Bank of the Carolinas Corporation Reports First Quarter Financial Results

MOCKSVILLE, N.C., May 17 /PRNewswire-FirstCall/ -- Bank of the Carolinas Corporation (Nasdaq: BCAR) reported today financial results for the three month period ended March 31, 2010.

For the three month period ended March 31, 2010, the Company reported a net loss of $235,000, as compared to a net loss of $655,000 in the first quarter of 2009.  The net loss available to common shareholders for the three months ended March 31, 2010 was $462,000, or $0.12 per common share, compared to a net loss of $0.17 per common share for the first quarter of 2009.

The economic downturn, which began in late 2007, continues to adversely affect the Company's operating results manifested by increased loan loss provisions and costs associated with foreclosed real estate. These costs have been partially mitigated in the first quarter of 2010 by improved net interest margins driven by lower funding costs.  Net interest income totaled $4.2 million in the first quarter of 2010, a 32.3% increase from the comparable 2009 quarter.  The net interest margin in the first quarter of 2010 increased to 3.17%, compared to 2.38% in 2009.

As of March 31, 2010, the Company's other real estate owned and nonaccrual loans totaled $20.8 million and amounted to 3.64% of total assets.  These levels of nonperforming assets compares to nonperforming assets totaling $17.5 million, or 2.86% of total assets as of December 31, 2009 and $15.9 million, or 2.65% of total assets at March 31, 2009.

The provision for loan losses totaled $916,000 for the quarter ended March 31, 2010, an increase of 30.9% from the provision of $700,000 for the first quarter of 2009.  The allowance for loan losses was 1.85% of total loans as of March 31, 2010, and net charge-offs for the current quarter represented an annualized percentage of 2.14% of average loans outstanding.    

Noninterest expenses totaled $4.2 million for the first quarter of 2010, an increase of 9.7% from the comparable quarter of 2009.  The most significant drivers in the cost increase for 2010 were significantly higher costs related to ownership and disposal of other real estate and increased salaries and benefits from bringing our special asset functions in-house.  Offsetting a portion of the above described increases in 2010 noninterest expenses were reductions in professional services, data processing services, and advertising.  Noninterest income, exclusive of securities gains, remains relatively flat for the first quarter compared to 2009.  

Total assets at March 31, 2010 amounted to $570.7 million, a decrease of 6.5% when compared to the $610.4 million as of December 31, 2009 and a decrease of 5.0% when compared to $600.6 million as of March 31, 2009.  The decrease in assets was a planned strategy by the Company to improve its net interest margin and capital ratios.  Loans totaled $380.9 million at March 31, 2010, a decline of 6.3% from a year earlier, and deposits fell 8.3% over the prior year to $445.1 million.

The Company continues to be well-capitalized with a Tier 1 leverage ratio of 7.87%, a Tier 1 capital to risk-weighted assets ratio of 10.07% and a total capital to risk-weighted assets ratio of 11.92% as of March 31, 2010.

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.  The common stock of the Company is traded on the NASDAQ Global Market under the symbol "BCAR".

DISCLOSURES ABOUT FORWARD LOOKING STATEMENTS

This press release may contain statements relating to our financial condition, results of operations, plans, strategies, 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.  Those statements, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements may be identified by terms such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "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.  Forward-looking information is inherently subject to risks and uncertainties, and our actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk 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 Commission's website at www.sec.gov.  Other factors that could influence the accuracy of forward-looking statements include, but are not limited to, (a) pressures on the earnings, capital and liquidity of financial institutions resulting from current and future adverse conditions in the credit and equity markets and the banking industry in general; (b) changes in competitive pressures among depository and other financial institutions or in our ability to compete successfully against the larger financial institutions in our banking markets; (c) the financial success or changing strategies of our customers; (d) actions of government regulators, or changes in laws, regulations or accounting standards, that adversely affect our business; (e) changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the volumes and values of loans we make and securities we hold; (f) changes in general economic or business conditions and real estate values in our banking markets (particularly changes that affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral); and (g) other developments or changes in our business that we do not expect.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  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 we do not intend, to update these forward-looking statements.

SOURCE Bank of the Carolinas Corporation