MOCKSVILLE ó Bank of the Carolinas Corp. reported a net loss of $5,000 in the first quarter compared to net income of $780,000 in the same period of 2007.
The company paid 20 cents per share for the three-month period last year, but none this year. The company said first quarter results were hurt by “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.”
Bank of the Carolinas’ net interest margin declined to 2.77 percent compared to 3.31 percent for the first quarter of 2007. This decrease was due to the Federal Reserve’s 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 margins in the near term.
Non-interest income for 2008 grew 5.4 percent while non-interest expense rose $594,000 or 21.3 percent over the year ago quarter.
Non-interest expense for the current quarter was impacted by the addition of two full service offices opened last year.
The provision for loan losses totaled $314,000 for the quarter versus $62,000 in 2007. The allowance for loan losses was 1.07 percent of total loans, and annualized net charge-offs were 0.21 percent of average loans outstanding. Non-performing assets stood at 2.09 percent of assets, compared to 1.92 percent three months earlier and 0.72 percent a year ago.
Total assets are $513.4 million, an increase of 8.6 percent over last year’s $472.8 million. Net loans increased 13.6 percent, compared to $401.1 million. Deposits grew to $427.4 million, a 5 percent increase over the prior year.
Bank of the Carolinas Corp. is the holding company for Bank of the Carolinas, which is headquartered in Mocksville. It has offices in Advance, Asheboro, Cleveland, Concord, Harrisburg, King, Landis, Lexington and Winston-Salem.