Exhibit 99.1
PRESS RELEASE
For Immediate Release
Bank of the Carolinas Corporation Reports Fourth Quarter Earnings
MOCKSVILLE, NORTH CAROLINA, January 25, 2007—Bank of the Carolinas Corporation (Nasdaq Capital Market: BCAR), today reported financial results for the three and twelve months ended December 31, 2006.
For the three month period ended December 31, 2006, the Company reported net income of $681,000, as compared to $694,000 in the fourth quarter of 2005. Diluted earnings per share were $.17 for the fourth quarter compared to $.18 per diluted share for the same period in 2005.
For the year ended December 31, 2006, the Company reported net income of $3,474,000 or $.88 per diluted share compared to $2,333,000 or $.59 per diluted share for the same period in 2005. The 2006 year to date amount includes a one time gain on the sale of our Carthage, NC branch that was consummated in the third quarter of 2006. Excluding the after-tax effect of the one time gain, 2006 net income was virtually unchanged from the 2005 amount and diluted earnings per share would have been unchanged year over year.
For the year ended 2006, net interest income increased $2,512,000 or 20.7% due primarily to growth in earning assets. However, the Bank’s net interest margin declined slightly to 3.78% during the period. Non-interest income for 2006 grew $278,000 or 20.7% exclusive of the one time gain. Offsetting these increases, non-interest expense rose $2,680,000 or 30.3% year over year. Primary factors that contributed to this increase were expenses related to personnel, data processing, marketing, other real estate write-downs and the formation of a holding company.
Total assets at December 31, 2006 amounted to $454.6 million, an increase of 16.5% when compared to the prior year end amount of $390.2 million. Net loans increased 18.3% over the prior year to $350.8 million while deposits grew to $382.7 million, a 17.2% increase over the prior year. The allowance for loan losses was 1.05% of total loans as of December 31, 2006 and net year to date charge-offs were 0.23% 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)
December 31, | ||||||||
2006 | 2005* | |||||||
Unaudited | ||||||||
Assets | ||||||||
Cash and Due from Banks | $ | 5,626 | $ | 5,035 | ||||
Interest-Bearing Deposits in Banks | 7,777 | 120 | ||||||
Federal Funds Sold | 6,449 | 17,000 | ||||||
Securities Available for Sale | 55,677 | 47,379 | ||||||
Loans | 354,555 | 299,927 | ||||||
Less, Allowance for Loan Losses | (3,732 | ) | (3,315 | ) | ||||
Total Loans, Net | 350,823 | 296,612 | ||||||
Properties and Equipment | 11,142 | 9,960 | ||||||
Other Assets | 17,084 | 14,081 | ||||||
Total Assets | $ | 454,578 | $ | 390,187 | ||||
Liabilities | ||||||||
Non-interest Bearing Demand Deposits | $ | 26,317 | $ | 26,131 | ||||
Interest Bearing Demand Deposits | 67,214 | 59,521 | ||||||
Savings Deposits | 10,021 | 11,101 | ||||||
Time Deposits | 279,169 | 229,887 | ||||||
Total Deposits | 382,721 | 326,640 | ||||||
Borrowings | 31,000 | 27,400 | ||||||
Other Liabilities | 3,143 | 1,496 | ||||||
Total Liabilities | 416,864 | 355,536 | ||||||
Shareholders’ Equity | ||||||||
Common Stock, Par Value $5 Per Share: Authorized 15,000,000 Shares; Issued 3,826,792 Shares in 2006 and 3,825,192 Shares in 2005 | 19,134 | 19,126 | ||||||
Additional Paid-In Capital | 11,444 | 11,419 | ||||||
Retained Earnings | 7,293 | 4,583 | ||||||
Accumulated Other Comprehensive Loss | (157 | ) | (477 | ) | ||||
Total Shareholders’ Equity | 37,714 | 34,651 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 454,578 | $ | 390,187 | ||||
* | Derived from audited financial statements |
Bank of the Carolinas Corporation
Consolidated Statements of Income
(In Thousands, Except Share and Per Share Data)
Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
2006 | 2005 | 2006 | 2005* | |||||||||
Unaudited | Unaudited | |||||||||||
Interest Income | ||||||||||||
Interest and Fees on Loans | $ | 7,265 | $ | 5,574 | $ | 26,672 | $ | 18,892 | ||||
Interest on Securities | 586 | 434 | 2,184 | 1,498 | ||||||||
Fed Funds Sold | 105 | 55 | 398 | 150 | ||||||||
Deposits in Other Banks | 8 | 3 | 22 | 16 | ||||||||
Total Interest Income | 7,964 | 6,066 | 29,276 | 20,556 | ||||||||
Interest Expense | ||||||||||||
Deposits | 4,067 | 2,393 | 13,343 | 7,434 | ||||||||
Borrowed Funds | 292 | 284 | 1,270 | 971 | ||||||||
Total Interest Expense | 4,359 | 2,677 | 14,613 | 8,405 | ||||||||
Net Interest Income | 3,605 | 3,389 | 14,663 | 12,151 | ||||||||
Provision for Loan Losses | 182 | 272 | 1,157 | 1,120 | ||||||||
Net Interest Income After Provision for Loan Losses | 3,423 | 3,117 | 13,506 | 11,031 | ||||||||
Other Income | ||||||||||||
Customer Service Fees | 234 | 239 | 947 | 847 | ||||||||
Mortgage Loan Broker Fees | 42 | 60 | 177 | 196 | ||||||||
Increase in CSV of Life Insurance | 64 | 51 | 215 | 203 | ||||||||
Gain on sale of branch | — | — | 1,755 | — | ||||||||
Other Income | 104 | 28 | 280 | 95 | ||||||||
Total Other Income | 444 | 378 | 3,374 | 1,341 | ||||||||
Noninterest Expense | ||||||||||||
Salaries and Benefits | 1,540 | 1,331 | 6,130 | 4,844 | ||||||||
Occupancy and Equipment | 383 | 313 | 1,412 | 1,222 | ||||||||
Other Noninterest Expense | 928 | 797 | 3,970 | 2,766 | ||||||||
Total Noninterest Expense | 2,851 | 2,441 | 11,512 | 8,832 | ||||||||
Income Before Income Taxes | 1,016 | 1,054 | 5,368 | 3,540 | ||||||||
Income Taxes | 335 | 360 | 1,894 | 1,207 | ||||||||
Net Income | $ | 681 | $ | 694 | $ | 3,474 | $ | 2,333 | ||||
Earnings Per Share(1) | ||||||||||||
Basic | $ | 0.18 | $ | 0.18 | $ | 0.91 | $ | 0.61 | ||||
Diluted | $ | 0.17 | $ | 0.18 | $ | 0.88 | $ | 0.59 | ||||
Weighted Average Shares Outstanding(1) | ||||||||||||
Basic | 3,825,644 | 3,810,202 | 3,825,343 | 3,799,565 | ||||||||
Diluted | 3,958,578 | 3,961,740 | 3,963,358 | 3,950,842 |
(1) | Share and per share data reflect a 6-for-5 stock split effected October 28, 2005. |
* | Derived from audited financial statements |
Bank of the Carolinas Corporation
Performance Ratios
Twelve Months Ended December 31 | |||||||||
2006 | 2005 | Change* | |||||||
Financial Ratios | |||||||||
Return On Average Assets | 0.84 | % | 0.69 | % | 15 | BP | |||
Return On Average Shareholders’ Equity | 9.57 | % | 6.86 | % | 271 | ||||
Net Interest Margin | 3.78 | % | 3.84 | % | (6 | ) | |||
Asset Quality Ratios | |||||||||
Net-chargeoffs to Average Loans | 0.23 | % | 0.11 | % | 12 | BP | |||
Nonperforming Loans To Total Loans | 1.31 | % | 0.67 | % | 64 | ||||
Nonperforming Assets To Total Assets | 1.25 | % | 1.08 | % | 17 | ||||
Allowance For Loan Losses To Total Loans | 1.05 | % | 1.11 | % | (6 | ) |
* | BP denotes basis points. |