GREENSBORO, N.C., Oct. 18, 2006 (PRIMEZONE) -- Carolina Bank Holdings, Inc. (Nasdaq:CLBH) today reported record third quarter earnings. Net income was $974,000, an increase of 77.7 percent over the $548,000 reported for the third quarter of 2005. Diluted earnings per share were $0.35 compared with $0.20 for the prior-year period, an increase of 75.0 percent. Per share results were restated to reflect the impact of the six-for-five stock split in the fourth quarter of 2005. Performance reflects strong growth in earning assets, a steady margin, disciplined expense control and continued improvement in asset quality.
For the first nine months of 2006, net income was $2.26 million compared with $1.48 million for the comparable 2005 period, an increase of 52.2 percent. Diluted earnings per share were $0.80, up 50.9 percent over the $0.53 reported for the first nine months of 2005.
Robert T. Braswell, President and CEO of Carolina Bank Holdings, commented, "Carolina Bank continues to produce record results. We are at the forefront of technology whenever convenience and speed are important, but we also believe in the bonds formed through the person-to-person interactions of relationship banking. This combination drives asset growth and contributes to improving profitability, even as we open new banking offices. Our Burlington office is performing well, and our full-service High Point office should be open for business before year-end. And yet we are still available to pick up deposits in person through our daily courier service. That choice is up to the customer, and Carolina Bank's financial services are shaped by the needs of our customers."
Total revenue, consisting of net interest income and non-interest income, was $3.8 million for the third quarter of 2006, up $954,000 or 33.4 percent from the $2.9 million reported for the year-ago quarter. Net interest income increased $573,000 or 22.2 percent to $3.1 million, reflecting a 20.0 percent increase in average earning assets and a six basis point improvement in the net interest margin to 3.38 percent. Year-to-date, average earnings assets rose 18.4 percent and the net interest margin increased by 12 basis points, resulting in net interest income growth of 22.9 percent.
Non-interest income for the third quarter was $660,000, an increase of $381,000, or 136.6 percent. Excluding a 2006 gain of $183,000 on the sale of repossessed assets and a dividend distribution of $117,000 relating to an investment in a limited partnership investment company, as well as a 2005 write-down on repossessed assets in the amount of $50,000, operating fee income for the 2006 quarter was $360,000, up $31,000 or 9.4 percent compared to the prior-year period. Operating fee income for nine-month period year-to-date was $1.1 million, an increase of 20.8 percent from the 2005 period.
Non-interest expense increased 16.0 percent year over year to $2.0 million for the third quarter of 2006; it declined 3.2 percent from the second quarter as the company achieved greater efficiencies. As a percent of average assets, operating expenses (annualized) declined throughout 2006, from 2.27 percent in the fourth quarter of 2005 to 2.00 percent in the current quarter. The efficiency ratio, normalized to exclude this quarter's gains totaling $300,000 and the year-ago quarter's $50,000 write-down, was 56.0 percent for the current quarter compared with 58.4 percent for the year-ago quarter, and 59.3 percent for the linked quarter.
Asset growth remains strong. At September 30, 2006, Carolina Bank had total assets of $401.2 million, an increase of $70.0 million or 21.1 percent over the past twelve months. Loans held for investment (HFI) increased $49.3 million, or 20.6 percent, since September 30, 2005, reaching $288.6 million this quarter. Commercial real estate-related loans (CRE, construction, and multi-family) together totaled $168.3 million or 58.3 percent of Carolina Bank's HFI portfolio at September 30, 2006; they increased 5.6 percent since year-end 2005 (7.5 percent annualized). Loan growth moderated slightly from the preceding quarter to 2.9 percent (11.7 percent annualized); however, much of this slowdown relates to seasonal factors in the bank's portfolio.
The Company's efforts to grow lower-cost deposits have been reasonably successful. Deposits increased $72.0 million, or 26.0 percent, over the past year, reaching $348.9 million at September 30, 2006. Since year-end 2005, transaction accounts (DDA, NOW, MMDA) and savings increased by $28.4 million, or 17.4 percent (23.2 percent annualized), and now account for $190.9 million or 54.7 percent of total deposits. This compares with $162.6 million or 53.1 percent of deposits at year-end 2005, and $178.0 million or 53.4 percent of total deposits at June 30, 2006.
Mr. Braswell added, "We have made impressive progress over the past year returning our bank's asset quality to levels more in line with our historical experience. The management time we invested has led to process enhancements and stronger controls that should have a continuing, positive impact on our future credit performance." Non-performing assets total $2.9 million or 0.71 percent of assets at September 30, 2006, compared with $3.6 million (0.92 percent of assets) at June 30, 2006, and $5.9 million (1.77 percent of assets) at September 30, 2005. The Company continues to strengthen its collateral position with one large borrower under a forbearance agreement. For the third quarter of 2006, the bank had recoveries of $21,000, or (0.03) percent annualized of average loans compared with net charge-offs for the previous quarter of $513,000 or 0.74 percent of average loans, and $497,000 or 0.83 percent of average loans for the prior-year third quarter. The allowance for loan losses was 1.25 percent of total loans at September 30, 2006.
Shareholders' equity totaled $25.1 million at September 30, 2006, up $2.7 million from twelve months ago. Shares outstanding at September 30, 2006 were 2,722,388.
About the Company
Carolina Bank, the banking subsidiary of Carolina Bank Holdings, Inc., began banking operations on November 25, 1996.The parent company is a North Carolina corporation organized in 2000. The bank is engaged in lending and deposit gathering activities in the Piedmont Triad of North Carolina, with operations in three counties: Guilford, Alamance and Randolph. The Bank has five full-service banking locations -- three in Greensboro, one in Asheboro, and one in Burlington, North Carolina. The Company's stock is listed on the Nasdaq Capital Market, under the symbol CLBH. Further information is available on the Company's web site: www.carolinabank.com.
The Carolina Bank Holdings, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2257
Forward-Looking Statements
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Carolina Bank Holdings with the Securities and Exchange Commission. Carolina Bank Holdings, Inc. undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Carolina Bank Holdings, Inc.
Consolidated Financial Highlights
Third Quarter 2006
(unaudited)
($ in thousands except for share data)
Quarterly
-----------------------------------------------------
3rd Qtr. 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
2006 2006 2006 2005 2005
-----------------------------------------------------
EARNINGS
Net interest
income $ 3,149 3,074 2,864 2,836 2,576
Provision for
loan loss $ 231 285 370 331 245
NonInterest
income $ 660 352 426 327 279
NonInterest
expense $ 1,966 2,031 1,991 1,963 1,695
Net income $ 974 678 603 555 548
Basic earnings
per share $ 0.36 0.25 0.22 0.20 0.20
Diluted earnings
per share $ 0.35 0.24 0.22 0.20 0.20
Average shares
outstanding 2,721,722 2,720,584 2,720,496 2,720,491 2,720,336
Average diluted
shares
outstanding 2,816,861 2,809,911 2,804,564 2,794,686 2,796,181
PERFORMANCE RATIOS
Return on average
assets (a) 0.99% 0.71% 0.66% 0.64% 0.68%
Return on average
common equity(a) 15.95% 11.53% 10.46% 9.85% 9.85%
Net interest
margin (fully-
tax
equivalent)(a) 3.38% 3.40% 3.26% 3.41% 3.32%
Efficiency ratio 56.03% 59.28% 60.52% 62.06% 58.35%
Full-time
equivalent
employees -
period end 62 62 59 59 57
CAPITAL
Equity to
ending assets 6.26% 6.10% 6.14% 6.24% 6.78%
Tier 1 leverage
capital ratio NA NA 8.65% 8.98% 9.39%
Tier 1 risk-
based capital
ratio NA NA 10.17% 10.36% 11.17%
Total risk-
based capital
ratio NA NA 11.32% 12.17% 13.14%
Book value
per share $ 9.23 8.74 8.57 8.38 8.25
ASSET QUALITY
Net charge-offs $ (21) 513 (2) 65 497
Net charge-offs
to average
loans(a) -0.03% 0.74% 0.00% 0.10% 0.83%
Allowance for
loan losses $ 3,606 3,354 3,582 3,210 2,944
Allowance for
loan losses
to total loans 1.25% 1.20% 1.30% 1.22% 1.23%
Nonperforming
loans $ 2,626 3,140 5,430 2,834 3,252
Restructured
loans $ 227 0 0 2,474 2,574
Other real
estate owned $ 0 453 111 111 37
Nonperforming
loans to total
loans 0.99% 1.12% 1.97% 2.02% 2.43%
Nonperforming
assets to total
assets 0.71% 0.92% 1.46% 1.48% 1.77%
END OF PERIOD
BALANCES
Total assets $401,224 389,978 379,692 365,170 331,359
Total earning
assets $378,080 367,246 357,423 344,522 309,913
Total loans $288,557 280,366 275,866 262,609 239,294
Total deposits $348,939 333,148 323,399 306,334 276,893
Stockholders'
equity $ 25,134 23,795 23,313 22,787 22,453
AVERAGE BALANCES
Total assets $393,605 383,008 366,335 346,434 323,461
Total earning
assets $372,257 361,521 351,541 332,575 310,297
Total loans $285,053 277,142 274,728 256,904 239,340
Total interest-
bearing
deposits $308,318 296,385 281,328 262,342 243,509
Stockholders'
equity $ 24,421 23,526 23,070 22,532 22,265
---------------------
Year-To-Date
---------------------
2006 2005
--------- ---------
EARNINGS
Net interest income $ 9,087 7,392
Provision for loan loss $ 886 975
NonInterest income $ 1,438 903
NonInterest expense $ 5,988 4,983
Net income $ 2,255 1,482
Basic earnings per share $ 0.83 0.55
Diluted earnings per share $ 0.80 0.53
Average shares outstanding 2,720,934 2,715,658
Average diluted shares outstanding 2,812,198 2,796,288
PERFORMANCE RATIOS
Return on average assets (a) 0.79% 0.62%
Return on average common equity (a) 12.70% 9.10%
Net interest margin (fully-tax equivalent)(a) 3.35% 3.23%
Efficiency ratio 58.56% 59.79%
Full-time equivalent employees - period end 61 54
CAPITAL
Equity to ending assets 6.26% 6.78%
Tier 1 leverage capital ratio NA 9.39%
Tier 1 risk-based capital ratio NA 11.17%
Total risk-based capital ratio NA 13.14%
Book value per share $ 9.23 8.25
ASSET QUALITY
Net charge-offs $ 490 839
Net charge-offs to average loans (a) 0.47% 0.96%
Allowance for loan losses $ 3,606 2,944
Allowance for loan losses to total loans 1.25% 1.23%
Nonperforming loans $ 2,626 3,252
Restructured loans $ 227 2,574
Other real estate owned $ 0 37
Nonperforming loans to total loans 0.99% 2.43%
Nonperforming assets to total assets 0.71% 1.77%
END OF PERIOD BALANCES
Total assets $ 401,224 331,359
Total earning assets $ 378,080 309,913
Total loans $ 288,557 239,294
Total deposits $ 348,939 276,893
Stockholders' equity $ 25,134 22,453
AVERAGE BALANCES
Total assets $ 380,983 319,010
Total earning assets $ 361,773 305,467
Total loans $ 278,974 234,190
Total interest-bearing deposits $ 295,344 232,011
Stockholders' equity $ 23,672 21,713
(a) annualized for all periods presented
NA = not avail.
All per share information has been presented or restated to reflect
the effect of the six-for-five stock splits in 2005.
Carolina Bank Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
For the three and nine months ended September 30, 2006 and 2005
(unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2006 2005 2006 2005
----------------------------------------------- --------------------
Interest income:
Loans $ 6,024 $ 4,150 $ 16,851 $ 11,507
Securities - taxable 874 556 2,330 1,518
Interest from
federal funds sold 125 76 376 288
Other interest income 11 12 30 22
-------------------- --------------------
Total interest income 7,034 4,794 19,587 13,335
Interest expense:
Deposits 3,433 1,884 9,188 5,040
FHLB advances and other 254 187 762 504
Junior subordinated
debentures 198 147 550 399
-------------------- --------------------
Total interest expense 3,885 2,218 10,500 5,943
-------------------- --------------------
Net interest income 3,149 2,576 9,087 7,392
Provision for loan losses 231 245 886 975
-------------------- --------------------
Net interest income after
provision for loan losses 2,918 2,331 8,201 6,417
Noninterest income:
Service charges 183 174 494 477
Mortgage banking income 101 77 271 213
Repossessed asset gains
(losses) and writedowns 183 (50) 183 (39)
Other 193 78 490 252
-------------------- --------------------
Total noninterest income 660 279 1,438 903
Noninterest expense:
Salaries and benefits 1,046 913 3,188 2,580
Occupancy and equipment 286 244 810 681
Professional fees 170 198 562 601
Outside data processing 139 141 434 400
Advertising and promotion 127 60 332 217
Stationery, printing
and supplies 80 87 261 235
Other 118 52 401 269
-------------------- --------------------
Total noninterest expense 1,966 1,695 5,988 4,983
-------------------- --------------------
Income before income taxes 1,612 915 3,651 2,337
Income taxes expense 638 367 1,396 855
-------------------- --------------------
Net income $ 974 $ 548 $ 2,255 $ 1,482
==================== ====================
Basic earnings per
common share $ 0.36 $ 0.20 $ 0.83 $ 0.55
Diluted earnings per
common share $ 0.35 $ 0.20 $ 0.80 $ 0.53
Average common shares
outstanding 2,721,722 2,720,336 2,720,934 2,715,658
Average common shares
and dilutive potential
common shares
outstanding 2,816,861 2,796,181 2,812,198 2,796,288
Total Shares outstanding
at end of period 2,722,388 2,720,489 2,722,388 2,720,489
All per share information has been presented or restated to reflect
the effect of the six-for-five stock splits in 2005.
Carolina Bank Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
At September 30, 2006 and 2005 and December 31, 2005
(unaudited)
September 30, December 31,
2006 2005 2005
---------------------------------------------------------------------
(in thousands)
ASSETS
Cash and due from banks $ 5,644 $ 4,800 $ 4,470
Short-term investments and
interest-earning deposits 311 101 12,770
Federal funds sold 13,589 9,064 3,519
-------------------- --------
Total cash and cash equivalents 19,544 13,965 20,759
Securities available for sale,
at fair value 74,494 60,539 64,461
Securities held-to-maturity,
at amortized cost 3,755 4,167 3,997
Loans 288,557 239,294 262,609
Allowance for loan losses (3,606) (2,944) (3,210)
-------------------- --------
Net loans 284,951 236,350 259,399
Premises and equipment, net 8,566 7,764 7,728
Other assets 9,914 8,574 8,826
-------------------- --------
Total assets $401,224 $331,359 $365,170
==================== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $ 28,068 $ 27,347 $ 27,168
Interest-bearing 320,871 249,546 279,166
-------------------- --------
Total deposits 348,939 276,893 306,334
Short-term borrowings 2,652 2,028 2,844
Federal Home Loan Bank advances 12,115 18,317 21,300
Junior subordinated debentures 10,310 10,310 10,310
Other liabilities 2,074 1,358 1,595
-------------------- --------
Total liabilities 376,090 308,906 342,383
STOCKHOLDERS' EQUITY
Common stock and paid-in-capital,
no par value, 20,000,000 shares
authorized; issued and outstanding
- 2,722,388 and 2,266,458 shares
at September 30, 2006 and 2005;
2,720,496 at December 31, 2005 2,722 2,267 2,720
Additional paid-in capital 15,597 16,026 15,580
Retained earnings 7,295 4,482 5,040
Stock in directors rabbi trust (418) (300) (333)
Directors deferred fees obligation 418 300 333
Accumulated other comprehensive loss (480) (322) (553)
-------------------- --------
Total stockholders' equity 25,134 22,453 22,787
-------------------- --------
Total liabilities and
stockholders' equity $401,224 $331,359 $365,170
==================== ========
Carolina Bank Holdings, Inc. and Subsidiary
Analysis of Loans
At September 30, 2006 and December 31, 2005 and 2004
At December 31,
----------------------------------
September 30, 2005 2004
2006 ---------------- ----------------
Amount Percent Amount Percent Amount Percent
---------------- ---------------- ----------------
(Dollars in thousands)
Loans Secured
by Real Estate:
Construction and
Land Develop-
ment $ 49,557 17.17% $ 52,666 20.05% $ 36,386 16.28%
1-4 Family
Residential
Properties 65,334 22.64% 49,794 18.96% 44,325 19.83%
Multifamily
Residential
Properties 10,609 3.68% 9,967 3.80% 14,164 6.34%
Nonfarm Non-
residential
Properties 108,087 37.46% 96,710 36.83% 78,909 35.31%
-------- ------ -------- ------ -------- ------
Total Loans
Secured by Real
Estate 233,587 80.95% 209,137 79.64% 173,784 77.76%
Commercial and
Industrial Loans 50,499 17.50% 47,144 17.95% 43,132 19.30%
Consumer 2,660 0.92% 3,989 1.52% 4,955 2.22%
All Other Loans 1,811 0.63% 2,339 0.89% 1,599 0.71%
-------- ------ -------- ------ -------- ------
Total Loans $288,557 100.00% $262,609 100.00% $223,470 100.00%
======== ====== ======== ====== ======== ======
Deposits
Noninterest
bearing demand 28,068 8.04% 27,168 8.87% 18,416 7.13%
NOW, money
market and
savings 162,821 46.66% 135,360 44.19% 87,968 34.08%
Time 158,050 45.29% 143,806 46.94% 151,771 58.79%
-------- ------ -------- ------ -------- ------
348,939 99.99% 306,334 100.00% 258,155 100.00%
======== ====== ======== ====== ======== ======