Bank of the Carolinas Corp. just missed returning to profitability -- at least for a quarter -- when it reported a $56,000 loss for the fourth quarter.
The Mocksville bank would have had a profit of $186,000 when excluding a $242,000 dividend payment to the U.S. Treasury for its participation in the capital repurchase program.
By comparison, the bank had an $8.8 million loss in the fourth quarter of 2011, caused primarily by taking a large provision for loan losses and a $3.5 million provision for income taxes. The bank took a $198,000 provision for income taxes in the fourth quarter of 2012.
The bank had an earnings loss of 2 cents compared with a loss of $2.26 a share a year ago. There was no earnings forecast by analysts surveyed by Zacks Investment Research.
For the full year, Bank of the Carolinas had a loss of $6.1 million compared with a loss of $29.2 million.
Analysts said the overall improvement could be a sign of better financial health, thus increasing the bank's odds of remaining independent. Or, they said, the heightened focus on the loan portfolio could be the bank's attempt at becoming more attractive to reluctant buyers.
In June 2011, the board of directors hired a consultant to explore "strategic alternatives," including the sale of the bank. It has not provided an update on those efforts.
The bank did not provide comment about the quarter or full-year performance. Stephen Talbert, president and chief executive, could not be reached for comment Monday.
Bank of the Carolinas, like many local community banks, has struggled to resolve problem commercial and residential mortgage loans since the financial crisis began in late 2007.
As a result, provisions for loan losses, nonperforming assets and net charge-offs have become as important in measuring financial health as revenue from loans and fees.
In recent quarters, many community banks have accelerated foreclosure proceedings and the process of writing off bad loans as a way of easing the pressure on their bottom lines.
The bank was able to transfer $637,000 from its loan-loss provision during the quarter -- the first time it has been able to take that step since 2007. The provision is a key sign of a bank's financial health since money put into the provision comes off its bottom line.
Nonperforming assets were at $12.7 million on Dec. 31 compared with $27.6 million a year ago.
The bank's net charge-off efforts during the fourth quarter resulted in a positive recovery of $77,000 compared with charge-offs of $1.6 million in the third quarter and $3.6 million a year ago.
Revenue from loans was at $3.4 million compared with $195,000 a year ago, mostly reflecting the ability to transfer money out of the loan-loss provision.
Revenue from fees was $449,000 compared with a loss of $3,000 a year ago. The bank had $397,000 in losses on investment securities in the fourth quarter of 2011.
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