Bank of the Carolinas Corporation Reports Third Quarter Financial Results
MOCKSVILLE, N.C., Oct. 28 /PRNewswire-FirstCall/ -- Bank of the Carolinas Corporation (Nasdaq: BCAR) today reported financial results for the three- and nine-month periods ended September 30, 2010.
For the three-month period ended September 30, 2010, the Company reported a net income of $82,000, as compared to a net income of $782,000 in the third quarter of 2009. Excluding the effect of one-time gains on sale of the securities in the periods, the current year quarter would have been an improvement over the previous year. On a linked quarterly basis, net income of $82,000 in the third quarter of 2010 compares to net losses of $188,000 and $235,000 in the second and first quarters of 2010, respectively. After payment of dividends on preferred stock, the net loss available to common shareholders for the three months ended September 30, 2010 was $147,000, or $0.04 per common share, compared to a net income of $470,000, or $0.12 per common share, for the third quarter of 2009.
For the nine-month period ended September 30, 2010, the Company reported a net loss of $341,000, as compared to a net loss of $1,352,000 for the nine-month period of 2009. The net loss available to common shareholders for the nine months ended September 30, 2010 was $1,024,000, or $0.26 per common share, compared to a net loss of $1,763,000, or $0.45 per common share, for the nine month period of 2009.
The improvement in year-to-date 2010 results versus the previous year was driven by stronger core operating results which helped offset increased provisions for loan losses. Operating results have improved due to both an increased net interest margin and reductions in noninterest expenses. The Company's year-to-date net interest margin increased to 3.30% in 2010 as compared to 2.43% in the previous year. Noninterest expense has been reduced throughout 2010, decreasing from $4.2 million in the first quarter to $3.8 million in the third quarter of 2010.
As of September 30, 2010, the Company's nonperforming assets totaled $20.2 million and amounted to 3.77% of total assets, compared to total nonperforming assets of $17.5 million, or 2.86% of total assets, as of December 31, 2009, and $15.5 million, or 2.33% of total assets at September 30, 2009.
For the nine-month period ended September 30, 2010, the loan loss provision totaled $2,860,000, an increase of 16.0% from the $2,466,000 recorded in the same period 2009. The allowance for loan losses was 1.73% of total loans as of September 30, 2010, and net charge-offs for the nine-month period represented an annualized percentage of 1.67% of average loans outstanding.
Total assets at September 30, 2010 amounted to $535.5 million, a decrease of 12.3% when compared to the $610.4 million as of December 31, 2009 and a decrease of 19.4% when compared to $664.1 million as of September 30, 2009. The decrease in assets has been a successful strategic decision by the Company to improve its net interest margin and capital ratios. Loans totaled $367.0 million at September 30, 2010, a decline of 6.3% from a year earlier, and deposits fell 23.9% over the prior year to $415.0 million.
The Company continues to be well capitalized with a Tier 1 leverage ratio of 8.57% and a total capital to risk-weighted assets ratio of 12.43% as of September 30, 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".
For further information contact: |
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Eric E. Rhodes |
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Chief Financial Officer |
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Bank of the Carolinas |
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(336) 998-1799 x 220 |
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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 |
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Consolidated Balance Sheets |
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(In Thousands Except Share Data) |
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(Unaudited) |
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September 30, |
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2010 |
2009 |
|||
Assets: |
||||
Cash and due from banks, noninterest-bearing |
$ 11,690 |
$ 44,519 |
||
Temporary investments |
5,557 |
24,136 |
||
Investment securities |
113,021 |
165,499 |
||
Loans |
367,021 |
391,592 |
||
Less, allowance for loan losses |
(6,342) |
(6,197) |
||
Total loans, net |
360,679 |
385,395 |
||
Premises and equipment, net |
13,370 |
14,289 |
||
Other real estate owned |
8,571 |
8,471 |
||
Bank owned life insurance |
10,280 |
9,917 |
||
Other assets |
12,321 |
11,875 |
||
Total Assets |
$ 535,489 |
$ 664,101 |
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Liabilities: |
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Noninterest bearing demand deposits |
$ 35,531 |
$ 38,139 |
||
Interest-checking deposits |
32,768 |
31,529 |
||
Savings and money market deposits |
126,782 |
275,749 |
||
Time deposits |
219,877 |
199,827 |
||
Total deposits |
414,958 |
545,244 |
||
Securities sold under repurchase agreements |
45,870 |
46,358 |
||
Federal Home Loan Bank advances |
20,000 |
15,000 |
||
Subordinated debt |
7,855 |
7,855 |
||
Other liabilities |
1,509 |
1,651 |
||
Total Liabilities |
490,192 |
616,108 |
||
Shareholders' Equity: |
||||
Preferred stock, no par value |
13,179 |
13,179 |
||
Discount on preferred stock |
(1,056) |
(1,306) |
||
Common stock, $5 par value per share |
19,486 |
19,486 |
||
Additional paid-in capital |
12,989 |
12,972 |
||
Retained earnings (loss) |
(724) |
2,304 |
||
Accumulated other comprehensive income |
1,423 |
1,358 |
||
Total Shareholders' Equity |
45,297 |
47,993 |
||
Total Liabilities and Shareholders' Equity |
$ 535,489 |
$ 664,101 |
||
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 |
3,897,174 |
3,897,174 |
||
Book value per common share |
$ 8.24 |
$ 8.93 |
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Bank of the Carolinas Corporation |
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Consolidated Statements of Income |
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(In Thousands Except Share Data) |
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(Unaudited) |
Three months ended |
Nine months ended |
||||||
September 30 |
September 30 |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Interest income |
||||||||
Interest and fees on loans |
$ 5,102 |
$ 5,875 |
$ 15,809 |
$ 17,904 |
||||
Interest on securities |
822 |
1,641 |
2,607 |
4,539 |
||||
Other interest income |
12 |
13 |
45 |
56 |
||||
Total interest income |
5,936 |
7,529 |
18,461 |
22,499 |
||||
Interest expense |
||||||||
Interest on deposits |
1,181 |
2,657 |
3,839 |
9,843 |
||||
Interest on borrowed funds |
641 |
776 |
1,997 |
2,364 |
||||
Total interest expense |
1,822 |
3,433 |
5,836 |
12,207 |
||||
Net interest income |
4,114 |
4,096 |
12,625 |
10,292 |
||||
Provision for loan losses |
858 |
1,046 |
2,860 |
2,466 |
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Net interest income after provision for |
||||||||
loan losses |
3,256 |
3,050 |
9,765 |
7,826 |
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Noninterest income |
||||||||
Customer service fees |
316 |
369 |
961 |
1,019 |
||||
Increase in value of banked owned life insurance |
91 |
92 |
270 |
272 |
||||
Gains on sale of investment securities |
178 |
1,246 |
368 |
1,341 |
||||
Other income |
4 |
8 |
5 |
31 |
||||
Total noninterest income |
589 |
1,715 |
1,604 |
2,663 |
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Noninterest expense |
||||||||
Salaries and benefits |
1,686 |
1,611 |
5,400 |
4,959 |
||||
Occupancy and equipment |
537 |
553 |
1,665 |
1,647 |
||||
FDIC insurance assessments |
155 |
217 |
717 |
932 |
||||
Data processing expense |
210 |
330 |
607 |
785 |
||||
Valuation provisions and net operating costs |
||||||||
associated with foreclosed real estate |
349 |
297 |
1,061 |
1,759 |
||||
Other |
857 |
838 |
2,660 |
2,735 |
||||
Total noninterest expenses |
3,794 |
3,846 |
12,110 |
12,817 |
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Income (loss) before income taxes |
51 |
919 |
(741) |
(2,328) |
||||
Provision for income taxes |
(31) |
137 |
(400) |
(976) |
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Net income (loss) |
$ 82 |
$ 782 |
$ (341) |
$ (1,352) |
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Dividends and accretion on preferred stock |
(229) |
(312) |
(683) |
(411) |
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Net income (loss) available to common shareholders |
$ (147) |
$ 470 |
$ (1,024) |
$ (1,763) |
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Loss per common share: |
||||||||
Basic |
$ (0.04) |
$ 0.12 |
$ (0.26) |
$ (0.45) |
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Diluted |
$ (0.04) |
$ 0.12 |
$ (0.26) |
$ (0.45) |
||||
Weighted Average Common Shares Outstanding: |
||||||||
Basic |
3,897,174 |
3,897,174 |
3,897,174 |
3,893,350 |
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Diluted |
3,897,174 |
3,901,735 |
3,897,174 |
3,893,350 |
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Bank of the Carolinas Corporation |
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Other Financial Data |
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(Dollars in thousands except per share amounts) |
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As of or for the |
As of or for the |
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three months ended September 30 |
nine months ended September 30 |
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2010 |
2009 |
Change* |
2010 |
2009 |
Change* |
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Average balance sheet data |
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Average loans |
$ 367,820 |
$ 399,173 |
(7.85) |
% |
$ 375,346 |
$ 404,860 |
(7.29) |
% |
||||||||||||
Average earning assets |
486,638 |
594,599 |
(18.16) |
511,383 |
566,571 |
(9.74) |
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Average total assets |
537,258 |
669,202 |
(19.72) |
559,594 |
618,918 |
(9.59) |
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Average common shareholders' equity |
32,703 |
42,907 |
(23.78) |
32,494 |
35,946 |
(9.60) |
||||||||||||||
Average total shareholders' equity |
45,882 |
56,086 |
(18.19) |
45,673 |
44,008 |
3.78 |
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Period-end balance sheet data: |
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Total loans |
$ 367,021 |
$ 391,592 |
(6.27) |
% |
||||||||||||||||
Allowance for loan losses |
(6,342) |
(6,197) |
2.34 |
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Total assets |
535,489 |
664,101 |
(19.37) |
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Total deposits |
414,958 |
545,244 |
(23.89) |
|||||||||||||||||
Total common shareholders' equity |
32,118 |
34,814 |
(7.74) |
|||||||||||||||||
Total shareholders' equity |
45,297 |
47,993 |
(5.62) |
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Asset quality indicators |
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Net loan charge-offs |
$ 1,695 |
$ 1,563 |
n/m |
% |
$ 4,685 |
$ 2,577 |
81.78 |
% |
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Total nonperforming loans |
11,634 |
7,021 |
65.70 |
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Total nonperforming assets |
20,205 |
15,492 |
30.42 |
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Asset quality ratios |
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Net-chargeoffs (recoveries) to average loans ** |
1.83 |
% |
1.55 |
% |
28 |
BP |
1.67 |
% |
0.85 |
% |
82 |
BP |
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Nonperforming loans to total loans |
3.17 |
1.79 |
138 |
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Nonperforming assets to total assets |
3.77 |
2.33 |
144 |
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Nonperforming assets to loan-related assets |
5.38 |
3.87 |
151 |
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Allowance for loan losses to total loans |
1.73 |
1.58 |
15 |
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Financial ratios |
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Return on average assets ** |
0.06 |
% |
0.46 |
% |
(40) |
BP |
(0.08) |
% |
(0.29) |
% |
21 |
BP |
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Return on average common shareholders' equity ** |
(1.78) |
(2.88) |
110 |
(4.21) |
(6.76) |
255 |
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Net interest margin ** |
3.35 |
2.73 |
62 |
3.30 |
2.43 |
87 |
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Per share amounts available to common shareholders |
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Basic earnings (loss) per common share |
$ (0.04) |
$ 0.12 |
133.33 |
% |
$ (0.26) |
$ (0.45) |
42.22 |
% |
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Diluted earnings (loss) per common share |
(0.04) |
0.12 |
133.33 |
(0.26) |
(0.45) |
42.22 |
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Book value per common share |
8.24 |
8.93 |
(7.74) |
8.24 |
8.93 |
(7.74) |
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* bps denotes basis points. |
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** ratio annualized. |
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SOURCE Bank of the Carolinas Corporation
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