Capital Bank Deposit Reclassification

Effective immediately, the Bank will make a change in your Checking Account that will not affect your available balance, interest earnings, FDIC insurance, or bank statement.  This Account will consist of a checking sub-account and a savings sub-account.  The bank may periodically transfer funds between these two sub-accounts.  On a sixth transfer during a calendar month, any funds in the savings sub-account will be transferred back to the checking sub-account.  If your Account is a Plan on which interest is paid, your interest calculation will remain the same.  Otherwise, the savings sub-account will be non-interest bearing.  The savings sub-account will be governed by the rules governing our other savings accounts.

Questions and Answers

What are you doing to my account? Why are you doing this?
Under federal law, we are required to classify our deposits a certain way for regulatory reporting purposes.  We are simply changing the way we report deposit accounts to the government and the government requires that we notify you of this change.  It does not affect you in any way.

Has my availability of funds been changed?
No. Funds are still immediately available from Non Interest Checking Accounts.

Is my account still insured by FDIC?
Yes. The FDIC insurance on your account will remain as it is today.

Is Capital Bank benefiting?
This change will lower the amount of funds that we have to keep on deposit at the Federal Reserve Bank, providing more funds for lending and investment purposes.

Will you adjust my analysis credit rate or change my marginal reserve requirement on analyzed business account?
No. Our already competitive analysis prices will be unchanged. This change is allowing these prices to remain competitive. The marginal reserve requirement will remain because our marginal reserve requirement is unchanged.

Will you increase the rate on my Interest Checking Account?
No. Not immediately. But the change will allow us to continue to pay competitive rates on all of our deposit products.  Our Smart Checking product allows you to maximize your interest earnings in a checking account by offering an annual percentage yield of 5.01%*.

Will my fees go up?
No. This change will not affect your account or fees in any way.

*5.01% Annual Percentage Yield (APY) paid on balances between one penny and $25,000, and 1.01% APY paid on all amounts above $25,000 for each cycle the following requirements are met: view electronic statements, ten debit/check card transactions and one direct deposit or draft. If these requirements are not met, the account will still function as a free checking account earning 0.20% APY, however it will not receive ATM refunds for the cycle. Rates as of March 12, 2007.