MOCKSVILLE, N.C., May 11 /PRNewswire-FirstCall/ -- Bank of the Carolinas Corporation , today reported financial results for the three months ended March 31, 2009.
For the three month period ended March 31, 2009, the Company reported a net loss of $655,000, as compared to a net loss of $5,000 in the first quarter of 2008. Diluted loss per share was $0.17 for the first quarter of 2009 compared to $0.00 per diluted share for the same period in 2008. First quarter results were significantly affected by the continued compression of the Company's net interest margin, a higher provision for loan loss expense and higher levels of non-interest expense versus the year ago period.
For the three months ended March 31, 2009, the Company's net interest margin declined to 2.57% as compared to 2.77% for the first quarter of 2008. The decrease was largely attributable to the continuation of the artificially low discount rate enacted by the Federal Reserve which has led to a decline in the yield on our earning assets. As a result, our interest bearing liabilities have not repriced as quickly as our interest earning assets which has led to the decrease in our net interest margin
The Company's non-performing assets increased during the quarter. Non-performing assets at March 31, 2009 were $15.9 million or 2.65% of total assets as compared to $12.3 million or 2.20% at December 31, 2008 and $10.7 million or 2.09% at March 31, 2008. The Company's non-performing loans as a percentage of total loans also increased from the previous quarter end. These ratios were 1.66% at March 31, 2009, 1.15% at December 31, 2008 and 2.07% at March 31, 2008. Of our non-performing loans, two loans with a combined balance of $4.0 million have a 75% USDA guarantee on the remaining balance. The Company had no loans accruing interest at March 31, 2009 which were 90 days or more past due. As with many other banks in our industry we continue to face credit challenges. As always, we remain committed to helping our customers weather the current economic storm to the best of our ability while being aggressive in identifying troubled assets in our portfolio.
The provision for loan losses totaled $700,000 for the quarter versus $314,000 in 2008. The allowance for loan losses was 1.71% of total loans as of March 31, 2009 and annualized net charge-offs were 0.04% of average loans outstanding.
In comparing 2009 versus 2008, non-interest expense increased approximately $411,000. Salaries and benefits decreased $176,000, occupancy expense increased $63,000 and other non-interest expense increased $524,000. The decrease in salary and benefits are the result of the Bank's efforts to reduce expense. The $524,000 increase in other non-interest expense was primarily attributable to an increase in FDIC deposit insurance expense as well as increased consulting and audit fees. The Company experienced a slight decline in non-interest income for the three month period in 2009 versus 2008, which was primarily due to a recorded loss in our wholly owned subsidiary, East Atlantic Properties, which houses most of our income producing OREO properties.
In late March 2009, the Company was approved for participation in the Capital Purchase Program (CPP) by the United States Treasury department. On April 17, 2009, the Company accepted a $13.179 capital infusion from the United States Treasury. The series A preferred stock issued in conjunction with this capital infusion from the government is considered Tier 1 capital. The stock will pay cumulative dividends of 5% per annum for the first five years and 9% per annum thereafter. The Treasury was also issued warrants to purchase an additional 475,024 shares of the Company's stock at a price of $4.16 per share with a term of ten years.
Total assets at March 31, 2009 amounted to $600.6 million, an increase of 6.8% when compared to the prior year end amount of $562.0 million. Net loans remained virtually flat from year end, while deposits grew to $485.2 million, a 9.2% increase over the prior year end.
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: Michelle L. Clodfelter Principal Financial Officer Bank of the Carolinas (336) 998-1799 x 207 Bank of the Carolinas Corporation Consolidated Balance Sheets (In Thousands Except Share Data) (Unaudited) March 31, December 31, 2009 2008 Assets Cash and Due from Banks $7,692 $8,271 Interest-Bearing Deposits in Banks 3,086 2,220 Federal Funds Sold 9,000 - Securities Available for Sale 136,857 108,639 Securities Held to Maturity 4,362 4,500 Loans 406,449 405,402 Less, Allowance for Loan Losses (6,969) (6,308) Total Loans, Net 399,480 399,094 Properties and Equipment 15,374 15,324 Other Assets 24,793 28,459 Total Assets $600,644 $562,007 Liabilities Non-interest Bearing Demand Deposits $31,439 $27,507 Interest Bearing Demand Deposits 278,527 238,551 Savings Deposits 21,428 21,903 Time Deposits 153,879 156,579 Total Deposits 485,273 444,540 Other Borrowings 30,855 32,855 Repurchase Agreements 46,533 46,557 Other Liabilities 1,848 1,464 Total Liabilities 564,509 525,416 Shareholders' Equity Preferred Stock, Par Value $0 Per Share: Authorized 10,000,000 Share: None Issued - - Common Stock, Par Value $5 Per Share: Authorized 15,000,000 Shares; Issued 3,891,174 Shares in 2009 and 3,920,752 Shares in 2008 19,456 19,604 Additional Paid-In Capital 11,630 11,721 Retained Earnings 3,413 8,275 Accumulated Other Comprehensive Income (Loss) 1,636 822 Total Shareholders' Equity 36,135 40,422 Total Liabilities and Shareholders' Equity $600,644 $565,838 Bank of the Carolinas Corporation Consolidated Statements of Income (In Thousands Except Share and Per Share Data) (Unaudited) Three Months Ended March 31, 2009 2008 Interest Income Interest and Fees on Loans $6,052 $7,091 Interest on Securities 1,463 726 Federal Funds Sold 6 76 Deposits in Other Banks 16 4 Total Interest Income 7,537 7,897 Interest Expense Deposits 3,542 4,386 Borrowed Funds 811 273 Total Interest Expense 4,353 4,659 Net Interest Income 3,184 3,238 Provision for Loan Losses 700 314 Net Interest Income After Provision for Loan Losses 2,484 2,924 Other Income Customer Service Fees 286 292 Mortgage Loan Broker Fees 22 36 Investment Services 1 9 Income from Bank Owned Life Insurance 89 88 Other Income (60) 27 Total Other Income 338 452 Noninterest Expense Salaries and Benefits 1,718 1,894 Occupancy and Equipment 562 499 Other Noninterest Expense 1,512 988 Total Noninterest Expense 3,792 3,381 Income (Loss) Before Income Taxes (970) (5) Income Taxes (315) - Net Income (Loss) $(655) $(5) Earnings Per Share Basic $(0.17) $- Diluted $(0.17) $- Weighted Average Shares Outstanding Basic 3,891,174 3,920,752 Diluted 3,891,174 3,977,182 Bank of the Carolinas Corporation Performance Ratios As of or for the Three Months Ended March 31, 2009 2008 Change* Financial Ratios Return On Average Assets ** -0.44% 0.00% (44)BP Return On Average Shareholders' Equity ** -7.18% -0.05% (713) Net Interest Margin ** 2.57% 2.77% (20) Asset Quality Ratios Net-chargeoffs to Average Loans ** 0.04% 0.21% (17)BP Nonperforming Loans To Total Loans 2.44% 2.07% 37 Nonperforming Assets To Total Assets 2.65% 2.09% 56 Allowance For Loan Losses To Total Loans 1.71% 1.07% 64 * BP denotes basis points. ** Ratio annualized.
Bank of the Carolinas Corporation
CONTACT: Michelle L. Clodfelter, Principal Financial Officer, Bank of
the Carolinas, +1-336-998-1799 x 207
