Bank Of The Carolinas Corp fka BCAR

[BigCat]

Bank of the Carolinas Corporation Reports Third Quarter Financial Results

MOCKSVILLE, N.C., Nov. 7, 2014 /PRNewswire/ -- Bank of the Carolinas Corporation (OTCQB: BCAR) today reported financial results for the three- and nine-month periods ended September 30, 2014.

For the three-month period ended September 30, 2014, the Company reported net income available to common shareholders of $10.7 million as compared to a net loss of $5,000 for the third quarter of 2013. For the nine-month period ended September 30, 2014, the Company reported net income available to common shareholders of $10.0 million or $0.075 per common share, compared to a net loss of $1.4 million or $0.36 per common share for the nine-month period ended September 30, 2013. The increase in net income was primarily due to the $10.2 million gain on redemption of preferred stock in the third quarter of 2014.

The provision for loan losses recognized a recovery of $535,000 in the third quarter of 2014 compared to a recovery of $920,000 in the third quarter a year ago. For the nine-month period ended September 30, 2014, the provision for loan losses recognized a recovery of $760,000 compared to a recovery of $2.1 million for the same nine-month period of 2013. The Company recovered $26,000 of costs related to foreclosed real estate for the third quarter of 2014 as compared to $144,000 of expense in the third quarter of 2013. For the nine-month period ended September 30, 2014, costs related to foreclosed real estate were $1,000 as compared to $676,000 for the same nine-month period of 2013. Through September 30, 2014, credit-related costs totaled a recovery of $706,000 as compared to the previous year's recovery of $1.6 million through September 30, 2013.

The Company continues its progress in reducing the level of nonperforming assets. As of September 30, 2014, the Company's nonperforming assets decreased to $4.5 million and amounted to 1.15% of total assets as compared to $8.7 million, or 2.04% of total assets as of September 30, 2013. The allowance for loan losses was 1.84% of total loans as of September 30, 2014 compared to 2.23% of total loans as of September 30, 2013. Net loan recoveries amounted to $565,000 for the third quarter of 2014, as compared to net loan recoveries of $737,000 in the third quarter of 2013.

The Company's net interest margin was 3.20% in the third quarter of 2014, which is an increase of 46 basis points from 2.74% in the third quarter of 2013. Excluding $4.4 million of debt prepayment penalties, noninterest expense for nine-months ended September 30 decreased 5.99% in 2014 versus 2013 and for the three-month period decreased 6.06% in the third quarter of 2014 versus 2013. Cost savings of $901,000 for the first nine months of 2014 have been recognized in salary and benefits and costs related to foreclosed real estate.

Total assets at September 30, 2014 amounted to $396.3 million, a decrease of 6.9% when compared to $425.6 million as of September 30, 2013. Loans totaled $281.7 million at September 30, 2014, an increase of 1.1% from a year earlier, and deposits decreased 4.8% over the prior year to $348.2 million. The Company's deposit mix has improved compared to a year earlier by decreasing non-core brokered and institutional deposits by $21.2 million.

The Company's banking subsidiary had a Tier 1 leverage capital ratio and Tier 1 capital to risk-weighted assets ratio of 10.77% and 14.45% respectively, while its total capital to risk-weighted assets ratio was 15.70% as of September 30, 2014.

The Company completed a private placement of $45.8 million on July 16, 2014. In connection with the private placement, the Company repurchased all 13,179 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued under the Capital Purchase Program from the U.S. Treasury. The Company also repurchased all of its floating rate trust preferred securities issued through its subsidiary, Bank of the Carolinas Trust I, from the holders of those securities. The Company also repurchased a subordinated note from the holder of the note.

The Company injected $34.8 million from the proceeds of the private placement into the Company's banking subsidiary, Bank of the Carolinas. In efforts to restructure the bank's balance sheet and address interest rate risk issues, two term repurchase agreements were prepaid with penalties totaling $4.4 million. To fund these prepayments, the bank sold investment securities, which resulted in a loss on sale of securities of $1.3 million. As of September 30, 2014, the Company and its subsidiaries had no outstanding third-party debt obligations.

President and CEO, Stephen R. Talbert, said, "We are pleased to release our third quarter earnings. We are proud of the continued success we have in reducing our levels of nonperforming assets. The successful $45.8 million private placement completed on July 16, 2014 raised our capital ratios above all the regulatory requirements. We are extremely proud of this accomplishment. We continue to believe that the Company is positioned for future success."