CapitalSouth Bancorp (?CapitalSouth?) (NASDAQ-GM: CAPB) today announced results for the third quarter of 2006. Total assets at the end of the quarter were $460.6 million, a 17.8% increase over the $390.9 million at the end of the third quarter 2005. Deposits grew 13.8% during the same period, ending the third quarter 2006 at $375.6 million. Stockholders' equity ended the third quarter at $40.5 million, or $13.63 per share, up $1.72 from September 30, 2005.

For the quarter ended September 30, 2006, CapitalSouth reported earnings of $611,000, level with the third quarter 2005. For the quarter, diluted earnings per share decreased 25.9% to $.20 from the $.27 reported for the third quarter 2005 due to the additional shares outstanding as a result of our Initial Public Offering in December 2005. Earnings in the third quarter 2006 resulted in a return on average shareholders' equity (ROE) of 6.02% compared to 9.11% in the same quarter of 2005, and a return on average assets (ROA) of 0.54% compared to 0.64% for the same quarter of 2005.

During the third quarter 2006, CapitalSouth recorded a loan loss provision of $119,000 and recognized $31,000 in net recoveries, representing -0.03% of average total loans for the period compared with net charge-offs representing .05% of average total loans for the third quarter of 2005. At September 30, 2006, nonperforming assets were 0.69% of period end loans and other real estate compared to 0.55% at December 31, 2005. The allowance for loan losses as a percentage of period end nonperforming loans was 200% at September 30, 2006, compared to 229% at December 31, 2005.

?This is an exciting time in the life of our Company as we continue our focus on growth and expansion,? stated W. Dan Puckett, Chairman and CEO. ?Our new market expansion and in-market expansion continues to mature and grow, creating higher returns on these investments. I am pleased that we have been successful in absorbing the expansion costs of the new offices opened late in 2005 and look forward to increased profitability as these offices continue to increase their contribution to our earnings. Additionally, the merger of our subsidiary banks, scheduled for November 2006, will generate efficiencies that will allow us to grow our Montgomery market more profitably.?

CapitalSouth Bancorp is a bank holding company operating nine full service banking offices and one loan production office through two bank subsidiaries as follows: CapitalSouth Bank with seven full service banking offices in Birmingham and Huntsville, Alabama, and Jacksonville, Florida, as well as a loan production office in Atlanta, Georgia; and Capital Bank with two full service banking offices in Montgomery, Alabama. CapitalSouth targets small to medium-sized businesses in the markets it serves. Two of CapitalSouth Bank's offices operate under the name ?Banco Hispano? and provide financial services to the growing Latino community prevalent in their areas. CapitalSouth offers SBA lending services and other loan programs for business owners through its Business Capital Group, which operates through full-service offices as well as the loan production office. CapitalSouth also provides Internet banking services at www.capitalsouthbank.com and www.capitalbankal.com as well as personal investment services.

CapitalSouth Bancorp common stock is traded on the NASDAQ Global Market System under the symbol ?CAPB?.

This press release contains ?forward-looking? statements as defined by the Private Securities Litigation Reform Act of 1995, which is based on CapitalSouth's current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business. These statements are not historical facts or guarantees of future performance, events, or results. Such statements involve potential risks and uncertainties and, accordingly, actual performance results may differ materially. CapitalSouth undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new, updated information, future events, or otherwise.

CapitalSouth Bancorp
(Unaudited Financial Highlights)
(in thousands, except for per share amounts and percentages)
 
 
Three Months Ended
September 30 Percentage
2006  2005  Change
 
Net interest income $ 4,069  $ 3,380  20.4%
Provision for loan losses 119  257  -53.7%
Noninterest income 573  456  25.7%
Noninterest expense 3,624  2,653  36.6%
Income before provision for income taxes 899  926  -2.9%
Provision for income taxes 288  316  -8.9%
Net income $ 611  $ 610  0.2%
 
 

Weighted average common and common equivalent shares outstanding

Basic 2,969  2,248  32.1%
Diluted 3,019  2,276  32.6%
 
Net income per common share
Basic $ 0.21  $ 0.27  -22.2%
Diluted $ 0.20  $ 0.27  -25.9%
 
Return on average assets 0.54% 0.64%
Return on average tangible assets 0.54% 0.64%
Return on average equity 6.02% 9.11%
Return on average tangible equity 6.22% 9.28%
 
Noninterest Income
 
Service charges on deposits $ 303  $ 246  23.2%
Investment banking income, net 52  17  205.9%
Business Capital Group loan income 130  105  23.8%
Other 88    88  0.0%
Total noninterest income $ 573    $ 456  25.7%
 
Noninterest Expense
 
Salaries and employee benefits $ 1,878  $ 1,569  19.7%
Occupancy and equipment expense 582  398  46.2%
Professional fees 345  186  85.5%
Advertising 169  39  333.3%
Other 650    461  41.0%
Total noninterest expense $ 3,624    $ 2,653  36.6%
CapitalSouth Bancorp
(Unaudited Financial Highlights)
(in thousands, except for per share amounts and percentages)
 
 
Nine Months Ended
September 30 Percentage
2006  2005  Change
 
Net interest income $ 11,674  $ 9,477  23.2%
Provision for loan losses 459  758  -39.4%
Noninterest income 2,569  1,688  52.2%
Noninterest expense 10,605  7,554  40.4%
Income before provision for income taxes 3,179  2,853  11.4%
Provision for income taxes 1,110  930  19.4%
Net income $ 2,069  $ 1,923  7.6%
 
 

Weighted average common and common equivalent shares outstanding

Basic 2,961  2,244  32.0%
Diluted 3,020  2,283  32.3%
 
Net income per common share
Basic $ 0.70  $ 0.86  -18.6%
Diluted $ 0.69  $ 0.84  -17.9%
 
Return on average assets 0.63% 0.71%
Return on average tangible assets 0.63% 0.71%
Return on average equity 6.99% 9.83%
Return on average tangible equity 7.23% 9.89%
 
Noninterest Income
 
Service charges on deposits $ 830  $ 721  15.1%
Investment banking income, net 146  50  192.0%
Business Capital Group loan income 268  640  -58.1%

Gain on sale of nonmarketable equity securities

1,055  -  100.0%
Other 270    277  -2.5%
Total noninterest income $ 2,569    $ 1,688  52.2%
 
Noninterest Expense
 
Salaries and employee benefits $ 5,868  $ 4,256  37.9%
Occupancy and equipment expense 1,661  1,240  34.0%
Professional fees 1,036  614  68.7%
Advertising 511  259  97.3%
Other 1,529    1,185  29.0%
Total noninterest expense $ 10,605    $ 7,554  40.4%
CapitalSouth Bancorp
(Unaudited Financial Highlights)
(in thousands, except for per share amounts and percentages)
 
 
Sept 30, Sept 30, Percentage
Period End Balances: 2006  2005  Change
Total assets $ 460,602  $ 390,862  17.8%
Earning assets 438,457  368,467  19.0%
Securities 67,903  68,485  -0.8%
Loans held for sale -  82  -100.0%
Loans 363,759  284,623  27.8%
Allowance for loan losses 4,160  3,744  11.1%
Deposits 375,599  329,910  13.8%
Borrowings 40,248  28,951  39.0%
Stockholders' equity 40,496  26,796  51.1%
 
Equity to assets 8.79% 6.86%
Leverage ratio 8.60% 6.61%
Book value per common share $ 13.63  $ 11.91  14.4%
Tangible book value per common share $ 13.20  $ 11.35  16.3%
Ending shares outstanding 2,972  2,250  32.1%

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© Business Wire - 2006

Latest news about CapitalSouth Bancorp.

Asset Quality Analysis
(in thousands, except percentages)
 
As of / For the Three Months Ended
Sept 30, 2006 June 30, 2006

Mar 31, 2005

Dec 31, 2005 Sept 30, 2005
Nonacrrual loans $ 2,085  $ 1,545  $ 2,135  $ 1,684  $ 1,281 

Loans past due 90 days or more and still accruing

-  -  -  -  - 
Other real estate owned and repossessions 431  357  298  111  320 
Total nonperforming assets