Exhibit 99.1
PRESS RELEASE
For Immediate Release
Bank of the Carolinas Corporation Reports
Fourth Quarter Financial Results
MOCKSVILLE, NORTH CAROLINA, January 24, 2008 — Bank of the Carolinas Corporation (Nasdaq: BCAR), today reported financial results for the three and twelve months ended December 31, 2007.
For the three month period ended December 31, 2007, the Company reported a net loss of $19,000, as compared to net income of $681,000 in the fourth quarter of 2006. Diluted earnings per share were $0.00 for the fourth quarter compared to $0.17 per diluted share for the same period in 2006. As was previously disclosed, during November 2007, the Company terminated its merger agreement with Randolph Bank & Trust Company and took a one-time after-tax charge for merger related expenses of $368,000 or $0.09 per diluted share in the fourth quarter. Fourth quarter results of operations also were affected by the provision for loan losses which increased to $450,000 for the quarter as compared to $182,000 for same period in 2006.
For the year ended December 31, 2007, the Company reported net income of $1,958,000 or $0.50 per diluted share compared to $3,474,000 or $0.88 per diluted share for the same period in 2006. The 2006 year to date amount included a one time pre-tax gain of $1.76 million related to a branch sale. Excluding the one time gain in 2006, and the merger related expenses in 2007, net income for 2007 would have decreased by $70,000 as compared to 2006, and diluted earnings per share would have decreased $.01 per share.
For the year ended December 31, 2007, the Company’s net interest margin declined to 3.36% from 3.78% during 2006. Non-interest income for 2007 grew $316,000 or 9.4% exclusive of the one time gain in 2006. Excluding the one time merger expenses in 2007, non-interest expense rose $288,000 or 2.5% year over year. As a percentage of average assets, non-interest expense (excluding merger related expenses) decreased to 2.53% for 2007 from 2.77% in 2006.
Total assets at December 31, 2007 amounted to $506.0 million, an increase of 11.3% when compared to the prior year end amount of $454.6 million. Net loans increased 11.4% over the prior year end to $390.8 million while deposits grew to $421.9 million, a 10.2% increase over the prior year. The allowance for loan losses was 1.07% of total loans as of December 31, 2007 and net charge-offs for 2007 were 0.26% 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, 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
(336) 751-5755
Bank of the Carolinas Corporation
Consolidated Balance Sheets
(In Thousands Except Share Data)
December 31, | ||||||||
2007 | 2006* | |||||||
Unaudited | ||||||||
Assets | ||||||||
Cash and Due from Banks | $ | 8,192 | $ | 5,626 | ||||
Interest-Bearing Deposits in Banks | 12,756 | 7,777 | ||||||
Federal Funds Sold | — | 6,449 | ||||||
Securities Available for Sale | 60,717 | 55,677 | ||||||
Loans | 395,052 | 354,555 | ||||||
Less, Allowance for Loan Losses | (4,245 | ) | (3,732 | ) | ||||
Total Loans, Net | 390,807 | 350,823 | ||||||
Properties and Equipment | 13,888 | 11,142 | ||||||
Other Assets | 19,638 | 17,084 | ||||||
Total Assets | $ | 505,998 | $ | 454,578 | ||||
Liabilities | ||||||||
Non-interest Bearing Demand Deposits | $ | 29,835 | $ | 26,317 | ||||
Interest Bearing Demand Deposits | 62,883 | 67,214 | ||||||
Savings Deposits | 19,655 | 10,021 | ||||||
Time Deposits | 309,555 | 279,169 | ||||||
Total Deposits | 421,928 | 382,721 | ||||||
Borrowings | 41,657 | 31,000 | ||||||
Other Liabilities | 2,173 | 3,143 | ||||||
Total Liabilities | 465,758 | 416,864 | ||||||
Shareholders’ Equity | ||||||||
Common Stock, Par Value $5 Per Share: | ||||||||
Authorized 15,000,000 Shares; Issued 3,920,752 | ||||||||
Shares in 2007 and 3,826,792 Shares in 2006 | 19,604 | 19,134 | ||||||
Additional Paid-In Capital | 11,716 | 11,444 | ||||||
Retained Earnings | 8,476 | 7,293 | ||||||
Accumulated Other Comprehensive Income (Loss) | 444 | (157 | ) | |||||
Total Shareholders’ Equity | 40,240 | 37,714 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 505,998 | $ | 454,578 | ||||
* | 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 Dec. 31, | Twelve Months Ended Dec. 31, | ||||||||||||
2007 | 2006 | 2007 | 2006* | ||||||||||
Unaudited | Unaudited | ||||||||||||
Interest Income | |||||||||||||
Interest and Fees on Loans | $ | 7,621 | $ | 7,265 | $ | 29,874 | $ | 26,672 | |||||
Interest on Securities | 738 | 586 | 2,808 | 2,184 | |||||||||
Federal Funds Sold | 25 | 105 | 408 | 398 | |||||||||
Deposits in Other Banks | 6 | 8 | 15 | 22 | |||||||||
Total Interest Income | 8,390 | 7,964 | 33,105 | 29,276 | |||||||||
Interest Expense | |||||||||||||
Deposits | 4,406 | 4,067 | 17,263 | 13,343 | |||||||||
Borrowed Funds | 316 | 292 | 1,237 | 1,270 | |||||||||
Total Interest Expense | 4,722 | 4,359 | 18,500 | 14,613 | |||||||||
Net Interest Income | 3,668 | 3,605 | 14,605 | 14,663 | |||||||||
Provision for Loan Losses | 450 | 182 | 1,470 | 1,157 | |||||||||
Net Interest Income After Provision for | |||||||||||||
Loan Losses | 3,218 | 3,423 | 13,135 | 13,506 | |||||||||
Other Income | |||||||||||||
Customer Service Fees | 314 | 234 | 1,075 | 947 | |||||||||
Mortgage Loan Broker Fees | 44 | 42 | 184 | 177 | |||||||||
Investment Services | 31 | 76 | 229 | 142 | |||||||||
Income from Bank Owned Life Insurance | 89 | 64 | 346 | 215 | |||||||||
Gain on Sale of Branch | — | — | — | 1,755 | |||||||||
Other Income | 2 | 28 | 101 | 138 | |||||||||
Total Other Income | 480 | 444 | 1,935 | 3,374 | |||||||||
Noninterest Expense | |||||||||||||
Salaries and Benefits | 1,675 | 1,540 | 6,153 | 6,130 | |||||||||
Occupancy and Equipment | 445 | 383 | 1,731 | 1,412 | |||||||||
Other Noninterest Expense | 1,743 | 928 | 4,514 | 3,970 | |||||||||
Total Noninterest Expense | 3,863 | 2,851 | 12,398 | 11,512 | |||||||||
Income (Loss) Before Income Taxes | (165 | ) | 1,016 | 2,672 | 5,368 | ||||||||
Income Taxes | (146 | ) | 335 | 714 | 1,894 | ||||||||
Net Income (Loss) | $ | (19 | ) | $ | 681 | $ | 1,958 | $ | 3,474 | ||||
Earnings Per Share | |||||||||||||
Basic | $ | — | $ | 0.18 | $ | 0.51 | $ | 0.91 | |||||
Diluted | $ | — | $ | 0.17 | $ | 0.50 | $ | 0.88 | |||||
Weighted Average Shares Outstanding | |||||||||||||
Basic | 3,906,962 | 3,825,644 | 3,857,679 | 3,825,343 | |||||||||
Diluted | 3,972,392 | 3,958,578 | 3,951,808 | 3,963,358 |
* | Derived from audited financial statements |
Bank of the Carolinas Corporation
Performance Ratios
As of or for the Twelve Months Ended Dec. 31, | |||||||||
2007 | 2006 | Change* | |||||||
Financial Ratios | |||||||||
Return On Average Assets | 0.42 | % | 0.84 | % | (42 | ) BP | |||
Return On Average Shareholders’ Equity | 5.10 | % | 9.57 | % | (447 | ) | |||
Net Interest Margin | 3.36 | % | 3.78 | % | (42 | ) | |||
Asset Quality Ratios | |||||||||
Net-chargeoffs to Average Loans | 0.26 | % | 0.23 | % | 3 | BP | |||
Nonperforming Loans To Total Loans | 1.82 | % | 1.31 | % | 51 | ||||
Nonperforming Assets To Total Assets | 1.92 | % | 1.25 | % | 67 | ||||
Allowance For Loan Losses To Total Loans | 1.07 | % | 1.05 | % | 2 |
* | BP denotes basis points. |