----

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| North Carolina                                                |   | 000-30062               |   | 56-2101930                          |
|---------------------------------------------------------------|--------|-------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (CommissionFile Number) |   | (I.R.S. EmployerIdentification No.) |

|   | Large accelerated filer  o                                            | Accelerated filer  o              |   |
|--------|---------------------------------------------------------------------------------|---------------------------------------------|--------|
|   | Non-accelerated filer  o(Do not check if a smaller reporting company) | Smaller reporting company  þ |   |

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CAPITAL BANK CORPORATION

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| PART I – FINANCIAL INFORMATION | Page No.                                                                                                                                                                                                                                                                                                                   |   |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 1.                              | Financial Statements                                                                                                                                                                                                                                                                                                       |   |   |
|                                 | Unaudited Condensed Consolidated Balance Sheets as of June 30, 2011 (Successor) and December 31, 2010 (Predecessor)                                                                                                                                                                                                        | 3      |   |
|                                 | Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended June 30 2011 (Successor) and 2010 (Predecessor) and the Period of January 29, 2011 to June 30, 2011 (Successor), the Period of January 1, 2011 to January 28, 2011 (Predecessor) and the Six Months Ended June 30, 2010 (Predecessor) | 4      |   |
|                                 | Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Period of January 29, 2011 to June 30, 2011 (Successor), the Period of January 1, 2011 to January 28, 2011 (Predecessor) and the Six Months Ended June 30, 2010 (Predecessor)                                                 | 5      |   |
|                                 | Unaudited Condensed Consolidated Statements of Cash Flows for the Period of January 29, 2011 to June 30, 2011 (Successor), the Period of January 1, 2011 to January 28, 2011 (Predecessor) and the Six Months Ended June 30, 2010 (Predecessor)                                                                            | 6      |   |
|                                 | Unaudited Notes to Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                             | 8      |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 2.                              | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                | 25     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 3.                              | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                                                                                                                                                 | 34     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 4.                              | Controls and Procedures                                                                                                                                                                                                                                                                                                    | 34     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| PART II – OTHER INFORMATION    |                                                                                                                                                                                                                                                                                                                       |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 1.                              | Legal Proceedings                                                                                                                                                                                                                                                                                                          | 34     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 1A.                             | Risk Factors                                                                                                                                                                                                                                                                                                               | 34     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 2.                              | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                | 41     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 3.                              | Defaults upon Senior Securities                                                                                                                                                                                                                                                                                            | 41     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 4.                              | (Removed and Reserved)                                                                                                                                                                                                                                                                                                     | 41     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 5.                              | Other Information                                                                                                                                                                                                                                                                                                          | 41     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Item 6.                              | Exhibits                                                                                                                                                                                                                                                                                                                   | 41     |   |
|                                 |                                                                                                                                                                                                                                                                                                                       |   |   |
| Signatures                           |                                                                                                                                                                                                                                                                                                                       |   |   |

----

Index

----

Item 1.  Financial Statements

|                                                                                                                                                        |   | SuccessorCompany |          |   | PredecessorCompany |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------------|--------|--------------------|--------|
| (Dollars in thousands)                                                                                                                                      |   | Jun. 30, 2011    |          |   | Dec. 31, 2010      |   |
|                                                                                                                                                        |   |             |          |   |               |   |   |   |
| Assets                                                                                                                                                      |   |             |          |   |               |   |   |   |
| Cash and cash equivalents:                                                                                                                                  |   |             |          |   |               |   |   |   |
| Cash and due from banks                                                                                                                                     |   | $                | 12,477        |   |               | $      | 13,646 |   |
| Interest-bearing deposits with banks                                                                                                                        |   |             | –       |   |               |   | 53,099 |   |
| Total cash and cash equivalents                                                                                                                             |   |             | 12,477        |   |               |   | 66,745 |   |
| Investment securities:                                                                                                                                      |   |             |          |   |               |   |   |   |
| Investment securities – available for sale, at fair value                                                                                             |   |             | –       |   |               |   | 214,991 |   |
| Other investments                                                                                                                                           |   |             | –       |   |               |   | 8,301 |   |
| Total investment securities                                                                                                                                 |   |             | –       |   |               |   | 223,292 |   |
| Mortgage loans held for sale                                                                                                                                |   |             | –       |   |               |   | 6,993 |   |
| Loans:                                                                                                                                                      |   |             |          |   |               |   |   |   |
| Loans – net of unearned income and deferred fees                                                                                                      |   |             | –       |   |               |   | 1,254,479 |   |
| Allowance for loan losses                                                                                                                                   |   |             | –       |   |               |   | (36,061 | ) |
| Net loans                                                                                                                                                   |   |             | –       |   |               |   | 1,218,418 |   |
| Investment in and advance to Capital Bank, NA                                                                                                               |   |             | 234,671       |   |               |   | – |   |
| Other real estate                                                                                                                                           |   |             | –       |   |               |   | 18,334 |   |
| Premises and equipment, net                                                                                                                                 |   |             | –       |   |               |   | 25,034 |   |
| Other intangible assets, net                                                                                                                                |   |             | –       |   |               |   | 1,774 |   |
| Other assets                                                                                                                                                |   |             | 428           |   |               |   | 24,957 |   |
| Total assets                                                                                                                                                |   | $                | 247,576       |   |               | $      | 1,585,547 |   |
|                                                                                                                                                        |   |             |          |   |               |   |   |   |
| Liabilities                                                                                                                                                 |   |             |          |   |               |   |   |   |
| Deposits:                                                                                                                                                   |   |             |          |   |               |   |   |   |
| Demand deposits                                                                                                                                             |   | $                | –       |   |               | $      | 116,113 |   |
| NOW accounts                                                                                                                                                |   |             | –       |   |               |   | 185,782 |   |
| Money market accounts                                                                                                                                       |   |             | –       |   |               |   | 137,422 |   |
| Savings deposits                                                                                                                                            |   |             | –       |   |               |   | 30,639 |   |
| Time deposits                                                                                                                                               |   |             | –       |   |               |   | 873,330 |   |
| Total deposits                                                                                                                                              |   |             | –       |   |               |   | 1,343,286 |   |
| Borrowings                                                                                                                                                  |   |             | –       |   |               |   | 121,000 |   |
| Subordinated debentures                                                                                                                                     |   |             | 18,561        |   |               |   | 34,323 |   |
| Other liabilities                                                                                                                                           |   |             | 638           |   |               |   | 10,250 |   |
| Total liabilities                                                                                                                                           |   |             | 19,199        |   |               |   | 1,508,859 |   |
|                                                                                                                                                        |   |             |          |   |               |   |   |   |
| Shareholders’ Equity                                                                                                                                  |   |             |          |   |               |   |   |   |
| Preferred stock, $1,000 par value; 100,000 shares authorized; 41,279 shares issued and outstanding (liquidation preference of $41,279) at December 31, 2010 |   |             |  – |   |               |   | 40,418 |   |
| Common stock, no par value; 300,000,000 shares authorized; 85,802,164 and 12,877,846 shares issued and outstanding                                          |   |             | 227,684       |   |               |   | 145,594 |   |
| Retained earnings (accumulated deficit)                                                                                                                     |   |             | 693           |   |               |   | (108,027 | ) |
| Accumulated other comprehensive loss                                                                                                                        |   |             | –       |   |               |   | (1,297 | ) |
| Total shareholders’ equity                                                                                                                            |   |             | 228,377       |   |               |   | 76,688 |   |
| Total liabilities and shareholders’ equity                                                                                                            |   | $                | 247,576       |   |               | $      | 1,585,547 |   |

----

Index

|                                                       |   | SuccessorCompany                      |    |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|------------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands except per share data)               |   | Three Months Ended Jun. 30, 2011 |    |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                                       |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Interest income:                                           |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Loans and loan fees                                        |   | $                                     | 14,915  |   |                           | $      | 17,312                       |   | $      | 25,971                      |   |   | $ | 5,479 |   | $ | 34,723 |   |
| Investment securities:                                     |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Taxable interest income                                    |   |                                  | 2,216   |   |                           |   | 1,971                        |   |   | 3,206                       |   |   |   | 391 |   |   | 3,997 |   |
| Tax-exempt interest income                                 |   |                                  | 239     |   |                           |   | 483                          |   |   | 398                         |   |   |   | 74 |   |   | 1,084 |   |
| Dividends                                                  |   |                                  | 30      |   |                           |   | 18                           |   |   | 59                          |   |   |   | – |   |   | 36 |   |
| Federal funds and other interest income                    |   |                                  | 40      |   |                           |   | 10                           |   |   | 87                          |   |   |   | 11 |   |   | 20 |   |
| Total interest income                                      |   |                                  | 17,440  |   |                           |   | 19,794                       |   |   | 29,721                      |   |   |   | 5,955 |   |   | 39,860 |   |
| Interest expense:                                          |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Deposits                                                   |   |                                  | 2,786   |   |                           |   | 5,604                        |   |   | 4,560                       |   |   |   | 1,551 |   |   | 11,755 |   |
| Borrowings and subordinated debentures                     |   |                                  | 765     |   |                           |   | 1,446                        |   |   | 1,251                       |   |   |   | 445 |   |   | 2,811 |   |
| Total interest expense                                     |   |                                  | 3,551   |   |                           |   | 7,050                        |   |   | 5,811                       |   |   |   | 1,996 |   |   | 14,566 |   |
| Net interest income                                        |   |                                  | 13,889  |   |                           |   | 12,744                       |   |   | 23,910                      |   |   |   | 3,959 |   |   | 25,294 |   |
| Provision for loan losses                                  |   |                                  | 1,485   |   |                           |   | 20,037                       |   |   | 1,652                       |   |   |   | 40 |   |   | 31,771 |   |
| Net interest income (loss) after provision for loan losses |   |                                  | 12,404  |   |                           |   | (7,293                       | )      |   | 22,258                      |   |   |   | 3,919 |   |   | (6,477 | ) |
| Noninterest income:                                        |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Service charges and other fees                             |   |                                  | 807     |   |                           |   | 854                          |   |   | 1,355                       |   |   |   | 291 |   |   | 1,722 |   |
| Bank card services                                         |   |                                  | 547     |   |                           |   | 543                          |   |   | 847                         |   |   |   | 174 |   |   | 958 |   |
| Mortgage origination and other loan fees                   |   |                                  | 255     |   |                           |   | 339                          |   |   | 518                         |   |   |   | 210 |   |   | 666 |   |
| Brokerage fees                                             |   |                                  | 212     |   |                           |   | 285                          |   |   | 308                         |   |   |   | 78 |   |   | 472 |   |
| Bank-owned life insurance                                  |   |                                  | 114     |   |                           |   | 255                          |   |   | 134                         |   |   |   | 10 |   |   | 494 |   |
| Net gain on sale of investment securities                  |   |                                  | – |   |                           |   | 63                           |   |   | –                     |   |   |   | – |   |   | 326 |   |
| Other                                                      |   |                                  | 130     |   |                           |   | 175                          |   |   | 155                         |   |   |   | 69 |   |   | 407 |   |
| Total noninterest income                                   |   |                                  | 2,065   |   |                           |   | 2,514                        |   |   | 3,317                       |   |   |   | 832 |   |   | 5,045 |   |
| Noninterest expense:                                       |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                             |   |                                  | 5,568   |   |                           |   | 5,319                        |   |   | 9,525                       |   |   |   | 1,977 |   |   | 10,719 |   |
| Occupancy                                                  |   |                                  | 1,786   |   |                           |   | 1,456                        |   |   | 2,926                       |   |   |   | 548 |   |   | 2,958 |   |
| Furniture and equipment                                    |   |                                  | 857     |   |                           |   | 700                          |   |   | 1,401                       |   |   |   | 275 |   |   | 1,445 |   |
| Data processing and telecommunications                     |   |                                  | 635     |   |                           |   | 525                          |   |   | 911                         |   |   |   | 180 |   |   | 1,042 |   |
| Advertising and public relations                           |   |                                  | 144     |   |                           |   | 599                          |   |   | 325                         |   |   |   | 131 |   |   | 1,029 |   |
| Office expenses                                            |   |                                  | 269     |   |                           |   | 288                          |   |   | 498                         |   |   |   | 93 |   |   | 620 |   |
| Professional fees                                          |   |                                  | 208     |   |                           |   | 684                          |   |   | 543                         |   |   |   | 190 |   |   | 1,159 |   |
| Business development and travel                            |   |                                  | 304     |   |                           |   | 307                          |   |   | 550                         |   |   |   | 87 |   |   | 574 |   |
| Amortization of other intangible assets                    |   |                                  | 287     |   |                           |   | 235                          |   |   | 478                         |   |   |   | 62 |   |   | 470 |   |
| ORE losses and miscellaneous loan costs                    |   |                                  | 1,085   |   |                           |   | 708                          |   |   | 1,608                       |   |   |   | 176 |   |   | 2,025 |   |
| Directors’ fees                                      |   |                                  | 53      |   |                           |   | 294                          |   |   | 93                          |   |   |   | 68 |   |   | 592 |   |
| FDIC deposit insurance                                     |   |                                  | 513     |   |                           |   | 651                          |   |   | 1,076                       |   |   |   | 266 |   |   | 1,316 |   |
| Contract termination fees                                  |   |                                  | 374     |   |                           |   | –                      |   |   | 3,955                       |   |   |   | – |   |   | – |   |
| Other                                                      |   |                                  | 670     |   |                           |   | 614                          |   |   | 1,093                       |   |   |   | 102 |   |   | 1,021 |   |
| Total noninterest expense                                  |   |                                  | 12,753  |   |                           |   | 12,380                       |   |   | 24,982                      |   |   |   | 4,155 |   |   | 24,970 |   |
| Net income (loss) before taxes                             |   |                                  | 1,716   |   |                           |   | (17,159                      | )      |   | 593                         |   |   |   | 596 |   |   | (26,402 | ) |
| Income tax expense (benefit)                               |   |                                  | 449     |   |                           |   | (3,576                       | )      |   | (100                        | )      |   |   | – |   |   | (7,485 | ) |
| Net income (loss)                                          |   |                                  | 1,267   |   |                           |   | (13,583                      | )      |   | 693                         |   |   |   | 596 |   |   | (18,917 | ) |
| Dividends and accretion on preferred stock                 |   |                                  | – |   |                           |   | 589                          |   |   | –                     |   |   |   | 861 |   |   | 1,178 |   |
| Net (income) loss attributable to common shareholders      |   | $                                     | 1,267   |   |                           | $      | (14,172                      | )      | $      | 693                         |   |   | $ | (265 | ) | $ | (20,095 | ) |
|                                                       |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Net income (loss) per common share – basic           |   | $                                     | 0.01    |   |                           | $      | (1.09                        | )      | $      | 0.01                        |   |   | $ | (0.02 | ) | $ | (1.60 | ) |
| Net income (loss) per common share – diluted         |   | $                                     | 0.01    |   |                           | $      | (1.09                        | )      | $      | 0.01                        |   |   | $ | (0.02 | ) | $ | (1.60 | ) |

----

Index

|                                                          |   | Preferred Stock |   | Common Stock |    | OtherComprehensive |   | Retained    |   |          |    |
|---------------------------------------------------------------|--------|-----------------|--------|--------------|---------|--------------------|--------|-------------|--------|---------------|---------|
| Successor Company                                             |   | Shares          |   | Amount       |    | Shares             |   | Amount      |   | Income        |    | Earnings |   | Total |   |
| (Dollars in thousands)                                        |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Balance at January 28, 2011                                   |   | –         |   | $            | – |               |   | 83,877,846  |   | $             | 224,085 |   | $ | – |   | $ | – |   | $ | 224,085 |   |
| Comprehensive income:                                         |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Net income                                                    |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   | 693 |   |   | 693 |   |
| Net unrealized gain on securities, net of tax of $2,820       |   |            |   |         |    |               |   |        |   |          |    |   |   | 4,495 |   |   |   |   |   | 4,495 |   |
| Total comprehensive income                                    |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   | 5,188 |   |
| Issuance of common stock, net of offering costs of $300       |   |            |   |         |    |               |   | 1,613,165   |   |          | 3,814   |   |   |   |   |   |   |   |   | 3,814 |   |
| Stock option expense                                          |   |            |   |         |    |               |   |        |   |          | 72      |   |   |   |   |   |   |   |   | 72 |   |
| Restricted stock                                              |   |            |   |         |    |               |   | (1,751      | )      |          | (7      | ) |   |   |   |   |   |   |   | (7 | ) |
| Directors’ deferred compensation                        |   |            |   |         |    |               |   | 312,904     |   |          | – |   |   |   |   |   |   |   |   | – |   |
| Merger of Old Capital Bank into Capital Bank, NA              |   |            |   |         |    |               |   |        |   |          | (280    | ) |   | (4,495 | ) |   |   |   |   | (4,775 | ) |
| Balance at June 30, 2011                                      |   | –         |   | $            | – |               |   | 85,802,164  |   | $             | 227,684 |   | $ | – |   | $ | 693 |   | $ | 228,377 |   |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |
|                                                          |   | Preferred Stock |   | Common Stock |    | OtherComprehensive |   | Accumulated |   |          |    |
| Predecessor Company                                           |   | Shares          |   | Amount       |    | Shares             |   | Amount      |   | Income (Loss) |    | Deficit |   | Total |   |
| (Dollars in thousands)                                        |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2010                                    |   | 41,279          |   | $            | 40,127  |               |   | 11,348,117  |   | $             | 139,909 |   | $ | 3,955 |   | $ | (44,206 | ) | $ | 139,785 |   |
| Comprehensive loss:                                           |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                      |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   | (18,917 | ) |   | (18,917 | ) |
| Net unrealized loss on securities, net of tax of $157         |   |            |   |         |    |               |   |        |   |          |    |   |   | 251 |   |   |   |   |   | 251 |   |
| Amortization of prior service cost on SERP                    |   |            |   |         |    |               |   |        |   |          |    |   |   | 4 |   |   |   |   |   | 4 |   |
| Total comprehensive loss                                      |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   | (18,662 | ) |
| Accretion of preferred stock discount                         |   |            |   |         | 146     |               |   |        |   |          |    |   |   |   |   |   | (146 | ) |   | – |   |
| Issuance of common stock                                      |   |            |   |         |    |               |   | 1,468,770   |   |          | 5,065   |   |   |   |   |   |   |   |   | 5,065 |   |
| Restricted stock forfeiture                                   |   |            |   |         |    |               |   | (400        | )      |          | (2      | ) |   |   |   |   |   |   |   | (2 | ) |
| Stock option expense                                          |   |            |   |         |    |               |   |        |   |          | 24      |   |   |   |   |   |   |   |   | 24 |   |
| Directors’ deferred compensation                        |   |            |   |         |    |               |   | 64,467      |   |          | 301     |   |   |   |   |   |   |   |   | 301 |   |
| Dividends on preferred stock                                  |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   | (1,032 | ) |   | (1,032 | ) |
| Balance at June 30, 2010                                      |   | 41,279          |   | $            | 40,273  |               |   | 12,880,954  |   | $             | 145,136 |   | $ | 4,210 |   | $ | (50,129 | ) | $ | 125,479 |   |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2011                                    |   | 41,279          |   | $            | 40,418  |               |   | 12,877,846  |   | $             | 145,594 |   | $ | (1,297 | ) | $ | (108,027 | ) | $ | 76,688 |   |
| Comprehensive income:                                         |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Net income                                                    |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   | 596 |   |   | 596 |   |
| Net unrealized loss on securities, net of tax benefit of $204 |   |            |   |         |    |               |   |        |   |          |    |   |   | (324 | ) |   |   |   |   | (324 | ) |
| Amortization of prior service cost on SERP                    |   |            |   |         |    |               |   |        |   |          |    |   |   | 1 |   |   |   |   |   | 1 |   |
| Total comprehensive income                                    |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   |   |   |   | 273 |   |
| Accretion of preferred stock discount                         |   |            |   |         | 24      |               |   |        |   |          |    |   |   |   |   |   | (24 | ) |   | – |   |
| Stock option expense                                          |   |            |   |         |    |               |   |        |   |          | 5       |   |   |   |   |   |   |   |   | 5 |   |
| Directors’ deferred compensation                        |   |            |   |         |    |               |   |        |   |          | 35      |   |   |   |   |   |   |   |   | 35 |   |
| Dividends on preferred stock                                  |   |            |   |         |    |               |   |        |   |          |    |   |   |   |   |   | (172 | ) |   | (172 | ) |
| Balance at January 28, 2011                                   |   | 41,279          |   | $            | 40,442  |               |   | 12,877,846  |   | $             | 145,634 |   | $ | (1,620 | ) | $ | (107,627 | ) | $ | 76,829 |   |

----

Index

|                                                                                                                         |   | SuccessorCompany             |     |   | PredecessorCompany          |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|--------|-----------------------------|--------|
| (Dollars in thousands)                                                                                                       |   | Jan. 29, 2011toJun. 30, 2011 |     |   | Jan. 1, 2011toJan. 28, 2011 |   | Six Months EndedJun. 30, 2010 |   |
|                                                                                                                         |   |                         |     |   |                        |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                        |   |                         |     |   |                        |   |   |   |   |   |   |
| Net income (loss)                                                                                                            |   | $                            | 693      |   |                        | $      | 596 |   | $ | (18,917 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                           |   |                         |     |   |                        |   |   |   |   |   |   |
| Accretion of purchased credit-impaired loans                                                                                 |   |                         | (24,968  | )      |                        |   | – |   |   | – |   |
| Amortization/accretion of fair value premium/discount on acquired time deposits, borrowings and subordinated debentures, net |   |                         | (3,529   | )      |                        |   | – |   |   | – |   |
| Provision for loan losses                                                                                                    |   |                         | 1,652    |   |                        |   | 40 |   |   | 31,771 |   |
| Amortization of other intangible assets                                                                                      |   |                         | 478      |   |                        |   | 62 |   |   | 470 |   |
| Depreciation                                                                                                                 |   |                         | 1,348    |   |                        |   | 203 |   |   | 1,271 |   |
| Stock-based compensation                                                                                                     |   |                         | 140      |   |                        |   | 42 |   |   | 386 |   |
| Gain on sale of securities, net                                                                                              |   |                         | –  |   |                        |   | – |   |   | (326 | ) |
| Amortization of premium on securities, net                                                                                   |   |                         | 695      |   |                        |   | 171 |   |   | 49 |   |
| Loss (gain) on disposal of premises, equipment and ORE                                                                       |   |                         | 16       |   |                        |   | (9 | ) |   | 334 |   |
| ORE valuation adjustments                                                                                                    |   |                         | 74       |   |                        |   | – |   |   | 646 |   |
| Bank-owned life insurance income                                                                                             |   |                         | (134     | )      |                        |   | (10 | ) |   | (518 | ) |
| Deferred income tax benefit                                                                                                  |   |                         | –  |   |                        |   | – |   |   | (6,763 | ) |
| Net change in:                                                                                                               |   |                         |     |   |                        |   |   |   |   |   |   |
| Mortgage loans held for sale                                                                                                 |   |                         | 1,907    |   |                        |   | 4,424 |   |   | (1,893 | ) |
| Accrued interest receivable and other assets                                                                                 |   |                         | (4,897   | )      |                        |   | (1,309 | ) |   | 815 |   |
| Accrued interest payable and other liabilities                                                                               |   |                         | 2,899    |   |                        |   | (3,939 | ) |   | (776 | ) |
| Net cash provided by (used in) operating activities                                                                          |   |                         | (23,626  | )      |                        |   | 271 |   |   | 6,549 |   |
|                                                                                                                         |   |                         |     |   |                        |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                        |   |                         |     |   |                        |   |   |   |   |   |   |
| Principal repayments on loans, net of loans originated or acquired                                                           |   |                         | 13,305   |   |                        |   | 14,547 |   |   | 4,057 |   |
| Purchases of premises and equipment                                                                                          |   |                         | (399     | )      |                        |   | (416 | ) |   | (1,655 | ) |
| Proceeds from sales of premises, equipment and ORE                                                                           |   |                         | 4,332    |   |                        |   | 201 |   |   | 6,730 |   |
| Sales (purchases) of FHLB stock                                                                                              |   |                         | 1,259    |   |                        |   | – |   |   | (2,025 | ) |
| Purchases of securities – available for sale                                                                           |   |                         | (138,855 | )      |                        |   | (6,840 | ) |   | (57,013 | ) |
| Proceeds from sales of securities – available for sale                                                                 |   |                         | –  |   |                        |   | – |   |   | 34,702 |   |
| Proceeds from principal repayments/calls/maturities of securities – available for sale                                 |   |                         | 25,761   |   |                        |   | 3,936 |   |   | 41,179 |   |
| Proceeds from principal repayments/calls/maturities of securities – held to maturity                                   |   |                         | –  |   |                        |   | – |   |   | 593 |   |
| Net cash paid in Capital Bank merger                                                                                         |   |                         | (42,880  | )      |                        |   | – |   |   | – |   |
| Investment in Capital Bank, NA                                                                                               |   |                         | (6,063   | )      |                        |   | – |   |   | – |   |
| Net cash provided by (used in) investing activities                                                                          |   |                         | (143,540 | )      |                        |   | 11,428 |   |   | 26,568 |   |
|                                                                                                                         |   |                         |     |   |                        |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                        |   |                         |     |   |                        |   |   |   |   |   |   |
| Increase (decrease) in deposits, net                                                                                         |   |                         | (2,426   | )      |                        |   | (4,960 | ) |   | (7,188 | ) |
| Decrease in repurchase agreements, net                                                                                       |   |                         | –  |   |                        |   | – |   |   | (6,543 | ) |
| Proceeds from borrowings                                                                                                     |   |                         | –  |   |                        |   | – |   |   | 151,000 |   |
| Principal repayments of borrowings                                                                                           |   |                         | (30,000  | )      |                        |   | (5,000 | ) |   | (165,000 | ) |
| Proceeds from issuance of subordinated debentures                                                                            |   |                         | –  |   |                        |   | – |   |   | 3,393 |   |
| Repurchase of preferred stock                                                                                                |   |                         | –  |   |                        |   | (41,279 | ) |   | – |   |
| Proceeds from North American Financial Holdings, Inc. Investment                                                             |   |                         | –  |   |                        |   | 181,050 |   |   |   |   |
| Proceeds from issuance of common stock, net of offering costs                                                                |   |                         | 3,814    |   |                        |   | – |   |   | 5,065 |   |
| Dividends paid                                                                                                               |   |                         | –  |   |                        |   | – |   |   | (1,940 | ) |
| Net cash provided by (used in) financing activities                                                                          |   |                         | (28,612  | )      |                        |   | 129,811 |   |   | (21,213 | ) |
| (continued on next page)                                                                                                     |   |                         |     |   |                        |   |   |   |   |   |   |

----

Index

|                                                      |   | SuccessorCompany             |     |   | PredecessorCompany          |   |
|-----------------------------------------------------------|--------|------------------------------|----------|--------|-----------------------------|--------|
| (Dollars in thousands)                                    |   | Jan. 29, 2011toJun. 30, 2011 |     |   | Jan. 1, 2011toJan. 28, 2011 |   | Six Months EndedJun. 30, 2010 |   |
|                                                      |   |                         |     |   |                        |   |   |   |   |   |   |
| Net change in cash and cash equivalents                   |   | $                            | (195,778 | )      |                        | $      | 141,510 |   | $ | 11,904 |   |
| Cash and cash equivalents at beginning of period          |   |                         | 208,255  |   |                        |   | 66,745 |   |   | 29,513 |   |
| Cash and cash equivalents at end of period                |   | $                            | 12,477   |   |                        | $      | 208,255 |   | $ | 41,417 |   |
|                                                      |   |                         |     |   |                        |   |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information          |   |                         |     |   |                        |   |   |   |   |   |   |
|                                                      |   |                         |     |   |                        |   |   |   |   |   |   |
| Noncash investing activities:                             |   |                         |     |   |                        |   |   |   |   |   |   |
| Transfers of loans and premises to ORE                    |   | $                            | 7,573    |   |                        | $      | 248 |   | $ | 13,054 |   |
| Transfers of ORE to loans                                 |   |                         | 857      |   |                        |   | 146 |   |   | – |   |
| Capital leases recorded in premises and other liabilities |   |                         | 6,618    |   |                        |   | – |   |   | – |   |
|                                                      |   |                         |     |   |                        |   |   |   |   |   |   |
| Cash paid for:                                            |   |                         |     |   |                        |   |   |   |   |   |   |
| Income taxes                                              |   | $                            | 130      |   |                        | $      | – |   | $ | – |   |
| Interest                                                  |   |                         | 9,989    |   |                        |   | 1,531 |   |   | 14,516 |   |

----

Index

----

Index

----

Index

----

Index

----

Index

|                                         |   | Successor Company                    |
|----------------------------------------------|--------|--------------------------------------|
| (Dollars in thousands)                       |   | OriginallyReportedas ofJan. 28, 2011 |   | MeasurementPeriodAdjustments |   | Revisedas ofJan. 28, 2011 |   |
|                                         |   |                                 |   |   |   |   |   |   |   |   |
| Fair value of assets acquired:               |   |                                 |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                    |   | $                                    | 208,255 |   | $ | – |   | $ | 208,255 |   |
| Investment securities                        |   |                                 | 225,336 |   |   | – |   |   | 225,336 |   |
| Mortgage loans held for sale                 |   |                                 | 2,569 |   |   | – |   |   | 2,569 |   |
| Loans                                        |   |                                 | 1,135,164 |   |   | – |   |   | 1,135,164 |   |
| Goodwill                                     |   |                                 | 30,994 |   |   | 1,863 |   |   | 32,857 |   |
| Other intangible assets                      |   |                                 | 5,004 |   |   | – |   |   | 5,004 |   |
| Deferred tax asset                           |   |                                 | 55,391 |   |   | – |   |   | 55,391 |   |
| Other assets                                 |   |                                 | 66,663 |   |   | (613 | ) |   | 66,050 |   |
| Total assets acquired                        |   |                                 | 1,729,376 |   |   | 1,250 |   |   | 1,730,626 |   |
| Fair value of liabilities assumed:           |   |                                 |   |   |   |   |   |   |   |   |
| Deposits                                     |   |                                 | 1,351,467 |   |   | – |   |   | 1,351,467 |   |
| Borrowings                                   |   |                                 | 123,837 |   |   | – |   |   | 123,837 |   |
| Subordinated debt                            |   |                                 | 19,392 |   |   | – |   |   | 19,392 |   |
| Other liabilities                            |   |                                 | 10,595 |   |   | 1,250 |   |   | 11,845 |   |
| Total liabilities assumed                    |   |                                 | 1,505,291 |   |   | 1,250 |   |   | 1,506,541 |   |
| Net assets acquired                          |   |                                 | 224,085 |   |   | – |   |   | 224,085 |   |
| Less: non-controlling interest at fair value |   |                                 | (43,785 | ) |   | – |   |   | (43,785 | ) |
|                                         |   |                                 | 180,300 |   |   | – |   |   | 180,300 |   |
| Underwriting and legal costs                 |   |                                 | 750 |   |   | – |   |   | 750 |   |
| Purchase price                               |   | $                                    | 181,050 |   | $ | – |   | $ | 181,050 |   |

----

Index

----

Index

----

Index

|                                                  |   | SuccessorCompany                     |       |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|-------------------------------------------------------|--------|--------------------------------------|------------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands except per share data)          |   | Three MonthsEnded Jun. 30, 2011 |       |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                                  |   |                                 |       |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Net income (loss) attributable to common shareholders |   | $                                    | 1,267      |   |                           | $      | (14,172                      | )      | $      | 693                         |   |   | $ | (265 | ) | $ | (20,095 | ) |
|                                                  |   |                                 |       |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding: |   |                                 |       |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Basic                                                 |   |                                 | 85,802,164 |   |                           |   | 13,021,208                   |   |   | 85,465,250                  |   |   |   | 13,188,612 |   |   | 12,520,600 |   |
| Dilutive effect of options outstanding                |   |                                 | 9          |   |                           |   | –                      |   |   | –                     |   |   |   | – |   |   | – |   |
| Diluted                                               |   |                                 | 85,802,173 |   |                           |   | 13,021,208                   |   |   | 85,465,250                  |   |   |   | 13,188,612 |   |   | 12,520,600 |   |
|                                                  |   |                                 |       |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Earnings (loss) per share – basic               |   | $                                    | 0.01       |   |                           | $      | (1.09                        | )      | $      | 0.01                        |   |   | $ | (0.02 | ) | $ | (1.60 | ) |
| Earnings (loss) per share – diluted             |   | $                                    | 0.01       |   |                           | $      | (1.09                        | )      | $      | 0.01                        |   |   | $ | (0.02 | ) | $ | (1.60 | ) |

|                        |   | SuccessorCompany                     |    |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|-----------------------------|--------|--------------------------------------|---------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
|                        |   | Three MonthsEnded Jun. 30, 2011 |    |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                        |   |                                 |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Anti-dilutive stock options |   |                                 | 291,980 |   |                           |   | 312,920                      |   |   | 292,480                     |   |   |   | 297,880 |   |   | 312,920 |   |
| Anti-dilutive warrants      |   |                                 | – |   |                           |   | 749,619                      |   |   | –                     |   |   |   | 749,619 |   |   | 749,619 |   |

|                                                               |   | SuccessorCompany                     |    |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|--------------------------------------------------------------------|--------|--------------------------------------|---------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)                                             |   | Three MonthsEnded Jun. 30, 2011 |    |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                                               |   |                                 |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on securities – available for sale |   | $                                    | 5,080   |   |                           | $      | 1,014                        |   | $      | 7,315                       |   |   | $ | (528 | ) | $ | 408 |   |
| Amortization of prior service cost on SERP                         |   |                                 | – |   |                           |   | 2                            |   |   | –                     |   |   |   | 1 |   |   | 4 |   |
| Income tax effect                                                  |   |                                 | (1,958  | )      |                           |   | (391                         | )      |   | (2,820                      | )      |   |   | 204 |   |   | (157 | ) |
| Other comprehensive income (loss)                                  |   | $                                    | 3,122   |   |                           | $      | 625                          |   | $      | 4,495                       |   |   | $ | (323 | ) | $ | 255 |   |

----

Index

|                                      |   | Predecessor Company |
|-------------------------------------------|--------|---------------------|
| December 31, 2010                         |   | Amortized Cost      |   | UnrealizedGains |   | UnrealizedLosses |   | Fair Value |   |
| (Dollars in thousands)                    |   |                |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale:                       |   |                |   |   |   |   |   |   |   |   |   |   |   |
| U.S. agency obligations                   |   | $                   | 19,003 |   | $ | 18 |   | $ | 87 |   | $ | 18,934 |   |
| Municipal bonds                           |   |                | 22,455 |   |   | 75 |   |   | 1,521 |   |   | 21,009 |   |
| Mortgage-backed securities issued by GSEs |   |                | 165,540 |   |   | 78 |   |   | 195 |   |   | 165,423 |   |
| Non-agency mortgage-backed securities     |   |                | 6,790 |   |   | 39 |   |   | 242 |   |   | 6,587 |   |
| Other securities                          |   |                | 3,252 |   |   | – |   |   | 214 |   |   | 3,038 |   |
|                                      |   |                | 217,040 |   |   | 210 |   |   | 2,259 |   |   | 214,991 |   |
| Other investments                         |   |                | 8,301 |   |   | – |   |   | – |   |   | 8,301 |   |
| Total                                     |   | $                   | 225,341 |   | $ | 210 |   | $ | 2,259 |   | $ | 223,292 |   |

|                                      |   | Predecessor Company |
|-------------------------------------------|--------|---------------------|
| December 31, 2010                         |   | Less than 12 Months |   | 12 Months or Greater |   | Total |   |
| (Dollars in thousands)                    |   | Fair Value          |   | UnrealizedLosses |   | Fair Value |   | UnrealizedLosses |   | Fair Value |   | UnrealizedLosses |   |
| Available for sale:                       |   |                |   |   |   |   |   |   |   |   |   |   |   |
| U.S. agency obligations                   |   | $                   | 8,916 |   | $ | 87 |   | $ | – |   | $ | – |   | $ | 8,916 |   | $ | 87 |   |
| Municipal bonds                           |   |                | 14,886 |   |   | 1,134 |   |   | 2,453 |   |   | 387 |   |   | 17,339 |   |   | 1,521 |   |
| Mortgage-backed securities issued by GSEs |   |                | 14,473 |   |   | 195 |   |   | – |   |   | – |   |   | 14,473 |   |   | 195 |   |
| Non-agency mortgage-backed securities     |   |                | – |   |   | – |   |   | 4,183 |   |   | 242 |   |   | 4,183 |   |   | 242 |   |
| Other securities                          |   |                | – |   |   | – |   |   | 2,536 |   |   | 214 |   |   | 2,536 |   |   | 214 |   |
| Total                                     |   | $                   | 38,275 |   | $ | 1,416 |   | $ | 9,172 |   | $ | 843 |   | $ | 47,447 |   | $ | 2,259 |   |

----

Index

|                                          |   | PredecessorCompany |      |
|-----------------------------------------------|--------|--------------------|-----------|
| (Dollars in thousands)                        |   | Dec. 31, 2010      |      |
|                                          |   |               |      |
| Commercial real estate:                       |   |               |      |   |
| Construction and land development             |   | $                  | 350,587   |   |
| Real estate – non-owner occupied        |   |               | 283,943   |   |
| Real estate – owner occupied            |   |               | 170,470   |   |
| Total commercial real estate                  |   |               | 805,000   |   |
| Consumer real estate:                         |   |               |      |   |
| Residential mortgage                          |   |               | 173,777   |   |
| Home equity lines                             |   |               | 89,178    |   |
| Total consumer real estate                    |   |               | 262,955   |   |
| Commercial and industrial                     |   |               | 145,435   |   |
| Consumer                                      |   |               | 6,163     |   |
| Other loans                                   |   |               | 33,742    |   |
|                                          |   |               | 1,253,295 |   |
| Deferred loan fees and origination costs, net |   |               | 1,184     |   |
|                                          |   | $                  | 1,254,479 |   |

| (Dollars in thousands)                             |   |   | As ofJan. 28, 2011 |   |
|----------------------------------------------------|--------|--------|--------------------|--------|
|                                               |   |   |               |   |
| Contractually required payments                    |   | $      | 1,318,702          |   |
| Nonaccretable difference                           |   |   | (98,777            | )      |
| Cash flows expected to be collected at acquisition |   |   | 1,219,925          |   |
| Accretable yield                                   |   |   | (163,892           | )      |
| Fair value of acquired loans at acquisition        |   | $      | 1,056,033          |   |

| (Dollars in thousands)                           |   | Three MonthsEndedJun. 30, 2011 |     | Jan. 29, 2011toJun. 30, 2011 |   |
|--------------------------------------------------|--------|--------------------------------|----------|------------------------------|--------|
|                                             |   |                           |     |                         |   |   |   |
| Balance, beginning of period                     |   | $                              | 153,627  |                         | $      | 163,892 |   |
| New loans purchased                              |   |                           | –  |                         |   | – |   |
| Accretion of income                              |   |                           | (14,703  | )                            |   | (24,968 | ) |
| Reclassifications from nonaccretable difference  |   |                           | 18,100   |                         |   | 18,100 |   |
| Merger of Old Capital Bank into Capital Bank, NA |   |                           | (157,024 | )                            |   | (157,024 | ) |
| Balance, end of period                           |   | $                              | –  |                         | $      | – |   |

----

Index

|   | • | the estimate of the remaining life of PCI loans which may change the amount of future interest income, and possibly principal, expected to be collected;                    |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                        |
|   | • | the estimate of the amount of contractually required principal and interest payments over the estimated life that will not be collected (the nonaccretable difference); and |
|   |    |                                                                                                                                                                        |
|   | • | indices for PCI loans with variable rates of interest.                                                                                                                      |

|                                             |   | SuccessorCompany             |    |   | PredecessorCompany          |   |
|--------------------------------------------------|--------|------------------------------|---------|--------|-----------------------------|--------|
| (Dollars in thousands)                           |   | Jan. 29, 2011toJun. 30, 2011 |    |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                             |   |                         |    |   |                        |   |   |   |   |   |   |
| Balance at beginning of period, predecessor      |   | $                            | – |   |                        | $      | 36,061 |   | $ | 26,081 |   |
| Loans charged off                                |   |                         | (339    | )      |                        |   | (49 | ) |   | (22,241 | ) |
| Recoveries of loans previously charged off       |   |                         | – |   |                        |   | 9 |   |   | 151 |   |
| Net charge-offs                                  |   |                         | (339    | )      |                        |   | (40 | ) |   | (22,090 | ) |
| Provision for loan losses                        |   |                         | 1,652   |   |                        |   | 40 |   |   | 31,771 |   |
| Merger of Old Capital Bank into Capital Bank, NA |   |                         | (1,313  | )      |                        |   | – |   |   | – |   |
| Balance at the end of period, predecessor        |   |                         | – |   |                        |   | 36,061 |   |   | 35,762 |   |
| Acquisition accounting adjustment                |   |                         | – |   |                        |   | (36,061 | ) |   | – |   |
| Balance at end of period, successor              |   | $                            | – |   |                        | $      | – |   | $ | – |   |

|                      |   | Predecessor Company                 |
|---------------------------|--------|-------------------------------------|
|                      |   | Allowance for Loan Losses           |   | Loans |   |
| December 31, 2010         |   | IndividuallyEvaluated forImpairment |   | CollectivelyEvaluated forImpairment |   | PurchasedCredit-Impaired |   | IndividuallyEvaluated forImpairment |   | CollectivelyEvaluated forImpairment |   | PurchasedCredit-Impaired |   |
| (Dollars in thousands)    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate    |   | $                                   | 351 |   | $ | 24,039 |   | $ | – |   | $ | 65,840 |   | $ | 739,160 |   | $ | – |   |
| Consumer real estate      |   |                                | 87 |   |   | 4,645 |   |   | – |   |   | 3,879 |   |   | 259,076 |   |   | – |   |
| Commercial and industrial |   |                                | 89 |   |   | 6,343 |   |   | – |   |   | 6,013 |   |   | 139,422 |   |   | – |   |
| Consumer                  |   |                                | 2 |   |   | 352 |   |   | – |   |   | 6 |   |   | 6,157 |   |   | – |   |
| Other                     |   |                                | – |   |   | 153 |   |   | – |   |   | 781 |   |   | 32,961 |   |   | – |   |
|                      |   | $                                   | 529 |   | $ | 35,532 |   | $ | – |   | $ | 76,519 |   | $ | 1,176,776 |   | $ | – |   |

----

Index

|   | • | Pass (risk rating 1–6) – These loans range from superior quality with minimal credit risk to loans requiring heightened management attention but that are still an acceptable risk and continue to perform as contracted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | Special Mention (risk rating 7) – Loans in this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institution’s credit position at some future date. They contain unfavorable characteristics and are generally undesirable. Loans in this category are currently protected by current sound net worth and paying capacity of the obligor or of the collateral pledged, if any, but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a Substandard classification.                 |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | Substandard (risk rating 8) – Loans in this category are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. A substandard loan normally has one or more well-defined weaknesses that could jeopardize repayment of the debt. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | • | Doubtful (risk rating 9) – For loans in this category, the borrower’s ability to continue repayment is highly unlikely. Full collection based on currently known facts, conditions, and values is highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and specific reasonable pending factors, which work to the bank’s advantage and strengthen the asset in the near term, its classification as loss is deferred until its more exact status may be determined.                                                                                                                                                              |

|                                   | Commercial Loans |
|----------------------------------------|------------------|
| December 31, 2010(Predecessor Company) |             | Constructionand LandDevelopment |   | Non-OwnerOccupiedReal Estate |   | OwnerOccupiedReal Estate |   | CommercialandIndustrial |   | Other |   | Total |   |
| (Dollars in thousands)                 |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                                   |             | $ | 250,557 |   | $ | 266,523 |   | $ | 154,156 |   | $ | 101,674 |   | $ | 32,961 |   | $ | 805,871 |   |
| Special mention                        |             |   | 20,178 |   |   | 12,505 |   |   | 2,287 |   |   | 20,488 |   |   | – |   |   | 55,458 |   |
| Substandard                            |             |   | 79,852 |   |   | 4,610 |   |   | 13,967 |   |   | 23,266 |   |   | 781 |   |   | 122,476 |   |
| Doubtful                               |             |   | – |   |   | 305 |   |   | 60 |   |   | 7 |   |   | – |   |   | 372 |   |
| Total                                  |             | $ | 350,587 |   | $ | 283,943 |   | $ | 170,470 |   | $ | 145,435 |   | $ | 33,742 |   | $ | 984,177 |   |

|                                   | Consumer Loans |
|----------------------------------------|----------------|
| December 31, 2010(Predecessor Company) |           | ResidentialMortgage |   | Home EquityLines |   | OtherConsumer |   | Total |   |
| (Dollars in thousands)                 |           |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                                   |           | $ | 162,002 |   | $ | 85,000 |   | $ | 5,803 |   | $ | 252,805 |   |
| Special mention                        |           |   | 5,518 |   |   | 1,972 |   |   | 188 |   |   | 7,678 |   |
| Substandard                            |           |   | 6,138 |   |   | 2,110 |   |   | 172 |   |   | 8,420 |   |
| Doubtful                               |           |   | 119 |   |   | 96 |   |   | – |   |   | 215 |   |
| Total                                  |           | $ | 173,777 |   | $ | 89,178 |   | $ | 6,163 |   | $ | 269,118 |   |

----

Index

|                                   |   | Predecessor Company     |
|----------------------------------------|--------|-------------------------|
| December 31, 2010                      |   | 30–59DaysPast Due |   | 60–89DaysPast Due |   | Over 90 DaysPast Due andAccruing |   | NonaccrualLoans |   | CurrentLoans |   | TotalLoans |   |
| (Dollars in thousands)                 |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate:                |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction and land development      |   | $                       | 6,166 |   | $ | 204 |   | $ | – |   | $ | 50,693 |   | $ | 293,524 |   | $ | 350,587 |   |
| Real estate – non-owner occupied |   |                    | 509 |   |   | – |   |   | – |   |   | 2,678 |   |   | 280,756 |   |   | 283,943 |   |
| Real estate – owner occupied     |   |                    | 3,165 |   |   | – |   |   | – |   |   | 8,198 |   |   | 159,107 |   |   | 170,470 |   |
| Consumer real estate:                  |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage                   |   |                    | 2,213 |   |   | 329 |   |   | – |   |   | 3,481 |   |   | 167,754 |   |   | 173,777 |   |
| Home equity lines                      |   |                    | 498 |   |   | 109 |   |   | – |   |   | 277 |   |   | 88,294 |   |   | 89,178 |   |
| Commercial and industrial              |   |                    | 175 |   |   | 146 |   |   | – |   |   | 5,830 |   |   | 139,284 |   |   | 145,435 |   |
| Consumer                               |   |                    | 4 |   |   | 4 |   |   | – |   |   | 6 |   |   | 6,149 |   |   | 6,163 |   |
| Other loans                            |   |                    | – |   |   | – |   |   | – |   |   | 781 |   |   | 32,961 |   |   | 33,742 |   |
| Total                                  |   | $                       | 12,730 |   | $ | 792 |   | $ | – |   | $ | 71,944 |   | $ | 1,167,829 |   | $ | 1,253,295 |   |

|                                     |   | Successor Company                 |    |   | Predecessor Company              |
|------------------------------------------|--------|-----------------------------------|---------|--------|----------------------------------|
|                                     |   | Period ofJan. 29 to Jun. 30, 2011 |    |   | Period ofJan. 1 to Jan. 28, 2011 |   | Six Months EndedJun. 30, 2010 |   |
|                                     |   | Shares                            |    | WAEP   |                             |   | Shares |   | WAEP |   | Shares |   | WAEP |   |
|                                     |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding options, beginning of period |   |                              | 297,880 |   | $                                | 12.11 |   |   |   | 297,880 |   | $ | 12.11 |   |   | 366,583 |   | $ | 11.76 |   |
| Granted                                  |   |                              | – |   |                             | – |   |   |   | – |   |   | – |   |   | 19,250 |   |   | 4.38 |   |
| Exercised                                |   |                              | – |   |                             | – |   |   |   | – |   |   | – |   |   | – |   |   | – |   |
| Forfeited and expired                    |   |                              | (5,400  | )      |                             | 14.51 |   |   |   | – |   |   | – |   |   | (72,413 | ) |   | 8.53 |   |
| Outstanding options, end of period       |   |                              | 292,480 |   | $                                | 12.07 |   |   |   | 297,880 |   | $ | 12.11 |   |   | 313,420 |   | $ | 12.05 |   |
|                                     |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at end of period     |   |                              | 253,280 |   | $                                | 12.92 |   |   |   | 226,430 |   | $ | 13.53 |   |   | 220,470 |   | $ | 13.70 |   |

|                  |   | Successor Company |
|-----------------------|--------|-------------------|
| Exercise Price        |   | NumberOutstanding |   | Weighted AverageRemaining ContractualLife in Years |   | NumberExercisable |   | IntrinsicValue |   |
|                  |   |              |   |   |   |   |   |   |   |   |   |   |   |
| $3.85 – $6.00   |   |              | 77,850 |   |   | 7.80 |   |   | 41,850 |   | $ | – |   |
| $6.01 – $9.00   |   |              | – |   |   | – |   |   | – |   |   | – |   |
| $9.01 – $12.00  |   |              | 74,880 |   |   | 0.70 |   |   | 74,880 |   |   | – |   |
| $12.01 – $15.00 |   |              | 20,000 |   |   | 5.13 |   |   | 16,800 |   |   | – |   |
| $15.01 – $18.00 |   |              | 66,000 |   |   | 3.57 |   |   | 66,000 |   |   | – |   |
| $18.00 – $18.37 |   |              | 53,750 |   |   | 3.49 |   |   | 53,750 |   |   | – |   |
|                  |   |              | 292,480 |   |   | 4.05 |   |   | 253,280 |   | $ | – |   |

----

Index

|                             |   | Shares |    | Weighted Avg.Grant DateFair Value |   |
|----------------------------------|--------|--------|---------|-----------------------------------|--------|
|                             |   |   |    |                              |   |   |   |
| Nonvested at beginning of period |   |   | 11,700  |                              | $      | 6.00 |   |
| Granted                          |   |   | – |                              |   | – |   |
| Vested                           |   |   | (11,700 | )                                 |   | 6.00 |   |
| Nonvested at end of period       |   |   | – |                              | $      | – |   |

----

Index

|                         |   | Predecessor Company |    |
|------------------------------|--------|---------------------|---------|
| (Dollars in thousands)       |   | Dec. 31, 2010       |    |
|                         |   |                |    |
| Commitments to extend credit |   | $                   | 175,318 |   |
| Standby letters of credit    |   |                | 10,285  |   |
| Total commitments            |   | $                   | 185,603 |   |

----

Index

|                                              |   | Predecessor Company                     |
|---------------------------------------------------|--------|-----------------------------------------|
| December 31, 2010                                 |   | Quoted Prices inActive Markets(Level 1) |   | Significant OtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |   | Total |   |
| (Dollars in thousands)                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities – available for sale: |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| U.S. agency obligations                           |   | $                                       | – |   | $ | 18,934 |   | $ | – |   | $ | 18,934 |   |
| Municipal bonds                                   |   |                                    | – |   |   | 21,009 |   |   | – |   |   | 21,009 |   |
| Mortgage-backed securities issued by GSEs         |   |                                    | – |   |   | 165,423 |   |   | – |   |   | 165,423 |   |
| Non-agency mortgage-backed securities             |   |                                    | – |   |   | 6,587 |   |   | – |   |   | 6,587 |   |
| Other securities                                  |   |                                    | 1,738 |   |   | – |   |   | 1,300 |   |   | 3,038 |   |
| Total                                             |   | $                                       | 1,738 |   | $ | 211,953 |   | $ | 1,300 |   | $ | 214,991 |   |

|                                             |   | SuccessorCompany             |    |   | PredecessorCompany          |   |
|--------------------------------------------------|--------|------------------------------|---------|--------|-----------------------------|--------|
| (Dollars in thousands)                           |   | Jan. 29, 2011toJun. 30, 2011 |    |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                             |   |                         |    |   |                        |   |   |   |   |   |   |
| Balance at beginning of period                   |   | $                            | 1,107   |   |                        | $      | 1,300 |   | $ | 1,300 |   |
| Total unrealized losses included in:             |   |                         |    |   |                        |   |   |   |   |   |   |
| Net income                                       |   |                         | – |   |                        |   | – |   |   | – |   |
| Other comprehensive income                       |   |                         | – |   |                        |   | (193 | ) |   | – |   |
| Purchases, sales and issuances, net              |   |                         | – |   |                        |   | – |   |   | – |   |
| Transfers in and (out) of Level 3                |   |                         | – |   |                        |   | – |   |   | – |   |
| Merger of Old Capital Bank into Capital Bank, NA |   |                         | (1,107  | )      |                        |   |   |   |   |   |   |
| Balance at end of period                         |   | $                            | – |   |                        | $      | 1,107 |   | $ | 1,300 |   |

|                   |   | Predecessor Company                     |
|------------------------|--------|-----------------------------------------|
| December 31, 2010      |   | Quoted Prices inActive Markets(Level 1) |   | Significant OtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |   | Total |   |
| (Dollars in thousands) |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans         |   | $                                       | – |   | $ | 61,006 |   | $ | 14,985 |   | $ | 75,990 |   |
| Other real estate      |   |                                    | – |   |   | 18,334 |   |   | – |   |   | 18,334 |   |

----

Index

|                                |   | SuccessorCompany |    |                | PredecessorCompany |    |
|-------------------------------------|--------|------------------|---------|---------------------|--------------------|---------|
|                                |   | Jun. 30, 2011    |    |                | Dec. 31, 2010      |    |
| (Dollars in thousands)              |   | CarryingAmount   |    | EstimatedFair Value |               |    | CarryingAmount |   | EstimatedFair Value |   |
| Financial Assets:                   |   |             |    |                |               |    |   |   |   |   |
| Cash and cash equivalents           |   | $                | 12,477  |                | $                  | 12,477  |   |   | $ | 66,745 |   | $ | 66,745 |   |
| Investment securities               |   |             | – |                |               | – |   |   |   | 223,292 |   |   | 223,292 |   |
| Mortgage loans held for sale        |   |             | – |                |               | – |   |   |   | 6,993 |   |   | 6,993 |   |
| Loans                               |   |             | – |                |               | – |   |   |   | 1,218,418 |   |   | 1,146,256 |   |
| Accrued interest receivable         |   |             | 266     |                |               | 266     |   |   |   | 5,158 |   |   | 5,158 |   |
|                                |   |             |    |                |               |    |   |   |   |   |   |   |   |   |
| Financial Liabilities:              |   |             |    |                |               |    |   |   |   |   |   |   |   |   |
| Non-maturity deposits               |   | $                | – |                | $                  | – |   |   | $ | 469,956 |   | $ | 469,956 |   |
| Time deposits                       |   |             | – |                |               | – |   |   |   | 873,330 |   |   | 885,105 |   |
| Borrowings                          |   |             | – |                |               | – |   |   |   | 121,000 |   |   | 126,787 |   |
| Subordinated debentures             |   |             | 18,561  |                |               | 20,695  |   |   |   | 34,323 |   |   | 19,164 |   |
| Accrued interest payable            |   |             | 70      |                |               | 70      |   |   |   | 1,363 |   |   | 1,363 |   |
|                                |   |             |    |                |               |    |   |   |   |   |   |   |   |   |
| Unrecognized financial instruments: |   |             |    |                |               |    |   |   |   |   |   |   |   |   |
| Commitments to extend credit        |   |             | – |                |               | – |   |   | $ | 175,318 |   | $ | 167,817 |   |
| Standby letters of credit           |   |             | – |                |               | – |   |   |   | 10,285 |   |   | 10,285 |   |

----

Index

Item 2.  
Management’s 

----

Index

|   | • | Capital Bank, formerly the wholly-owned banking subsidiary of Capital Bank Corporation, was merged with and into NAFH National Bank on June 30, 2011;      |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                       |
|   | • | NAFH Bank changed its name to and was rebranded as Capital Bank, NA immediately following the merger;                                                      |
|   |    |                                                                                                                                                       |
|   | • | The Company’s technology platform was converted to NAFH’s enterprise-wide technology platform;                                                 |
|   |    |                                                                                                                                                       |
|   | • | Core deposits (total deposits minus time deposits) grew by $27.9 million, or 5.7%, in the second quarter of 2011 immediately prior to the Bank Merger; and |
|   |    |                                                                                                                                                       |

|   | • | Net income totaled $1.3 million, or $0.01 per share, in the second quarter of 2011 and totaled $693 thousand, or $0.01 per share, in the period from January 29 to June 30, 2011. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

|                                             |   | Successor Company               |      |                              | Predecessor Company |        |
|--------------------------------------------------|--------|---------------------------------|-----------|-----------------------------------|---------------------|-------------|
|                                             |   | Three Months EndedJun. 30, 2011 |      | Period ofJan. 29 to Mar. 31, 2011 |                |        | Three Months EndedJun. 30, 2010 |   |
| (Dollars in thousands)                           |   | AverageBalance                  |      | AmountEarned                      |                | AverageRate |   | AverageBalance |   | AmountEarned |   | AverageRate |   |   | AverageBalance |   | AmountEarned |   | AverageRate |   |
| Assets                                           |   |                            |      |                              |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans 2                                          |   | $                               | 1,128,456 |                              | $                   | 15,029      |   |   | 5.34 | % | $ | 1,139,698 |   | $ | 11,155 |   |   | 6.06 | % |   | $ | 1,373,613 |   | $ | 17,465 |   |   | 5.10 | % |
| Investment securities 3                          |   |                            | 334,230   |                              |                | 2,639       |   |   | 3.16 |   |   | 242,840 |   |   | 1,254 |   |   | 3.10 |   |   |   | 224,366 |   |   | 2,722 |   |   | 4.85 |   |
| Interest-bearing deposits                        |   |                            | 56,149    |                              |                | 40          |   |   | 0.29 |   |   | 138,309 |   |   | 47 |   |   | 0.21 |   |   |   | 25,300 |   |   | 10 |   |   | 0.16 |   |
| Total interest-earning assets                    |   |                            | 1,518,835 |                              | $                   | 17,708      |   |   | 4.68 | % |   | 1,520,847 |   | $ | 12,456 |   |   | 5.07 | % |   |   | 1,623,279 |   | $ | 20,197 |   |   | 4.99 | % |
| Cash and due from banks                          |   |                            | 16,587    |                              |                |        |   |   |   |   |   | 16,373 |   |   |   |   |   |   |   |   |   | 17,819 |   |   |   |   |   |   |   |
| Other assets                                     |   |                            | 166,859   |                              |                |        |   |   |   |   |   | 156,670 |   |   |   |   |   |   |   |   |   | 78,142 |   |   |   |   |   |   |   |
| Total assets                                     |   | $                               | 1,702,281 |                              |                |        |   |   |   |   | $ | 1,693,890 |   |   |   |   |   |   |   |   | $ | 1,719,240 |   |   |   |   |   |   |   |
|                                             |   |                            |      |                              |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Equity                           |   |                            |      |                              |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and money market accounts                    |   | $                               | 345,307   |                              | $                   | 666         |   |   | 0.77 | % | $ | 344,189 |   | $ | 418 |   |   | 0.75 | % |   | $ | 326,706 |   | $ | 648 |   |   | 0.80 | % |
| Savings accounts                                 |   |                            | 32,241    |                              |                | 10          |   |   | 0.12 |   |   | 31,521 |   |   | 6 |   |   | 0.12 |   |   |   | 30,721 |   |   | 10 |   |   | 0.13 |   |
| Time deposits                                    |   |                            | 843,725   |                              |                | 2,110       |   |   | 1.00 |   |   | 851,424 |   |   | 1,350 |   |   | 0.98 |   |   |   | 891,645 |   |   | 4,946 |   |   | 2.22 |   |
| Total interest-bearing deposits                  |   |                            | 1,221,273 |                              |                | 2,786       |   |   | 0.91 |   |   | 1,227,134 |   |   | 1,774 |   |   | 0.89 |   |   |   | 1,249,072 |   |   | 5,604 |   |   | 1.80 |   |
| Borrowings                                       |   |                            | 93,849    |                              |                | 410         |   |   | 1.76 |   |   | 98,599 |   |   | 254 |   |   | 1.59 |   |   |   | 153,264 |   |   | 1,146 |   |   | 3.00 |   |
| Subordinated debentures                          |   |                            | 18,848    |                              |                | 355         |   |   | 7.55 |   |   | 19,313 |   |   | 232 |   |   | 7.43 |   |   |   | 34,323 |   |   | 298 |   |   | 3.48 |   |
| Repurchase agreements                            |   |                            | –   |                              |                | –     |   |   | – |   |   | – |   |   | – |   |   | – |   |   |   | 1,590 |   |   | 2 |   |   | 0.50 |   |
| Total interest-bearing liabilities               |   |                            | 1,333,470 |                              | $                   | 3,551       |   |   | 1.07 | % |   | 1,345,046 |   | $ | 2,260 |   |   | 1.04 | % |   |   | 1,438,249 |   | $ | 7,050 |   |   | 1.97 | % |
| Noninterest-bearing deposits                     |   |                            | 122,326   |                              |                |        |   |   |   |   |   | 113,607 |   |   |   |   |   |   |   |   |   | 133,455 |   |   |   |   |   |   |   |
| Other liabilities                                |   |                            | 15,378    |                              |                |        |   |   |   |   |   | 8,814 |   |   |   |   |   |   |   |   |   | 10,587 |   |   |   |   |   |   |   |
| Total liabilities                                |   |                            | 1,471,174 |                              |                |        |   |   |   |   |   | 1,467,467 |   |   |   |   |   |   |   |   |   | 1,582,291 |   |   |   |   |   |   |   |
| Shareholders’ equity                       |   |                            | 231,107   |                              |                |        |   |   |   |   |   | 226,423 |   |   |   |   |   |   |   |   |   | 136,949 |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity |   | $                               | 1,702,281 |                              |                |        |   |   |   |   | $ | 1,693,890 |   |   |   |   |   |   |   |   | $ | 1,719,240 |   |   |   |   |   |   |   |
|                                             |   |                            |      |                              |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread 4                            |   |                            |      |                              |                |        |   |   | 3.61 | % |   |   |   |   |   |   |   | 4.03 | % |   |   |   |   |   |   |   |   | 3.02 | % |
| Tax equivalent adjustment                        |   |                            |      |                              | $                   | 268         |   |   |   |   |   |   |   | $ | 175 |   |   |   |   |   |   |   |   | $ | 403 |   |   |   |   |
| Net interest income and net interest margin 5    |   |                            |      |                              | $                   | 14,157      |   |   | 3.74 | % |   |   |   | $ | 10,196 |   |   | 4.15 | % |   |   |   |   | $ | 13,147 |   |   | 3.25 | % |
|                                             |   |                            |      |                              |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 1 | The tax equivalent adjustment is computed using a federal tax rate of 34% and is applied to interest income from tax exempt municipal loans and investment securities. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | Loans include mortgage loans held for sale in addition to nonaccrual loans for which accrual of interest has not been recorded.                                        |
| 3 | The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.                                                          |
| 4 | Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.               |
| 5 | Net interest margin represents net interest income divided by average interest-earning assets.                                                                         |

----

Index

|                                             |   | Successor Company                 |      | Predecessor Company              |   |
|--------------------------------------------------|--------|-----------------------------------|-----------|----------------------------------|--------|
|                                             |   | Period ofJan. 29 to Jun. 30, 2011 |      | Period ofJan. 1 to Jan. 28, 2011 |   | Six Months EndedJun. 30, 2010 |   |
| (Dollars in thousands)                           |   | Average Balance                   |      | Amount Earned                    |   | Average Rate |   |   | Average Balance |   | Amount Earned |   | Average Rate |   | Average Balance |   | Amount Earned |   | Average Rate |   |
| Assets                                           |   |                              |      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans 2                                          |   | $                                 | 1,132,878 |                             | $      | 26,184 |   |   | 5.62 | % |   | $ | 1,253,296 |   | $ | 5,530 |   |   | 5.20 | % | $ | 1,383,337 |   | $ | 35,027 |   |   | 5.11 | % |
| Investment securities 3                          |   |                              | 298,283   |                             |   | 3,893 |   |   | 3.13 |   |   |   | 225,971 |   |   | 504 |   |   | 2.68 |   |   | 225,088 |   |   | 5,678 |   |   | 5.05 |   |
| Interest-bearing deposits                        |   |                              | 88,465    |                             |   | 87 |   |   | 0.24 |   |   |   | 63,350 |   |   | 11 |   |   | 0.20 |   |   | 22,777 |   |   | 20 |   |   | 0.18 |   |
| Total interest-earning assets                    |   |                              | 1,519,626 |                             | $      | 30,164 |   |   | 4.83 | % |   |   | 1,542,617 |   | $ | 6,045 |   |   | 4.61 | % |   | 1,631,202 |   | $ | 40,725 |   |   | 5.03 | % |
| Cash and due from banks                          |   |                              | 16,503    |                             |   |   |   |   |   |   |   |   | 16,112 |   |   |   |   |   |   |   |   | 18,630 |   |   |   |   |   |   |   |
| Other assets                                     |   |                              | 158,079   |                             |   |   |   |   |   |   |   |   | 34,021 |   |   |   |   |   |   |   |   | 76,219 |   |   |   |   |   |   |   |
| Total assets                                     |   | $                                 | 1,694,208 |                             |   |   |   |   |   |   |   | $ | 1,592,750 |   |   |   |   |   |   |   | $ | 1,726,051 |   |   |   |   |   |   |   |
|                                             |   |                              |      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Equity                           |   |                              |      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and money market accounts                    |   | $                                 | 344,867   |                             | $      | 1,084 |   |   | 0.76 | % |   | $ | 334,668 |   | $ | 211 |   |   | 0.74 | % | $ | 334,334 |   | $ | 1,534 |   |   | 0.93 | % |
| Savings accounts                                 |   |                              | 31,958    |                             |   | 16 |   |   | 0.12 |   |   |   | 30,862 |   |   | 3 |   |   | 0.11 |   |   | 29,861 |   |   | 20 |   |   | 0.14 |   |
| Time deposits                                    |   |                              | 846,753   |                             |   | 3,460 |   |   | 0.99 |   |   |   | 870,146 |   |   | 1,337 |   |   | 1.81 |   |   | 881,632 |   |   | 10,201 |   |   | 2.33 |   |
| Total interest-bearing deposits                  |   |                              | 1,223,578 |                             |   | 4,560 |   |   | 0.91 |   |   |   | 1,235,676 |   |   | 1,551 |   |   | 1.48 |   |   | 1,245,827 |   |   | 11,755 |   |   | 1.90 |   |
| Borrowings                                       |   |                              | 95,414    |                             |   | 665 |   |   | 1.70 |   |   |   | 120,032 |   |   | 343 |   |   | 3.36 |   |   | 162,061 |   |   | 2,290 |   |   | 2.85 |   |
| Subordinated debentures                          |   |                              | 19,031    |                             |   | 586 |   |   | 7.49 |   |   |   | 34,323 |   |   | 102 |   |   | 3.50 |   |   | 32,786 |   |   | 516 |   |   | 3.17 |   |
| Repurchase agreements                            |   |                              | –   |                             |   | – |   |   | – |   |   |   | – |   |   | – |   |   | – |   |   | 3,120 |   |   | 5 |   |   | 0.32 |   |
| Total interest-bearing liabilities               |   |                              | 1,338,023 |                             | $      | 5,811 |   |   | 1.06 | % |   |   | 1,390,031 |   | $ | 1,996 |   |   | 1.69 | % |   | 1,443,794 |   | $ | 14,566 |   |   | 2.03 | % |
| Noninterest-bearing deposits                     |   |                              | 118,896   |                             |   |   |   |   |   |   |   |   | 114,660 |   |   |   |   |   |   |   |   | 132,718 |   |   |   |   |   |   |   |
| Other liabilities                                |   |                              | 12,796    |                             |   |   |   |   |   |   |   |   | 9,635 |   |   |   |   |   |   |   |   | 10,622 |   |   |   |   |   |   |   |
| Total liabilities                                |   |                              | 1,469,715 |                             |   |   |   |   |   |   |   |   | 1,514,326 |   |   |   |   |   |   |   |   | 1,587,134 |   |   |   |   |   |   |   |
| Shareholders’ equity                       |   |                              | 224,493   |                             |   |   |   |   |   |   |   |   | 78,424 |   |   |   |   |   |   |   |   | 138,917 |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity |   | $                                 | 1,694,208 |                             |   |   |   |   |   |   |   | $ | 1,592,750 |   |   |   |   |   |   |   | $ | 1,726,051 |   |   |   |   |   |   |   |
|                                             |   |                              |      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread 4                            |   |                              |      |                             |   |   |   |   | 3.77 | % |   |   |   |   |   |   |   |   | 2.92 | % |   |   |   |   |   |   |   | 3.00 | % |
| Tax equivalent adjustment                        |   |                              |      |                             | $      | 443 |   |   |   |   |   |   |   |   | $ | 90 |   |   |   |   |   |   |   | $ | 865 |   |   |   |   |
| Net interest income and net interest margin 5    |   |                              |      |                             | $      | 24,353 |   |   | 3.90 | % |   |   |   |   | $ | 4,049 |   |   | 3.09 | % |   |   |   | $ | 26,159 |   |   | 3.23 | % |
|                                             |   |                              |      |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 1 | The tax equivalent adjustment is computed using a federal tax rate of 34% and is applied to interest income from tax exempt municipal loans and investment securities. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | Loans include mortgage loans held for sale in addition to nonaccrual loans for which accrual of interest has not been recorded.                                        |
| 3 | The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.                                                          |
| 4 | Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.               |
| 5 | Net interest margin represents net interest income divided by average interest-earning assets.                                                                         |

----

Index

|                                      |   | SuccessorCompany                      |    |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|-------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)                    |   | Three Months Ended Jun. 30, 2011 |    |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                      |   |                                  |    |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Service charges and other fees            |   | $                                     | 807     |   |                           | $      | 854                          |   | $      | 1,355                       |   |   | $ | 291 |   | $ | 1,722 |   |
| Bank card services                        |   |                                  | 547     |   |                           |   | 543                          |   |   | 847                         |   |   |   | 174 |   |   | 958 |   |
| Mortgage origination and other loan fees  |   |                                  | 255     |   |                           |   | 339                          |   |   | 518                         |   |   |   | 210 |   |   | 666 |   |
| Brokerage fees                            |   |                                  | 212     |   |                           |   | 285                          |   |   | 308                         |   |   |   | 78 |   |   | 472 |   |
| Bank-owned life insurance                 |   |                                  | 114     |   |                           |   | 255                          |   |   | 134                         |   |   |   | 10 |   |   | 494 |   |
| Net gain on sale of investment securities |   |                                  | – |   |                           |   | 63                           |   |   | –                     |   |   |   | – |   |   | 326 |   |
| Other                                     |   |                                  | 130     |   |                           |   | 175                          |   |   | 155                         |   |   |   | 69 |   |   | 407 |   |
| Total noninterest income                  |   | $                                     | 2,065   |   |                           | $      | 2,514                        |   | $      | 3,317                       |   |   | $ | 832 |   | $ | 5,045 |   |

----

Index

|                                    |   | SuccessorCompany                     |   |   | PredecessorCompany             |   | SuccessorCompany             |   |   | PredecessorCompany          |   |
|-----------------------------------------|--------|--------------------------------------|--------|--------|--------------------------------|--------|------------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)                  |   | Three MonthsEnded Jun. 30, 2011 |   |   | Three MonthsEndedJun. 30, 2010 |   | Jan. 29, 2011toJun. 30, 2011 |   |   | Jan. 1, 2011toJan. 28, 2011 |   | Six MonthsEndedJun. 30, 2010 |   |
|                                    |   |                                 |   |   |                           |   |                         |   |   |                        |   |   |   |   |   |   |   |   |
| Salaries and employee benefits          |   | $                                    | 5,568  |   |                           | $      | 5,319                        |   | $      | 9,525                       |   |   | $ | 1,977 |   | $ | 10,719 |   |
| Occupancy                               |   |                                 | 1,786  |   |                           |   | 1,456                        |   |   | 2,926                       |   |   |   | 548 |   |   | 2,958 |   |
| Furniture and equipment                 |   |                                 | 857    |   |                           |   | 700                          |   |   | 1,401                       |   |   |   | 275 |   |   | 1,445 |   |
| Data processing and telecommunications  |   |                                 | 635    |   |                           |   | 525                          |   |   | 911                         |   |   |   | 180 |   |   | 1,042 |   |
| Advertising and public relations        |   |                                 | 144    |   |                           |   | 599                          |   |   | 325                         |   |   |   | 131 |   |   | 1,029 |   |
| Office expenses                         |   |                                 | 269    |   |                           |   | 288                          |   |   | 498                         |   |   |   | 93 |   |   | 620 |   |
| Professional fees                       |   |                                 | 208    |   |                           |   | 684                          |   |   | 543                         |   |   |   | 190 |   |   | 1,159 |   |
| Business development and travel         |   |                                 | 304    |   |                           |   | 307                          |   |   | 550                         |   |   |   | 87 |   |   | 574 |   |
| Amortization of other intangible assets |   |                                 | 287    |   |                           |   | 235                          |   |   | 478                         |   |   |   | 62 |   |   | 470 |   |
| ORE losses and miscellaneous loan costs |   |                                 | 1,085  |   |                           |   | 708                          |   |   | 1,608                       |   |   |   | 176 |   |   | 2,025 |   |
| Directors’ fees                   |   |                                 | 53     |   |                           |   | 294                          |   |   | 93                          |   |   |   | 68 |   |   | 592 |   |
| FDIC deposit insurance                  |   |                                 | 513    |   |                           |   | 651                          |   |   | 1,076                       |   |   |   | 266 |   |   | 1,316 |   |
| Contract termination fees               |   |                                 | 374    |   |                           |   | –                      |   |   | 3,955                       |   |   |   | – |   |   | – |   |
| Other                                   |   |                                 | 670    |   |                           |   | 614                          |   |   | 1,093                       |   |   |   | 102 |   |   | 1,021 |   |
| Total noninterest expense               |   | $                                    | 12,753 |   |                           | $      | 12,380                       |   | $      | 24,982                      |   |   | $ | 4,155 |   | $ | 24,970 |   |

----

Index

----

Index

|                                     |   |   |    | Minimum Requirements To Be: |
|------------------------------------------|--------|--------|---------|-----------------------------|
|                                     |   | Actual |    | Adequately Capitalized      |   | Well Capitalized |   |
| (Dollars in thousands)                   |   |   | Amount  |                        |   | Ratio |   |   | Amount |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                     |   |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Bank Corporation:                |   |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $      | 246,938 |                        |   | 105.04 | % | $ | 18,808 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
| Tier I capital (to risk-weighted assets) |   |   | 243,341 |                        |   | 103.51 |   |   | 9,404 |   |   | 4.00 |   |   | N/A |   |   | N/A |   |
| Tier I capital (to average assets)       |   |   | 243,341 |                        |   | 14.29 |   |   | 68,091 |   |   | 4.00 |   |   | N/A |   |   | N/A |   |
|                                     |   |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Bank, NA:                        |   |   |    |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $      | 472,047 |                        |   | 17.45 | % | $ | 216,469 |   |   | 8.00 | % | $ | 270,587 |   |   | 10.00 | % |
| Tier I capital (to risk-weighted assets) |   |   | 459,853 |                        |   | 16.99 |   |   | 108,235 |   |   | 4.00 |   |   | 162,352 |   |   | 6.00 | % |
| Tier I capital (to average assets)       |   |   | 459,853 |                        |   | 10.50 |   |   | 175,199 |   |   | 4.00 |   |   | 218,999 |   |   | 5.00 | % |

----

Index

Item 3.  
Quantitative 

Item 4.  
Controls 

----

Item 1.  
Legal 

Item 1A.  
Risk 

----

Index

----

Index

|   | • | payment of dividends to our shareholders;                            |
|--------|---------|----------------------------------------------------------------------|
|   |    |                                                                 |
|   | • | possible mergers with, or acquisitions of or by, other institutions; |
|   |    |                                                                 |
|   | • | our desired investments;                                             |
|   |    |                                                                 |
|   | • | loans and interest rates on loans;                                   |
|   |    |                                                                 |
|   | • | interest rates paid on our deposits;                                 |
|   |    |                                                                 |
|   | • | the possible expansion of our branch offices; and/or                 |
|   |    |                                                                 |
|   | • | our ability to provide securities or trust services.                 |

----

Index

|   | • | changes in regulations;                                                    |
|--------|---------|----------------------------------------------------------------------------|
|   |    |                                                                       |
|   | • | changes in technology and product delivery systems; and                    |
|   |    |                                                                       |
|   | • | the accelerating pace of consolidation among financial services providers. |

----

Index

----

Index

----

Index

----

Index

Item 2.  
Unregistered 

Item 3.  
Defaults 

Item 4.  
(Removed 

Item 5.  
Other 

Item 6.  Exhibits

| Exhibit No.  |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 2.1  |   | Agreement of Merger of Capital Bank with and into NAFH National Bank, by and between NAFH National Bank and Capital Bank, dated as of June 30, 2011 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 7, 2011) (Exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.) |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 31.1 |   | Certification of R. Eugene Taylor pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 31.2 |   | Certification of Christopher G. Marshall pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 32.1 |   | Certification of R. Eugene Taylor pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 32.2 |   | Certification of Christopher G. Marshall pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                       |

----

Index

|   | CAPITAL BANK CORPORATION |                        |
|--------|--------------------------|-----------------------------|
|   |                     |                        |   |
|   |                     |                        |   |
|   | By:                      | /s/ Christopher G. Marshall |   |
|   |                     | Christopher G. Marshall     |   |
|   |                     | Chief Financial Officer     |   |

----

Index

| Exhibit No.  |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 2.1  |   | Agreement of Merger of Capital Bank with and into NAFH National Bank, by and between NAFH National Bank and Capital Bank, dated as of June 30, 2011 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 7, 2011) (Exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.) |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 31.1 |   | Certification of R. Eugene Taylor pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 31.2 |   | Certification of Christopher G. Marshall pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 32.1 |   | Certification of R. Eugene Taylor pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Exhibit 32.2 |   | Certification of Christopher G. Marshall pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                       |

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Index