Carolina Bank Holdings, Inc. Reports Fourth Quarter and Full Year 2009 Results

GREENSBORO, N.C., Feb. 5, 2010 (GLOBE NEWSWIRE) -- Carolina Bank Holdings, Inc. (Nasdaq:CLBH) today reported fourth quarter and full year 2009 results with highlights as follows:

Full Year Financial 2009 Highlights

• Total deposits increased 24.0% during 2009 to $617.5 million at December 31, 2009. Transaction accounts consisting of checking, money market and savings accounts increased 66.8% during 2009 to $353.5 million.
• During 2009, assets increased 13.0% to $697.1 million and loans increased 5.8% to $530.6 million at December 31, 2009.
• Net interest income increased 33.8% in 2009 to $19.7 million with the net interest margin increasing to 3.20% in 2009 from 2.82% in 2008.
• Non-interest income increased 128.9% in 2009 to $10.6 million.
• Provision for loan losses increased to $10.5 million in 2009 from $1.9 million in 2008.
• Non-performing assets to total assets increased to 4.04% at December 31, 2009 from 3.26% at September 30, 2009 and 1.04% at December 31, 2008.
• Net loss allocable to stockholders was $1.4 million, or $(0.43) per diluted share, in 2009 compared to net income of $2.2 million, or $0.65 per diluted share, in 2008.

Fourth Quarter 2009 Financial Highlights

• Net interest income increased 54.2% in the fourth quarter of 2009 from the same quarter a year ago to $5.5 million with the net interest margin at 3.41% in the fourth quarter of 2009 compared to 2.86% in the fourth quarter of 2008.
• Non-interest income increased 103.2% in the fourth quarter of 2009 from the fourth quarter of 2008.
• Provision for loan losses increased to $5.6 million in the fourth quarter of 2009 from $0.7 million in the same quarter of 2008.
• Net loss allocable to stockholders was $1.8 million, or $(0.53) per diluted share, in the fourth quarter of 2009 compared to net income of $0.2 million, or $0.05 per diluted share, in the fourth quarter of 2008.

Net loss and net loss allocable to common stockholders was $358,000 and $1,448,000 in 2009, respectively, compared to net income and net income available to stockholders of $2,194,000 in 2008. Net loss per common share was $0.43 in 2009 compared to net income per common share of $0.65 in 2008.   Robert T. Braswell, President and CEO of Carolina Bank Holdings, commented, "Amid tumultuous times, Carolina Bank maintained its Well Capitalized rating despite a year fraught with challenges for our clients and industry. Although we experienced weaknesses in our loan portfolio, we are pleased with the performance of our core operations in that we improved our margins, generated a huge increase in non-interest income, and improved our efficiency ratio." The primary reasons for the net loss in 2009 were higher provisions for loan losses and impairment charges related to four assets.

Assets increased 13.0% in 2009 to $697.1 million and deposits increased 24.0% to $617.5 million at December 31, 2009. The net interest margin was 3.20% in 2009 compared to 2.82% in 2008 with the fourth quarter of 2009 hitting a 2.5 year high of 3.41%. Mr. Braswell stated, "2009 was the most challenging year most of us have faced in our industry. Achieving the growth in core deposits, improving margins, and maintaining efficiencies in light of the noted weaknesses in our loan portfolio, gives us the belief that 2010 will be a better year for Carolina Bank Holdings, Inc."

An increase of 128.9% in non-interest income in 2009 was primarily driven by mortgage banking income of $8.8 million in 2009 compared to $3.0 million in 2008. Braswell further commented, "Attractive interest rates, a focus on execution by a dedicated well-trained team, and exceptional customer service have allowed us to expand our wholesale mortgage division in 2009 and take advantage of efficiencies to generate record fees and income from originating and selling home mortgage loans."

Non-performing loans to total loans declined slightly to 2.67% at December 31, 2009 from 2.71% at September 30, 2009 but was up from 1.13% at December 31, 2008.  Non-performing assets to total assets increased to 4.04% at December 31, 2009 from 3.26% at September 30, 2009 and 1.04% at December 31, 2008. Braswell commented, "Many of our customers continue to face challenging times and, when possible, we are trying to help them. We are disappointed in our level of non-performing loans and have increased our resources to dispose of non-performing assets and to improve our lending procedures." The bank had net charge-offs of 1.19% and 0.15% of average loans in 2009 and 2008, respectively. The allowance for loan losses was 1.90% and 1.15% of loans held for investment at December 31, 2009 and 2008, respectively.

Non-interest expense was $20.6 million in 2009, an increase of 46.4% from 2008. A new corporate office and full service branch in downtown Greensboro, a growing office in Winston-Salem, higher FDIC premiums, an expanded wholesale mortgage division, and impairment charges on an investment security and three repossessed assets accounted for most of the new expense in 2009. Excluding the impairment charges and FDIC insurance increases, non-interest expense increased 29.0%.

Shareholders' equity was strengthened during 2009 from the issuance of $16.0 million of preferred stock to the United States Treasury under the UST Capital Purchase Program. Dividends paid and accrued to the United States Treasury and accretion of the discount on the preferred stock totaled $1.1 million in 2009.

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 four counties: Guilford, Alamance, Forsyth and Randolph. The bank has eight full-service banking locations, four in Greensboro, one in Asheboro, one in High Point, one in Burlington, and one in Winston-Salem, North Carolina. The Company's stock is listed on the NASDAQ Global Market under the symbol CLBH. Further information is available on the Company's web site: www.carolinabank.com.

This press release contains forward-looking statements regarding future events. These statements are only predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include risks of managing our growth, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other financial institutions, and changes in real estate values and the real estate market. Additional information concerning factors that could cause actual results to be materially different from those in the forward-looking statements is contained in the Company's filings with the Securities and Exchange Commission. Carolina Bank Holdings undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

The above release presents certain financial information excluding the impairment charges and FDIC assessments (non-GAAP). These expense items are included in the financial results presented in accordance with generally accepted accounting principles (GAAP). Non-GAAP measures are not in accordance with, or a substitute for, measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations that would be reflected in measures determined in accordance with GAAP. Non-GAAP measures should only be used to evaluate our results of operations in conjunction with corresponding GAAP measures.