Bank of the Carolinas Corporation Reports Fourth Quarter and Year-End Financial Results

    Bank of the Carolinas Corporation Reports Fourth Quarter and Year-End
                              Financial Results

PR Newswire

MOCKSVILLE, N.C., Jan. 31, 2014

MOCKSVILLE, N.C., Jan. 31, 2014 /PRNewswire/ -- Bank of the Carolinas
Corporation (OTCQB: BCAR) today reported financial results for the three- and
twelve-month periods ended December 31, 2013.

For the three-month period ended December 31, 2013, the Company reported a net
loss available to common shareholders of $764,000 as compared to net income of
$147,000 for the third quarter of 2013 and net income of $551,000 for the
fourth quarter of 2012. Net loss per diluted common share was $0.20 for the
fourth quarter of 2013 compared with net income per share of $0.04 for the
third quarter of 2013 and net income per share of $0.14 for the fourth quarter
of 2012.

For the year ended December 31, 2013, the Company reported a net loss
available to common shareholders of $1.4 million or $0.36 per common share,
compared to a net loss of $5.5 million or $1.42 per common share for the year
ended December 31, 2012.

The provision for loan losses recognized an expense of $39,000 in the fourth
quarter of 2013 compared to a recovery of $637,000 in the fourth quarter a
year ago. For the year ended December 31, 2013, the provision for loan losses
recognized a recovery of $1.2 million compared to an expense of $2.4 million
for the year ended December 31, 2012. Costs related to foreclosed real estate
were $134,000 for the fourth quarter of 2013 as compared to $2,000 in the
fourth quarter of 2012. For the year ended December 31, 2013, costs related
to foreclosed real estate were $810,000 as compared to $2.4 million for the
year ended December 31, 2012. Through December 31, 2013, credit-related costs
totaled a recovery of $1.3 million, or a 127.2% decrease over the previous
year's costs of $5.0 million through December 31, 2012.

As of December 31, 2013, the Company's nonperforming assets were $6.0 million
and amounted to 1.41% of total assets as compared to $8.7 million or 2.03% of
total assets as of September 30, 2013 and compared to $12.7 million, or 2.91%
of total assets as of December 31, 2012. The allowance for loan losses was
2.16% of total loans as of December 31, 2013. Net loan recoveries amounted to
$2.0 million for the year ended December 31, 2013 as compared to net loan
chargeoffs of $3.6 million for the year ended December 31, 2012.

The Company's net interest margin was 2.75% in the fourth quarter of 2013,
which is a decrease of 1 basis point from 2.76% in the fourth quarter of
2012. Net interest margin stayed consistent year over year at 2.72%.
Noninterest expenses, excluding the costs related to foreclosed real estate,
decreased 11.0% for the year 2013 versus 2012. Cost savings of $1.2 million
for 2013 have been recognized in salary and benefits, occupancy and equipment,
and consultant and legal fees.

Total assets at December 31, 2013 amounted to $426.7 million, a decrease of
2.3% when compared to $436.8 million as of December 31, 2012. Loans totaled
$278.5 million at December 31, 2013, an increase of $8.1 million or 3.0% from
a year earlier. Deposits decreased 1.8% over the prior year to $366.2
million. The Company's deposit mix has improved by reducing $15.1 million in
non-core brokered deposits since December 31, 2012.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier
1 capital to risk-weighted assets ratio of 3.08% and 4.21% respectively, while
its total capital to risk-weighted assets ratio was 5.47% as of December 31,
2013.

President and CEO, Stephen R. Talbert, said, "We are proud of the progress we
made in 2013 and look forward to continued improvement in 2014. Our staff
continues to work hard 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)
                                             December 31,
                                             2013             2012
Assets:                                      (Unaudited)      *
Cash and due from banks,                     $   12,778     $    5,942
noninterest-bearing
Temporary investments                        21,644           29,214
Investment securities                        90,315           106,931
Loans                                        278,510          270,374
Less, allowance for loan losses             (6,015)          (6,890)
 Total loans, net                        272,495          263,484
Premises and equipment, net                  11,274           11,843
Other real estate owned                      1,233            4,976
Bank owned life insurance                    10,888           10,536
Other assets                                 6,055            3,859
 Total Assets                            $  426,682     $  436,785
Liabilities:
Noninterest bearing demand deposits          $   35,243     $   36,622
Interest-checking deposits                   40,939           37,768
Savings and money market deposits            109,419          111,459
Time deposits                                180,549          187,123
 Total deposits                          366,150          372,972
Securities sold under repurchase agreements  45,388           45,362
Subordinated debt                            7,855            7,855
Other liabilities                            2,509            2,138
 Total Liabilities                       421,902          428,327
Shareholders' Equity:
Preferred stock, no par value               13,179           13,179
Discount on preferred stock                 (100)            (419)
Common stock, $5 par value per share         19,479           19,479
Additional paid-in capital                   12,991           12,991
Retained losses                              (37,479)         (37,355)
Accumulated other comprehensive income       (3,290)          583
(loss)
 Total Shareholders' Equity              4,780            8,458
 Total Liabilities and Shareholders'     $  426,682     $  436,785
Equity
Preferred shares authorized                  3,000,000        3,000,000
Preferred shares issued and outstanding      13,179           13,179
Unaccrued preferred stock dividend           1,894            1,406
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                  $    (2.64)  $    (1.57)
*Derived from audited financial statements



Bank of the Carolinas Corporation
Consolidated Statements of Income
(In Thousands Except Share Data)
                        Three months ended         Year ended
                        December 31                December 31
                        2013          2012         2013          2012
Interest income         (Unaudited)   *            (Unaudited)   *
 Interest and fees    $  3,274    $  3,398   $  12,978    $  14,303
on loans
 Interest on          550           626          2,156         2,669
securities
Other interest income  18            18           74            77
 Total interest     3,842         4,042        15,208        17,049
income
Interest expense
 Interest on          540           695          2,301         3,225
deposits
 Interest on          570           570          2,259         2,268
borrowed funds
 Total interest    1,110         1,265        4,560         5,493
expense
Net interest income     2,732         2,777        10,648        11,556
 Provision for loan   39            (637)        (2,039)       2,359
losses
 Net interest income
after provision for
 loan losses        2,693         3,414        12,687        9,197
Noninterest income
 Customer service     292           309          1,149         1,176
fees
 Increase in value
of bank owned life      89            89           352           774
insurance
 Gains on investment   -             43           -             2,190
securities
 Other income         19            8            28            28
 Total noninterest  400           449          1,529         4,168
income
Noninterest expense
 Salaries and         1,633         1,611        6,437         6,877
benefits
 Occupancy and        450           452          1,787         1,903
equipment
 FDIC insurance       363           375          1,459         1,600
assessments
 Data processing      245           252          1,054         989
expense
 Valuation
provisions and net
operating costs
associated with         134           2            810           2,417
foreclosed real estate
 Other                785           787          3,082         4,158
 Total noninterest  3,610         3,479        14,629        17,944
expenses
Income (Loss) before    (517)         384          (413)         (4,579)
income taxes
 Provision for        -             (409)        -             -
income taxes
Net income (loss)       $   (517)  $    793  $   (413)  $  (4,579)
 Dividends and
accretion on preferred  (247)         (242)        (978)         (956)
stock
Net loss available to   $   (764)  $    551  $  (1,391)   $  (5,535)
common shareholders
Loss per common share:
 Basic                $   (0.20)  $   0.14  $   (0.36)  $   (1.42)
 Diluted              $   (0.20)  $   0.14  $   (0.36)  $   (1.42)
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
*Derived from audited financial statements



Bank of the Carolinas Corporation
Other Financial Data
(Dollars in thousands except per share amounts)
                                  As of or for the
                                  year ended December 31
                                  2013             2012           Change*
Average balance sheet data
 Average loans                    $ 272,614       $ 287,764     (5.26)   %
 Average earning assets           390,854          425,385        (8.12)
 Average total assets             427,789          464,541        (7.91)
 Average common shareholders'     (5,817)          (2,691)        116.16
 equity
 Average total shareholders'      7,362            10,488         (29.81)
 equity
Period-end balance sheet data:
 Total loans                      $ 278,510       $ 270,374     3.01     %
 Allowance for loan losses        (6,015)          (6,890)        (12.70)
 Total assets                     426,682          436,785        (2.31)
 Total deposits                   366,150          372,972        (1.83)
 Total common shareholders'       (8,399)          (4,721)        77.91
 equity
 Total shareholders' equity       4,780            8,458          (43.49)
Asset quality indicators
 Net loan charge-offs             $  (1,164)     $   3,570    (132.60) %
 (recoveries)
 Total nonperforming loans        4,789            7,733          (38.07)
 Total nonperforming assets       6,022            12,709         (52.62)
Asset quality ratios
 Net-chargeoffs (recoveries) to   (0.43)        %  1.24        %  (167)    BP
 average loans **
 Nonperforming loans to total     1.72             2.86           (114)
 loans
 Nonperforming assets to total    1.41             2.91           (150)
 assets
 Nonperforming assets to          2.15             4.62           (246)
 loan-related assets
 Allowance for loan losses to     2.16             2.55           (39)
 total loans
Financial ratios
 Return on average assets **      (0.10)        %  (0.99)      %  89       BP
 Return on average common         N/M            N/M          N/M
 shareholders' equity **
 Net interest margin **           2.72             2.72           -
Per share amounts available to
common shareholders
 Basic loss per common share      $   (0.36)    $            74.65    %
                                                   (1.42)
 Diluted loss per common share    (0.36)           (1.42)         74.65
 Book value per common share      (2.64)           (1.57)         67.99
* 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 December 31
                                2013             2012            Change*
Average balance sheet data
 Average loans                  $ 279,326       $ 275,438      1.41     %
 Average earning assets         394,744          404,511         (2.41)
 Average total assets           429,727          441,097         (2.58)
 Average common shareholders'   (7,129)          (4,670)         52.63
 equity
 Average total shareholders'    6,050            8,509           (28.89)
 equity
Asset quality indicators
 Net loan charge-offs          $    239     $           (411.02) %
                                                 (77)
Asset quality ratios
 Net-chargeoffs to average      0.34          %  (0.11)       %  45       BP
 loans **
Financial ratios
 Return on average assets **    (0.48)        %  0.72         %  (120)    BP
 Return on average common       N/M            N/M           N/M
 shareholders' equity **
 Net interest margin **         2.75             2.76            (1)
Per share amounts available to
common shareholders
 Basic loss per common share    $   (0.20)    $    0.14    242.86   %
 Diluted loss per common share  (0.20)           0.14            242.86
 Book value per common share    (2.64)           (1.57)          67.99
* BP denotes basis points. N/M denotes not
meaningful.
** ratio annualized.

SOURCE Bank of the Carolinas Corporation
 
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