Capital Bank's eight outside directors will receive rich payments if the Raleigh bank's deal with a private investor goes through.

Earlier this month, Capital announced that North American Financial Holdings had agreed to pay $2.55 per share, or $181 million, to buy a majority stake in the struggling bank. Capital shareholders are scheduled to vote on the deal Dec. 16.

If completed, the deal will trigger lump-sum payments for Capital's directors worth a total of $2.2 million, the company reported in a Securities and Exchange Commission filing late today. That money is based on a "change in control" clause in the directors' retirement benefits.

Capital chairman O.A. Keller III would receive $891,104. Keller is CEO of Earthtec of NC, an environmental treatment facility in Sanford. He has been a Capital director since the bank started in 1997.

Capital Bank, which is anticipating pressure from regulators to shore up its finances, today withdrew a stock offering that would have done just that.

The Raleigh bank said that it was withdrawing the public offering "in order to pursue certain other alternatives."

One possibility, which Capital noted in its filing with the Securities and Exchance Commission, is pursuing a private sale of stock. A private sale would enable a single investor to acquire a bigger stake in the bank than a public offering allows.

Another possibility is selling the bank to a larger competitor or a bank that is seeking entree into the bank's markets. Capital has 32 branches across the state.

Capital also planned a stock sale earlier this year but canceled it in January because of "unfavorable market conditions." The absence of similar language this time around could be a sign that the bank remains intent on selling its shares at the prevailing price -- but privately, rather than through a public offering.

Capital Bank disclosed that it expects to receive orders from state and federal banking regulators to clean up its finances.

If issued a so-called Memorandum of Understanding, or MOU, from the N.C. Banking Commission and FDIC, the Raleigh-based bank would be required to improve its liquidity, reduce its real-estate loans, strengthen its loan guidelines and take other steps to improve its financial health.

The disclosure raises questions about Capital's business. It also throws up another obstacle as the bank seeks to raise millions of dollars by selling more of its stock on Wall Street.

Capital Bank is seeking to raise more than $100 million to shore up its finances, make new loans as the economy recovers and pay for future expansion.

The Raleigh-based community bank scrapped a plan earlier this year to raise $55 million to finance acquisitions, citing poor market conditions. In March, the company raised $8.5 million from private investors.

This morning the bank filed plans to sell 34.5 million new shares on Wall Street. The final amount raised will depend on how much investors are willing to pay.

The bank's stock, which has lost more than half its value in the past year, fell 93 cents to $2.58 this morning.

Capital Bank this morning reported a $7.8 million net loss during the fourth quarter and suspended its dividend as the Raleigh-based bank is hit by loan losses and higher expenses.

The quarterly results were an improvement from the same period a year earlier for the company, which operates 32 branches across North Carolina. But like many community banks, Capital Bank is struggling during the recession.

The company's board voted to suspend paying a quarterly dividend to save money, a move that could further depress its stock. Earlier this month, Capital canceled a plan to raise as much as $55 million by selling shares, citing stock market conditions.

Capital's shares fell 67 cents today to $3.49 and are down nearly 30 percent in the past year.

“Weakness in local residential and commercial real estate markets continues to severely impact the financial health and stability of many businesses within the communities we serve,” said CEO B. Grant Yarber, in a prepared statement.

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.

Today on NBC's "Today Show": Capital Bank CEO Grant Yarber.

The head of the Raleigh-based bank was included in a segment this morning devoted to Pretty in Pink, a foundation that help breast cancer victims who can't afford treatment obtain the care they need for free or at reduced cost. The foundation was created by Dr. Lisa Tolnitch, a Raleigh breast cancer surgeon.

Yarber is shown talking about why Capital Bank donated $100,000 to Pretty in Pink.

"Can you imagine your mother or your sister or your daughter having this disease and not having the ability to get the treatment that they need to live?" he asks.

You can see the segment below.

The corporate parent of Raleigh-based Capital Bank posted a $1.3 million profit in the second quarter, down 39 percent from a year ago.

The company managed to return to profitability in the latest quarter “despite the current recessionary environment,” CEO Grant Yarber said in a prepared statement today.

The bank also disclosed that it is planning to close two branches in Alamance County.

The company plans to consolidate its two branches in Burlington and Graham into one branch in each town.

“There just isn’t enough business growth there” to justify two branches, said chief financial officer Mike Moore.

But the bank previously announced it is opening new branches in West Cary and Holly Springs – targeted to open in August and September, respectively – so it will continue to have 32 branches in all. Those two locations offer more “growth opportunity,” Moore said.

Grant Yarber will spend part of his Saturday night on stage in front of an audience of mostly young girls.

His company, Capital Bank of Raleigh, is one of the top corporate sponsors of N.C. Theatre and its production of High School Musical 2.

As he did last weekend, Yarber will join the group's executive director Lisa Grele Barrie and others in saying a few words before the curtain lifts.

Mostly, he'll thank parents for bringing their kids, and for supporting the arts in Raleigh. As he does, he'll also further his efforts to market Capital Bank.

"Parents are very loyal," Yarber said. "If you're doing stuff to help out their kids and entertain their children, parents look favorably on that. They remember that."