Exhibit 99.1
PRESS RELEASE
For Immediate Release
Bank of the Carolinas Corporation Reports Third Quarter Earnings
MOCKSVILLE, NORTH CAROLINA, October 25, 2006 — Bank of the Carolinas Corporation (Nasdaq Capital Market: BCAR), today reported financial results for the three months and nine months ended September 30, 2006.
For the three month period ended September 30, 2006, the Company reported net income of $1,148,000, an increase of 80.2% when compared to $637,000 in the third quarter of 2005. Diluted earnings per share increased to $.29 for the third quarter, an 81.3% increase when compared to $.16 per diluted share for the same period in 2005.
For the nine months ended September 30, 2006, the Company reported net income of $2,793,000, an increase of 70.4% when compared to $1,639,000 in the nine month period of 2005. Diluted earnings per share increased to $.70 for the nine month period, a 70.7% increase when compared to $.41 per diluted share for the same period in 2005.
During the third quarter of 2006, the Company consummated the sale of its branch location in Carthage, NC to First Bancorp, in a deal previously announced in April 2006. Excluding a one time gain on that sale, net income for the quarter would have decreased over the comparable period for 2005. Factors that negatively affected earnings for the third quarter included an increased loan loss provision, losses on repossessed real estate, expenses related to the formation of a holding company, and increased marketing expenses related to a branding campaign that culminated in the third quarter.
Total assets at September 30, 2006 amounted to $431.4 million, an increase of 16.5% when compared to the September 30, 2005 amount of $370.3 million. Net loans increased 14.2% over the prior year to $334.8 million while deposits grew to $364.1 million, a 19.6% increase over the prior year. The allowance for loan losses was 1.12% of total loans as of September 30, 2006 and net year to date charge-offs were 0.20% of average loans outstanding.
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, Harrisburg, King, Landis, and Lexington. Common stock of the company is traded on the NASDAQ Capital 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 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
(336) 751-5755
Bank of the Carolinas Corporation
Consolidated Balance Sheets
(In Thousands—Unaudited)
September 30, | ||||||||
2006 | 2005 | |||||||
Assets | ||||||||
Cash and Due from Banks | $ | 4,820 | $ | 4,132 | ||||
Interest-Bearing Deposits in Banks | 4,679 | 3,681 | ||||||
Federal Funds Sold | 5,554 | 18 | ||||||
Securities Available for Sale | 56,277 | 46,682 | ||||||
Loans | 338,651 | 296,390 | ||||||
Less, Allowance for Loan Losses | (3,802 | ) | (3,103 | ) | ||||
Total Loans, Net | 334,849 | 293,287 | ||||||
Properties and Equipment | 11,062 | 10,074 | ||||||
Other Assets | 14,181 | 12,394 | ||||||
Total Assets | $ | 431,422 | $ | 370,268 | ||||
Liabilities | ||||||||
Non-interest Bearing Demand Deposits | $ | 25,969 | $ | 26,569 | ||||
Interest Bearing Demand Deposits | 62,432 | 49,953 | ||||||
Savings Deposits | 9,864 | 12,008 | ||||||
Time Deposits | 265,859 | 215,918 | ||||||
Total Deposits | 364,124 | 304,448 | ||||||
Borrowings | 27,500 | 30,400 | ||||||
Other Liabilities | 2,873 | 1,204 | ||||||
Total Liabilities | 394,497 | 336,052 | ||||||
Shareholders’ Equity | ||||||||
Common Stock, Par Value $5 Per Share: | ||||||||
Authorized 15,000,000 Shares; Issued 3,825,192 Shares in 2006 and 3,168,047 Shares in 2005 | 19,126 | 15,840 | ||||||
Additional Paid-In Capital | 11,431 | 14,548 | ||||||
Retained Earnings | 6,803 | 4,080 | ||||||
Accumulated Other Comprehensive Loss | (435 | ) | (252 | ) | ||||
Total Shareholders’ Equity | 36,925 | 34,216 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 431,422 | $ | 370,268 | ||||
Bank of the Carolinas Corporation
Consolidated Statements of Income
(In Thousands, Except Share and Per Share Data)
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||
Interest Income | ||||||||||||
Interest and Fees on Loans | $ | 7,044 | $ | 5,043 | $ | 19,407 | $ | 13,318 | ||||
Interest on Securities | 577 | 397 | 1,598 | 1,064 | ||||||||
Fed Funds Sold | 124 | 68 | 293 | 95 | ||||||||
Deposits in Other Banks | 8 | 1 | 14 | 13 | ||||||||
Total Interest Income | 7,753 | 5,509 | 21,312 | 14,490 | ||||||||
Interest Expense | ||||||||||||
Deposits | 3,629 | 2,089 | 9,276 | 5,041 | ||||||||
Borrowed Funds | 311 | 251 | 978 | 687 | ||||||||
Total Interest Expense | 3,940 | 2,340 | 10,254 | 5,728 | ||||||||
Net Interest Income | 3,813 | 3,169 | 11,058 | 8,762 | ||||||||
Provision for Loan Losses | 678 | 322 | 975 | 848 | ||||||||
Net Interest Income After Provision for | ||||||||||||
Loan Losses | 3,135 | 2,847 | 10,083 | 7,914 | ||||||||
Other Income | ||||||||||||
Customer Service Fees | 247 | 216 | 713 | 608 | ||||||||
Mortgage Loan Broker Fees | 54 | 46 | 135 | 136 | ||||||||
Increase in CSV of Life Insurance | 51 | 50 | 151 | 152 | ||||||||
Gain on sale of branch | 1,755 | — | 1,755 | — | ||||||||
Other Income | 98 | 23 | 176 | 67 | ||||||||
Total Other Income | 2,205 | 335 | 2,930 | 963 | ||||||||
Noninterest Expense | ||||||||||||
Salaries and Benefits | 1,773 | 1,227 | 4,590 | 3,513 | ||||||||
Occupancy and Equipment | 357 | 311 | 1,029 | 909 | ||||||||
Other Noninterest Expense | 1,414 | 680 | 3,042 | 1,969 | ||||||||
Total Noninterest Expense | 3,544 | 2,218 | 8,661 | 6,391 | ||||||||
Income Before Income Taxes | 1,796 | 964 | 4,352 | 2,486 | ||||||||
Income Taxes | 648 | 327 | 1,559 | 847 | ||||||||
Net Income | $ | 1,148 | $ | 637 | $ | 2,793 | $ | 1,639 | ||||
Earnings Per Share(1) | ||||||||||||
Basic | $ | 0.30 | $ | 0.17 | $ | 0.73 | $ | 0.43 | ||||
Diluted | $ | 0.29 | $ | 0.16 | $ | 0.70 | $ | 0.41 | ||||
Weighted Average Shares Outstanding(1) | ||||||||||||
Basic | 3,825,192 | 3,801,656 | 3,825,192 | 3,795,329 | ||||||||
Diluted | 3,963,896 | 3,976,418 | 3,964,123 | 3,962,144 |
(1) | Share and per share data reflect a 6-for-5 stock split effected October 28, 2005. |
Bank of the Carolinas Corporation
Performance Ratios
Nine Months Ended Sept. 30, | |||||||||
2006 | 2005 | Change* | |||||||
Financial Ratios | |||||||||
Return On Average Assets | 0.92 | % | 0.67 | % | 25 | BP | |||
Return On Average Shareholders’ Equity | 10.41 | % | 6.49 | % | 392 | ||||
Net Interest Margin | 3.87 | % | 3.85 | % | 2 | ||||
Asset Quality Ratios | |||||||||
Net-chargeoffs to Average Loans | 0.20 | % | 0.10 | % | 10 | BP | |||
Nonperforming Loans To Total Loans | 0.78 | % | 0.99 | % | (21 | ) | |||
Nonperforming Assets To Total Assets | 0.87 | % | 0.90 | % | (3 | ) | |||
Allowance For Loan Losses To Total Loans | 1.12 | % | 1.05 | % | 7 |
* | BP denotes basis points. |