Capital Bank selling more mortgages with stimulus money

Capital Bank’s discount mortgage program, which was established with federal stimulus money, has generated 60 new mortgages totaling more than $20 million during the past two months.

The Raleigh-based bank has another 60 houses that it still wants to sell under its "Buyer's Program," CEO Grant Yarber said. The sales prices of the remaining homes range from $150,000 to $2 million.

The program offers 30-year, 3.95 percent fixed-rate mortgages. The houses in the program were either erected by builders and developers that are Capital Bank clients, or are houses that the bank has foreclosed on or foreclosure is imminent.

Capital Bank loses money on each mortgage under the program, Yarber said. But it is worth it to help its builder/developer customers and to get bad loans off its books.
“We believe it is our duty and our responsibility as a community bank to assist our customers in good times and bad times,” he said.

Capital Bank received $41.3 million in federal stimulus money at the end of last year, making it one of three Triangle-based banks that received U.S. Treasury dollars. To receive the influx of capital, banks had to show that they could survive without the extra funds.

On Tuesday Capital Bank reported a third-quarter profit of $3 million, up 50 percent from a year earlier.

During an earnings conference call today, Capital Bank also disclosed the recent closing of branches in Graham and Burlington.

Yarber said in an interview that the Graham branch was less than a mile from another Capital Bank office, and that the bank still has three offices in Burlington.

"We didn't see any decreases in deposit or loans, or lose any customers" as a result of the closings, Yarber said.

He added that closing those offices also enabled the bank to open new branches recently in much more densely populated areas in the Triangle: Holly Springs and West Cary.

Since Yarber became CEO six years ago, the bank has closed 10 offices and built nine new ones in more desirable locations, mostly in the Triangle, he said. That tally doesn’t include last year’s acquisition of four Omni National Bank branches in Fayetteville.

During that same span, the bank's assets have tripled. Capital Bank had $1.7 billion in assets as of Sept. 30.

Capital Bank's shares rose 8 cents to $5.49 today, but remain down 32 percent from a year ago.