From OTC Market PRs Oct 25, 2013 BCAR

For the three-month period ended September 30, 2013, the Company reported net income available to common shareholders of $147,000 as compared to a net loss of $965,000 for the second quarter of 2013 and a net loss of $3.2 million for the third quarter of 2012. Net income per diluted common share was $0.04 for the third quarter of 2013 compared with a net loss per share of $0.25 for the second quarter of 2013 and a net loss per share of $0.82 for the third quarter of 2012.

For the nine-month period ended September 30, 2013, the Company reported a net loss available to common shareholders of $627,000 or $0.16 per common share, compared to a net loss of $6.1 million or $1.56 per common share for the nine-month period ended September 30, 2012.

The provision for loan losses recognized a recovery of $920,000 in the third quarter of 2013 compared to an expense of $1.5 million in the third quarter a year ago. For the nine-month period ended September 30, 2013, the provision for loan losses recognized a recovery of $2.1 million compared to an expense of $3.0 million for the same nine-month period of 2012. Costs related to foreclosed real estate were $144,000 for the third quarter of 2013 as compared to $1.3 million in the third quarter of 2012. For the nine-month period ended September 30, 2013, costs related to foreclosed real estate were $676,000 as compared to $2.4 million for the same nine-month period of 2012. Through September 30, 2013, credit-related costs totaled a recovery of $1.6 million, or a 128.7% decrease over the previous year's costs of $5.5 million through September 30, 2012.

Although nonperforming assets increased in the third quarter of 2013 as compared to the second quarter of 2013, the Company continues its overall progress in reducing the level of nonperforming assets. As of September 30, 2013, the Company's nonperforming assets were $8.7 million and amounted to 2.03% of total assets as compared to $7.0 million or 1.64% of total assets as of June 30, 2013 and compared to $13.5 million, or 3.02% of total assets as of September 30, 2012. The allowance for loan losses was 2.23% of total loans as of September 30, 2013. Net loan recoveries amounted to $737,000 for the third quarter of 2013, as compared to net loan chargeoffs of $88,000 in the second quarter of 2013 and net loan chargeoffs of $1.6 million in the third quarter of 2012.

The Company's net interest margin was 2.74% in the third quarter of 2013, which is a decrease of 7 basis points from 2.81% in the third quarter of 2012. Noninterest expenses, excluding the costs related to foreclosed real estate, for the three-month period decreased 11.9% in the third quarter of 2013 versus 2012 and decreased 14.2% for the nine-month period. Cost savings of $1.2 million for the first nine months of 2013 have been recognized in salary and benefits, occupancy and equipment, and consultant and legal fees.

Total assets at September 30, 2013 amounted to $427.9 million, a decrease of 4.5% when compared to $448.3 million as of September 30, 2012. Loans totaled $278.5 million at September 30, 2013, an increase of $9.0 million or 3.3% compared to June 30, 2013 and a decline of $2.2 million or 0.8% from a year earlier. Deposits decreased 4.9% over the prior year to $365.7 million. The Company's deposit mix has improved by reducing $27.6 million in non-core brokered deposits since September 30, 2012.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to risk-weighted assets ratio of 3.38% and 4.51% respectively, while its total capital to risk-weighted assets ratio was 5.77% as of September 30, 2013.

President and CEO, Stephen R. Talbert, said, "We are proud of the progress we have made for our shareholders, particularly with the loan growth this quarter. Our staff continues to work hard on further improvements to make Bank of the Carolinas better each day."

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.