UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to_______________
Commission file no. 2-26080
CAPITAL BANCORP
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2160717
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(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1221 Brickell Avenue, Miami, Florida 33131
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(Address of Principal Executive Offices) (Zip Code)
(305) 536-1500
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
X Yes ______ No
As of August 4, 1995, there were 7,299,463 shares of the
registrant's common stock outstanding.
==================================================================
Page 1 of 22 Pages
Exhibit Index Page 19
<PAGE>
<TABLE>
ITEM 1. PART I. FINANCIAL INFORMATION
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(In Thousands of Dollars)
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 96,145 $ 91,712
Federal funds sold and securities
purchased under agreement to resell 70,000 15,000
---------- ----------
Cash and cash equivalents 166,145 106,712
---------- ----------
Securities held to maturity
(Market value 6/30/95 -
$75,575, 12/31/94 - $ 89,122) 74,701 91,031
Securities available for sale
(at market value) 126,611 130,018
---------- ----------
Total securities 201,312 221,049
---------- ----------
Loans 667,332 638,144
Less allowance for loan losses (11,218) (9,210)
Less unearned income (2,757) (2,771)
---------- ----------
Loans, net 653,357 626,163
---------- ----------
Accounts receivable -
factoring subsidiary, net 285,063 262,423
Premises and equipment, net 33,727 32,358
Due from customers on acceptances 25,680 30,575
Other real estate 12,331 14,710
Accrued interest and other assets 29,203 29,679
---------- ----------
Total assets $1,406,818 $1,323,669
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing deposits $ 285,782 $ 296,599
Savings and money market deposits 289,348 315,323
Time deposits 371,805 264,871
---------- ----------
Total deposits 946,935 876,793
---------- ----------
Funds purchased and securities sold
under agreements to repurchase 86,453 87,236
Bank acceptances outstanding 25,680 30,575
Due to clients - factoring subsidiary 98,728 94,513
Long-term debt 126,650 126,980
Other liabilities 21,582 16,209
---------- ----------
Total liabilities 1,306,028 1,232,306
---------- ----------
Stockholders' equity:
Common stock, $1 par value
Authorized - 20,000,000 shares
Issued - 7,295,393 shares - 6/30/95,
4,821,475 shares - 12/31/94 7,295 4,821
Capital surplus 6,301 8,216
Retained earnings 89,912 83,445
Treasury stock, 120,000 shares -
6/30/95, 80,000 shares - 12/31/94 (1,440) (1,440)
Unrealized loss on securities
available for sale (1,278) (3,679)
---------- ----------
Total stockholders' equity 100,790 91,363
---------- ----------
Total liabilities and
stockholders' equity $1,406,818 $1,323,669
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
Page 2
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<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $15,883 $12,638 $31,256 $24,370
Advances-factoring clients 6,493 3,673 12,404 7,018
Taxable securities 3,169 2,640 6,365 5,030
Tax-exempt securities 58 85 121 171
Federal funds sold and
securities purchased under
agreements to resell 586 942 832 1,670
------- ------- ------- -------
Total interest income 26,189 19,978 50,978 38,259
------- ------- ------- -------
INTEREST EXPENSE:
Savings and money
market deposits 1,677 1,684 3,410 3,412
Time deposits 4,484 2,622 7,829 5,005
Short-term borrowings 1,190 944 2,475 1,490
Long-term debt 2,504 81 4,934 137
------- ------- ------- -------
Total interest expense 9,855 5,331 18,648 10,044
------- ------- ------- -------
Net interest income 16,334 14,647 32,330 28,215
Provision for loan losses 375 1,050 750 2,325
Provision for doubtful accounts-
factoring subsidiary 500 650 950 1,385
------- ------- ------- -------
Net interest income
after provisions 15,459 12,947 30,630 24,505
------- ------- ------- -------
OTHER INCOME:
Factoring revenues 5,529 4,691 10,724 9,256
Service charges on deposits 3,199 2,865 6,560 5,374
Fees on letters of credit 1,099 1,078 2,010 2,055
Securities gains 12 5 12 1,062
Other operating income 1,349 1,548 2,711 2,691
------- ------- ------- -------
Total other income 11,188 10,187 22,017 20,438
------- ------- ------- -------
OTHER EXPENSES:
Salaries and
employee benefits 9,511 8,787 18,801 17,246
Occupancy expense, net 1,871 1,941 3,690 3,805
Other operating
expenses, net 8,918 7,163 17,903 13,718
------- ------- ------- -------
Total other expenses 20,300 17,891 40,394 34,769
------- ------- ------- -------
Income before income taxes 6,347 5,243 12,253 10,174
Provision for income taxes 2,375 1,950 4,592 3,668
------- ------- ------- -------
Net income $ 3,972 $ 3,293 $ 7,661 $ 6,506
======= ======= ======= =======
Earnings per common & common
equivalent share $ .53 $ .46 $ 1.03 $ .91
======= ======= ======= =======
Cash dividends declared per
share of common stock $ .0833 $ .0833 $ .1666 $ .1666
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
Page 3
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<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,661 $ 6,506
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses 750 2,325
Provision for doubtful
accounts-factoring subsidiary 950 1,385
Depreciation and amortization 1,922 2,152
Net losses on other real estate 819 139
Securities gains (12) (1,062)
Gain on disposal of premises and equipment (33) (20)
Increase in accrued interest
and other assets (943) (4,431)
Increase in other liabilities 5,368 2,335
-------- --------
Net cash provided by
operating activities 16,482 9,329
Cash flows from investing activities:
Proceeds from sales of securities -- 1,062
Proceeds from maturities of securities 30,727 32,574
Purchase of securities (7,000) (63,925)
Net increase in loans (29,048) (21,769)
Purchase of premises and equipment (3,492) (8,617)
Proceeds from sale of other real estate 3,553 23
Improvements to other real estate (889) (391)
Proceeds from sale of premises & equipment 76 4,018
Increase in accounts receivable-factoring
subsidiary (net of due to clients) (19,375) (9,370)
-------- --------
Net cash used in investing activities (25,448) (66,395)
-------- --------
Cash flows from financing activities:
Net increase in deposits 70,142 12,168
Net increase (decrease) in Federal
funds purchased and securities sold
under agreements to repurchase (783) 46,088
Proceeds from issuance of senior
certificates - factoring subsidiary -- 97,808
Repayment of debt-factoring subsidiary -- (15,000)
Repayment of long-term debt (330) (625)
Cash dividends (1,189) (1,162)
Proceeds from exercise of stock options 561 474
Redemption of fractional shares after
3-for-2 stock split (2) --
-------- --------
Net cash provided by
financing activities 68,399 139,751
-------- --------
Net increase in cash and cash equivalents 59,433 82,685
Cash and cash equivalents at
beginning of period 106,712 156,789
-------- --------
Cash and cash equivalents
at end of period $166,145 $239,474
======== ========
</TABLE>
(Continued)
Page 4
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<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
Supplemental Disclosures
Cash paid during the period for:
Interest $ 18,150 $ 10,130
======== =========
Income taxes $ 5,287 $ 7,405
======== =========
Non-cash activities:
Decrease in the unrealized loss on
securities available for sale,
net of applicable taxes in 1995 -
$1,419 and in 1994 - $2,390 $ 2,401 $ 4,044
======== =========
Loans transferred to other
asset categories $ 1,104 $ --
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
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<PAGE>
CAPITAL BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
NOTE 1: Basis of Presentation
- ------------------------------
The Consolidated Statements of Condition for Capital Bancorp and
Subsidiaries (the "Company") as of June 30, 1995 and December 31,
1994, the Consolidated Statements of Income for the six- and three-
month periods ended June 30, 1995 and 1994 and the Consolidated
Statements of Cash Flows for the six-month periods ended June 30,
1995 and 1994 included in Form 10-Q have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission. The statements are unaudited except for the
Consolidated Statement of Condition as of December 31, 1994.
The accounting policies followed for interim financial reporting
are consistent with the accounting policies set forth in Note 1 of
the Company's latest Annual Report to Stockholders, which is
incorporated by reference by the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission. Effective
January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures." Adoption of this Statement did not have a
significant impact on the Company's consolidated financial position
or results of operations.
Common stock per share and average share information for the
periods prior to June 30, 1995 have been retroactively restated for
the 3-for-2 stock split which was effective June 22, 1995.
The consolidated financial statements include the accounts of
Capital Bancorp (the "Parent Company"), Capital Bank (the "Bank")
and its subsidiaries and Capital Factors Holding, Inc., and its
subsidiaries ("Capital Factors") and Capital Factors Financing
Trust, a special purpose trust. All significant inter-company
transactions and balances have been eliminated in consolidation.
In the opinion of management, the interim consolidated financial
statements reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the
information contained therein. The interim results of operations
are not necessarily indicative of the results which may be expected
for the full year.
NOTE 2: Risk Elements - Loans and Advances
- ------------------------------------------
Foreign Outstandings
- --------------------
Foreign outstandings included in the loan portfolio consisted of
the following (in thousands of dollars):
June 30, 1995 December 31, 1994
-------------- -----------------
Performing trade credits $130,021 $111,150
Other performing loans 2,464 3,832
Nonaccrual loans 861 334
-------- --------
$133,346 $115,316
======== ========
Performing trade credits consist primarily of refinanced letters of
credit, acceptances purchased and pre-export financings principally
to banks that are located in foreign countries. Cash collateral
maintained at Capital Bank as offsets to outstanding foreign loans
totaled $14.1 million at June 30, 1995 compared to $14.6 million at
year end 1994. In addition to the outstanding foreign loans, at
June 30, 1995 and December 31, 1994 there were $24.7 million and
$28.1 million, respectively, due primarily from foreign customers
on acceptances, offset by $4.3 million and $2.2 million of cash
collateral maintained at Capital Bank.
Page 6
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<PAGE>
The following is a list of cross border outstandings at June 30,
1995 and December 31, 1994 for those countries for which the total
amount of outstandings (loans, acceptances, acceptances purchased,
pre-export financings and other interest bearing assets), net of
(a) any written guarantees of principal or interest by domestic or
other non-local third parties (other than the foreign government)
and (b) the value of any tangible liquid collateral that may be
netted against the outstandings, exceeds 1% of consolidated total
assets at the respective dates (in thousands of dollars):
June 30, December 31,
1995 1994
-------- -----------
Argentina $26,599 Brazil $18,594
Brazil 18,303 Argentina 15,982
Peru 17,674 Mexico 13,999
El Salvador 15,336
Ecuador 14,308
------- -------
$92,220 $48,575
======= =======
At June 30, 1995, Capital Bank had cross border outstandings to
Mexico, aggregating $12.4 million, which exceeded .75%, but were
less than 1% of consolidated total assets. At December 31, 1994,
Capital Bank had cross border outstandings to Peru, Ecuador and
Bolivia, aggregating $13.2 million, $12.8 million and $10.9
million, respectively, which exceeded .75%, but were less than 1%
of consolidated total assets.
At June 30, 1995 and December 31, 1994 Capital Bank held other
interest earning assets of $6.8 million and $6.6 million,
respectively, issued by debtors located in foreign countries.
Impaired Loans
- --------------
The Company adopted SFAS 114, as amended by SFAS 118, effective
January 1, 1995. This did not have any impact on the Company's
results of operations nor on its financial position, including the
level of the reserve for possible credit losses. Instead, it
resulted only in a reallocation of the existing reserve of possible
credit losses.
At June 30, 1995, the recorded investment in loans and bank
acceptances that were considered impaired under SFAS 114 was
$6,669,000 and $289,000, respectively. These loans and bank
acceptances required a SFAS 114 reserve for possible credit losses
of $1,759,000. The average recorded investment in impaired loans
during the six months ended June 30, 1995 was $2,236,000. For the
six months ended June 30, 1995, the Company recognized interest
revenue on these loans of $89,000.
Non-accrual and Past Due Loans and Advances
- ------------------------------------------
Management evaluates past due and non-accrual loans and advances
regularly in connection with estimating the provisions and the
allowances for loan losses and doubtful accounts, taking into
consideration the value of collateral and the prospects for
repayment of principal and collectibility of interest. Loans and
advances are classified on a non-accrual basis when management
deems that collectibility of interest is doubtful, which is
generally after 90 days of past due status, unless the loan or
advance is well secured and in the process of collection. Charge-
offs to the allowances are made when a loss is deemed probable.
At June 30, 1995 there were $1.0 million of loans that were over 90
days past due and still accruing interest, as compared to $1.9
million at December 31, 1994. Included in loans 90 days past due
and still accruing interest were commercial, real estate and
consumer loans of $614,000, $252,000, and $143,000, respectively,
at June 30, 1995 as compared to foreign, commercial and consumer
loans of $1.5 million, $279,000 and $131,000, respectively, at
December 31, 1994. Loans which are over 90 days past due and still
accruing interest are in the process of collection and deemed to be
well secured.
Page 7
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<PAGE>
Following is a summary of non-accrual loans and advances (in
thousands):
June 30, December 31,
1995 1994
-------- -----------
Commercial $ 3,409 $ 3,416
Foreign 861 334
Real Estate 1,215 1,801
Consumer 1,582 1,547
------- -------
$ 7,067 $ 7,098
======= =======
The decrease in non-accrual loans and advances is due to charge-
offs and collections partially offset by the transfer of new loans
from accrual status to non-accrual status. Management has
instituted collection procedures in connection with non-accrual
loans and advances and has established allowances for loan losses
and doubtful accounts deemed adequate to absorb potential losses,
based on information currently available. Many of the factors
considered in management's determination as to the adequacy of the
allowances involve a significant degree of estimation and are
subject to rapid change that may be unforeseen by management.
Changes to these factors could result in future adjustments to the
allowance for loan losses.
NOTE 3: Litigation
- -------------------
Various legal actions and proceedings are pending or are threatened
against the Company, Capital Bank and Capital Factors, some of
which seek relief or damages in amounts that are substantial.
These actions or proceedings arose in the ordinary course of
business. Due to the complex nature of some of these matters, it
may be a number of years before they are ultimately resolved.
After consultation with legal counsel, management believes the
aggregate liability, if any, to the Company, the Bank and/or
Capital Factors resulting from such pending or threatened actions
and proceedings will not have a material adverse effect on the
Company's consolidated financial condition.
Page 8
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<PAGE>
ITEM 2.
PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL BANCORP AND SUBSIDIARIES
INTRODUCTION
- ------------
Capital Bancorp (the "Parent Company") is a bank holding company.
Capital Bancorp and Subsidiaries (the "Company") had total
consolidated assets of $1.4 billion at June 30, 1995. Capital Bank
(the "Bank"), a Florida-chartered commercial bank, is wholly-owned
by Capital Bancorp. Capital Factors, Inc. ("Capital Factors"),
which conducts commercial factoring activities, is wholly-owned by
the Bank.
The following discussion and analysis presents the significant
changes in the financial condition and results of operations for
the periods indicated. The discussion should be read in
conjunction with the consolidated financial statements and notes
included in Part I, Item 1 of this report.
FINANCIAL CONDITION - JUNE 30, 1995 VS. DECEMBER 31, 1994
- ----------------------------------------------------------
Total assets increased $83.1 million during the first six months of
1995, composed of an increase of $83.3 million in interest earning
assets offset by a decrease of $171,000 in non-interest earning
assets. The increase in assets was primarily composed of increases
of $59.4 million in cash and cash equivalents, $27.2 million in net
loans, $22.6 million in net accounts receivable - factoring
subsidiary and $1.4 million in premises and equipment offset by
decreases of $19.7 million in total securities, $4.9 million in due
from customers on acceptances and $2.4 million in other real
estate.
The increase in cash and cash equivalents was composed of increases
of $55.0 million in federal funds sold and securities purchased
under agreements to resell and $4.4 million in cash and due from
banks. The increase in federal funds sold and securities purchased
under agreements to resell resulted primarily from net inflows of
deposits during the second quarter.
The increase in net loans primarily consisted of an increase in
loans of $29.2 million offset by an increase of $2.0 million in the
allowance for loan losses. The increase in loans was comprised
primarily of increases of $21.9 million in international -
commercial loans, $10.0 million in mortgage loans and $2.7 million
in domestic - commercial loans offset by decreases of $4.0 million
in acceptances purchased and $768,000 in overdrafts. The growth in
international - commercial loans resulted from increased marketing
efforts of foreign trade finance services.
The allowance for loan losses totaled $11.2 million and $9.2
million at June 30, 1995 and December 31, 1994, respectively,
representing, 1.7% and 1.4% of outstanding loans at these dates,
respectively. The increase in the allowance for loan losses is
primarily due to the $1.6 million recovery of certain non-trade
foreign loans which were charged off during 1994. Non-accrual
loans and loans 90 days or more past due amounted to $7.1 million
and $8.3 million, at June 30, 1995 and December 31, 1994,
respectively. The adjusted ratio of annualized net loans charged
off to average loans outstanding was .12% and 1.09% for the six
months ended June 30, 1995 and 1994, respectively. The ratios of
annualized net loans charged off to average loans outstanding
mentioned above exclude the $1.6 million recovery of certain non-
trade foreign loans during the first six months of 1995 and $6.3
million in charge-offs of non-trade foreign loans in the first six
months of 1994. Based on information currently available,
management believes the allowance for loan losses to be adequate to
absorb losses, if any, which might occur on these loans or are
otherwise inherent in the loan portfolio. In determining the level
of the allowance, management considers a variety of factors
including the financial condition of borrowers, the availability
and nature of collateral, current economic conditions and past loan
loss experience, among other things. Such factors are subject to
estimations and assumptions regarding future events. At this time,
management is unable to predict the amount of future adjustments to
the allowance for loan losses if its estimates and assumptions are
determined to be incorrect.
Page 9
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<PAGE>
The increase in accounts receivable - factoring subsidiary was due
to an overall increase in factoring volume. Capital Factors
operates factoring offices in New York City, Los Angeles, Fort
Lauderdale and Charlotte. Capital Factors purchases receivables
from its clients and records a liability payable to the clients at
the time of such purchase. From time to time, the liability is
reduced by advance payment by Capital Factors to the clients, prior
to the contractual payment date for the receivables purchased.
Such advance payments are interest earning balances of Capital
Factors. Interest earning advances amounted to $188.5 million at
June 30, 1995, compared to $169.7 million at December 31, 1994.
Non-accrual advances amounted to $930,000 and $739,000 at June 30,
1995 and December 31, 1994, respectively.
The increase in premises and equipment was primarily due to
additional purchases of computer equipment related to the pending
applications systems conversion.
The decline in total securities consisted of maturities and
paydowns during the first six months totaling $30.7 million offset
by purchases of $7.0 million and a reduction in the unrealized loss
on securities available for sale of $3.8 million. Proceeds from
these maturities and paydowns were used to fund alternative earning
assets and supplement short term liquidity.
The decline in due from customers on acceptances reflects the
increase in competition in the foreign trade financing market and
the general improvement in the Latin American economy which has
reduced the need for such financing.
Other real estate amounted to $12.3 million and $14.7 million at
June 30, 1995 and December 31, 1994, respectively. The decline in
other real estate was due primarily to the sale of two properties
totalling $2.9 million.
Total liabilities increased $73.7 million, primarily composed of
increases of $70.1 million in total deposits, $5.4 million in other
liabilities and $4.2 million in due to factoring clients offset by
a decrease of $4.9 million in bank acceptances outstanding.
The increase in total deposits included an increase of $106.9
million in time deposits offset by decreases of $26.0 million in
savings and money market deposits and $10.8 million in non-interest
bearing deposits. The increase in time deposit balances reflects
the combined effects of internal marketing efforts to increase
overall deposits, and increased customer demand for time deposits
due to higher rates offered. Management believes the decrease in
savings and money market deposits reflects a continuation of an
industry-wide trend whereby customers have chosen alternative
investment and savings products over low yielding deposit products.
Deposit liabilities represented 73%, 71% and 82% of total
liabilities at June 30, 1995, December 31, 1994 and December 31,
1993, respectively. For the same dates, interest-bearing non-
deposit balances represented 16%, 17% and 6% of total liabilities.
Management believes that non-deposit funding sources will continue
to represent a greater percentage of total liabilities when
compared to historical levels for the foreseeable future.
CAPITAL RESOURCES
- -----------------
Stockholders' equity increased $9,427,000 during the first six
months of 1995 as a result of net income of $7,661,000 and proceeds
from the exercise of stock options of $561,000 along with a
decrease in the unrealized loss on securities available for sale of
$2,401,000 offset by dividends declared of $1,194,000 and cash
redemption of fractional shares of $2,000 due to the 3-for-2 stock
split effective June 22, 1995.
The capital ratios of the Company and Capital Bank were as follows:
Company Capital Bank
6/30/95 12/31/94 6/30/95 12/31/94
------- -------- ------- --------
Leverage 7.86% 7.56% 7.75% 7.56%
Tier One
Risk-Based 10.81% 10.27% 10.65% 10.25%
Total
Risk-Based 12.06% 11.47% 11.91% 11.45%
Page 10
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<PAGE>
In the opinion of management, these ratios are sufficient to
protect depositors and facilitate future growth. Management of the
Company continuously reviews capital adequacy. The various
alternatives for generating equity from external resources are
constantly under review to ascertain the most effective approach
for the Company. The Company has traditionally provided most of
its capital through retained earnings. For the first six months of
1995 and 1994, respectively, the Company's annualized internal
capital generation rate was 14.27% and 12.74%, respectively. The
Company currently pays dividends of 8.33 cents per share per
quarter. This dividend policy is dependent upon the Bank's ability
to continue the payment of dividends to the Parent Company.
Unforeseen changes in the financial condition of the Company or
Capital Bank, or actions by regulatory authorities, could result in
changes in the dividend policy.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
- ----------------------------------------
Liquidity represents the Company's ability to meet customers'
borrowing needs, take advantage of investment opportunities, fund
deposit withdrawals and maintain reserve requirements. On the
asset side, the primary sources of liquidity are cash and due from
banks, interest bearing deposits with banks, Federal funds sold and
other short-term investments, investment securities and scheduled
repayments on outstanding loans and receivables. On the liability
side, the principal source of liquidity is growth in deposits,
purchased funds and other borrowings.
The liquidity position is evaluated daily by management to maintain
the level of liquidity conducive to efficient operations.
Attention is directed primarily to assets and liabilities that
mature or can be repriced within a period of 30 to 365 days. The
Company matches the maturities of a significant portion of its
assets and liabilities to minimize variability in net interest
income within a 12 to 18 month period. This practice serves to
minimize both liquidity and interest rate risks. Prudent risks are
taken, however, by leaving certain assets and liabilities unmatched
in an effort to benefit from the interest rate sensitivity created.
Deposits represent the primary funding source, however, other
sources, including purchased funds and borrowings by the Company's
factoring subsidiary, increased significantly during the second
half of 1994.
Maintenance of satisfactory funding levels allows the Company to
position itself so that the risks of interest rate fluctuations are
decreased. This, together with a high percentage of variable rate
assets, provides a more consistent margin between interest earning
assets and interest bearing liabilities. For the six months of
1995, the average rate paid on interest bearing deposit liabilities
was 3.73%, while the average rate paid for other interest bearing
liabilities was 6.78%. Furthermore, to the extent that non-deposit
liabilities grow faster than deposits, the Company's overall cost
of funds will likely rise. At this time, management does not
believe these factors will have a significant adverse impact on net
interest income.
Following is a summarized analysis of maturity and repricing
characteristics of assets and liabilities at June 30, 1995. For
purposes of this analysis, regular passbook savings, NOW and money
market accounts and demand deposits are included as repricing based
on an assessment of the underlying liabilities' sensitivity to
changes in interest rates.
Maturity or Repricing (In Millions of Dollars)
----------------------------------------------
30 days 31-180 181-365 Over
or less days days one year Total
------- ------- -------- -------- -----
Assets $580.1 $ 145.5 $ 95.5 $585.7 $1,406.8
Liabilities
and Equity 301.6 336.6 241.9 526.7 1,406.8
------ ------- ------- ------ --------
Gap 278.5 (191.1) (146.4) 59.0 --
------ ------- ------- ------ --------
Cumulative Gap $278.5 $ 87.4 $ (59.0) $ -- $ --
====== ======= ======= ====== ========
Page 11
- ------------------------------------------------------------------
<PAGE>
Liquidity is also necessary at the Parent Company level. The
ability of the Parent Company to meet debt service requirements,
pay dividends to stockholders and satisfy other liquidity needs is
primarily dependent on the Bank's ability to continue the payment
of dividends. The ability of the Bank to pay dividends is
restricted by Florida statutes. At periodic intervals, State and
Federal regulatory agencies routinely examine the Parent Company
and the Bank as part of their legally prescribed oversight of the
banking industry and may further restrict the payment of dividends
or other activities by regulatory action. At June 30, 1995, the
Bank was not subject to any restrictions other than statutory.
For the remainder of 1995, the Parent Company's estimated debt
service and stockholder dividend requirements will total
approximately $1.3 million. At June 30, 1995, the Parent Company
had available cash balances of approximately $4.6 million.
Management believes that adequate undistributed earnings of the
Bank will be available, and capital levels will be maintained, to
allow for payment of dividends adequate to meet the Parent
Company's cash requirements for the remainder of 1995.
In the normal course of business, the Company utilizes various
financial instruments with off-balance sheet risk to meet the
financing needs of its customers. These off-balance sheet
activities include commitments to extend credit, commercial letters
of credit and standby letters of credit. The credit and market
risks associated with these financial instruments are generally
managed in conjunction with the Company's balance sheet activities
and are subject to normal credit policies, financial controls and
risk limiting and monitoring procedures. Additionally, the Company
may obtain various types of collateral to further reduce risks,
including, but not limited to, cash, time deposits, securities or
other tangible or intangible property of a nature acceptable to the
Company. The maximum risk may exceed the amounts recognized in the
consolidated statements of condition because these amounts vary
depending on the nature of the underlying instrument and the
related accounting policy.
Credit losses may be incurred when one of the parties fails to
perform in accordance with the terms of the contract. The
Company's exposure to credit loss is represented by the contractual
amount of the commitments to extend credit, commercial letters of
credit and standby letters of credit, reduced by the value of any
associated collateral obtained. This is the maximum potential loss
of principal in the event the commitment is drawn upon and the
counter-party defaults. In addition, the measurement of the risks
associated with these financial instruments is meaningful only when
all related and offsetting transactions are considered.
At June 30, 1995, the Company had outstanding commitments to extend
credit, commercial letters of credit and standby letters of credit
amounting to $131.3 million, $112.1 million and $14.7 million,
respectively. In the normal course of business, some of these
commitments may expire without being drawn upon. The Company
expects to meet funding requirements resulting from these
commitments by using its traditional sources of liquidity.
RESULTS OF OPERATIONS - Six Months Ended June 30, 1995 and 1994
- ------------------------------------------------------------------
The Company recorded net income of $7,661,000, or $1.03 per share,
for the six months ended June 30, 1995, compared to $6,506,000, or
$.91 per share, for the first six months of 1994. The annualized
return on average assets was 1.14% for the six months ended June
30, 1995 compared to 1.08% for the same period in 1994. The
annualized return on average stockholders' equity was 15.97% for
the first six months of 1995 compared to 15.39% for the same period
in 1994. The increase in income was primarily a result of improved
net interest margin after provisions for credit losses, higher
factoring revenue and service charges on deposits offset by higher
other operating expenses and lower gains on securities
transactions.
Net Interest Income
- -------------------
The following net interest earnings analysis should be read in
conjunction with selected statistical information presented on
pages 16 and 17.
Net interest income is the difference between interest and fees
earned on loans and investments and interest paid on deposits and
other sources of funds. Net interest income totaled $32.3 million
and $28.2 million for the six months ended June 30, 1995 and 1994,
respectively. Loan fees included in net interest income amounted
to $780,000 and $939,000 for the six months ended June 30, 1995 and
1994, respectively. Net interest income on a fully tax-equivalent
basis, including loan fees, totaled $33.0 million for the first six
months of 1995 compared to $29.0 million for the first six months
of 1994.
Page 12
- ------------------------------------------------------------------
<PAGE>
Net interest income can be viewed as the product of average earning
assets and the net interest margin. Net interest income for the
six months ended June 30, 1995 increased $4.1 million over the
comparable period in 1994, as a result of an increase of $12.7
million in interest income offset by an increase of $8.6 million in
interest expense. Interest income and interest expense increased
primarily due to increases in average balances and interest rates.
The annualized net interest margin increased to 6.20% for the six
months ended June 30, 1995 from 5.99% for the six months ended June
30, 1994. The increase in net interest income was due to an
increase in average interest earning assets to $1.072 billion for
the six months ended June 30, 1995 from $977 million for the six
months ended June 30, 1994 along with increased interest rates.
The annualized yield on average interest earning assets increased
from 8.06% for the six months ended June 30, 1994 to 9.71% for the
same period in 1995 primarily due to higher yields on accounts
receivable advances and total loans. Average interest bearing
liabilities increased to $827.4 million for the first six months of
1995 from $729.7 million for the same period in 1994, while the
annualized average rate paid on these liabilities increased to
4.55% from 2.78%. The increase in average interest bearing
liability balances occurred primarily in short and long-term
borrowings which averaged $220.3 million in 1995, compared to $81.7
million in 1994. Capital Factors' average borrowings were $125
million in 1995 compared to $15 million in 1994 and accounts for
most of the increase. Average interest bearing deposits declined
by $40.9 million as a result of a decrease of $64.8 million in the
average savings and money market accounts offset by an increase of
$23.8 million in the average time deposit accounts. Substantially
all of the Company's non-deposit borrowings are floating rate or
otherwise reprice in 30 days or less and were thus significantly
influenced by increased market interest rates. The higher rates
paid on all liabilities combined with the increased portion of non-
deposit liabilities resulted in the overall increase in the average
rates paid on liabilities.
The utilization rate, the ratio of average interest earning assets
to average total assets, decreased to 79.02% for the six months
ended June 30, 1995 from 80.28% for the same period in 1994. The
utilization rate decreased primarily due to higher average non-
interest earning assets, primarily other assets and cash and due
from banks.
Provisions for Credit Losses
- ----------------------------
For the first six months of 1995, the provision for loan losses and
the provision for doubtful accounts decreased $1.6 million and
$435,000, respectively, when compared to the same period in 1994.
The decrease in the provision for credit losses reflects, in part,
the general improvement in asset quality. Problem or potential
problem loans and advances amounted to $12.8 million at June 30,
1995 and $16.1 million at June 30, 1994. The provisions reflect
management's judgment as to the amount deemed adequate to absorb
potential loan and receivables losses in the respective portfolios
after evaluating the portfolios, current economic conditions,
changes in the nature and volume of the portfolios, past loss
experience and other pertinent factors.
Non-Interest Income and Expense
- -------------------------------
Other income increased $1.6 million for the six months ended June
30, 1995 compared to the same period in 1994. The increase in
other income primarily consisted of increases of $1.5 million in
factoring revenues and $1.2 million in service charges on deposits
offset by a decrease of $1.1 in securities gains.
The Company, through Capital Factors, operates factoring offices in
Fort Lauderdale, Los Angeles, New York City and Charlotte. Total
accounts receivable factored amounted to $901.6 million and $694.0
million during the first six months of 1995 and 1994, respectively,
representing an increase of 29.9%. Factoring revenues, primarily
representing commissions earned on factored accounts receivable,
increased 15.9% from $9,256,000 in 1994 to $10,724,000 in 1995,
reflecting volume growth offset by lower commission rates earned on
accounts receivable factored. This growth is primarily
attributable to overall expansion of factoring activities.
Service charges on deposits increased 22.1% from $5,374,000 in 1994
to $6,560,000 in 1995. This increase was primarily due to the
adjustment to the pricing of some services during the second
quarter of 1994.
In 1994, securities gains included the gain on the sale of certain
floating rate Argentinian bonds, received inconnection with a prior
Brady Plan restructuring.
Page 13
- ------------------------------------------------------------------
<PAGE>
Other expenses increased $5.6 million, consisting primarily of
increases of $4.2 million in other operating expenses and $1.6
million in salary and employee benefits. The increase in other
operating expenses primarily reflects the $2.7 million in
provisions to fully reserve for potential losses resulting from
several overdrafts related to one customer. The increase in salary
and employee benefits is due to merit increases, increased benefit
costs and work force growth. Approximately 70% of the increase in
personnel costs is attributable to expansion of Capital Factors
activities.
RESULTS OF OPERATIONS - Three Months Ended June 30, 1995 and 1994
- -----------------------------------------------------------------
The Company recorded net income of $3,972,000, or $.53 per share,
for the three months ended June 30, 1995, compared to $3,293,000,
or $.46 per share, for the same period in 1994. The annualized
return on average assets was 1.15% for the three months ended June
30, 1995, compared to 1.07% for the three months ended June 30,
1994. The annualized return on average stockholders' equity was
16.13% for the three months ended June 30, 1995 compared to 15.49%
for the same period in 1994. The increase in income was primarily
a result of improved net interest margin after provisions for
credit losses, higher factoring revenue and service charges on
deposits offset by higher other operating expenses and salary and
employee benefits.
Net Interest Income
- -------------------
Net interest income for the three months ended June 30, 1995
increased $1.7 million over the comparable period in 1994, as a
result of an increase of $6.2 million in interest income (primarily
in interest and fees on loans and interest on advances to factoring
clients) offset by an increase of $4.5 million in interest expense
(primarily in long term borrowings and time deposits). The
increase in interest income is primarily due to higher average
balances along with higher average yields on interest earning
assets. Interest expense was higher primarily due to higher
average interest bearing liabilities and higher average rates paid.
The net interest margin for the three months ended June 30, 1995
increased to 6.11% from 6.08% for the three months ended June 30,
1994.
Provisions for Credit Losses
- ----------------------------
For the three months ended June 30, 1995, the provision for loan
losses and the provision for doubtful accounts decreased $675,000
and $150,000, respectively, when compared to the same period in
1994. The decrease in the provisions for credit losses reflects,
in part, the general improvement in asset quality. The provisions
reflect management's judgment as to the amount deemed adequate to
absorb potential loan and receivables losses in the respective
portfolios after evaluating the portfolios, current economic
conditions, changes in the nature and volume of the portfolios,
past loss experience and other pertinent factors.
Non-Interest Income and Expense
- -------------------------------
Other income increased $1.0 million for the three months ended June
30, 1995 compared to the same period in 1994. The increase in
other income primarily consisted of increases of $838,000 in
factoring revenues and $334,000 in service charges on deposits.
Other expenses increased $2.4 million, consisting primarily of
increases of $1.8 million in other operating expenses and $724,000
in salary and employee benefits. The increase in other operating
expenses was primarily due to an additional provision of $1.3
million to fully reserve for potential losses resulting from
several overdrafts related to one customer.
LITIGATION
- ----------
Various legal actions and proceedings are pending or are threatened
against the Company, Capital Bank and Capital Factors, some of
which seek relief or damages in amounts that are substantial.
These actions or proceedings arose in the ordinary course of
business. Due to the complex nature of some of these matters, it
may be a number of years before they are ultimately resolved.
After consultation with legal counsel, management believes the
aggregate liability, if any, to the Company, the Bank and/or
Capital Factors resulting from such pending or threatened actions
and proceedings will not have a material adverse effect on the
Company's consolidated financial condition.
Page 14
- ------------------------------------------------------------------
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Statement of Financial Accounting Standards ("SFAS") No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures," is effective for fiscal years
beginning after December 15, 1994. This Statement requires that
certain impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or at the observable market price or the fair value
of collateral if the loan is collateral dependent. Adoption of
this Statement did not have a significant impact on the Company's
consolidated financial position or results of operations.
IMPACT OF INFLATION AND CHANGING PRICES
- ---------------------------------------
The impact of inflation on the Company is reflected primarily in
the increased costs of operations. These increased costs are
generally passed on to customers in the form of increased service
fees. Since the primary assets and liabilities of the Company are
monetary in nature, the impact of inflation on interest rates has
had, and is expected to continue to have, an effect on net income.
In structuring fees, negotiating loan margins and developing
customer relationships, management concentrates its efforts on
maximizing earnings capacity while attempting to contain increases
in operating expenses. In addition, management continually reviews
the feasibility of new and additional fee-generating services to
offset the effects of inflation and changing prices with an
objective of increasing earnings.
Page 15
- ------------------------------------------------------------------
PAGE
<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(All Dollar Amounts in Thousands)
<CAPTION>
For the Six Months Ended June 30,
------------------------------------------------------------------------------------
1995 1994
-------------------------------------- -------------------------------------
Average Average
Average Yield Average Yield
Balance Interest* Or Rate* Balance Interest* Or Rate*
---------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
Interest earning assets:
Loans, net of unearned income:
U.S. borrowers $ 507,501 $ 25,143 9.99% $ 460,667 $ 20,606 9.02%
Foreign borrowers 122,560 5,036 8.29% 82,664 2,409 5.88%
Tax-exempt 20,333 1,657 16.44% 26,902 2,103 15.76%
---------- ---------- ----------- ---------
Total loans 650,394 31,836 9.87% 570,233 25,118 8.88%
Accounts receivable
advances-factoring
subsidiary, net of due to
clients 188,062 12,404 13.30% 134,602 7,016 10.51%
Securities:
Taxable 207,428 6,365 6.19% 176,691 5,032 5.74%
Tax-exempt 3,511 187 10.71% 4,597 244 10.70%
Federal funds sold and
securities purchased under
agreement to resell 22,914 832 7.32% 91,194 1,670 3.69%
---------- ---------- ---------- ---------
Total interest earning
assets 1,072,309 51,624 9.71% 977,317 39,080 8.06%
---------- ---------- ---------- ---------
Less allowance for loan losses
and doubtful accounts (12,282) (16,781)
Cash and due from banks 95,999 75,782
Due from customers on acceptances 26,780 29,667
Other real estate 12,823 14,530
Other assets 161,349 136,910
---------- ----------
Total assets $1,356,978 $1,217,425
========== ==========
</TABLE>
* Yield and interest on tax-exempt loans and securities have been
adjusted to reflect tax-equivalent basis. Loan fees are included
in interest. Nonaccrual loans are included in interest-earning loans
for purposes of calculating average yields.
Page 16
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
SELECTED STATISTICAL INFORMATION
(All Dollar Amounts in Thousands)
<CAPTION>
For the Six Months Ended June 30,
------------------------------------------------------------------------
1995 1994
------------------------------------ --------------------------------
Average Average
Average Yield Average Yield
Balance Interest* Or Rate* Balance Interest* Or Rate*
--------- -------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Deposits:
Savings and money market $ 302,340 $ 3,411 2.27% $ 367,134 $ 3,412 1.87%
Time 304,703 7,829 5.18% 280,854 5,005 3.59%
---------- --------- ---------- ---------
Total interest bearing deposits 607,043 11,240 3.73% 647,988 8,417 2.62%
---------- --------- ---------- ---------
Federal funds purchased and short-term
borrowings:
Domestic banks -- -- -- 100 1 2.70%
Short-term borrowings 93,395 2,467 5.33% 78,321 1,489 3.83%
---------- --------- ---------- --------
93,395 2,467 5.33% 78,421 1,490 3.83%
---------- --------- ---------- --------
Long-term borrowings 126,933 4,942 7.85% 3,308 137 8.33%
---------- --------- ---------- --------
Total interest bearing liabilities 827,371 18,649 4.55% 729,717 10,044 2.78%
---------- --------- ---------- --------
Non-interest bearing deposits 289,027 268,861
Bank acceptances outstanding 26,780 29,667
Other liabilities 117,210 103,932
Stockholders' equity 96,590 85,248
---------- ----------
Total liabilities and stockholders'
equity $1,356,978 $1,217,425
========== ==========
Net interest earnings/yield $32,975 6.20% $29,036 5.99%
======= ===== ======= =====
Net interest spread 5.16% 5.28%
===== =====
Utilization rate 79.02% 80.28%
===== =====
</TABLE>
Page 17
- -------------------------------------------------------------------------------
PAGE
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
NATHAN J. ESFORMES, STANLEY I. WORTON, M.D., AND LEONARD WIEN, AS
INDIVIDUAL SHAREHOLDERS AND ON BEHALF OF ALL OTHER SHAREHOLDERS OF
CAPITAL BANCORP V. ABEL HOLTZ, FANA HOLTZ, DANIEL M. HOLTZ, JAVIER
J. HOLTZ, CAPITAL BANK AND CAPITAL BANCORP, CIRCUIT COURT FOR THE
11TH JUDICIAL DISTRICT IN AND FOR DADE COUNTY, FLORIDA CASE NO. 95-
02515.
This action is described in Part I, Item 3, "Legal Proceedings" of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, which description is incorporated herein by
reference and made a part hereof. Since the date of the Company's
Form 10-Q for the quarter ended March 31, 1995, plaintiffs amended
their complaint to eliminate all federal causes of action, and, as
a result, moved to remand the case to state court. The motion was
granted. Pursuant to the amended complaint, directors of the
Company, Messrs. Russell W. Galbut, Timothy E. Kish, Craig L.
Platt, Jeffrey H. Porter and Leon J. Simkins, have been added as
defendants. In addition, the amended complaint includes three new
claims relating to an alleged misleading proxy solicitation.
STANLEY I. WORTON, M.D. V. ABEL HOLTZ, FANA HOLTZ, DANIEL HOLTZ,
ALEX HALBERSTEIN AND CAPITAL BANCORP, CIRCUIT COURT OF THE 11TH
JUDICIAL DISTRICT IN AND FOR DADE COUNTY, FLORIDA CASE NO. 95-
02520-CA-09.
This action is described in Part I, Item 3, "Legal Proceedings" of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, and Part II, Item 1, "Legal Proceedings" of the
Company's Annual Report on Form 10-Q for the quarter ended March
31, 1995, which descriptions are incorporated herein by reference
and made a part hereof.
AGUSTIN CORDERO, OLD CUTLER BAY DEVELOPMENT CORPORATION ET AL. VS.
CAPITAL BANK ET AL., 11TH JUDICIAL CIRCUIT, DADE COUNTY, FLORIDA,
CIV. ACTION 95-010662 (CA 23-DONNER)
The plaintiffs filed suit on July 5, 1995 against Capital Bank and
certain other defendants. Plaintiffs' allege violations of the
Bank Holding Company Act, breach of fiduciary duty, fraudulent
inducement, conspiracy to defraud and interference with an
advantageous business relationship and seek compensatory, treble
and punitive damages in an unspecified amount. Plaintiffs allege
that Capital Bank, acting through its counsel, caused Old Cutler
Bay to enter into an unfavorable partnership agreement with an
insolvent borrower of Capital Bank, pursuant to which Old Cutler
Bay contributed real property valued at $9 million in order to
improve the Bank's collateral from other partners. Plaintiffs also
allege that Capital Bank caused Cordero to invest in the
partnership in order to get certain loans repaid and that counsel
failed to obtain available permits to develop the property causing
Old Cutler Bay to purchase the interests of other partners.
Plaintiffs also allege that the Bank recommended one of its
customers as a purchaser of the property, falsely represented that
it would allow this customer to assume Old Cutler Bay's loan from
the Bank, fraudulently induced Old Cutler Bay to extend its loan,
that the extension excluded the mortgage from bankruptcy and
prevented Old Cutler Bay from contesting any foreclosure and that
the Bank ultimately refused to allow the property to be sold and
foreclosed on its mortgage, causing Old Cutler Bay to lose its
property, and that as part of a scheme, the Bank sold the property
to a third party at a profit and financed the development of the
property. The Bank intends to vigorously defend against this
lawsuit.
Other Litigation
In addition to the matters set forth above, various legal actions
and proceedings are pending or are threatened against the Company,
Capital Bank and Capital Factors, some of which seek relief or
damages in amounts that are substantial. These actions or
proceedings arose in the ordinary course of business. Due to the
complex nature of some of these matters, it may be a number of
years before they are ultimately resolved. After consultation with
legal counsel, management believes the aggregate liability, if any,
to the Company, the Bank and/or Capital Factors resulting from such
pending or threatened actions and proceedings will not have a
material adverse effect on the Company's consolidated financial
condition.
Page 18
- ------------------------------------------------------------------
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit - 11 Calculation of Earnings Per Share - Page 21
Exhibit - 27 Financial Data Schedule
(b) No Current Reports on Form 8-K were filed by the Company
during the quarter ended June 30, 1995.
Page 19
- ------------------------------------------------------------------
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: August 11, 1995 By: /s/ Lucious T. Harris
-------------------------
LUCIOUS T. HARRIS
Treasurer
(Principal Financial and
Accounting Officer)
Page 20
- ------------------------------------------------------------------
<PAGE>
EXHIBIT 11
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
<CAPTION>
Six Months Ended
June 30,
-------
Primary 1995 1994
- ------- ---- -----
<S> <C> <C>
Weighted average number of
common shares outstanding 7,157,854 6,916,256
Common equivalent shares
outstanding - options 271,797 247,089
---------- ----------
Total common and common
equivalent shares outstanding 7,429,651 7,163,345
========== ==========
Net income $7,661,000 $6,506,000
========== ==========
Primary earnings per share $ 1.03 $ .91
========== ==========
Fully diluted
- -------------
Weighted average number of
common shares outstanding 7,157,854 6,916,256
Common equivalent shares
outstanding - options 271,797 247,089
---------- ----------
Total common and common
equivalent shares outstanding 7,429,651 7,163,345
========== ==========
Net income $7,661,000 $6,506,000
========== ==========
Fully diluted earnings per share $ 1.03 $ .91
========== ==========
Three Months Ended
June 30,
-------
Primary 1995 1994
- ------- ---- -----
Weighted average number of
common shares outstanding 7,162,876 6,921,537
Common equivalent shares
outstanding - options 267,174 244,134
---------- ----------
Total common and common
equivalent shares outstanding 7,430,050 7,165,671
========== ==========
Net income $3,972,000 $3,293,000
========== ==========
Primary earnings per share $ .53 $ .46
========== ==========
Fully diluted
- -------------
Weighted average number of
common shares outstanding 7,162,876 6,921,537
Common equivalent shares
outstanding - options 267,174 244,134
---------- ----------
Total common and common
equivalent shares outstanding 7,430,050 7,165,671
========== ==========
Net income $3,972,000 $3,293,000
========== ==========
Fully diluted earnings per share $ .53 $ .46
========== ==========
</TABLE>
Page 21
- ------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 96,145
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 70,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 126,611
<INVESTMENTS-CARRYING> 74,701
<INVESTMENTS-MARKET> 75,575
<LOANS> 664,575
<ALLOWANCE> 11,218
<TOTAL-ASSETS> 1,406,818
<DEPOSITS> 946,935
<SHORT-TERM> 86,453
<LIABILITIES-OTHER> 21,582
<LONG-TERM> 126,650
<COMMON> 7,295
0
0
<OTHER-SE> 93,495
<TOTAL-LIABILITIES-AND-EQUITY> 1,406,818
<INTEREST-LOAN> 31,256
<INTEREST-INVEST> 6,486
<INTEREST-OTHER> 13,236
<INTEREST-TOTAL> 50,978
<INTEREST-DEPOSIT> 11,239
<INTEREST-EXPENSE> 18,648
<INTEREST-INCOME-NET> 32,330
<LOAN-LOSSES> 1,700
<SECURITIES-GAINS> 12
<EXPENSE-OTHER> 40,394
<INCOME-PRETAX> 12,253
<INCOME-PRE-EXTRAORDINARY> 4,592
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,661
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
<YIELD-ACTUAL> 6.20
<LOANS-NON> 6,137
<LOANS-PAST> 1,009
<LOANS-TROUBLED> 8,502
<LOANS-PROBLEM> 5,622
<ALLOWANCE-OPEN> 9,210
<CHARGE-OFFS> 1,341
<RECOVERIES> 2,599
<ALLOWANCE-CLOSE> 11,218
<ALLOWANCE-DOMESTIC> 8,500
<ALLOWANCE-FOREIGN> 380
<ALLOWANCE-UNALLOCATED> 2,338
</TABLE>
