Exhibit 99.1
PRESS RELEASE
For Immediate Release
Bank of the Carolinas Corporation Reports First Quarter Financial Results
MOCKSVILLE, NORTH CAROLINA, April 18, 2008 — Bank of the Carolinas Corporation (Nasdaq: BCAR), 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. |