RALEIGH, N.C., June 15 /PRNewswire-FirstCall/ -- Capital Bank today announced they have limited exposure in the real estate development in Mitchell County that is now the focus of an investigation by Attorney General Roy Cooper.
Multiple community, regional and super-regional banks, in and out of North Carolina, are connected to the project in a wide range of investments. Capital Bank's limited exposure consists of three loans: One loan, in the amount of $1.2 million, is to the named developer and is collateralized by 60 lots in the project. Capital Bank's collateral is the wholesale value of the lots, which is $20,563 per lot.
Another loan is to an attorney/surveyor tied to the initial development in the amount of $249,000. The third loan is a consumer loan made to a Triangle resident for $95,838 to purchase a residential lot in the development.
"We believe the third loan is the only one involved in the alleged scheme outlined by the Attorney General," stated Capital Bank CEO Grant Yarber. "We have scoured our portfolio and this is the extent of our exposure."
Attorney General Roy Cooper won a court order last week stopping the venture which promised consumers a profit would be made on the property by taking out loans and without having to invest any of their own money. Cooper has asked the court to permanently stop the developers' deceptive practices and to order them to pay refunds to individuals to satisfy loans on the properties.
A complicated investment scheme created by out-of-state developers has defrauded North Carolina residents and banks across the state. The Village of Penland project in Mitchell County involves 1200 acres subdivided into 2,000 lots located near the Penland School of Crafts. The planned community was to comprise a mix of retail and residential, including single family homes, condos and craft studios. The developers created a scheme that utilized inflated appraisals and phony second mortgages as down payments.
Capital Bank Corporation, headquartered in Raleigh, N.C., with approximately $1.4 billion in total assets, offers a broad range of financial services. Capital Bank operates 26 banking offices in Asheville (3), Burlington (4), Cary, Graham (2), Greensboro, Hickory, Mebane, Morrisville, Oxford, Pittsboro, Raleigh (5), Sanford (3), Siler City, and Wake Forest. The company's website is http://www.capitalbank-nc.com/.
