Bank of the Carolinas Corporation Reports Second Quarter Financial Results

MOCKSVILLE, N.C., Aug. 6 /PRNewswire-FirstCall/ -- Bank of the Carolinas Corporation (Nasdaq: BCAR) today reported financial results for the three and six months ended June 30, 2009.

For the three month period ended June 30, 2009, the Company reported a net loss of $1,479,000, as compared to a net loss of $259,000 in the second quarter of 2008. The net loss available to common shareholders for the three months ended June 30, 2009 was $1,534,000. Diluted loss per share was $0.38 for the second quarter of 2009 compared to $0.07 per diluted share for the same period in 2008. For the six month period ended June 30, 2009, the Company reported a net loss of $2,134,000 or $.55 per diluted share compared to a net loss of $264,000 or $.07 per diluted share for the same six month period of 2008. The net year to date loss available to common shareholders at June 30, 2009 was $2,189,000. As with the last several quarters, our second quarter results were largely impacted by continued pressure on the net interest margin as well as significant provisions for loan loss expense. Second quarter results also were affected by a sizeable increase in other non-interest expense, including a substantial increase in FDIC expense due to the one-time special assessment imposed on all banks and a significant write-down on OREO properties.

For the six months ended June 30, 2009, the Company's net interest margin continued to decline; due in part to a continuing increase in non-accrual loans as well as a special Money Market rate the Company began in July 2008; which was guaranteed through June 30, 2009. The Company expects to see improvement in our net interest margin throughout the rest of the year since the rate guarantee has expired.

The Company's non-performing assets increased during the quarter. Non-performing assets at June 30, 2009 were $20.0 million or 3.27% of total assets as compared to $12.3 million or 2.20% of total assets at December 31, 2008 and $14.4 million or 2.82% of total assets at June 30, 2008. The Company's non-performing loans as a percentage of total loans also increased from the previous quarter end. These ratios were 3.17% at June 30, 2009, 1.66% at December 31, 2008 and 2.95% at June 30, 2008. Of our non-performing loans, two loans with a combined balance of $3.4 million have a 75% USDA guarantee on the remaining balance.

The provision for loan losses totaled $720,000 for the quarter ended June 30, 2009 versus $781,000 for the second quarter in 2008; however the year to date expense increased to $1,420,000 from $1,095,000 in the previous year. The allowance for loan losses was 1.66% of total loans as of June 30, 2009, and year to date annualized net charge-offs were 0.50% of average loans outstanding. As with many other banks in our industry we continue to face credit challenges. As always, we remain committed to helping our customers weather the current economic storm to the best of our ability while being aggressive in identifying troubled assets in our portfolio.

In comparison to 2008, non-interest expense increased approximately $2,299,000 for the first six months of 2009. Salaries and benefits decreased $242,000; while occupancy expense increased $114,000 and other expenses increased $2,427,000. The decrease in salary and benefits are the result of the Bank's efforts to reduce expense. The increase in other expenses was largely attributable to a $1,231,000 valuation allowance on OREO properties as well as an increase of $555,000 in our premiums for FDIC deposit insurance. Non-interest income remained relatively flat for the three and six month periods.

In late March 2009, the Company was approved for participation in the Capital Purchase Program (CPP) by the United States Department of the Treasury ("Treasury"), and on April 17, 2009, the Company accepted a $13,179,000 capital infusion from the Treasury. The Series A Preferred Stock issued to the Treasury in conjunction with this capital infusion is considered Tier 1 capital for regulatory purposes. The stock will pay cumulative dividends of 5% per annum for the first five years and 9% per annum thereafter. The Treasury was also issued warrants to purchase 475,024 shares of the Company's common stock at a price of $4.16 per share and with a term of ten years.

The Company's Board of Directors has chosen not to pay a dividend on our outstanding common stock for the second quarter of 2009 nor did they pay one during the first quarter of 2009. The Bank will continue to evaluate on a quarterly basis whether payment of a dividend on common stock is warranted.

Total assets at June 30, 2009 amounted to $611.2 million, an increase of 8.8% when compared to the prior year end amount of $562.0 million. Net loans remained virtually flat from year end, while deposits grew to $485.2 million, a 9.1% increase over the prior year end amount of $444.5 million.

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. Common stock of the Company is traded on the NASDAQ Global Market under the symbol BCAR.

This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Bank of the Carolinas Corporation undertakes no obligation to revise these statements following the date of this press release.

    Bank of the Carolinas Corporation
    Consolidated Balance Sheets
    (In Thousands Except Share Data)

                                                    June 30,    December 31,
                                                  ------------  ------------
                                                      2009          2008*
                                                  ------------  ------------
                                                  (Unaudited)
    Assets
    Cash and Due from Banks                            $8,282        $8,271
    Interest-Bearing Deposits in Banks                    174         2,220
    Federal Funds Sold                                 30,075             -
    Securities Available for Sale                     127,607       108,639
    Securities Held to Maturity                         4,370         4,500
    Loans                                             405,364       405,402
     Less, Allowance for Loan Losses                   (6,714)       (6,308)
                                                  ------------  ------------
         Total Loans, Net                             398,650       399,094
    Properties and Equipment                           14,491        15,324
    Other Assets                                       27,518        23,959
                                                  ------------  ------------
         Total Assets                                $611,167      $562,007
                                                  ============  ============

    Liabilities

    Non-interest Bearing Demand Deposits              $29,925       $27,507
    Interest Bearing Demand Deposits                   29,076        28,173
    Money Market Deposits                             266,673       210,378
    Savings Deposits                                   20,009        21,903
    Time Deposits                                     139,467       156,579
                                                  ------------  ------------
         Total Deposits                               485,150       444,540

    Other Borrowings                                   30,855        32,855
    Repurchase Agreements                              46,111        46,557
    Other Liabilities                                   1,986         1,464
                                                  ------------  ------------
         Total Liabilities                            564,102       525,416
                                                  ------------  ------------
    Shareholders' Equity
    Preferred Stock, No Par Value:
      Authorized 10,000,000 Shares: Issued
      and Outstanding (liquidation preference
      $1,000 per share) 13,179 at June 30, 2009
      and None at December 31, 2008                    13,179             -
    Common Stock, Par Value $5 Per Share:
        Authorized 15,000,000 Shares; Issued
        3,891,841 Shares in 2009 and 3,920,752
        Shares in 2008                                 19,456        19,456
    Additional Paid-In Capital                         11,602        11,625
    Preferred Stock Discount                           (1,366)            -
    Warrants Outstanding                                1,414             -
    Retained Earnings                                   1,834         4,067
    Accumulated Other Comprehensive
     Income (Loss)                                        946         1,443
                                                  ------------  ------------
         Total Shareholders' Equity                    47,065        36,591
                                                  ------------  ------------
         Total Liabilities and Shareholders'
          Equity                                     $611,167      $562,007
                                                  ============  ============

    * Derived from audited information



    Bank of the Carolinas Corporation
    Consolidated Statements of Income
    (In Thousands Except Share and Per Share Data)
    (Unaudited)
                                 Three Months Ended       Six Months Ended
                                        June 30,               June 30,
                               ----------------------  ----------------------
                                  2009         2008       2009         2008
                               ----------  ----------  ----------  ----------

    Interest Income
      Interest and Fees on Loans  $5,977      $6,603     $12,029     $13,694
      Interest on Securities       1,435         710       2,898       1,436
      Federal Funds Sold              13          38          19         114
      Deposits in Other Banks          8           2          24           6
                               ----------  ----------  ----------  ----------
        Total Interest Income      7,433       7,353      14,970      15,250
                               ----------  ----------  ----------  ----------

    Interest Expense
      Deposits                     3,644       3,808       7,186       8,194
      Borrowed Funds                 777         388       1,588         661
                               ----------  ----------  ----------  ----------
        Total Interest Expense     4,421       4,196       8,774       8,855
                               ----------  ----------  ----------  ----------

    Net Interest Income            3,012       3,157       6,196       6,395
      Provision for Loan Losses      720         781       1,420       1,095
                               ----------  ----------  ----------  ----------
      Net Interest Income After
       Provision for Loan Losses   2,292       2,376       4,776       5,300
                               ----------  ----------  ----------  ----------

    Other Income
      Customer Service Fees          307         347         593         639
      Mortgage Loan Broker Fees       34          31          56          67
      Investment Services              1           6           2          15
      Income from Bank Owned
       Life Insurance                 91          92         180         180
      Other Income                   177          42         117          69
                               ----------  ----------  ----------  ----------
        Total Other Income           610         518         948         970
                               ----------  ----------  ----------  ----------

    Noninterest Expense
      Salaries and Benefits        1,736       1,802       3,454       3,696
      Occupancy and Equipment        532         481       1,094         980
      FDIC Expense                   380          80         715         160
      OREO Valuation Allowance     1,231           -       1,231           -
      OREO Expense                   204          20         204          43
      Data Processing Expense        211         212         451         422
      Other Noninterest Expense      885         696       1,822       1,371
                               ----------  ----------  ----------  ----------
        Total Noninterest
         Expense                   5,179       3,291       8,971       6,672
                               ----------  ----------  ----------  ----------
      Loss Before Income Taxes    (2,277)       (397)     (3,247)       (402)
      Income Taxes                  (798)       (138)     (1,113)       (138)
                               ----------  ----------  ----------  ----------
    Net loss                     $(1,479)      $(259)    $(2,134)      $(264)
                               ----------  ----------  ----------  ----------
      Dividend and accretion on
       preferred stock               (55)          -         (55)          -
                               ----------  ----------  ----------  ----------
        Net income available to
         common shareholders     $(1,534)      $(259)    $(2,189)      $(264)
                               ==========  ==========  ==========  ==========

    Loss Per Common Share
      Basic                       $(0.38)     $(0.07)     $(0.55)     $(0.07)
      Diluted                     $(0.38)     $(0.07)     $(0.55)     $(0.07)

    Weighted Average Shares
     Outstanding
      Basic                    3,891,423   3,967,400   3,891,299   3,944,205
      Diluted                  3,891,423   3,967,400   3,891,299   3,944,205



    Bank of the Carolinas Corporation
    Performance Ratios

                                                     As of or for the
                                                 Six Months Ended June 30,
                                               ------------------------------
                                                  2009      2008     Change*
                                               --------   --------   --------
    Financial Ratios
       Return On Average Assets **               -0.73%    -0.10%     (63) BP
       Return On Average Shareholders'
        Equity **                                 9.14%    -1.33%   1,047
       Net Interest Margin **                     2.31%     2.75%     (44)



    Asset Quality Ratios
       Net-chargeoffs to Average Loans**          0.50%     0.40%      10 BP
       Nonperforming Loans To Total Loans         3.17%     2.95%      22
       Nonperforming Assets To Total Assets       3.27%     2.82%      45
       Allowance For Loan Losses To Total Loans   1.66%     1.12%      54

    * BP denotes basis points.
    ** Ratio annualized.
    For further information contact:

          Michelle L. Clodfelter
          Principal Financial Officer
          Bank of the Carolinas
          (336) 998-1799 x 207

SOURCE Bank of the Carolinas Corporation



More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.