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

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, noninterest-bearing


$     12,778


$       5,942


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 (loss)


(3,290)


583


     Total Shareholders' Equity


4,780


8,458


     Total Liabilities and Shareholders' Equity


$    426,682


$    436,785








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 on loans


$    3,274


$    3,398


$   12,978


$   14,303


   Interest on securities


550


626


2,156


2,669


 Other interest income


18


18


74


77


     Total interest income


3,842


4,042


15,208


17,049


Interest expense










   Interest on deposits


540


695


2,301


3,225


   Interest on borrowed funds


570


570


2,259


2,268


      Total interest expense


1,110


1,265


4,560


5,493


Net interest income


2,732


2,777


10,648


11,556


   Provision for loan losses


39


(637)


(2,039)


2,359


   Net interest income after provision for










     loan losses


2,693


3,414


12,687


9,197


Noninterest income










   Customer service fees


292


309


1,149


1,176


   Increase in value of bank owned life insurance


89


89


352


774


  Gains on investment securities


-


43


-


2,190


   Other income


19


8


28


28


     Total noninterest income


400


449


1,529


4,168


Noninterest expense










   Salaries and benefits


1,633


1,611


6,437


6,877


   Occupancy and equipment


450


452


1,787


1,903


   FDIC insurance assessments


363


375


1,459


1,600


   Data processing expense


245


252


1,054


989


   Valuation provisions and net operating costs










associated with foreclosed real estate


134


2


810


2,417


   Other


785


787


3,082


4,158


     Total noninterest expenses


3,610


3,479


14,629


17,944


Income (Loss) before income taxes


(517)


384


(413)


(4,579)


   Provision for income taxes


-


(409)


-


-


Net income (loss)


$      (517)


$       793


$      (413)


$   (4,579)


  Dividends and accretion on preferred stock


(247)


(242)


(978)


(956)


Net loss available to common shareholders


$      (764)


$       551


$   (1,391)


$   (5,535)












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' equity


(5,817)



(2,691)



116.16




Average total shareholders' equity


7,362



10,488



(29.81)















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' equity


(8,399)



(4,721)



77.91




Total shareholders' equity


4,780



8,458



(43.49)















Asset quality indicators












Net loan charge-offs (recoveries)


$    (1,164)



$     3,570



(132.60)

%



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 average loans **


(0.43)

%


1.24

%


(167)

BP



Nonperforming loans to total loans


1.72



2.86



(114)




Nonperforming assets to total assets


1.41



2.91



(150)




Nonperforming assets to loan-related assets


2.15



4.62



(246)




Allowance for loan losses to total loans


2.16



2.55



(39)















Financial ratios












Return on average assets **


(0.10)

%


(0.99)

%


89

BP



Return on average common shareholders' equity **


 N/M 



 N/M 



 N/M 




Net interest margin **


2.72



2.72



-















Per share amounts available to common shareholders












Basic loss per common share


$      (0.36)



$      (1.42)



74.65

%



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' equity


(7,129)



(4,670)



52.63





Average total shareholders' equity


6,050



8,509



(28.89)


















Asset quality indicators













Net loan charge-offs 


$        239



$         (77)



(411.02)

%

















Asset quality ratios













Net-chargeoffs to average loans **


0.34

%


(0.11)

%


45

BP

















Financial ratios













Return on average assets **


(0.48)

%


0.72

%


(120)

BP




Return on average common shareholders' equity **


 N/M 



 N/M 



 N/M 





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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