UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 2000

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Transition Period From _____ to ____

                         Commission File Number 0-30062

                            CAPITAL BANK CORPORATION
             (Exact name of registrant as specified in its charter)

                    North Carolina 56-2101930 (State or other
                 jurisdiction of (IRS Employer incorporation or
                        organization) Identification No.)

                            4400 Falls of Neuse Road
                          Raleigh, North Carolina 27609

               (Address of Principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (919) 878-3100

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 May 5, 2000,  there were issued and  outstanding  3,658,689  shares of the
Registrant's common stock, no par value.
<PAGE>
                            Capital Bank Corporation

                                    CONTENTS


PART I - FINANCIAL INFORMATION                                          Page No.

     Item 1. Financial Statements

     Consolidated  statements  of financial  condition at March 31, 2000
          (Unaudited) and December 31, 1999                                 1

     Consolidated statements of income (loss) for the three months ended
          March 31, 2000 and March 31, 1999 (Unaudited)                     2

     Consolidated  statements  of cash flows for the three  months ended
          March 31, 2000 and March 31, 1999 (Unaudited)                     3

     Notes to consolidated financial statements                           4 - 5

     Item 2. Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                       6 - 8

     Item 3. Quantitative and Qualitative  Disclosures About Market Risk    9



PART II - OTHER INFORMATION

     Item 1. Legal Proceedings                                               9

     Item 2. Changes in Securities and Use of Proceeds                       9

     Item 3. Defaults Upon Senior Securities                                 9

     Item 4. Submission of Matters to a Vote of Security Holders             9

     Item 5. Other Information                                               9

     Item 6. Exhibits and Reports on Form 8-K                                9


     Signatures                                                             10

<PAGE>
<TABLE>
<CAPTION>
CAPITAL BANK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 2000 and December 31, 1999
                                                              March 31,     December 31,
ASSETS                                                          2000            1999
----------------------------------------------------------------------------------------
                (In thousands except per share data)         (Unaudited)
<S>                                                           <C>            <C>
Cash and due from banks                                       $  14,547      $   9,702
Federal funds sold                                                3,030          1,960
Investment securities - available for sale, at fair value        47,005         46,581
Loans-net of unearned income                                    175,445        159,329
Allowance for loan losses                                        (2,582)        (2,328)
                                                              ---------      ---------
         Net loans                                              172,863        157,001
                                                              ---------      ---------
Premises and equipment, net                                       3,654          3,501
Accrued interest receivable                                       1,395          1,244
Deposit premium and goodwill, net                                 1,563          1,617
Other assets                                                      1,301            731
                                                              ---------      ---------
            Total assets                                      $ 245,358      $ 222,337
                                                              =========      =========

LIABILITIES
Deposits
      Demand, non-interest bearing                            $  12,978      $  10,923
      Savings and interest bearing demand deposits               42,270         42,144
      Time deposits                                             134,462        110,178
                                                              ---------      ---------
         Total deposits                                         189,710        163,245
                                                              ---------      ---------
Accrued interest payable                                            642            671
Repurchase agreements                                             6,010          4,818
Borrowings                                                       15,000         20,000
Other liabilities                                                 2,710          2,477
                                                              ---------      ---------
            Total liabilities                                   214,072        191,211

STOCKHOLDERS' EQUITY
Common stock, no par value; 20,000,000 shares
      authorized; 3,658,689 shares issued and outstanding        34,806         34,806
Accumulated deficit                                              (1,887)        (2,287)
Accumulated other comprehensive income (loss)                    (1,633)        (1,393)
                                                              ---------      ---------
            Total stockholders' equity                           31,286         31,126
                                                              ---------      ---------
            Total liabilities and stockholders' equity        $ 245,358      $ 222,337
                                                              =========      =========
</TABLE>

See Notes to Consolidated Financial Statements

                                      -1-
<PAGE>
<TABLE>
<CAPTION>
CAPITAL BANK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended March 31, 2000 and 1999
                                                                  2000          1999
------------------------------------------------------------------------------------
                (In thousands except per share data)                  (Unaudited)
<S>                                                              <C>         <C>
Interest income:
      Loans and loan fees                                        $ 3,666     $ 2,389
       Investment securities                                         765         737
      Federal funds and other interest income                        131          99
                                                                 -------     -------
        Total interest income                                      4,562       3,225
                                                                 -------     -------
Interest expense:
      Deposits                                                     2,085       1,547
      Borrowings and repurchase agreements                           322         118
                                                                 -------     -------
         Total interest expense                                    2,407       1,665
                                                                 -------     -------
         Net interest income                                       2,155       1,560
      Provision for loan losses                                      255         204
                                                                 -------     -------
         Net interest income after provision for loan losses       1,900       1,356
Noninterest income:
      Service charges and other fees                                 153          97
      Other noninterest income                                       224         175
                                                                 -------     -------
         Total noninterest income                                    377         272
                                                                 -------     -------
Noninterest expenses:
      Salaries and employee benefits                               1,114         869
      Occupancy                                                      138         112
      Data processing                                                 93          81
      Directors fees                                                  60          79
      Advertising                                                    104          63
      Furniture and equipment                                         90          63
      Amortization of intangibles                                     54          54
      Merger/acquisition related expenses                             40       1,647
      Other expenses                                                 184         214
                                                                 -------     -------
         Total noninterest expenses                                1,877       3,182
                                                                 -------     -------
            Net income (loss) before tax expense                     400      (1,554)
      Income tax expense (benefit)                                    --         (36)
                                                                 -------     -------
            Net income (loss)                                    $   400     $(1,518)
                                                                 =======     =======
Earnings per share - basic and diluted                           $  0.11     $ (0.41)
                                                                 =======     =======
Dividends per share                                              $    --     $  0.05
                                                                 =======     =======
</TABLE>
See Notes to Consolidated Financial Statements

                                      -2-
<PAGE>
<TABLE>
<CAPTION>
CAPITAL BANK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2000 and 1999

                                                                        2000         1999
-------------------------------------------------------------------------------------------
                                    (In thousands)                   (Unaudited)

<S>                                                                 <C>           <C>
Cash Flows From Operating Activities
      Net income (loss)                                             $    400      $ (1,518)
      Adjustments to reconcile net loss to net cash provided
         by (used in) operating activities:
         Amortization of deposit premium and goodwill                     54            54
         Depreciation                                                    125           118
         Amortization of premium on securities, net                       10             3
         MRP and ESOP compensation                                        --           209
         Provision for loan losses                                       255           204
         Changes in assets and liabilities:
            Accrued interest receivable                                 (151)         (167)
            Other assets                                                (538)          221
            Accrued interest payable and other liabilities               204         1,377
                                                                    --------      --------
               Net cash provided by operating activities                 359           501
                                                                    --------      --------
Cash Flows From Investing Activities
      Loan originations, net of principal repayments                 (16,149)       (8,482)
      Additions to premises and equipment                               (278)         (331)
      Purchase of Federal Home Loan Bank stock                            --          (193)
      Purchase of securities available for sale                       (1,468)      (16,281)
      Proceeds from maturities of securities available for sale          794         3,271
      Proceeds from maturities of securities held to maturity             --         1,560
                                                                    --------      --------
                Net cash used in investing activities                (17,101)      (20,456)
                                                                    --------      --------
Cash Flows From Financing Activities
      Net increase in deposits                                        26,465         2,039
      Net increase in repurchase agreements                            1,192           (24)
      Net increase (decrease) in borrowings                           (5,000)        3,586
      Cash dividends                                                      --          (183)
                                                                    --------      --------
                Net cash provided by financing activities             22,657         5,418
                                                                    --------      --------
                Net change in cash and cash equivalents                5,915       (14,537)
      Cash and cash equivalents:
         Beginning                                                    11,662        26,765
                                                                    --------      --------
         Ending                                                     $ 17,577      $ 12,228
                                                                    ========      ========
Supplemental Disclosure of Cash Flow Information
      Transfers from loans to real estate acquired
         through foreclosure                                        $     32      $     --
                                                                    ========      ========
</TABLE>
See Notes to Consolidated Financial Statements


                                      -3-
<PAGE>
                 Notes to the Consolidated Financial Statements

1.       Significant Accounting Policies and Interim Reporting

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information,  with the  instructions to Form 10-Q and Regulation S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all adjustments necessary for a fair presentation
of the financial  position and results of operations  for the periods  presented
have been  included.  The results of operations for the three month period ended
March 31, 2000 are not necessarily  indicative of the results of operations that
may be expected for the year ended December 31, 2000.

The  accounting  policies  followed  are as set  forth in Note 1 of the Notes to
Financial Statements in the 1999 Capital Bank Corporation annual report.

2.       Operating Structure

Capital Bank Corporation (the "Company") is a bank holding company  incorporated
under the laws of North  Carolina  on August 10,  1998.  The  Company's  primary
function is to serve as the holding  company  for its  wholly-owned  subsidiary,
Capital Bank. Capital Bank (the "Bank") was incorporated under the laws of North
Carolina on May 30, 1997 and commenced  operations on June 20, 1997. The Bank is
not a member of the Federal Reserve System and has no subsidiaries. Capital Bank
is a locally  owned  community  bank  engaged  in  general  commercial  banking,
providing a full range of banking services. The majority of the Bank's customers
are individuals and small to medium-size  businesses.  The Bank's primary source
of revenue is interest earned from loans to customers and from invested cash and
securities.

The Bank operates through its corporate office in Raleigh,  North Carolina,  two
branches in Cary, North Carolina, three branches in Sanford, North Carolina, and
one branch in Siler City, North Carolina.

As used in this report,  the term "Company"  refers to Capital Bank  Corporation
and its subsidiary, Capital Bank.

3.       Comprehensive Loss

Comprehensive  income (loss) includes net income (loss) and all other changes to
the Company's  equity,  with the  exception of  transactions  with  shareholders
("Other  Comprehensive   Income").   The  Company's  only  components  of  other
comprehensive  income  relate  to  unrealized  gains and  losses  on  securities
available for sale. The Company's total  comprehensive  net loss and information
concerning the Company's  other  comprehensive  income items for the three month
periods ended March 31, 2000 and 1999 are as follows:

                                      -4-
<PAGE>
<TABLE>
<CAPTION>
                                                                     2000            1999
                                                                    ---------------------
(In thousands)                                                           (Unaudited)
<S>                                                                 <C>           <C>
Three month period ended March 31, 2000 and 1999:
      Net income (loss) before comprehensive items                  $ 400         $ (1,544)
      Unrealized gains on securities available for sale              (240)            (337)
      Comprehensive net income                                      $ 160         $ (1,881)
</TABLE>


4.       Earnings Per Share

The Bank is required to report a dual presentation of basic and diluted earnings
per share  ("EPS").  Basic EPS  excludes  dilution  and is  computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding for the period. For loss periods,  diluted EPS is the same as
basic EPS due to the fact that including common stock equivalents  computed as a
result of the 312,298 stock options  outstanding  in the  calculation of diluted
EPS would be  antidilutive.  For periods  where the Bank has positive  earnings,
diluted EPS are presented due to the effect of those same options. The following
tables provide a computation and reconciliation of basic and diluted EPS for the
three month periods ended March 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                2000            1999
-----------------------------------------------------------------------------------------
(In thousands except number of shares)                                (Unaudited)
<S>                                                         <C>              <C>
Three month period ended March 31, 2000 and 1999:
Income available to stockholders - basic and diluted        $       400      $    (1,518)
Shares used in the computation of earnings per share:
Weighted average number of shares outstanding - basic         3,709,005        3,673,801
Incremental shares from assumed exercise of stock
      options - antidilutive during loss periods                    806              n/a
Weighted average number of shares outstanding - diluted       3,709,811        3,673,801

</TABLE>

Item 2

Management's Discussion and Analysis
Of Financial Condition and Results of Operations

The  following  discussion  presents  an  overview  of the  unaudited  financial
statements for the three month periods ended March 31, 2000 and 1999 for Capital
Bank Corporation and its wholly owned subsidiary,  Capital Bank. This discussion
and analysis is intended to provide pertinent  information  concerning financial
position, results of operations,  liquidity, and capital resources. It should be
read  in  conjunction  with  the  unaudited  financial  statements  and  related
footnotes contained in Part I, Item 1 of this report.


                                      -5-
<PAGE>
Information set forth below contains various  forward-looking  statements within
the meaning of Section 27A of the  Securities Act of 1933 and Section 21E of the
Securities  Exchange  Act of 1934,  which  statements  represent  the  Company's
judgment  concerning the future and are subject to risks and uncertainties  that
could cause the Company's actual operating  results to differ  materially.  Such
forward-looking  statements  can be  identified  by the  use of  forward-looking
terminology,  such  as  "may",  "will",  "expect",   "anticipate",   "estimate",
"believe", or "continue", or the negative thereof or other variations thereof or
comparable   terminology.   The  Company  cautions  that  such   forward-looking
statements  are further  qualified  by  important  factors  that could cause the
Company's  actual  operating  results  to differ  materially  from  those in the
forward-looking  statements,  as well as the factors set forth in the  Company's
periodic reports and other filings with the SEC.

Overview

Capital Bank Corporation (the "Company") is a bank holding company  incorporated
under the laws of North  Carolina  on August 10,  1998.  The  Company's  primary
function is to serve as the holding  company  for its  wholly-owned  subsidiary,
Capital Bank.  Capital Bank (the "Bank") was incorporated  under the laws of the
State  of  North  Carolina  on May  30,  1997,  and  commenced  operations  as a
state-chartered  banking  corporation on June 20, 1997. The Bank is not a member
of the Federal Reserve System and has no  subsidiaries.  At a special meeting of
shareholders  held on March 26, 1999, the  shareholders of Capital Bank approved
the reorganization of Capital Bank into Capital Bank Corporation. In the holding
company  reorganization,  the shareholders of Capital Bank each received a right
to one share of Company  stock for each  share of  Capital  Bank stock that they
owned.  Thus,  the  shareholders  of Capital  Bank  before the  holding  company
reorganization  are now the shareholders of the Company.  In addition,  on March
31, 1999 the Company  completed  its  acquisition  of Home Savings Bank of Siler
City  SSB,  Inc.  in a  stock-for-stock  exchange  in which the  Company  issued
1,181,038 shares of its Common Stock. On July 16, 1999, Home Savings Bank merged
with Capital Bank to form one subsidiary under Capital Bank  Corporation.  Prior
to the merger date,  Home Savings Bank  capitalized  the holding company with an
upstream dividend of $100,000.  In conjunction with the merger, the common stock
of Home Savings Bank was retired.

As used in this report,  the term "Company"  refers to Capital Bank  Corporation
and its subsidiary, Capital Bank, after the holding company reorganization.

The Company has no operations other than those of its subsidiary,  Capital Bank.
The Bank is a full-service  community bank. The Company's  profitability depends
principally upon the net interest income, provision for loan losses, noninterest
income and noninterest expenses of the bank.

Financial Condition

Total  consolidated  assets of the Company for the quarter  ended March 31, 2000
were $245.4 million compared to $222.3 million at December 31, 1999, an increase
of $23.0 million, or 10%. On March 31, 2000, loans were $175.4 million, up $16.1
million, or 10%, compared to December 31, 1999. Investment securities were $47.0
million and federal funds sold were $3.0 million at period end. During the three
month  period,  federal  funds sold  increased by $1.1 million due  primarily to
monies  received from  significant  increases in deposits which had not yet been
invested in securities or used to fund new loans. Earning assets represented 95%
of total

                                      -6-
<PAGE>
assets on March 31, 2000.  The  allowance  for loan losses on March 31, 2000 was
$2.6 million and  represented  approximately  1.47% of total  loans.  Management
believes that the amount of the allowance is adequate at this time.

Deposits on March 31, 2000 were $189.7 million,  an increase of $26.5 million or
16% from December 31, 1999.  This  increase was primarily due to an  advertising
campaign run by the Company with special rates and terms on certain Certificates
of Deposit,  whose growth of $24.3 million  represented 92% of the total deposit
growth.  Borrowings  decreased  from $20.0 million at December 31, 1999 to $15.0
million at March 31, 2000, as the Company used funds  received from the increase
in deposits  to pay down a higher rate  Federal  Home Loan Bank  advance.  Total
consolidated  stockholders'  equity  was $ 31.3  million at March 31,  2000,  an
increase of $160,000 from December 31, 1999, due to net income  partially offset
by declines in the market value of available for sale securities.

Results of Operations

For the three month period ended March 31, 2000, the Company reported net income
of  $400,000 or $.11 per share  compared  to a loss of $1.5  million or $.41 per
share in the first  quarter of 1999.  Included in the income for the three month
period ended March 31, 2000 were $40,000 of certain nonrecurring charges related
to the acquisition of five branches from two other area financial  institutions.
Included  in the loss for the three  month  period  ended  March  31,  1999 were
certain  nonrecurring  charges related to the  establishment of the bank holding
company and the  acquisition  of Home Savings of $1.6 million.  Excluding  those
costs,  the Company had  consolidated  net income from  operations  in the first
quarter of 1999 of approximately $129,000 or $0.04 per share for the three month
period ended March 31, 2000.

Net interest  income in the first quarter was $2.2  million,  up 38% compared to
$1.6 million in the first quarter of 1999.  The  Company's  net interest  margin
(net interest  income as a percentage of average  earning  assets) was 3.82% for
the three month period ended March 31, 2000.

The  provision for loan losses was $255,000 for the three period ended March 31,
2000.  This  provision  was used to build  the  allowance  for loan  losses to a
prudent  level to support the Company's  actual loan growth.  At March 31, 2000,
the  allowance  for loan losses was 1.47% of total loans.  Loans 30 days or more
past due totaled $967,000 and represented .55% of total loans on March 31, 2000.

Non-interest  income  for the three  month  period  ended  March 31,  2000,  was
$377,000  compared to  $272,000  for the same  period in 1999.  The  increase in
non-interest  income is primarily  attributable  to increases in fees associated
with deposit accounts relative to the overall increase in deposits.

Non-interest expense for the three period ended March 31, 2000, was $1.9 million
compared to $3.2 million for the same period in 1999.  Mergers and  acquisitions
related  expenses,  the largest expense  category during this period,  decreased
from $1.6 million in 1999 relating to the establishment of a holding company and
the merger of Home Savings Bank, to $40,000 in 2000 relating to the  acquisition
of five branches  from two area  financial  institutions.  Salaries and employee
benefits,  representing  the second largest expense  category during the period,
increased  from  $869,000 for the three month period in 1999 to $1.1 million for
the same period in 2000.  These  increases  reflect an increase in the number of
personnel employed by the Company as the

                                      -7-
<PAGE>
Company must maintain  adequate  staffing levels in order to meet customer needs
and to keep pace with its expected growth.  As of March 31, 2000 the Company had
77 full-time equivalent employees.  Occupancy costs, the third highest component
of non-interest expenses,  increased from $112,000 for the three month period in
1999 to  $138,000  for the same  period  in 2000.  This  increase  is  primarily
associated  with the  opening  of a new  branch in the Lee  County  area and the
leasing of  additional  office space as a result of growth in the  marketing and
Human Resources area and the related growth in the number of personnel needed in
that department.  Although management expects noninterest expense to increase on
an absolute  basis as the Company  continues  its  growth,  these  expenses as a
percentage of asset size,  currently and operating  revenue are  anticipated  to
decrease over time.

Liquidity and Capital Resources

The  Company's  liquidity  management  involves  planning to meet the  Company's
anticipated funding needs at a reasonable cost.  Liquidity  management is guided
by  policies   formulated   by  the   Company's   senior   management   and  the
Asset/Liability  Management Committee of the Board of Directors. The Company had
$17.6 million in its most liquid  assets,  cash and cash  equivalents at quarter
end. The Company's  principal  sources of funds are deposits,  Federal Home Loan
Bank borrowings and capital.  Core deposits (total deposits less certificates of
deposits in the amount of $100,000 or more),  one of the most stable  sources of
liquidity,  together with equity capital funded 81% of total assets at March 31,
2000.  In  addition,  the Company has the ability to take  advantage  of various
other funding programs available from the Federal Home Loan Bank of Atlanta.

Stockholder's  equity was $31.3  million  or $8.55 per share at March 31,  2000.
Management believes this level of shareholders' equity provides adequate capital
to support the Company's  growth for at least the next 12 months and to maintain
a  well-capitalized  position.  At March 31,  2000,  Capital Bank had a leverage
ratio of 13.4%, a Tier 1 capital ratio of 17.7%, and a total risk-based  capital
ratio  of  18.9%.  These  ratios  far  exceed  the  federal  regulatory  minimum
requirements for a  "well-capitalized"  bank.  Management's  challenge is to use
this  capital  to  implement  a  prudent  growth  strategy  of  branch  and bank
acquisitions while growing the existing branch structure through quality service
and responsiveness to its customers' needs,  although there is no assurance that
the Company will meet these objectives.

Effects of Inflation

Inflation  can  have a  significant  effect  on  the  operating  results  of all
industries.  However,  management  believes the inflationary  factors are not as
critical to the banking  industry  as they are to other  industries,  due to the
high concentration of relatively  short-duration  monetary assets in the banking
industry.  Inflation does,  however,  have some impact on the Company's  growth,
earnings and total assets, and on its need to closely monitor capital levels.

Interest rates are significantly  affected by inflation,  but it is difficult to
assess the impact,  since neither the timing nor the magnitude of the changes in
the  various  inflation  indices  coincides  with  changes  in  interest  rates.
Inflation does impact the economic value of longer-term  interest-bearing assets
and  liabilities,  but the Company  attempts to limit its  long-term  assets and
liabilities.


                                      -8-
<PAGE>
Item 3            Quantitative and Qualitative Disclosures About Market Risk
------            ----------------------------------------------------------

The Company has not  experienced  any material change in its portfolio risk from
December 31, 1999 to March 31, 2000.

Part II - Other Information

Item 1            Legal Proceedings
------            -----------------

There are no material pending legal  proceedings to which the Company is a party
or to which any of its  property is  subject.  In  addition,  the Company is not
aware of any threatened litigation,  unasserted claims or assessments that could
have a material adverse effect on the Company's  business,  operating results or
condition.

Item 2            Changes in Securities and Use of Proceeds
------            -----------------------------------------

None

Item 3            Defaults Upon Senior Securities

None

Item 4            Submission of Matters to a Vote of Security Holders
------            ---------------------------------------------------

None

Item 5            Other Information
------            -----------------

None

Item 6            Exhibits and Reports on Form 8-K
------            --------------------------------

 (a)     Exhibits
         --------

27.01    Financial Data Schedule


 (b)     Reports on Form 8-K
         -------------------

         No  reports on form 8-K were  filed  during the period  covered by this
         report.



                                      -9-
<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.





                                          CAPITAL BANK CORPORATION


Date:  May 10, 2000                       By:  /s/Allen T. Nelson, Jr.,
                                               Allen T. Nelson, Jr.,
                                               Senior Vice President and CFO




                                      -10-