MOCKSVILLE, N.C., Aug. 1 /PRNewswire-FirstCall/ -- Bank of the Carolinas
Corporation (Nasdaq: BCAR), today reported financial results for the three and
six months ended June 30, 2008.
For the three-month period ended June 30, 2008, the Corporation incurred a
net loss of $259,000, as compared to net income of $592,000 in the second
quarter of 2007. Diluted income (loss) per share was ($.07) for the second
quarter of 2008 compared to income of $.15 for the comparable quarter of 2007.
For the six-month period ended June 30, 2008, the Bank reported a net loss of
$264,000 compared to net income of $1,372,000 for the same six-month period of
2007. Diluted income (loss) per share amounted to ($.07) for the six-month
period ended June 30, 2008 compared to income of $.35 per diluted share for
the same period of 2007.
In discussing the Company's results, Robert Marziano, President and CEO,
stated, 'We are very disappointed with our results, not only for the second
quarter, but year-to-date in 2008. This is a trying economic environment, and
our results reflect that. Along with many of our peers, Bank of the Carolinas
has experienced increased levels of non-performing assets over the last year.
However, based on our best determination of current market values, our bank
has written down these assets to realizable amounts, reserved for potential
losses and we remain well-capitalized. While excessive land development and
construction credits have proven troublesome to the industry, these loans at
Bank of the Carolinas remain relatively stable at a modest 14.6% of our
portfolio.'
Addressing liquidity and expense control, Marziano continued, 'As
evidenced by a $19.7 million increase in our savings balances at June 30, 2008
compared to June 30, 2007, a key focal point for our bank is to increase core
funding so that we are less dependent on volatile liabilities and, therefore,
less sensitive to interest rate swings. Additionally, we have reduced and
will continue to reduce costs where doing so does not adversely impact our
ability to serve our loyal customers. We regard our customers as our greatest
asset.'
The Company's non-performing assets were $14.4 million at June 30, 2008,
or 3.6% of outstanding loans. While the reported amount is at a historically
high level, it is inflated by the inclusion of one credit relationship of
approximately $4.9 million for which 75% of any loss incurred by the Bank is
guaranteed by the US Department of Agriculture. Presently the Bank expects no
significant loss with regard to that particular credit. Excluding this
credit, non-performing assets would amount to $9.5 million, or 2.3% of
outstanding loans.
Principal factors leading to the decrease in net income for the three and
six-month periods ended in 2008, relative to 2007, were a decline in the
Company's net interest income, an increase in the provision for loan losses
and increased non-interest expense. For the six-month period ended in 2008,
the net interest margin declined to 2.75% from 3.35% in 2007. For the six-
month period ended June 30, 2008, approximately $197,000 or 15.0% of the
decline in our net interest margin was attributable to the loss of income
associated with non-accrual loans. The increase in the provision for loan
losses of $621,000 for the six-months ended June 30, 2008 relative to 2007 was
related to additions to specific reserves for impaired loans the Company
identified. While non-interest expense overall was stable from the first to
second quarters of 2008, for the comparable six-month periods, 2008 non-
interest expense increased approximately $1.1 million over 2007 levels.
Salaries and benefits increased $761,000, occupancy expense increased $141,000
and other non-interest expense increased $204,000 for the current year period.
The increased salary and benefit and occupancy expense levels are comprised of
normal salary adjustments plus increased staffing and occupancy costs
associated with two banking offices opened in mid-2007. The Company
experienced growth in non-interest income of 9.7% and 7.7%, respectively, for
the three and six month periods in 2008 versus 2007.
Total assets at June 30, 2008 amounted to $511.9 million, an increase of
12.1% when compared to the June 30, 2007 amount of $456.9 million. Net loans
increased 14.1% over the prior year to $402.2 million, while deposits grew to
$414.3 million, a 7.1% increase. The allowance for loan losses was 1.12% of
total loans as of June 30, 2008, and the ratio of annualized net charge-offs
to average loans was 0.40%.
Bank of the Carolinas Corporation is the holding company for Bank of the
Carolinas, a state 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
Capital 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.
For further information contact:
Michelle L. Clodfelter
Principal Financial Officer
Bank of the Carolinas
(336) 751-5755
Bank of the Carolinas Corporation
Consolidated Balance Sheets
(In Thousands, Except Share Data)
(Unaudited)
June 30
2008 2007
Assets
Cash and Due from Banks $8,047 $5,364
Interest-Bearing Deposits in Banks 7,834 3,418
Federal Funds Sold - 969
Securities Held to Maturity 1,000 -
Securities Available for Sale 57,448 64,564
Loans 406,713 355,750
Less, Allowance for Loan Losses (4,538) (3,425)
Total Loans, Net 402,175 352,325
Properties and Equipment 15,181 12,303
Other Assets 20,228 17,910
Total Assets $511,913 $456,853
Liabilities
Non-interest Bearing Demand Deposits $32,683 $30,613
Interest Bearing Demand Deposits 59,408 62,296
Savings Deposits 31,672 12,012
Time Deposits 290,582 282,072
Total Deposits 414,345 386,993
Borrowings 46,155 26,500
Fed Funds Purchased and Repurchase Agreements 10,203 2,111
Other Liabilities 1,446 2,556
Total Liabilities 472,149 418,160
Shareholders' Equity
Common Stock, Par Value $5 Per Share:
Authorized 15,000,000 Shares; Issued
3,987,374 Shares in 2008 and 3,852,992
Shares in 2007 19,937 19,265
Additional Paid-In Capital 11,828 11,505
Retained Earnings 7,816 8,281
Accumulated Other Comprehensive Income (Loss) 183 (358)
Total Shareholders' Equity 39,764 38,693
Total Liabilities and
Shareholders' Equity $511,913 $456,853
Bank of the Carolinas Corporation
Consolidated Statements of Operation
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Interest Income
Interest and Fees on Loans $6,603 $7,285 $13,694 $14,594
Interest on Securities 710 699 1,436 1,313
Federal Funds Sold 38 184 114 361
Deposits in Other Banks 2 1 6 5
Total Interest Income 7,353 8,169 15,250 16,273
Interest Expense
Deposits 3,808 4,311 8,194 8,561
Borrowed Funds 388 303 661 588
Total Interest Expense 4,196 4,614 8,855 9,149
Net Interest Income 3,157 3,555 6,395 7,124
Provision for Loan Losses 781 412 1,095 474
Net Interest Income After
Provision for Loan Losses 2,376 3,143 5,300 6,650
Other Income
Customer Service Fees 347 266 639 502
Mortgage Loan Broker Fees 31 31 67 62
Investment Services 6 56 15 99
Increase in CSV of Life
Insurance 92 86 180 168
Other Income 42 33 69 70
Total Other Income 518 472 970 901
Noninterest Expense
Salaries and Benefits 1,802 1,418 3,696 2,935
Occupancy and Equipment 481 421 980 839
Other Noninterest Expense 1,008 940 1,996 1,792
Total Noninterest Expense 3,291 2,779 6,672 5,566
Income (Loss) Before Income
Taxes (397) 836 (402) 1,985
Income Taxes (138) 244 (138) 613
Net Income (Loss) $(259) $592 $(264) $1,372
Net Income (Loss) Per Share
Basic $(0.07) $0.15 $(0.07) $0.36
Diluted $(0.07) $0.15 $(0.07) $0.35
Weighted Average Shares
Outstanding
Basic 3,967,400 3,837,533 3,944,205 3,833,146
Diluted 3,967,400 3,943,364 3,944,205 3,947,383
Bank of the Carolinas Corporation
Performance Ratios
As of or for the
Six Months Ended June 30
2008 2007 Change*
Financial Ratios
Return On Average Assets ** -0.10% 0.60% (70)BP
Return On Average Shareholders'
Equity ** -1.33% 7.18% (851)
Net Interest Margin ** 2.75% 3.35% (60)
Asset Quality Ratios
Net-chargeoffs to Average Loans ** 0.40% 0.44% (4)BP
Nonperforming Loans To Total Loans 2.95% 0.95% 200
Nonperforming Assets To Total Assets 2.82% 0.96% 186
Allowance For Loan Losses To
Total Loans 1.12% 0.96% 16
* BP denotes basis points
** Ratio Annualized
SOURCE Bank of the Carolinas Corporation
