The Raleigh bank, which has a branch in Zebulon, benefitted from an improved interest margin, a measure of profitability on loans and investments, and an income tax refund.

The higher net interest margins, driven by lower interest rates on consumer deposits, boosted net interest income $2.7 million over a year ago.

It was the second straight quarterly profit for Capital Bank, which received $41.3 million in stimulus money from the U.S. Treasury last year.

Its provision for loan losses, however, totaled $3.6 million, up from 2.8 million a year ago.

Capital also cited "continued deteriorating economic conditions and weakness in the local real estate markets." That led to higher write-offs and downgrades of the credit ratings of some loans.

Shares rose 22 cents last Tuesday to closed at $5.41.