Bank of the Carolinas Corporation Reports Second Quarter Financial Results

MOCKSVILLE, N.C., July 26, 2013 /PRNewswire/ -- Bank of the Carolinas Corporation (OTCQB: BCAR) today reported financial results for the three- and six-month periods ended June 30, 2013.

For the three-month period ended June 30, 2013, the Company reported a net loss available to common shareholders of $965,000 as compared to net income of $191,000 for the first quarter of 2013 and a net loss of $170,000 for the second quarter of 2012.  Net loss per diluted common share was $0.25 for the second quarter of 2013 compared with net income per share of $0.05 for the first quarter of 2013 and a net loss per share of $0.04 for the second quarter of 2012.

For the six-month period ended June 30, 2013, the Company reported a net loss available to common shareholders of $774,000 or $0.20 per common share, compared to a net loss of $2.9 million or $0.74 per common share for the six-month period ended June 30, 2012.

The provision for loan losses recognized a recovery of $12,000 in the second quarter of 2013 compared to an expense of $233,000 in the second quarter a year ago.  For the six-month period ended June 30, 2013, the provision for loan losses recognized a recovery of $1.2 million compared to an expense of $1.5 million for the same six-month period of 2012.  Costs related to foreclosed real estate were $167,000 for the second quarter of 2013 as compared to $252,000 in the second quarter of 2012.  For the six-month period ended June 30, 2013, costs related to foreclosed real estate were $532,000 as compared to $1.1 million for the same six-month period of 2012.  Through June 30, 2013, credit-related costs totaled a recovery of $803,000, or a 130.2% decrease over the previous year's costs of $2.7 million through June 30, 2012.

The Company continues its progress in reducing the level of nonperforming assets.  As of June 30, 2013, the Company's nonperforming assets decreased to $7.0 million and amounted to 1.64% of total assets as compared to $7.8 million or 1.80% of total assets as of March 31, 2013 and compared to $16.9 million, or 3.58% of total assets as of June 30, 2012.  The allowance for loan losses was 2.37% of total loans as of June 30, 2013. Net loan chargeoffs amounted to $88,000 for the second quarter of 2013, as compared to net loan recoveries of $754,000 in the first quarter of 2013 and net loan chargeoffs of $740,000 in the second quarter of 2012.

The Company's net interest margin was 2.67% in the second quarter of 2013, which is an increase of 16 basis points from 2.51% in the second quarter of 2012.  Noninterest expense through June 30, excluding the costs related to foreclosed real estate, decreased 15.2% in 2013 versus 2012 and for the three-month period decreased 10.4% in the second quarter of 2013 versus 2012.  The Company was able to reduce other noninterest expenses by closing its King, North Carolina branch in June 2013.  Cost savings of $964,000 for the first six months of 2013 have been recognized in salary and benefits, occupancy and equipment, and consultant and legal fees.

Total assets at June 30, 2013 amounted to $429.0 million, a decrease of 9.4% when compared to $473.6 million as of June 30, 2012.   Loans totaled $269.5 million at June 30, 2013, a decline of 5.5% from a year earlier, and deposits decreased 10.1% over the prior year to $366.3 million. The Company's deposit mix has improved by decreasing non-core brokered deposits by $34.1 million, or 90.8%, since June 30, 2012.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to risk-weighted assets ratio of 3.26% and 4.51% respectively, while its total capital to risk-weighted assets ratio was 5.77% as of June 30, 2013.

President and CEO, Stephen R. Talbert, said, "We continue to make progress for our shareholders and will work hard each and every day to make Bank of the Carolinas even better."

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, Concord, Harrisburg, 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)

(Unaudited)



June 30,



2013


2012

Assets:





Cash and due from banks, noninterest-bearing


$       4,374


$       3,884

Temporary investments


39,182


51,691

Investment securities


93,202


105,609

Loans


269,497


285,186

 Less, allowance for loan losses


(6,398)


(7,541)

     Total loans, net


263,099


277,645

Premises and equipment, net


11,542


12,091

Other real estate owned


1,589


7,403

Bank owned life insurance


10,710


10,359

Other assets


5,270


4,924

     Total Assets


$    428,968


$    473,606






Liabilities:





Noninterest bearing demand deposits


$     33,353


$     38,486

Interest-checking deposits


41,131


38,363

Savings and money market deposits


111,783


103,613

Time deposits


180,041


226,986

     Total deposits


366,308


407,448

Securities sold under repurchase agreements


45,939


45,249

Subordinated debt


7,855


7,855

Other liabilities


2,633


2,111

     Total Liabilities


422,735


462,663

Shareholders' Equity:





Preferred stock,  no par value


13,179


13,179

Discount on preferred stock 


(263)


(570)

Common stock, $5 par value per share


19,479


19,479

Additional paid-in capital


12,991


12,992

Retained losses


(37,192)


(34,424)

Accumulated other comprehensive income


(1,961)


287

     Total Shareholders' Equity


6,233


10,943

     Total Liabilities and Shareholders' Equity


$    428,968


$    473,606






Preferred shares authorized


3,000,000


3,000,000

Preferred shares issued and outstanding


13,179


13,179

Unaccrued preferred stock dividend


1,565


906

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


$        (2.18)


$        (0.81)

 

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands Except Share Data)

(Unaudited)










Three months ended


Six months ended


June 30


June 30


2013


2012


2013


2012

Interest income








   Interest and fees on loans

$      3,224


$      3,548


$      6,440


$      7,334

   Interest on securities

497


583


1,086


1,320

Other interest income

25


29


39


46

     Total interest income

3,746


4,160


7,565


8,700

Interest expense








   Interest on deposits

579


852


1,200


1,751

   Interest on borrowed funds

563


564


1,120


1,128

      Total interest expense

1,142


1,416


2,320


2,879

Net interest income

2,604


2,744


5,245


5,821

   Provision for loan losses

(12)


233


(1,158)


1,525

   Net interest income after provision for








     loan losses

2,616


2,511


6,403


4,296

Noninterest income








   Customer service fees

291


289


572


570

   Increase in value of bank owned life insurance

87


505


174


596

Gains on investment securities

-


1,399


-


2,147

   Other income

5


8


3


15

     Total noninterest income

383


2,201


749


3,328

Noninterest expense








   Salaries and benefits

1,595


1,785


3,193


3,543

   Occupancy and equipment

426


479


878


983

   FDIC insurance assessments

369


402


736


820

   Data processing expense

283


241


552


480

   Valuation provisions and net operating costs








associated with foreclosed real estate

167


252


532


1,091

   Other

881


1,061


1,549


2,323

     Total noninterest expenses

3,721


4,220


7,440


9,240

Income (Loss) before income taxes

(722)


492


(288)


(1,616)

   Provision for income taxes

-


424


-


792

Net income (loss)

$       (722)


$          68


$        (288)


$     (2,408)

  Dividends and accretion on preferred stock

(243)


(238)


(486)


(475)

Net loss available to common shareholders

$       (965)


$       (170)


$        (774)


$     (2,883)









Loss per common share:








   Basic

$      (0.25)


$      (0.04)


$       (0.20)


$       (0.74)

   Diluted

$      (0.25)


$      (0.04)


$       (0.20)


$       (0.74)









Weighted Average Common Shares Outstanding:








   Basic

3,895,840


3,895,840


3,895,840


3,895,840

   Diluted

3,895,840


3,895,840


3,895,840


3,895,840

 

Bank of the Carolinas Corporation

Other Financial Data

(Dollars in thousands except per share amounts)





As of or for the




six months ended June 30




2013



2012



Change*


Average balance sheet data










Average loans

$  268,747



$  296,518



(9.37)

%


Average earning assets

391,043



439,339



(10.99)



Average total assets

429,698



480,189



(10.51)



Average common shareholders' equity

(4,472)



(806)



454.70



Average total shareholders' equity

8,707



12,373



(29.63)













Period-end balance sheet data:










Total loans

$  269,497



$  285,186



(5.50)

%


Allowance for loan losses

(6,398)



(7,541)



(15.16)



Total assets

428,968



473,606



(9.43)



Total deposits

366,308



407,448



(10.10)



Total common shareholders' equity

(6,946)



(2,236)



210.64



Total shareholders' equity

6,233



10,943



(43.04)













Asset quality indicators










Net loan charge-offs (recoveries) 

$       (666)



$     2,085



(131.95)

%


Total nonperforming loans

5,455



9,544



(42.85)



Total nonperforming assets

7,044



16,947



(58.44)













Asset quality ratios










Net-chargeoffs (recoveries) to average loans **

(0.50)

%


1.41

%


(191)

BP


Nonperforming loans to total loans

2.02



3.35



(132)



Nonperforming assets to total assets

1.64



3.58



(194)



Nonperforming assets to loan-related assets

2.60



5.79



(319)



Allowance for loan losses to total loans

2.37



2.64



(27)













Financial ratios










Return on average assets **

(0.14)

%


(1.01)

%


87

BP


Return on average common shareholders' equity **

 N/M 



719.14



 N/M 



Net interest margin **

2.70



2.66



4













Per share amounts available to common shareholders










Basic loss per common share

$      (0.20)



$      (0.74)



72.97

%


Diluted loss per common share

(0.20)



(0.74)



72.97



Book value per common share

(2.18)



(0.81)



170.88
























*   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 June 30



2013



2012



Change*


Average balance sheet data










Average loans

$  268,947



$  291,034



(7.59)

%


Average earning assets

391,200



438,908



(10.87)



Average total assets

430,190



477,264



(9.86)



Average common shareholders' equity

(4,385)



(1,847)



137.37



Average total shareholders' equity

8,794



11,332



(22.39)











Asset quality indicators










Net loan charge-offs

$          88



$        740



(88.11)

%










Asset quality ratios










Net-chargeoffs to average loans **

0.13

%


1.02

%


(89)

BP











Financial ratios










Return on average assets **

(0.67)

%


0.06

%


(73)

BP


Return on average common shareholders' equity **

 N/M 



36.91



 N/M 



Net interest margin **

2.67



2.51



16












Per share amounts available to common shareholders










Basic loss per common share

$      (0.25)



$      (0.04)



(525.00)

%


Diluted loss per common share

(0.25)



(0.04)



(525.00)



Book value per common share

(2.18)



(0.81)



170.88




















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









** ratio annualized.









 

 

SOURCE Bank of the Carolinas Corporation



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