Capital Bank reported a $34.1 million loss in the fourth quarter as a result of increased income tax expenses and a higher provision for loan losses.
The Raleigh bank reported the fourth-quarter loss, which amounted to $2.59 per share, Monday. A year ago Capital lost $7.8 million, or 68 cents per share.
Capital took an $18.6 million non-cash expense stemming from the way it accounts for income tax in the fourth quarter. In addition, its provision for loan losses was $20 million. That compares to $6.8 million in the third quarter and $11.8 million in the year-ago quarter.
On Friday, North American Financial Holdings, an investment group whose leaders work out of Charlotte, completed its purchase of an 85 percent stake in the business for $181 million. That deal pumps much-needed capital into the bank, which was being pressured by regulators to shore up its finances in the wake of its struggles after the recession hit.
Capital Bank also increased its loan charge-offs to $20.3 million, up from $6.9 million in the third quarter, in part because of a change in the way it accounts for charge-offs. Writing off bad loans ahead of North American's assuming control of the bank makes sense.
As part of the deal, Gene Taylor, North American's chairman and CEO, became Capital's CEO. Former CEO Grant Yarber is remaining with the bank as market president for North Carolina.
"Many of our borrowers remain under stress, but we continue to work aggressively to resolve our problem loans and have experienced measurable success with many of these efforts," Taylor said in a prepared statement. "While the fourth quarter results are a disappointment, they were expected. We are excited to have closed our investment and are eager to proceed with accelerating improvements throughout the company."
North American has said it plans to more than double Capital's size by combining it with four out-of-state banks it purchased last year. That will boost Capital's network of branches from 32 to 84.
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