Bank of the Carolinas Corporation Reports Fourth Quarter and Year-End Financial Results
MOCKSVILLE, N.C., Feb. 10, 2012 /PRNewswire/ -- Bank of the Carolinas Corporation (Nasdaq: BCAR) today reported financial results for the three- and twelve-month periods ended December 31, 2011.
For the three-month period ended December 31, 2011, the Company reported a net loss available to common shareholders of $8.8 million as compared to a net loss of $2.5 million for the fourth quarter of 2010. The net loss per common share was $2.26 for the fourth quarter of 2011 compared with a net loss per share of $0.65 for the fourth quarter of 2010.
For the year ended December 31, 2011, the Company reported a net loss available to common shareholders of $29.2 million, or $7.49 per common share, compared to a net loss of $3.6 million, or $0.92 per common share, for the year ended December 31, 2010.
Fourth quarter and year-end results were negatively impacted by elevated levels of loan loss provisions and expenses related to foreclosed real estate as the Bank continues to aggressively work on reducing problem assets. The provision for loan losses totaled $3.0 million in the fourth quarter of 2011 as compared to $3.6 million in the fourth quarter a year ago. Costs related to foreclosed real estate were $1.2 million for the fourth quarter of 2011 as compared to $768,000 in the fourth quarter of 2010. For the full year of 2011, total credit-related costs totaled $22.8 million, or an 175.5% increase over the previous year's costs of $8.3 million.
In addition, as of year-end the Company updated its evaluation of the likelihood of realization of a net deferred tax asset that had arisen principally as a result of operating losses incurred during the last four years. Based upon that evaluation, the Company determined that it is unlikely that any significant realization of any portion of the net deferred tax asset is likely to occur within a timeframe that would support a decision to continue to include a net deferred tax asset in the Company's consolidated balance sheet. Accordingly, the Company recorded a provision for income taxes of $3.5 million during the fourth quarter to reduce the carrying value of the Company's net deferred tax asset to zero, increasing the total provision for income taxes for the full year to $4.5 million.
The Company had significant improvement in the level of nonperforming assets for the third consecutive quarter as they decreased to $27.6 million or 5.68% of total assets at December 31, 2011 down from $33.0 million at December 31, 2010. The Company continued to build its allowance for loan losses in the fourth quarter bringing it to 2.63% of total loans as of December 31, 2011 as compared to 1.87% as of December 31, 2010. Net loan charge-offs amounted to $3.6 million for the fourth quarter of 2011 as compared to $3.1 million in the fourth quarter of 2010.
The Company's net interest margin was 2.79% in the fourth quarter of 2011, which is a decrease from 3.12% in the fourth quarter in 2010. Noninterest expense year to date, excluding the costs related to foreclosed real estate, increased 8.5% in 2011 versus 2010. The increase year over year was mainly driven by increased FDIC premiums, legal expenses, and costs related to the Company's compliance with the regulatory consent order put in place in the second quarter of 2011. Noninterest expense, excluding the costs related to foreclosed real estate, was reduced by 16.4% in the fourth quarter of 2011 versus 2010.
Total assets at December 31, 2011 amounted to $486.0 million, a decrease of 9.2% when compared to $535.0 million as of December 31, 2010. Loans totaled $307.9 million at December 31, 2011, a decline of 15.9% from a year earlier, and deposits increased 0.01% over the prior year to $416.2 million.
The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to risk-weighted assets ratio of 4.09% and 5.66% respectively, while its total capital to risk-weighted assets ratio was 6.92% as of December 31, 2011.
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".
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, |
|||||
2011 |
2010 |
||||
Assets: |
(Unaudited) |
* |
|||
Cash and due from banks, noninterest-bearing |
$ 5,044 |
$ 4,303 |
|||
Temporary investments |
30,722 |
15,592 |
|||
Investment securities |
112,404 |
110,373 |
|||
Loans |
307,907 |
366,153 |
|||
Less, allowance for loan losses |
(8,101) |
(6,863) |
|||
Total loans, net |
299,806 |
359,290 |
|||
Premises and equipment, net |
12,229 |
13,106 |
|||
Other real estate owned |
8,524 |
8,314 |
|||
Bank owned life insurance |
10,732 |
10,371 |
|||
Other assets |
6,506 |
13,621 |
|||
Total Assets |
$ 485,967 |
$ 534,970 |
|||
Liabilities: |
|||||
Noninterest bearing demand deposits |
$ 34,034 |
$ 33,730 |
|||
Interest-checking deposits |
37,306 |
34,004 |
|||
Savings and money market deposits |
106,308 |
114,923 |
|||
Time deposits |
238,565 |
233,512 |
|||
Total deposits |
416,213 |
416,169 |
|||
Securities sold under repurchase agreements |
45,381 |
45,603 |
|||
Federal Home Loan Bank advances |
- |
22,000 |
|||
Subordinated debt |
7,855 |
7,855 |
|||
Other liabilities |
2,485 |
1,639 |
|||
Total Liabilities |
471,934 |
493,266 |
|||
Shareholders' Equity: |
|||||
Preferred stock, no par value |
13,179 |
13,179 |
|||
Discount on preferred stock |
(716) |
(991) |
|||
Common stock, $5 par value per share |
19,479 |
19,486 |
|||
Additional paid-in capital |
12,991 |
12,988 |
|||
Retained earnings (loss) |
(32,453) |
(3,268) |
|||
Accumulated other comprehensive income |
1,553 |
310 |
|||
Total Shareholders' Equity |
14,033 |
41,704 |
|||
Total Liabilities and Shareholders' Equity |
$ 485,967 |
$ 534,970 |
|||
Preferred shares authorized |
3,000,000 |
3,000,000 |
|||
Preferred shares issued and outstanding |
13,179 |
13,179 |
|||
Common shares authorized |
15,000,000 |
15,000,000 |
|||
Common shares issued and outstanding |
3,895,840 |
3,897,174 |
|||
Book value per common share |
$ 0.22 |
$ 7.32 |
|||
* 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 |
||||||||
2011 |
2010 |
2011 |
2010 |
||||||
Interest income |
(Unaudited) |
* |
(Unaudited) |
* |
|||||
Interest and fees on loans |
$ 3,983 |
$ 4,914 |
$ 17,398 |
$ 20,723 |
|||||
Interest on securities |
753 |
711 |
3,175 |
3,318 |
|||||
Other interest income |
17 |
8 |
59 |
53 |
|||||
Total interest income |
4,753 |
5,633 |
20,632 |
24,094 |
|||||
Interest expense |
|||||||||
Interest on deposits |
982 |
1,197 |
4,387 |
5,036 |
|||||
Interest on borrowed funds |
578 |
627 |
2,653 |
2,624 |
|||||
Total interest expense |
1,560 |
1,824 |
7,040 |
7,660 |
|||||
Net interest income |
3,193 |
3,809 |
13,592 |
16,434 |
|||||
Provision for loan losses |
2,998 |
3,581 |
17,565 |
6,441 |
|||||
Net interest income after provision for |
|||||||||
loan losses |
195 |
228 |
(3,973) |
9,993 |
|||||
Noninterest income |
|||||||||
Customer service fees |
299 |
342 |
1,250 |
1,303 |
|||||
Increase in value of bank owned life insurance |
92 |
91 |
361 |
361 |
|||||
Gains on investment securities |
(397) |
(24) |
(391) |
344 |
|||||
Other income (loss) |
3 |
24 |
19 |
29 |
|||||
Total noninterest income |
(3) |
433 |
1,239 |
2,037 |
|||||
Noninterest expense |
|||||||||
Salaries and benefits |
1,737 |
1,559 |
6,684 |
6,959 |
|||||
Occupancy and equipment |
503 |
573 |
2,074 |
2,238 |
|||||
FDIC insurance assessments |
567 |
258 |
1,516 |
975 |
|||||
Data processing expense |
231 |
214 |
885 |
821 |
|||||
Valuation provisions and net operating costs |
|||||||||
associated with foreclosed real estate |
1,172 |
768 |
5,222 |
1,829 |
|||||
Other |
1,002 |
866 |
4,593 |
3,526 |
|||||
Total noninterest expenses |
5,212 |
4,238 |
20,974 |
16,348 |
|||||
Loss before income taxes |
(5,020) |
(3,577) |
(23,708) |
(4,318) |
|||||
Provision for income taxes |
3,547 |
(1,263) |
4,543 |
(1,663) |
|||||
Net loss |
$ (8,567) |
$ (2,314) |
$ (28,251) |
$ (2,655) |
|||||
Dividends and accretion on preferred stock |
(236) |
(231) |
(934) |
(914) |
|||||
Net loss available to common shareholders |
$ (8,803) |
$ (2,545) |
$ (29,185) |
$ (3,569) |
|||||
Loss per common share: |
|||||||||
Basic |
$ (2.26) |
$ (0.65) |
$ (7.49) |
$ (0.92) |
|||||
Diluted |
$ (2.26) |
$ (0.65) |
$ (7.49) |
$ (0.92) |
|||||
Weighted Average Common Shares Outstanding: |
|||||||||
Basic |
3,895,840 |
3,897,174 |
3,896,428 |
3,897,174 |
|||||
Diluted |
3,895,840 |
3,897,174 |
3,896,428 |
3,897,174 |
|||||
* 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 |
||||||||||||
2011 |
2010 |
Change* |
||||||||||
Average balance sheet data |
||||||||||||
Average loans |
$ 341,459 |
$ 373,156 |
(8.49) |
% |
||||||||
Average earning assets |
475,297 |
504,582 |
(5.80) |
|||||||||
Average total assets |
524,196 |
553,639 |
(5.32) |
|||||||||
Average common shareholders' equity |
18,679 |
32,494 |
(42.52) |
|||||||||
Average total shareholders' equity |
31,858 |
45,673 |
(30.25) |
|||||||||
Period-end balance sheet data: |
||||||||||||
Total loans |
$ 307,907 |
$ 366,153 |
(15.91) |
% |
||||||||
Allowance for loan losses |
(8,101) |
(6,863) |
18.04 |
|||||||||
Total assets |
485,967 |
534,970 |
(9.16) |
|||||||||
Total deposits |
416,213 |
416,169 |
0.01 |
|||||||||
Total common shareholders' equity |
854 |
28,525 |
(97.01) |
|||||||||
Total shareholders' equity |
14,033 |
41,704 |
(66.35) |
|||||||||
Asset quality indicators |
||||||||||||
Net loan charge-offs |
$ 16,327 |
$ 7,745 |
110.80 |
% |
||||||||
Total nonperforming loans |
19,062 |
24,690 |
(22.80) |
|||||||||
Total nonperforming assets |
27,585 |
33,004 |
(16.42) |
|||||||||
Asset quality ratios |
||||||||||||
Net-chargeoffs (recoveries) to average loans ** |
4.78 |
% |
2.08 |
% |
270 |
BP |
||||||
Nonperforming loans to total loans |
6.19 |
6.74 |
(55) |
|||||||||
Nonperforming assets to total assets |
5.68 |
6.17 |
(49) |
|||||||||
Nonperforming assets to loan-related assets |
8.72 |
8.81 |
(10) |
|||||||||
Allowance for loan losses to total loans |
2.63 |
1.87 |
76 |
|||||||||
Financial ratios |
||||||||||||
Return on average assets ** |
(5.39) |
% |
(0.48) |
% |
(491) |
BP |
||||||
Return on average common shareholders' equity ** |
(156.25) |
(10.98) |
(14,527) |
|||||||||
Net interest margin ** |
2.86 |
3.26 |
(40) |
|||||||||
Per share amounts available to common shareholders |
||||||||||||
Basic earnings (loss) per common share |
$ (7.49) |
$ (0.92) |
(714.13) |
% |
||||||||
Diluted earnings (loss) per common share |
(7.49) |
(0.92) |
(714.13) |
|||||||||
Book value per common share |
0.22 |
7.32 |
(97.01) |
|||||||||
* bps denotes basis points. |
||||||||||||
** ratio annualized. |
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Bank of the Carolinas Corporation |
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Other Financial Data (continued) |
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(Dollars in thousands except per share amounts) |
||||||||||||
As of or for the |
||||||||||||
three months ended December 31 |
||||||||||||
2011 |
2010 |
Change* |
||||||||||
Average balance sheet data |
||||||||||||
Average loans |
$ 313,836 |
$ 366,658 |
(14.41) |
% |
||||||||
Average earning assets |
453,976 |
484,401 |
(6.28) |
|||||||||
Average total assets |
501,894 |
535,968 |
(6.36) |
|||||||||
Average common shareholders' equity |
8,163 |
32,494 |
(74.88) |
|||||||||
Average total shareholders' equity |
21,342 |
45,673 |
(53.27) |
|||||||||
Asset quality indicators |
||||||||||||
Net loan charge-offs |
$ 3,588 |
$ 3,061 |
17.23 |
% |
||||||||
Asset quality ratios |
||||||||||||
Net-chargeoffs (recoveries) to average loans ** |
4.54 |
% |
3.31 |
% |
123 |
BP |
||||||
Financial ratios |
||||||||||||
Return on average assets ** |
(6.77) |
% |
(1.71) |
% |
(506) |
BP |
||||||
Return on average common shareholders' equity ** |
(427.84) |
(31.07) |
(39,677) |
|||||||||
Net interest margin ** |
2.79 |
3.12 |
(33) |
|||||||||
Per share amounts available to common shareholders |
||||||||||||
Basic earnings (loss) per common share |
$ (2.26) |
$ (0.65) |
(247.69) |
% |
||||||||
Diluted earnings (loss) per common share |
(2.26) |
(0.65) |
(247.69) |
|||||||||
Book value per common share |
0.22 |
7.32 |
(97.01) |
|||||||||
* bps denotes basis points. |
||||||||||||
** ratio annualized. |
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SOURCE Bank of the Carolinas Corporation
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