MOCKSVILLE, N.C., April 18 /PRNewswire-FirstCall/ -- Bank of the Carolinas Corporation , today reported financial results for the three months ended March 31, 2008.
For the three month period ended March 31, 2008, the Company reported a net loss of $5,000, as compared to net income of $780,000 in the first quarter of 2007. Diluted earnings per share were $0.00 for the first quarter compared to $0.20 per diluted share for the same period in 2007. First quarter results were significantly affected by the further compression of the Company's net interest margin, increased provision for loan losses and higher levels of non-interest expense versus the year ago period.
For the three months ended March 31, 2008, the Company's net interest margin declined to 2.77% compared to 3.31% for the first quarter of 2007. This decrease was due to the Federal Reserve's aggressive rate cuts during the quarter which led to a 200 basis point drop in the prime rate. Since a significant portion of the Company's loan portfolio adjusts with prime, rapidly declining rates have a negative impact on the Company's margin in the near term. Non-interest income for 2008 grew 5.4%; while non-interest expense rose $594,000 or 21.3% over the year ago quarter. Non-interest expense for the current quarter was impacted by the addition of two full service offices opened during 2007. The Company implemented cost savings measures during the last quarter of 2007 and is committed to controlling non-interest expense during 2008.
The provision for loan losses totaled $314,000 for the quarter versus $62,000 in 2007. The allowance for loan losses was 1.07% of total loans as of March 31, 2008 and annualized net charge-offs were 0.21% of average loans outstanding. Non-performing assets stood at 2.09% of assets as of March 31, 2008, compared to 1.92% three months earlier and 0.72% a year ago. Included in non-performing assets at March 31, 2008, was a $4.9 million credit which has a 75% USDA guarantee.
Total assets at March 31, 2008 amounted to $513.4 million, an increase of 8.6% when compared to the prior year amount of $472.8 million. Net loans increased 13.6% over the prior year to $401.1 million while deposits grew to $427.4 million, a 5.0% increase over the prior year. The Company remains well capitalized and raised an additional $5 million of capital during the quarter through trust preferred securities financing, which is included in Tier 1 capital.
Bank of the Carolinas Corporation is the holding company for Bank of the Carolinas, a state chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Cleveland, Concord, Harrisburg, King, Landis, Lexington and Winston-Salem. Common stock of the Company is traded on the NASDAQ Global Market under the symbol BCAR.
This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Bank of the Carolinas Corporation undertakes no obligation to revise these statements following the date of this press release.
For further information contact: Eric E. Rhodes Chief Financial Officer Bank of the Carolinas Corporation (336) 751-5755 Bank of the Carolinas Corporation Consolidated Balance Sheets (In Thousands Except Share Data) (Unaudited) March 31, 2008 2007 Assets Cash and Due from Banks $ 7,909 $ 5,594 Interest-Bearing Deposits in Banks 5,049 100 Federal Funds Sold 3,541 27,467 Securities Available for Sale 61,727 58,452 Loans 405,440 356,948 Less, Allowance for Loan Losses (4,355) (3,735) Total Loans, Net 401,085 353,213 Properties and Equipment 14,251 11,391 Other Assets 19,795 16,626 Total Assets $ 513,357 $ 472,843 Liabilities Non-interest Bearing Demand Deposits $ 30,589 $ 29,603 Interest Bearing Demand Deposits 57,518 64,377 Savings Deposits 26,340 11,428 Time Deposits 312,948 301,808 Total Deposits 427,395 407,216 Borrowings 43,155 23,000 Retail Repurchase Agreements 554 994 Other Liabilities 1,831 3,191 Total Liabilities 472,935 434,401 Shareholders' Equity Common Stock, Par Value $5 Per Share: Authorized 15,000,000 Shares; Issued 3,920,752 Shares in 2008 and 3,831,692 Shares in 2007 19,604 19,158 Additional Paid-In Capital 11,721 11,471 Retained Earnings 8,275 7,881 Accumulated Other Comprehensive Income (Loss) 822 (68) Total Shareholders' Equity 40,422 38,442 Total Liabilities and Shareholders' Equity $ 513,357 $ 472,843 Bank of the Carolinas Corporation Consolidated Statements of Income (In Thousands Except Share and Per Share Data) (Unaudited) Three Months Ended March 31, 2008 2007 Interest Income Interest and Fees on Loans $ 7,091 $ 7,309 Interest on Securities 726 614 Federal Funds Sold 76 177 Deposits in Other Banks 4 4 Total Interest Income 7,897 8,104 Interest Expense Deposits 4,386 4,250 Borrowed Funds 273 285 Total Interest Expense 4,659 4,535 Net Interest Income 3,238 3,569 Provision for Loan Losses 314 62 Net Interest Income After Provision for Loan Losses 2,924 3,507 Other Income Customer Service Fees 293 236 Mortgage Loan Broker Fees 36 31 Investment Services 9 43 Income from Bank Owned Life Insurance 88 82 Other Income 26 37 Total Other Income 452 429 Noninterest Expense Salaries and Benefits 1,894 1,517 Occupancy and Equipment 499 418 Other Noninterest Expense 988 852 Total Noninterest Expense 3,381 2,787 Income (Loss) Before Income Taxes (5) 1,149 Income Taxes - 369 Net Income (Loss) $ (5) $ 780 Earnings Per Share Basic $ - $ 0.20 Diluted $ - $ 0.20 Weighted Average Shares Outstanding Basic 3,920,752 3,826,706 Diluted 3,977,182 3,949,095 Bank of the Carolinas Corporation Performance Ratios As of or for the Three Months Ended March 31, 2008 2007 Change* Financial Ratios Return On Average Assets ** 0.00% 0.69% (69)BP Return On Average Shareholders' Equity ** -0.05% 8.27% (832) Net Interest Margin ** 2.77% 3.31% (54) Asset Quality Ratios Net-chargeoffs to Average Loans ** 0.21% 0.07% 14 BP Nonperforming Loans To Total Loans 2.07% 0.70% 137 Nonperforming Assets To Total Assets 2.09% 0.72% 137 Allowance For Loan Losses To Total Loans 1.07% 1.05% 2 * BP denotes basis points. ** Ratio annualized.
