Bank of the Carolinas Corporation Reports Third Quarter

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Bank of the Carolinas Corporation Reports Third Quarter Financial Results

MOCKSVILLE, N.C., Oct. 25, 2013 /PRNewswire/ -- Bank of the Carolinas Corporation (OTCQB: BCAR) today reported financial results for the three- and nine-month periods ended September 30, 2013.

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.

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)





September 30,




2013


2012


Assets:






Cash and due from banks, noninterest-bearing


$       4,941


$       3,987


Temporary investments


28,696


17,553


Investment securities


92,891


121,387


Loans


278,503


280,671


 Less, allowance for loan losses


(6,215)


(7,450)


     Total loans, net


272,288


273,221


Premises and equipment, net


11,429


11,911


Other real estate owned


1,386


5,424


Bank owned life insurance


10,799


10,447


Other assets


5,498


4,343


     Total Assets


$    427,928


$    448,273








Liabilities:






Noninterest bearing demand deposits


$     35,323


$     34,756


Interest-checking deposits


39,790


39,138


Savings and money market deposits


111,913


106,541


Time deposits


178,668


204,095


     Total deposits


365,694


384,530


Securities sold under repurchase agreements


45,544


45,379


Subordinated debt


7,855


7,855


Other liabilities


2,613


1,919


     Total Liabilities


421,706


439,683


Shareholders' Equity:






Preferred stock,  no par value


13,179


13,179


Discount on preferred stock 


(183)


(496)


Common stock, $5 par value per share


19,479


19,479


Additional paid-in capital


12,991


12,991


Retained losses


(36,880)


(37,463)


Accumulated other comprehensive income (loss)


(2,364)


900


     Total Shareholders' Equity


6,222


8,590


     Total Liabilities and Shareholders' Equity


$    427,928


$    448,273








Preferred shares authorized


3,000,000


3,000,000


Preferred shares issued and outstanding


13,179


13,179


Unaccrued preferred stock dividend


1,730


1,071


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


$        (2.23)


$        (1.45)








 

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands Except Share Data)

(Unaudited)


Three months ended


Nine months ended




September 30


September 30




2013


2012


2013


2012


Interest income










   Interest and fees on loans


$    3,264


$    3,571


$    9,704


$   10,905


   Interest on securities


520


723


1,606


2,043


  Other interest income


17


13


56


59


     Total interest income


3,801


4,307


11,366


13,007


Interest expense










   Interest on deposits


561


779


1,761


2,530


   Interest on borrowed funds


569


570


1,689


1,698


      Total interest expense


1,130


1,349


3,450


4,228


Net interest income


2,671


2,958


7,916


8,779


   Provision for loan losses


(920)


1,471


(2,078)


2,996


   Net interest income after provision for










     loan losses


3,591


1,487


9,994


5,783


Noninterest income










   Customer service fees


285


297


857


867


   Increase in value of bank owned life insurance


89


89


263


685


 Gains on investment securities


-


-


-


2,147


   Other income


6


5


9


20


     Total noninterest income


380


391


1,129


3,719


Noninterest expense










   Salaries and benefits


1,611


1,723


4,804


5,266


   Occupancy and equipment


459


468


1,337


1,451


   FDIC insurance assessments


360


405


1,096


1,225


   Data processing expense


257


257


809


737


   Valuation provisions and net operating costs










   associated with foreclosed real estate


144


1,324


676


2,415


   Other


748


1,048


2,297


3,371


     Total noninterest expenses


3,579


5,225


11,019


14,465


Income (Loss) before income taxes


392


(3,347)


104


(4,963)


   Provision for income taxes


-


(383)


-


409


Net income (loss)


$       392


$   (2,964)


$       104


$   (5,372)


  Dividends and accretion on preferred stock


(245)


(239)


(731)


(714)


Net loss available to common shareholders


$       147


$   (3,203)


$      (627)


$   (6,086)












Loss per common share:










   Basic


$      0.04


$     (0.82)


$     (0.16)


$     (1.56)


   Diluted


$      0.04


$     (0.82)


$     (0.16)


$     (1.56)












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





nine months ended September 30





2013


2012


Change*

Average balance sheet data











Average loans


$  270,352



$  291,858



(7.37)

%


Average earning assets


389,543



432,317



(9.89)



Average total assets


427,136



472,327



(9.57)



Average common shareholders' equity


(5,375)



(2,034)



164.30



Average total shareholders' equity


7,804



11,145



(29.98)














Period-end balance sheet data:











Total loans


$  278,503



$  280,671



(0.77)

%


Allowance for loan losses


(6,215)



(7,450)



(16.58)



Total assets


427,928



448,273



(4.54)



Total deposits


365,694



384,530



(4.90)



Total common shareholders' equity


(6,957)



(4,589)



51.60



Total shareholders' equity


6,222



8,590



(27.57)














Asset quality indicators











Net loan charge-offs (recoveries)


$    (1,403)



$     3,647



(138.47)

%


Total nonperforming loans


7,305



8,124



(10.09)



Total nonperforming assets


8,692



13,549



(35.85)














Asset quality ratios











Net-chargeoffs (recoveries) to average loans **


(0.69)

%


1.67

%


(236)

BP


Nonperforming loans to total loans


2.62



2.89



(27)



Nonperforming assets to total assets


2.03



3.02



(99)



Nonperforming assets to loan-related assets


3.11



4.74



(163)



Allowance for loan losses to total loans


2.23



2.65



(42)














Financial ratios











Return on average assets **


0.03

%


(1.52)

%


155

BP


Return on average common shareholders' equity **


 N/M 



 N/M 



 N/M 



Net interest margin **


2.72



2.71



1














Per share amounts available to common shareholders











Basic loss per common share


$      (0.16)



$      (1.56)



89.74

%


Diluted loss per common share


(0.16)



(1.56)



89.74



Book value per common share


(2.23)



(1.45)



53.48


























*   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 September 30





2013


2012


Change*

Average balance sheet data











Average loans


$  273,510



$  282,639



(3.23)

%


Average earning assets


386,592



418,426



(7.61)



Average total assets


422,096



456,774



(7.59)



Average common shareholders' equity


(7,152)



(4,462)



60.27



Average total shareholders' equity


6,027



8,717



(30.85)














Asset quality indicators











Net loan charge-offs 


$       (737)



$     1,562



(147.18)

%













Asset quality ratios











Net-chargeoffs to average loans **


(1.07)

%


2.20

%


(327)

BP













Financial ratios











Return on average assets **


0.37

%


(2.58)

%


295

BP


Return on average common shareholders' equity **


 N/M 



 N/M 



 N/M 



Net interest margin **


2.74



2.81



(7)














Per share amounts available to common shareholders











Basic loss per common share


$       0.04



$      (0.82)



104.88

%


Diluted loss per common share


0.04



(0.82)



104.88



Book value per common share


(2.23)



(1.45)



53.48


























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

** ratio annualized.

 

 



 

SOURCE Bank of the Carolinas Corporation


Copyright 2013 PR Newswire
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