What's going on at Raleighs Capital Bank? (Charlotte: for sale, real estate market)

[Beermat]

The N&O had an article today about 'struggling' Capital Bank being bought by Charlotte based North American Financial Holdings for $181m conditional on Capital getting Government approval that the $41.3m TARP money that it borrowed being paid back at 50 cents to the dollar. If the deal goes through Grant Yarber, the CEO gets a bonus of $3.4m, and 3 other senior executives get $1.9m between them. Call me old fashioned but I don't like the smell of deals like this. If the CEO and executives have screwed up they should be fired rather than negotiate sweetheart deals at the taxpayers expense where they get to keep their jobs and very generous 'change of control' bonuses

If the bank is failing and requires rescuing the people who caused the problems through should pay the price and leave with nothing and let the fallout be managed by the FDIC rather than let Private Equity vultures get $21m from taxpayers. To rub salt Capital has signed an exclusivity deal where they have to pay NAFH $5m if they decide to accept a higher offer from another bank - well with nice bonuses on the table they would

What do others think? I will be taking my few dollars out of Capital Bank tomorrow out of disgust.

http://www.newsobserver.com/2010/11/...ylink=misearch

[RaleighLass]

My understanding of the situation is that the bank is for sale and the potential buyer will only buy if the current bank owners/leadership agrees to request repayment of the money at the rate you stated. The buyer feels this will make the deal viable. The current bank owners are not proposing to short the repayment. The current leadership haven't "screwed up" that I am aware of. I think they may have gotten burned with some bad mortages during the crisis but not certain that I am remembering this accurately.
Aside from the discussion of this bank, I totally agree with you about banks that were run carelessly and then wanted the taxpayers to bail them out - disgusting.

[henriInCary]

Always shocks me, when people who do a bad job .. get compensated .. EXTREMELY well. That's simply wrong. Being "burned by bad mortgages" is no different than me buying a used car that has a bad transmission. Should I ask to be ... bailed out as well?

[Beermat]

I see that Capital Bank announced it's 3rd quarter results yesterday and it explains why they are looking for a buyer. In the last 4 quarters they have lost $36.4m; in the 3rd quarter they have lost $9.1m; and in the 9 months of 2010 they have lost over $26m. The non performing assets don't sound so bad when shown as 5.69% but look painful when you read that the figure is $93.8m of which $63m is commercial real estate and only $4.8m is consumer real estate. Looks like they got into businesses they didn't fully understand.

I am still surprized that anyone would want to pay the executives that created this mess bonuses totalling $5.3m with the CEO getting $3.4m for himself and getting to keep his job


RALEIGH, N.C., November 12, 2010 – Capital Bank Corporation (Nasdaq: CBKN), the parent company of Capital Bank, today reported financial results for the third quarter of 2010.

Key Items in Third Quarter of 2010:

• Net loss to common shareholders was $9.7 million, or $0.74 per share, in the third quarter of 2010 compared with net income to common shareholders of $3.0 million, or $0.26 per share, in the third quarter of 2009;


• Nonperforming assets, including restructured loans, were 5.69% of total assets as of September 30, 2010 compared with 5.76% as of June 30, 2010 and 4.87% as of December 31, 2009;

• Allowance for loan losses increased to 2.74% of total loans as of September 30, 2010 from 2.65% as of June 30, 2010 and 1.88% as of December 31, 2009;

• Provision for loan losses fell to $6.8 million in the third quarter of 2010 from $20.0 million in the second quarter of 2010 but increased from $3.6 million in the third quarter of 2009; and

• The valuation allowance recorded against deferred tax assets increased to $8.8 million as of September 30, 2010 from $3.3 million as of June 30, 201. (I bet the buyers love the accumulated tax loss asset that they can get their hands on - maybe thats what the bonus payments for?)


exhibit99_1.htm

[WRAL]

Looks like RBC (the Canadian Bank which owns RBC) is having a tough time in their Raleigh based banking operations with losses in the International division of $155M for the 3rd quarter caused by RBC's exposure to the south east slumping real estate market. It just demonstrates that the Triangle isn't immune from the economic downturn with both Capital and RBC having reported substantial losses. It will be interesting how many other local banks are suffering similar woes.

U.S. subsidiary saps RBC profit - Local/State - NewsObserver.com

[Starglow]

Now that's strange because Capital Bank is finishing up construction of a new building on Falls of Neuse Road where Blockbuster Video used to be between Cookout and Autozone. Why build new branches if money is tight and at least four other banks are already established in the same general area?

I don't know why developers seem to think we need a bank and a drugstore on practically every corner in the Raleigh area.

[Beermat]

Originally Posted by Beermat

I am still surprized that anyone would want to pay the executives that created this mess bonuses totalling $5.3m with the CEO getting $3.4m for himself and getting to keep his job
]

So one year later I read in the N&O that ex Capital Bank CEO Grant Yerber is suing the bank for $1.1m severance pay after they dismissed him. His claim seems to be that he and other Capital Bank executives were coerced into giving up 'change in control' payments in exchange for the $5.3m bonus payments on the closure of the takeover.

Sorry but I have little sympathy for this guy, particularly as he was trying to set up a new bank whilst working for his new bosses. Yerber needs to get real and understand how out of touch he is with the 1000's of Triangle residents who have lost their job in the last few years with little or no compensation. I was shocked that his new employers were paying him a $3.4m bonus after he run Capital Bank into the ground with poor decisions and wondered at the time of the ethics of the 'sweetheart deal'. Now it turns out there was another alternative from Piedmont Community Bank Holdings which was never disclosed a year ago.

Ex-CEO of Capital Bank sues for $1.1M - Business - NewsObserver.com

[BoBromhal]

if $1MM was at stake, you don't think you'd try to get it?