CODE OF ETHICS

PURPOSE

The purpose of this Code of Ethics is to set forth the guiding principles by which Capital Bank Corporation (referred to in this code as the "Company") operates our company and conducts our daily business with our shareholders, customers, vendors and with each other. This code will establish standards for compliance with all applicable government rules and regulations. This code applies to all of the directors, officers and associates of Capital Bank Corporation and all of its wholly-owned subsidiaries.

POLICY

Conflicts of Interest

All directors, officers and associates of Capital Bank Corporation should be scrupulous in avoiding any action or interest that conflicts or gives the appearance of a conflict with the Company’s interests. A conflict of interest may exist whenever an individual’s private interests conflict in any way (or even appear to conflict) with the interests of the Company. For example, a conflict situation can arise when an associate, officer or director takes actions or has interests that make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest may also arise when a director, officer or associate or member of his or her family receives improper personal benefits as a result of his or her position with the Company, whether from a third party or from the Company. The Company’s associates are encouraged to utilize the Company’s products and services, but this should generally be done on an arm’s length basis.

Opportunities

Directors, officers and associates are prohibited from taking for themselves personally opportunities that properly belong to the Company or are discovered through the use of corporate property, information or position. They are further prohibited from using corporate property, information or position for personal gain and/or competing with the Company. Directors, officers and associates have an obligation to Capital Bank Corporation to advance the Company’s legitimate interests when the opportunity to do so arises.

Confidentiality

Directors, officers and associates must maintain the confidentiality of confidential information entrusted to them by the Company or its suppliers or customers, except when disclosure is specifically authorized by required laws, regulations or legal proceedings. Confidential information includes all non-public information that might be used by competitors of the Company or harmful to Capital Bank or its customers or associates if disclosed. Further information regarding the Company’s confidentiality policy can be found in the Capital Bank Associate Handbook.

Fair Dealing

We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing or utilizing trade secret information that was obtained without the owner’s consent or inducing such disclosures by past or present associates of other companies is prohibited.

Each director, officer and associate is expected to deal fairly with the Company’s customers, suppliers, competitors, officers and associates. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing.

Public Company Reporting

As a public company, it is of critical importance that Capital Bank Corporation’s filings with the Securities and Exchange Commission be accurate and timely. Depending on their position with the Company, an associate, officer or director may be called upon to provide necessary information to assure that the Company’s public reports are complete, fair and understandable. The Company expects directors, officers and associates to take this responsibility very seriously and to provide prompt and accurate answers to inquiries related to the Company’s public disclosure requirements.

Financial Statements and Other Records

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable laws or regulations. Records should always be retained or destroyed according to Capital Bank Corporation’s record retention policies.

Insider Trading

The Company prohibits all directors, officers and associates from buying, selling, or recommending the Company’s securities if they are aware of material, nonpublic information about the Company. This restriction is contained in the Capital Bank Associate Handbook under “Insider Trading Policy” and each director, officer and associate shall abide by such Company policy.

Protection and Proper Use of Company Assets

All directors, officers and associates should protect the Company’s assets and ensure their efficient use. All Company assets should be used for legitimate Company business purposes only.

REPORTING

Reporting Responsibility

Directors, officers and associates have an obligation to contact either (i) their supervisor, (ii) the appropriate contact within the Company’s human resources department, (iii) the appropriate contact within the Company’s internal audit departments, or (iv) EthicsPoint if they suspect or know of violations of this Code of Ethics, or other unethical business or workplace conduct, by directors, officers or associates. If the individuals to whom such information is conveyed are not responsive, or if there is reason to believe that reporting to such individuals is inappropriate in particular cases, then the director, officer or associate may contact the Chief Executive Officer of the Company. Such communications will be kept confidential to the extent possible. If the director, officer or associate is not satisfied with the response received, he or she may contact the Chairman of the Audit Committee of the Board of Directors of the Company.

Ethics Point

EthicsPoint is an organization that offers a comprehensive confidential reporting system that manages report intake as well as incident management and tracking. The Company uses EthicsPoint as a tool for the Company’s directors, officers, associates, employees, vendors and clients to confidentially report conflicts of interest, fraud, harassment and other serious issues.

Reporting Conflicts of Interest

It is a matter of Company policy that conflicts of interests be handled in an ethical manner. Conflicts of interest may not always be clear cut; if a question arises, directors, officers and associates must first consult with executive management. Any associate, officer or director who becomes aware of a conflict or potential conflict must bring it to the attention of a manager or other appropriate personnel as described in the section titled Reporting Responsibility above.

A violation of this Code of Ethics constitutes grounds for disciplinary action, including censure, suspension (with or without pay), demotion or termination.