thousand and $127 thousand to employee benefits and occupancy expense, respectively, during the quarter ended June 30, 2009. Directors fees increased $288 thousand largely from an accelerated payout of deferred compensation benefits related to a former director.
Capital Bank Corporation, headquartered in Raleigh, N.C., with approximately $1.7 billion in total assets, offers a broad range of financial services. Capital Bank operates 32 banking offices in Asheville (4), Burlington (4), Cary, Clayton, Fayetteville (3), Graham (2), Hickory, Mebane, Morrisville, Oxford, Parkton, Pittsboro, Raleigh (5), Sanford (3), Siler City, Wake Forest and Zebulon. 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, | Six Months Ended June 30, | |||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||
(In thousands except per share data) | |||||||||||||
Interest income | $ | 20,755 | $ | 21,283 | $ | 40,420 | $ | 44,001 | |||||
Interest expense | 8,591 | 10,355 | 18,075 | 22,164 | |||||||||
Net interest income | 12,164 | 10,928 | 22,345 | 21,837 | |||||||||
Provision for loan losses | 1,692 | 850 | 7,678 | 1,415 | |||||||||
Net interest income after provision for loan losses | 10,472 | 10,078 | 14,667 | 20,422 | |||||||||
Noninterest income | 3,724 | 3,002 | 5,830 | 5,242 | |||||||||
Noninterest expense | 12,465 | 9,996 | 24,029 | 19,614 | |||||||||
Income (loss) before taxes | 1,731 | 3,084 | (3,532 | ) | 6,050 | ||||||||
Income tax expense (benefit) | 382 | 869 | (418 | ) | 1,668 | ||||||||
Net income (loss) | $ | 1,349 | $ | 2,215 | $ | (3,114 | ) | $ | 4,382 | ||||
Earnings (loss) per common share – basic | $ | 0.07 | $ | 0.20 | $ | (0.38 | ) | $ | 0.39 | ||||
Earnings (loss) per common share – fully diluted | $ | 0.07 | $ | 0.20 | $ | (0.38 | ) | $ | 0.39 | ||||
Weighted average shares outstanding: | |||||||||||||
Basic | 11,448 | 11,310 | 11,430 | 11,300 | |||||||||
Fully diluted | 11,448 | 11,324 | 11,430 | 11,315 |
End of Period Balances
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31(a) | September 30 | June 30 | ||||||||||||
(Dollars in thousands except per share data) | ||||||||||||||||
Total assets | $ | 1,695,342 | $ | 1,665,611 | $ | 1,654,232 | $ | 1,594,402 | $ | 1,592,034 | ||||||
Investment securities | 268,224 | 286,310 | 278,138 | 244,310 | 246,468 | |||||||||||
Loans (gross) | 1,293,340 | 1,277,064 | 1,254,368 | 1,194,149 | 1,178,157 | |||||||||||
Allowance for loan losses | 18,602 | 18,480 | 14,795 | 14,017 | 13,910 | |||||||||||
Total earning assets | 1,615,164 | 1,580,140 | 1,559,256 | 1,444,727 | 1,435,020 | |||||||||||
Deposits | 1,380,842 | 1,340,974 | 1,315,314 | 1,197,721 | 1,182,615 | |||||||||||
Shareholders’ equity | 143,306 | 142,674 | 148,514 | 166,521 | 165,731 | |||||||||||
Book value per common share | $ | 9.03 | $ | 8.97 | $ | 9.54 | $ | 14.83 | $ | 14.76 | ||||||
Tangible book value per common share | $ | 8.74 | $ | 8.66 | $ | 9.20 | $ | 9.26 | $ | 9.16 |
(a) Derived from audited consolidated financial statements
Average Quarterly Balances
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Total assets | $ | 1,665,387 | $ | 1,659,767 | $ | 1,620,817 | $ | 1,574,810 | $ | 1,578,357 | ||||||
Investments | 279,607 | 289,368 | 246,658 | 245,408 | 256,406 | |||||||||||
Loans (gross) | 1,285,571 | 1,265,438 | 1,213,027 | 1,176,491 | 1,166,795 | |||||||||||
Total earning assets | 1,588,502 | 1,574,017 | 1,473,422 | 1,425,516 | 1,433,099 | |||||||||||
Deposits | 1,324,507 | 1,307,827 | 1,238,343 | 1,164,362 | 1,148,671 | |||||||||||
Shareholders’ equity | 145,216 | 149,285 | 171,227 | 166,570 | 170,945 |
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CAPITAL BANK CORPORATION
Quarterly Results
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||
(In thousands except per share data) | ||||||||||||||||
Net interest income | $ | 12,164 | $ | 10,181 | $ | 9,932 | $ | 10,827 | $ | 10,928 | ||||||
Provision for loan losses | 1,692 | 5,986 | 1,701 | 760 | 850 | |||||||||||
Net interest income after provision for loan losses | 10,472 | 4,195 | 8,231 | 10,067 | 10,078 | |||||||||||
Noninterest income | 3,724 | 2,106 | 2,297 | 3,513 | 3,002 | |||||||||||
Noninterest expense | 12,465 | 11,564 | 76,286 | 10,763 | 9,996 | |||||||||||
Income (loss) before taxes | 1,731 | (5,263 | ) | (65,758 | ) | 2,817 | 3,084 | |||||||||
Income tax expense (benefit) | 382 | (800 | ) | (3,680 | ) | 805 | 869 | |||||||||
Net income (loss) | $ | 1,349 | $ | (4,463 | ) | $ | (62,078 | ) | $ | 2,012 | $ | 2,215 | ||||
Earnings (loss) per common share – basic | $ | 0.07 | $ | (0.45 | ) | $ | (5.50 | ) | $ | 0.18 | $ | 0.20 | ||||
Earnings (loss) per common share – fully diluted | $ | 0.07 | $ | (0.45 | ) | $ | (5.50 | ) | $ | 0.18 | $ | 0.20 | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 11,448 | 11,293 | 11,309 | 11,302 | 11,310 | |||||||||||
Fully diluted | 11,448 | 11,293 | 11,309 | 11,313 | 11,324 |
Quarterly Net Interest Margin*
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||
Yield on earning assets | 5.34 | % | 5.17 | % | 5.51 | % | 5.94 | % | 6.07 | % | ||||||
Cost of interest-bearing liabilities | 2.50 | 2.80 | 3.05 | 3.12 | 3.24 | |||||||||||
Net interest spread | 2.84 | 2.37 | 2.46 | 2.82 | 2.83 | |||||||||||
Net interest margin | 3.17 | 2.72 | 2.78 | 3.13 | 3.14 |
*Annualized and on a fully taxable equivalent basis
Nonperforming Assets
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31(a) | September 30 | June 30 | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Commercial | $ | 6,635 | $ | 6,231 | $ | 4,682 | $ | 4,343 | $ | 3,650 | ||||||
Construction | 11,336 | 10,259 | 3,843 | 1,570 | 418 | |||||||||||
Consumer | 32 | 33 | 92 | 25 | 42 | |||||||||||
Home equity | 140 | 96 | 275 | 275 | 515 | |||||||||||
Residential mortgage | 387 | 389 | 223 | 198 | 582 | |||||||||||
Total nonperforming loans | 18,530 | 17,008 | 9,115 | 6,411 | 5,207 | |||||||||||
Other real estate owned | 5,170 | 3,616 | 1,347 | 1,019 | 663 | |||||||||||
Total nonperforming assets | $ | 23,700 | $ | 20,624 | $ | 10,462 | $ | 7,430 | $ | 5,870 | ||||||
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
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CAPITAL BANK CORPORATION
Key Ratios
(Unaudited) | 2009 | 2008 | ||||||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Past due loans | $ | 15,196 | $ | 17,064 | $ | 13,642 | $ | 8,933 | $ | 9,239 | ||||||
Past due loans as a percent of total loans | 1.17 | % | 1.34 | % | 1.09 | % | 0.75 | % | 0.78 | % | ||||||
Net charge-offs | $ | 1,570 | $ | 2,301 | $ | 1,768 | $ | 653 | $ | 503 | ||||||
Net charge-offs as a percent of average loans (annualized) | 0.49 | % | 0.73 | % | 0.58 | % | 0.22 | % | 0.17 | % | ||||||
Allowance for loan losses as a percent of total loans | 1.44 | % | 1.45 | % | 1.18 | % | 1.17 | % | 1.18 | % | ||||||
Nonperforming assets as a percent of total assets | 1.40 | % | 1.24 | % | 0.63 | % | 0.47 | % | 0.37 | % | ||||||
Allowance for loan losses as a percent of nonperforming loans | 100 | % | 109 | % | 162 | % | 219 | % | 267 | % |
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CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2009 and December 31, 2008
June 30, 2009 | December 31, 2008 | ||||||
(Dollars in thousands except share data) | (Unaudited) | ||||||
Assets | |||||||
Cash and due from banks: | |||||||
Interest-earning | $ | 53,590 | $ | 26,621 | |||
Noninterest-earning | 19,094 | 27,705 | |||||
Federal funds sold and short term investments | 10 | 129 | |||||
Total cash and cash equivalents | 72,694 | 54,455 | |||||
Investment securities – available for sale, at fair value | 263,845 | 272,944 | |||||
Investment securities – held to maturity, at amortized cost | 4,379 | 5,194 | |||||
Loans – net of unearned income and deferred fees | 1,293,340 | 1,254,368 | |||||
Allowance for loan losses | (18,602 | ) | (14,795 | ) | |||
Net loans | 1,274,738 | 1,239,573 | |||||
Premises and equipment, net | 24,170 | 24,640 | |||||
Bank-owned life insurance | 22,398 | 22,368 | |||||
Deposit premium, net | 3,282 | 3,857 | |||||
Deferred income tax | 9,116 | 9,342 | |||||
Accrued interest receivable | 6,191 | 6,225 | |||||
Other assets | 14,529 | 15,634 | |||||
Total assets | $ | 1,695,342 | $ | 1,654,232 | |||
Liabilities | |||||||
Deposits: | |||||||
Demand, noninterest-bearing | $ | 130,567 | $ | 125,281 | |||
Savings and interest-bearing checking | 209,622 | 173,711 | |||||
Money market deposit accounts | 206,259 | 212,780 | |||||
Time deposits less than $100,000 | 503,476 | 509,231 | |||||
Time deposits $100,000 and greater | 330,918 | 294,311 | |||||
Total deposits | 1,380,842 | 1,315,314 | |||||
Repurchase agreements and federal funds purchased | 10,589 | 15,010 | |||||
Borrowings | 117,000 | 132,000 | |||||
Subordinated debentures | 30,930 | 30,930 | |||||
Other liabilities | 12,675 | 12,464 | |||||
Total liabilities | 1,552,036 | 1,505,718 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity | |||||||
Preferred stock, $1,000 par value; 100,000 shares authorized; 41,279 shares issued and outstanding (liquidation preference of $41,279) | 39,982 | 39,839 | |||||
Common stock, no par value; 20,000,000 shares authorized; 11,300,369 and 11,238,085 shares issued and outstanding | 139,641 | 139,209 | |||||
Retained deficit | (37,515 | ) | (31,420 | ) | |||
Accumulated other comprehensive income | 1,198 | 886 | |||||
Total shareholders’ equity | 143,306 | 148,514 | |||||
Total liabilities and shareholders’ equity | $ | 1,695,342 | $ | 1,654,232 |
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CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2009 and 2008 (Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2009 | 2008 | 2009 | 2008 | ||||||||||
(Dollars in thousands except per share data) | |||||||||||||
Interest income: | |||||||||||||
Loans and loan fees | $ | 17,412 | $ | 18,111 | $ | 33,504 | $ | 37,610 | |||||
Investment securities: | |||||||||||||
Taxable interest income | 2,561 | 2,216 | 5,360 | 4,434 | |||||||||
Tax-exempt interest income | 763 | 805 | 1,527 | 1,634 | |||||||||
Dividends | 13 | 118 | 13 | 235 | |||||||||
Federal funds and other interest income | 6 | 33 | 16 | 88 | |||||||||
Total interest income | 20,755 | 21,283 | 40,420 | 44,001 | |||||||||
Interest expense: | |||||||||||||
Deposits | 7,033 | 8,026 | 14,799 | 17,098 | |||||||||
Borrowings and repurchase agreements | 1,558 | 2,329 | 3,276 | 5,066 | |||||||||
Total interest expense | 8,591 | 10,355 | 18,075 | 22,164 | |||||||||
Net interest income | 12,164 | 10,928 | 22,345 | 21,837 | |||||||||
Provision for loan losses | 1,692 | 850 | 7,678 | 1,415 | |||||||||
Net interest income after provision for loan losses | 10,472 | 10,078 | 14,667 | 20,422 | |||||||||
Noninterest income: | |||||||||||||
Service charges and other fees | 959 | 1,266 | 1,911 | 2,225 | |||||||||
Mortgage fees and revenues | 385 | 354 | 618 | 626 | |||||||||
Other loan fees | 198 | 387 | 492 | 500 | |||||||||
Brokerage fees | 150 | 245 | 313 | 401 | |||||||||
Bank card services | 385 | 354 | 724 | 653 | |||||||||
Bank-owned life insurance | 1,165 | 260 | 1,423 | 562 | |||||||||
Net gain on investment securities | 336 | 69 | 16 | 140 | |||||||||
Other | 146 | 67 | 333 | 135 | |||||||||
Total noninterest income | �� | 3,724 | 3,002 | 5,830 | 5,242 | ||||||||
Noninterest expense: | |||||||||||||
Salaries and employee benefits | 5,856 | 5,269 | 11,817 | 10,172 | |||||||||
Occupancy | 1,348 | 957 | 2,721 | 1,954 | |||||||||
Furniture and equipment | 739 | 793 | 1,569 | 1,540 | |||||||||
Data processing and telecommunications | 573 | 528 | 1,204 | 960 | |||||||||
Advertising | 223 | 205 | 546 | 520 | |||||||||
Office expenses | 322 | 315 | 657 | 680 | |||||||||
Professional fees | 434 | 281 | 813 | 651 | |||||||||
Business development and travel | 247 | 340 | 575 | 673 | |||||||||
Amortization of deposit premiums | 287 | 257 | 575 | 514 | |||||||||
Miscellaneous loan handling costs | 372 | 224 | 535 | 318 | |||||||||
Directors fees | 477 | 189 | 836 | 589 | |||||||||
Insurance | 140 | 103 | 244 | 198 | |||||||||
FDIC deposit insurance | 1,179 | 181 | 1,408 | 228 | |||||||||
Other | 268 | 354 | 529 | 617 | |||||||||
Total noninterest expense | 12,465 | 9,996 | 24,029 | 19,614 | |||||||||
Net income before tax expense | 1,731 | 3,084 | (3,532 | ) | 6,050 | ||||||||
Income tax expense (benefit) | 382 | 869 | (418 | ) | 1,668 | ||||||||
Net income (loss) | $ | 1,349 | $ | 2,215 | $ | (3,114 | ) | $ | 4,382 | ||||
Dividends and accretion on preferred stock | 587 | – | 1,174 | – | |||||||||
Net income (loss) attributable to common shareholders | $ | 762 | $ | 2,215 | $ | (4,288 | ) | $ | 4,382 | ||||
Earnings (loss) per common share – basic | $ | 0.07 | $ | 0.20 | $ | (0.38 | ) | $ | 0.39 | ||||
Earnings (loss) per common share – diluted | $ | 0.07 | $ | 0.20 | $ | (0.38 | ) | $ | 0.39 |
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Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended June 30, 2009, March 31, 2009 and June 30, 2008
Tax Equivalent Basis (1)
June 30, 2009 | March 31, 2009 | June 30, 2008 | ||||||||||||||||||||||||||
(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 | $ | 1,115,003 | $ | 15,244 | 5.48 | % | $ | 1,095,804 | $ | 13,942 | 5.16 | % | $ | 1,010,899 | $ | 15,713 | 6.23 | % | ||||||||||
Consumer | 54,552 | 902 | 6.63 | 52,873 | 910 | 6.98 | 46,344 | 869 | 7.52 | |||||||||||||||||||
Home equity | 94,054 | 974 | 4.15 | 93,861 | 966 | 4.17 | 80,842 | 1,101 | 5.46 | |||||||||||||||||||
Residential mortgages | 21,962 | 292 | 5.32 | 22,900 | 274 | 4.79 | 28,710 | 427 | 5.95 | |||||||||||||||||||
Total loans | 1,285,571 | 17,412 | 5.43 | 1,265,438 | 16,092 | 5.16 | 1,166,795 | 18,111 | 6.23 | |||||||||||||||||||
Investment securities (3) | 278,033 | 3,731 | 5.37 | 288,679 | 3,957 | 5.48 | 256,406 | 3,555 | 5.55 | |||||||||||||||||||
Federal funds sold and interest-earning cash (4) | 24,898 | 6 | 0.10 | 19,900 | 10 | 0.20 | 9,898 | 33 | 1.34 | |||||||||||||||||||
Total interest-earning assets | 1,588,502 | $ | 21,149 | 5.34 | % | 1,574,017 | $ | 20,059 | 5.17 | % | 1,433,099 | $ | 21,699 | 6.07 | % | |||||||||||||
Cash and due from banks | 15,294 | 22,116 | 22,938 | |||||||||||||||||||||||||
Other assets | 80,296 | 78,814 | 135,976 | |||||||||||||||||||||||||
Allowance for loan losses | (18,705 | ) | (15,180 | ) | (13,656 | ) | ||||||||||||||||||||||
Total assets | $ | 1,665,387 | $ | 1,659,767 | $ | 1,578,357 | ||||||||||||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||||||
Savings deposits | $ | 29,609 | $ | 13 | 0.18 | % | $ | 28,793 | $ | 13 | 0.18 | % | $ | 30,540 | $ | 35 | 0.46 | % | ||||||||||
Interest-bearing demand deposits | 368,132 | 1,152 | 1.26 | 353,262 | 1,202 | 1.38 | 335,851 | 1,635 | 1.95 | |||||||||||||||||||
Time deposits | 796,306 | 5,868 | 2.96 | 800,879 | 6,551 | 3.32 | 668,690 | 6,356 | 3.81 | |||||||||||||||||||
Total interest-bearing deposits | 1,194,047 | 7,033 | 2.36 | 1,182,934 | 7,766 | 2.66 | 1,035,081 | 8,026 | 3.11 | |||||||||||||||||||
Borrowed funds | 140,682 | 1,273 | 3.63 | 146,233 | 1,389 | 3.85 | 181,841 | 1,820 | 4.01 | |||||||||||||||||||
Subordinated debt | 30,930 | 278 | 3.61 | 30,930 | 322 | 4.22 | 30,930 | 403 | 5.23 | |||||||||||||||||||
Repurchase agreements and fed funds purchased | 12,010 | 7 | 0.23 | 13,849 | 7 | 0.20 | 35,183 | 106 | 1.21 | |||||||||||||||||||
Total interest-bearing liabilities | 1,377,669 | $ | 8,591 | 2.50 | % | 1,373,946 | $ | 9,484 | 2.80 | % | 1,283,035 | $ | 10,355 | 3.24 | % | |||||||||||||
Noninterest-bearing deposits | 130,460 | 124,893 | 113,590 | |||||||||||||||||||||||||
Other liabilities | 12,042 | 11,643 | 10,787 | |||||||||||||||||||||||||
Total liabilities | 1,520,171 | 1,510,482 | 1,407,412 | |||||||||||||||||||||||||
Shareholders’ equity | 145,216 | 149,285 | 170,945 | |||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,665,387 | $ | 1,659,767 | $ | 1,578,357 | ||||||||||||||||||||||
Net interest spread (5) | 2.84 | % | 2.37 | % | 2.83 | % | ||||||||||||||||||||||
Tax equivalent adjustment | $ | 394 | $ | 394 | $ | 416 | ||||||||||||||||||||||
Net interest income and net interest margin (6) | $ | 12,558 | 3.17 | % | $ | 10,575 | 2.72 | % | $ | 11,344 | 3.14 | % |
(1) | The tax equivalent basis is computed using a tax rate of 34%. |
(2) | Loans receivable include nonaccrual loans for which accrual of interest has not been recorded. |
(3) | The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any. |
(4) | The Federal Reserve began paying interest on cash balances in the quarter ended December 31, 2008. For comparison purposes, average balances have been adjusted for all periods presented to include cash held at the Federal Reserve as interest earning. |
(5) | Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. |
(6) | Net interest margin represents net interest income divided by average interest-earning assets. |
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Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Six Months Ended June 30, 2009 and 2008
Tax Equivalent Basis (1)
June 30, 2009 | June 30, 2008 | ||||||||||||||||||
(Dollars in thousands) | Average Balance | Amount Earned | Average Rate | Average Balance | Amount Earned | Average Rate | |||||||||||||
Assets | |||||||||||||||||||
Loans receivable: (2) | |||||||||||||||||||
Commercial | $ | 1,105,457 | $ | 29,185 | 5.32 | % | $ | 998,552 | $ | 32,490 | 6.53 | % | |||||||
Consumer | 53,717 | 1,812 | 6.80 | 46,522 | 1,779 | 7.67 | |||||||||||||
Home equity | 93,958 | 1,941 | 4.17 | 80,203 | 2,422 | 6.06 | |||||||||||||
Residential mortgages | 22,428 | 566 | 5.05 | 29,485 | 919 | 6.23 | |||||||||||||
Total loans | 1,275,560 | 33,504 | 5.30 | 1,154,762 | 37,610 | 6.53 | |||||||||||||
Investment securities (3) | 283,327 | 7,688 | 5.43 | 256,472 | 7,144 | 5.57 | |||||||||||||
Federal funds sold and interest-earning cash (4) | 22,413 | 16 | 0.14 | 10,721 | 88 | 1.65 | |||||||||||||
Total interest-earnings assets | 1,581,300 | $ | 41,208 | 5.26 | % | 1,421,955 | $ | 44,842 | 6.32 | % | |||||||||
Cash and due from banks | 18,686 | 22,854 | |||||||||||||||||
Other assets | 79,559 | 136,024 | |||||||||||||||||
Allowance for loan losses | (16,952 | ) | (13,659 | ) | |||||||||||||||
Total assets | $ | 1,662,593 | $ | 1,567,174 | |||||||||||||||
Liabilities and Equity | |||||||||||||||||||
Savings deposits | $ | 29,204 | $ | 26 | 0.18 | % | $ | 30,461 | $ | 81 | 0.53 | % | |||||||
Interest-bearing demand deposits | 360,738 | 2,355 | 1.32 | 334,480 | 3,489 | 2.09 | |||||||||||||
Time deposits | 798,580 | 12,418 | 3.14 | 663,150 | 13,528 | 4.09 | |||||||||||||
Total interest-bearing deposits | 1,188,522 | 14,799 | 2.51 | 1,028,091 | 17,098 | 3.34 | |||||||||||||
Borrowed funds | 143,442 | 2,663 | 3.74 | 176,743 | 3,843 | 4.36 | |||||||||||||
Subordinated debt | 30,930 | 599 | 3.91 | 30,930 | 929 | 6.02 | |||||||||||||
Repurchase agreements and fed funds purchased | 12,924 | 14 | 0.22 | 35,373 | 294 | 1.67 | |||||||||||||
Total interest-bearing liabilities | 1,375,818 | $ | 18,075 | 2.65 | % | 1,271,137 | $ | 22,164 | 3.50 | % | |||||||||
Noninterest-bearing deposits | 127,692 | 115,799 | |||||||||||||||||
Other liabilities | 11,844 | 10,960 | |||||||||||||||||
Total liabilities | 1,515,354 | 1,397,896 | |||||||||||||||||
Shareholders’ equity | 147,239 | 169,278 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,662,593 | $ | 1,567,174 | |||||||||||||||
Net interest spread (5) | 2.61 | % | 2.83 | % | |||||||||||||||
Tax equivalent adjustment | $ | 788 | $ | 841 | |||||||||||||||
Net interest income and net interest margin (6) | $ | 23,133 | 2.95 | % | $ | 22,678 | 3.20 | % |
(1) | The tax equivalent basis is computed using a tax rate of 34%. |
(2) | Loans receivable include nonaccrual loans for which accrual of interest has not been recorded. |
(3) | The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any. |
(4) | The Federal Reserve began paying interest on cash balances in the quarter ended December 31, 2008. For comparison purposes, average balances have been adjusted for all periods presented to include cash held at the Federal Reserve as interest earning. |
(5) | Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. |
(6) | Net interest margin represents net interest income divided by average interest-earning assets. |
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