2014

Bank of the Carolinas Corporation Reports Fourth Quarter and Year-End Financial Results

MOCKSVILLE, N.C., Feb. 1, 2013 /PRNewswire/ -- Bank of the Carolinas Corporation (OTCQB: BCAR) today reported financial results for the three- and twelve-month periods ended December 31, 2012.

For the three-month period ended December 31, 2012, the Company reported a net loss available to common shareholders of $56,000 as compared to a net loss of $3.2 million for the third quarter of 2012 and a net loss of $8.8 million for the fourth quarter of 2011.  Prior to the accrual for dividends and accretion on preferred stock, the Company had a net income of $186,000 for the three-month period ended December 31, 2012. The net loss per diluted common share was $0.02 for the fourth quarter of 2012 compared with a net loss per share of $0.82 for the third quarter of 2012 and a net loss per share of $2.26 for the fourth quarter of 2011.

For the year ended December 31, 2012, the Company reported a net loss available to common shareholders of $6.1 million, or $1.58 per common share, compared to a net loss of $29.2 million, or $7.49 per common share, for the year ended December 31, 2011.

The Company's net interest margin was 2.73% in the fourth quarter of 2012, which is a decrease from 2.79% in the fourth quarter of 2011.  Noninterest expense for the year, excluding the costs related to foreclosed real estate, decreased 1.4% in 2012 versus 2011 and for the three month periods decreased 13.9% in the fourth quarter of 2012 versus 2011.  The Company made an effort to reduce its other noninterest expenses in order to offset the increased FDIC premiums, legal expenses, and costs related to the Company's compliance with the regulatory consent order put in place in the second quarter of 2011.

The Company continues with significant improvement in the levels of nonperforming assets for the seventh consecutive quarter.  As of December 31, 2012, the Company's nonperforming assets decreased to $12.7 million and amounted to 2.91% of total assets as compared to $13.5 million or 3.02% of total assets as of September 30, 2012 and compared to $27.6 million, or 5.68% of total assets as of December 31, 2011.  The allowance for loan losses was 2.55% of total loans as of December 31, 2012. Net loan recoveries amounted to $77,000 for the fourth quarter of 2012, as compared to net loan charge-offs of $1.6 million in the third quarter of 2012 and $3.6 million in the fourth quarter of 2011.  The fourth quarter of 2012 is the Company's first quarter of net loan recoveries in five years.

Total assets at December 31, 2012 amounted to $436.8 million, a decrease of 10.1% when compared to $486.0 million as of December 31, 2011.   Loans totaled $270.4 million at December 31, 2012, a decline of 12.2% from a year earlier, and deposits decreased 10.4% over the prior year to $373.0 million. The Company's deposit mix has improved by decreasing non-core brokered deposits by $27.6 million, or 64.7%, since December 31, 2011.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to risk-weighted assets ratio of 3.55% and 4.99% respectively, while its total capital to risk-weighted assets ratio was 6.25% as of December 31, 2012.

Bank of the Carolinas Corporation is the holding company for Bank of the Carolinas, a North Carolina chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Cleveland, Concord, Harrisburg, King, Landis, Lexington and Winston-Salem.  The common stock of the Company is quoted under the symbol "BCAR" on the OTCQB marketplace operated by OTC Markets Group Inc.

For further information contact:

Stephen R. Talbert
President and Chief Executive Officer
Bank of the Carolinas Corporation
(336) 751-5755

DISCLOSURES ABOUT FORWARD LOOKING STATEMENTS

Statements in this press release relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments, expectations or beliefs about future events or results, and other statements that are not descriptions of historical facts, may be forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include, but are not limited to, factors discussed in our Annual Report on Form 10-K and in other documents we file with the Securities and Exchange Commission from time to time.  Copies of those reports are available directly through the SEC's Internet website at www.sec.gov.  Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "feels," "believes," "estimates," "predicts," "forecasts," "potential" or "continue," or similar terms or the negative of these terms, or other statements concerning opinions or judgments of our management about future events.  Factors that could influence the accuracy of forward-looking statements include, but are not limited to (a) pressures on our earnings, capital and liquidity resulting from current and future conditions in the credit and capital markets, (b) continued or unexpected increases in nonperforming loans and credit losses in our loan portfolio, (c) continued adverse conditions in the economy and in the real estate market in our banking markets (particularly those conditions that affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of collateral that secures our loans), (d) the financial success or changing strategies of our customers, (e) actions of government regulators, or change in laws, regulations or accounting standards, that adversely affect our business, (f) changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the values of loans we make and securities we hold,  (g) changes in competitive pressures among depository and other financial institutions or in our ability to compete effectively against other financial institutions in our banking markets, and (h) other developments or changes in our business that we do not expect.  Although we believe that the expectations reflected in the forward-looking statements included in this press release are reasonable, they represent our management's judgments only as of the date they are made, and we cannot guarantee future results, levels of activity, performance or achievements.  As a result, readers are cautioned not to place undue reliance on these forward-looking statements.  All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statements in this paragraph.  We have no obligation, and do not intend, to update these forward-looking statements.

 

Bank of the Carolinas Corporation

Consolidated Balance Sheets

(In Thousands Except Share Data)








December 31,



2012


2011

Assets:


(Unaudited)


*

Cash and due from banks, noninterest-bearing


$       5,942


$       5,044

Temporary investments


29,214


30,722

Investment securities


106,931


112,404

Loans


270,374


307,907

 Less, allowance for loan losses


(6,890)


(8,101)

     Total loans, net


263,484


299,806

Premises and equipment, net


11,843


12,229

Other real estate owned


4,976


8,524

Bank owned life insurance


10,536


10,732

Other assets


3,859


6,506

     Total Assets


$    436,785


$    485,967






Liabilities:





Noninterest bearing demand deposits


$     36,622


$     34,034

Interest-checking deposits


37,768


37,306

Savings and money market deposits


111,459


106,308

Time deposits


187,123


238,565

     Total deposits


372,972


416,213

Securities sold under repurchase agreements


45,362


45,381

Federal Home Loan Bank advances


-


-

Subordinated debt


7,855


7,855

Other liabilities


2,138


1,903

     Total Liabilities


428,327


471,352

Shareholders' Equity:





Preferred stock,  no par value


13,179


13,179

Discount on preferred stock 


(419)


(716)

Common stock, $5 par value per share


19,479


19,479

Additional paid-in capital


12,991


12,991

Retained earnings (loss)


(37,355)


(31,871)

Accumulated other comprehensive income


583


1,553

     Total Shareholders' Equity


8,458


14,615

     Total Liabilities and Shareholders' Equity


$    436,785


$    485,967






Preferred shares authorized


3,000,000


3,000,000

Preferred shares issued and outstanding


13,179


13,179

Unaccrued preferred stock dividend


1,405,760


582,072

Common shares authorized


15,000,000


15,000,000

Common shares issued and outstanding


3,895,840


3,895,840






Book value per common share


$        (1.57)


$         0.22






*Derived from audited financial statements

 

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands Except Share Data)

(Unaudited)


Three months ended


Year ended



December 31


December 31



2012


2011


2012


2011

Interest income


(Unaudited)


*


(Unaudited)


*

   Interest and fees on loans


$    3,398


$    3,983


$   14,303


$   17,398

   Interest on securities


626


753


2,669


3,175

 Other interest income


18


17


77


59

     Total interest income


4,042


4,753


17,049


20,632

Interest expense









   Interest on deposits


695


982


3,225


4,387

   Interest on borrowed funds


570


578


2,268


2,653

      Total interest expense


1,265


1,560


5,493


7,040

Net interest income


2,777


3,193


11,556


13,592

   Provision for loan losses


(637)


2,998


2,359


17,565

   Net interest income (loss) after provision

    for loan losses


 

3,414


 

195


 

9,197


(3,973)

Noninterest income









   Customer service fees


309


299


1,176


1,250

   Increase in value of bank owned life 

    insurance


89


92


774


361

Gains on investment securities


43


(397)


2,190


(391)

   Other income


8


3


28


19

     Total noninterest income


449


(3)


4,168


1,239

Noninterest expense









   Salaries and benefits


1,611


1,737


6,877


6,684

   Occupancy and equipment


452


503


1,903


2,074

   FDIC insurance assessments


375


567


1,600


1,516

   Data processing expense


252


231


989


885

   Valuation provisions and net operating 

    costs associated with foreclosed real 

    estate


 

2


1,172


 

2,417


5,222

   Other


787


1,002


4,158


4,593

     Total noninterest expenses


3,479


5,212


17,944


20,974

Income (Loss) before income taxes


384


(5,020)


(4,579)


(23,708)

   Provision for income taxes


198


3,547


607


4,543

Net income (loss)


$       186


$   (8,567)


$   (5,186)


$  (28,251)

  Dividends and accretion on preferred 

   stock


(242)


(236)


(956)


(934)

Net loss available to common 

 shareholders


$        (56)


$   (8,803)


$   (6,142)


$  (29,185)










Loss per common share:









   Basic


$     (0.02)


$     (2.26)


$     (1.58)


$     (7.49)

   Diluted


$     (0.02)


$     (2.26)


$     (1.58)


$     (7.49)










Weighted Average Common Shares

 Outstanding:









   Basic


3,895,840


3,895,840


3,895,840


3,896,428

   Diluted


3,895,840


3,895,840


3,895,840


3,896,428










*Derived from audited financial statements

 


Bank of the Carolinas Corporation

Other Financial Data

(Dollars in thousands except per share amounts)





As of or for the





year ended December 31





2012



2011



Change*


Average balance sheet data











Average loans


$  287,764



$  341,459



(15.73)

%


Average earning assets


425,385



475,297



(10.50)



Average total assets


464,541



524,196



(11.38)



Average common shareholders' equity


(2,691)



18,679



(114.41)



Average total shareholders' equity


10,488



31,858



(67.08)














Period-end balance sheet data:











Total loans


$  270,374



$  307,907



(12.19)

%


Allowance for loan losses


(6,890)



(8,101)



(14.95)



Total assets


436,785



485,967



(10.12)



Total deposits


372,972



416,213



(10.39)



Total common shareholders' equity


(4,721)



1,436



(428.76)



Total shareholders' equity


8,458



14,615



(42.13)














Asset quality indicators











Net loan charge-offs 


$     3,570



$    16,327



(78.14)

%


Total nonperforming loans


7,733



19,062



(59.43)



Total nonperforming assets


12,709



27,585



(53.93)














Asset quality ratios











Net-chargeoffs (recoveries) to average loans **


1.24

%


4.78

%


(354)

BP


Nonperforming loans to total loans


2.86



6.19



(333)



Nonperforming assets to total assets


2.91



5.68



(277)



Nonperforming assets to loan-related assets


4.62



8.72



(410)



Allowance for loan losses to total loans


2.55



2.63



(8)














Financial ratios











Return on average assets **


(1.12)

%


(5.39)

%


427

BP


Return on average common shareholders' equity **


 N/M 



(156.25)



 N/M 



Net interest margin **


2.72



2.86



(14)














Per share amounts available to common shareholders











Basic earnings (loss) per common share


$      (1.58)



$      (7.49)



78.91

%


Diluted earnings (loss) per common share


(1.58)



(7.49)



78.91



Book value per common share


(1.57)



0.22



(817.48)


























*   BP denotes basis points. N/M denotes not meaningful.

** ratio annualized.

Bank of the Carolinas Corporation

Other Financial Data (continued)

(Dollars in thousands except per share amounts)





As of or for the





three months ended December 31





2012



2011



Change*


Average balance sheet data











Average loans


$ 275,572



$ 313,836



(12.19)

%


Average earning assets


404,738



453,976



(10.85)



Average total assets


441,352



501,894



(12.06)



Average common shareholders' equity


(4,649)



8,163



(156.95)



Average total shareholders' equity


8,530



21,342



(60.03)














Asset quality indicators











Net loan charge-offs (recoveries)


$ (77)



$ 3,588



(102.14)

%













Asset quality ratios











Net-chargeoffs (recoveries) to average loans **


(0.11)

%


4.54

%


(465)

BP













Financial ratios











Return on average assets **


0.17

%


(6.77)

%


694

BP


Return on average common shareholders' equity **


N/M



(427.84)



N/M



Net interest margin **


2.73



2.79



(6)














Per share amounts available to common shareholders











Basic earnings (loss) per common share


$ (0.02)



$ (2.26)



99.56

%


Diluted earnings (loss) per common share


(0.02)



(2.26)



99.56



Book value per common share


(1.57)



0.22



(817.48)


























* BP denotes basis points. N/M denotes not meaningful.

** ratio annualized.

 

 

SOURCE Bank of the Carolinas Corporation



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