Bank of the Carolinas Corporation Reports Second Quarter Financial Results

  Bank of the Carolinas Corporation Reports Second Quarter Financial Results

PR Newswire

MOCKSVILLE, N.C., Aug. 14, 2014

MOCKSVILLE, N.C., Aug. 14, 2014 /PRNewswire/ --Bank of the Carolinas
Corporation (OTCQB: BCAR) today reported financial results for the three- and
six-month periods ended June 30, 2014.

For the three-month period ended June 30, 2014, the Company reported net
income available to common shareholders of $599,000 as compared to a net loss
of $1.8 million for the first quarter of 2014 and a net loss of $1.3 million
for the second quarter of 2013. Net income per diluted common share was $0.15
for the second quarter of 2014 compared with a net loss per share of $0.45 for
the first quarter of 2014 and a net loss per share of $0.33 for the second
quarter of 2013.

For the six-month period ended June 30, 2014, the Company reported a net loss
available to common shareholders of $1.2 million or $0.30 per common share,
compared to a net loss of $1.4 million or $0.36 per common share for the
six-month period ended June 30, 2013.

The provision for loan losses recognized a recovery of $1.3 million in the
second quarter of 2014 compared to a recovery of $12,000 in the second quarter
a year ago. For the six-month period ended June 30, 2014, the provision for
loan losses recognized a recovery of $225,000 compared to a recovery of $1.2
million for the same six-month period of 2013. The Company recovered $12,000
of costs related to foreclosed real estate for the second quarter of 2014 as
compared to $167,000 of expense in the second quarter of 2013. For the
six-month period ended June 30, 2014, costs related to foreclosed real estate
were $27,000 as compared to $532,000 for the same six-month period of 2013.
Through June 30, 2014, credit-related costs totaled a recovery of $163,000, or
a 79.7% decrease over the previous year's recovery of $803,000 through June
30, 2013.

The Company continues its progress in reducing the level of nonperforming
assets. As of June 30, 2014, the Company's nonperforming assets decreased to
$5.8 million and amounted to 1.36% of total assets as compared to $7.4 million
or 1.74% of total assets as of March 31, 2014 and compared to $7.0 million, or
1.64% of total assets as of June 30, 2013. The allowance for loan losses was
1.84% of total loans as of June 30, 2014. Net loan chargeoffs amounted to
$671,000 for the second quarter of 2014, as compared to net loan recoveries of
$34,000 in the first quarter of 2014 and net loan chargeoffs of $88,000 in the
second quarter of 2013.

The Company's net interest margin was 2.73% in the second quarter of 2014,
which is an increase of 6 basis points from 2.67% in the second quarter of
2013. Noninterest expense through June 30 decreased 5.95% in 2014 versus 2013
and for the three-month period decreased 6.42% in the second quarter of 2014
versus 2013. Cost savings of $717,000 for the first six months of 2013 have
been recognized in salary and benefits, legal fees, and costs related to
foreclosed real estate.

Total assets at June 30, 2014 amounted to $427.8 million, an increase of 0.2%
when compared to $427.1 million as of June 30, 2013. Loans totaled $279.4
million at June 30, 2014, an increase of 3.7% from a year earlier, and
deposits increased 0.2% over the prior year to $367.0 million. The Company's
deposit mix has improved by decreasing non-core brokered deposits by $3.5
million June 30, 2013.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier
1 capital to risk-weighted assets ratio of 3.43% and 4.70% respectively, while
its total capital to risk-weighted assets ratio was 5.96% as of June 30, 2014.

The Company completed a private placement of $45.8 million on July 16, 2014.
In connection with the private placement, the Company repurchased all 13,179
shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A,
issued under the Capital Purchase Program from the U.S. Treasury. The Company
also repurchased all of its floating rate trust preferred securities issued
through its subsidiary, Bank of the Carolinas Trust I, from the holders of
those securities. The Company also repurchased a subordinated note from the
holder of the note. As of July 31, 2014, the Company and its subsidiaries
have no outstanding third-party debt obligations.

The Company injected $34.8 million from the proceeds of the private placement
into the Company's banking subsidiary. As of July 31, 2014, the Company's
banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to
risk-weighted assets ratio of 10.58% and 14.86% respectively, while its total
capital to risk-weighted assets ratio was 16.12%.

President and CEO, Stephen R. Talbert, said, "We are pleased to release our
second quarter earnings. We continue to have success in reducing our levels
of nonperforming assets and decreasing our noninterest expense. I am proud of
our successful $45.8 million private placement. I am grateful to the many
people who helped us through this complicated transaction. We believe the
Company is now positioned for continued success."

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)
                                          June 30,
                                          2014                 2013
Assets:
Cash and due from banks,                  $              $       
noninterest-bearing                       18,342               4,374
Temporary investments                     20,209               39,182
Investment securities                     88,335               93,202
Loans                                     279,437              269,497
Less, allowance for loan losses          (5,153)              (6,398)
 Total loans, net                     274,284              263,099
Premises and equipment, net               11,097               11,542
Other real estate owned                   1,951                1,589
Bank owned life insurance                 11,059               10,710
Other assets                              2,550                3,374
 Total Assets                         $      427,827  $     
                                                               427,072
Liabilities:
Noninterest bearing demand deposits       $              $      
                                          34,657               33,353
Interest-checking deposits                42,466               41,131
Savings and money market deposits         111,385              111,783
Time deposits                             178,504              180,041
 Total deposits                       367,012              366,308
Securities sold under repurchase          45,267               45,939
agreements
Subordinated debt                         7,855                7,855
Other liabilities                         2,914                2,633
 Total Liabilities                    423,048              422,735
Shareholders' Equity:
Preferred stock, no par value            13,179               13,179
Discount on preferred stock              -                    (263)
Common stock, no par value at June 30,
2014,
 $5 par value per share at June 30,     -                    19,479
2013
Additional paid-in capital                32,470               12,991
Retained losses                           (39,157)             (37,830)
Accumulated other comprehensive income    (1,713)              (3,219)
(loss)
 Total Shareholders' Equity           4,779                4,337
 Total Liabilities and Shareholders'  $      427,827  $     
Equity                                                         427,072
Preferred shares authorized               3,000,000            3,000,000
Preferred shares issued and outstanding   13,179               13,179
Unaccrued preferred stock dividend        2,331                1,565
Common shares authorized                  500,000,000          15,000,000
Common shares issued and outstanding      3,895,840            3,895,840
Book value per common share               $             $       
                                          (2.75)              (2.67)



Bank of the Carolinas Corporation
Consolidated Statements of Income
(In Thousands Except Share Data)
(Unaudited)                 Three months ended        Six months ended
                            June 30                   June 30
                            2014           2013       2014           2013
Interest income
 Interest and fees on     $        $       $        $   
loans                       3,235         3,224     6,428         6,440
 Interest on securities   537            497        1,075          1,086
Other interest income       15             25         33             39
 Total interest income  3,787          3,746      7,536          7,565
Interest expense
 Interest on deposits     525            579        1,052          1,200
 Interest on borrowed     564            563        1,121          1,120
funds
 Total interest        1,089          1,142      2,173          2,320
expense
Net interest income         2,698          2,604      5,363          5,245
 Provision for loan       (1,287)        (12)       (225)          (1,158)
losses
 Net interest income
after provision for
 loan losses            3,985          2,616      5,588          6,403
Noninterest income
 Customer service fees    293            291        584            572
 Increase in value of     86             87         171            174
bank owned life insurance
Gains on investment         -              -          -              -
securities
 Other income             5              5          19             3
 Total noninterest      384            383        774            749
income
Noninterest expense
 Salaries and benefits    1,547          1,595      3,137          3,193
 Occupancy and equipment  456            426        928            878
 FDIC insurance           368            369        731            736
assessments
 Data processing expense  267            283        528            552
 Valuation provisions
and net operating costs
associated with foreclosed  (12)           167        27             532
real estate
 Other                    856            881        1,646          1,549
 Total noninterest      3,482          3,721      6,997          7,440
expenses
Income (Loss) before        887            (722)      (635)          (288)
income taxes
 Provision for income     -              341        -              638
taxes
Net income (loss)           $        $       $        $    
                              887        (1,063)     (635)       (926)
 Dividends and accretion   (288)          (243)      (537)          (486)
on preferred stock
Net loss available to       $        $       $        $   
common shareholders           599        (1,306)    (1,172)        (1,412)
Loss per common share:
 Basic                    $        $      $        $    
                             0.15        (0.33)      (0.30)       (0.36)
 Diluted                  $        $      $        $    
                             0.15        (0.33)      (0.30)       (0.36)
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
                                 six months ended June 30
                                 2014               2013           Change*
Average balance sheet data
 Average loans                   $              $  268,747    3.59     %
                                 278,401
 Average earning assets          394,996            391,043        1.01
 Average total assets            427,982            429,698        (0.40)
 Average common shareholders'    (10,081)           (4,472)        125.42
 equity
 Average total shareholders'     3,098              8,707          (64.42)
 equity
Period-end balance sheet data:
 Total loans                     $              $  269,497    3.69     %
                                 279,437
 Allowance for loan losses       (5,153)            (6,398)        (19.46)
 Total assets                    427,827            427,072        0.18
 Total deposits                  367,012            366,308        0.19
 Total common shareholders'      (8,400)            (8,842)        (5.00)
 equity
 Total shareholders' equity      4,779              4,337          10.19
Asset quality indicators
 Net loan charge-offs            $           $           (195.65) %
 (recoveries)                    637               (666)
 Total nonperforming loans       3,865              5,455          (29.15)
 Total nonperforming assets      5,816              7,044          (17.44)
Asset quality ratios
 Net-chargeoffs (recoveries) to  0.46            %  (0.50)      %  96       BP
 average loans **
 Nonperforming loans to total    1.38               2.02           (64)
 loans
 Nonperforming assets to total   1.36               1.64           (29)
 assets
 Nonperforming assets to         2.07               2.60           (53)
 loan-related assets
 Allowance for loan losses to    1.84               2.37           (53)
 total loans
Financial ratios
 Return on average assets **     (0.30)          %  (0.43)      %  13       BP
 Return on average common        (23.44)            (63.67)        4,023
 shareholders' equity **
 Net interest margin **          2.74               2.70           4
Per share amounts available to
common shareholders
 Basic loss per common share     $            $           16.67    %
                                 (0.30)            (0.36)
 Diluted loss per common share   (0.30)             (0.36)         16.67
 Book value per common share     (2.75)             (2.67)         3.11
* 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 June 30
                                  2014             2013             Change*
Average balance sheet data
 Average loans                    $             $   268,947    3.56    %
                                  278,525
 Average earning assets           395,675          391,200          1.14
 Average total assets             430,066          430,190          (0.03)
 Average common shareholders'     (10,144)         (4,385)          131.34
 equity
 Average total shareholders'      3,035            8,794            (65.49)
 equity
Asset quality indicators
 Net loan charge-offs            $          $          662.50  %
                                   671            88
Asset quality ratios
 Net-chargeoffs to average loans  0.97          %  0.13          %  84      BP
 **
Financial ratios
 Return on average assets **      0.83          %  (0.99)        %  182     BP
 Return on average common         23.68            (119.46)         14,314
 shareholders' equity **
 Net interest margin **           2.73             2.67             6
Per share amounts available to
common shareholders
 Basic loss per common share      $          $            144.12  %
                                  0.15            (0.33)
 Diluted loss per common share    0.15             (0.33)           144.12
 Book value per common share      (2.75)           (2.67)           3.11
* BP denotes basis points. N/M denotes not meaningful.
** ratio annualized.



SOURCE Bank of the Carolinas Corporation
 
Press spacebar to pause and continue. Press esc to stop.