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 DATASOURCE: Bank of the
Carolinas Corporation CONTACT: Michelle L. Clodfelter, Principal
Financial Officer of Bank of the Carolinas, +1-336-998-1799, ext.
207
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