GREENSBORO, N.C., Jan. 24, 2006 (PRIMEZONE) -- Carolina Bank Holdings, Inc. (Nasdaq:CLBH) today reported 2005 net income of $2.0 million, an increase of 24.7% over the $1.6 million reported for the prior year. Diluted earnings per share were $0.73 compared with $0.59 for 2004, an increase of 23.7%. Per share results were restated to reflect the impact of the 20% stock dividend in the fourth quarter of 2005. Results reflect strong revenue growth resulting from solid loan volumes, coupled with disciplined expense growth.
For the fourth quarter of 2005, earnings were $555 thousand, an increase of 16.4% over the $477 thousand reported for the year-ago fourth quarter. Diluted earnings per share were $0.20, up 17.6% from the $0.17 reported for the 2004 period.
Robert T. Braswell, President and CEO of Carolina Bank Holdings, commented, "We are pleased to report our fourth consecutive year of record earnings. Our solid revenue growth reflects the success of our personalized banking philosophy in markets dominated by large regional banking institutions. As we expand our footprint from our Greensboro hub, we are continuing to attract new client relationships with our straight-forward approach: provide quality service, convenient locations, and a broad array of products delivered by bankers that understand the needs of local businesses and the preferences of the people who live in the communities we serve."
Mr. Braswell continued, "We opened our new Burlington loan production office in the third quarter of 2005, and plan to convert this location into a branch as soon as we receive state regulatory approval. We recently purchased the land for our sixth full-service banking office, which will open in High Point later this year or early in 2007. To support this growth, we issued $10 million of floating rate trust preferred securities in December 2004, replacing $3 million of trust preferred securities issued in 2001 at a higher rate.
Mr. Braswell continued, "Asset quality has been a challenge this year for the first time in our nine-year history. Carolina Bank charged off a total of $1.9 million in nonperforming loans since we began operations in 1996; $900 thousand of this occurred in 2005. We believe our underwriting standards are strong, and we have not deviated from past practices; however, several commercial customers recently experienced financial difficulties and defaulted on their loans. We believe nonperforming asset levels have peaked and look forward to gradual improvement throughout 2006."
Total revenue, consisting of net interest income and non-interest income, was $11.5 million for fiscal 2005 compared with $9.6 million for 2004, an increase of 19.6%. Net interest income increased 23.0% to $10.2 million, reflecting a 29.0% increase in average earning assets, partially offset by a 15 basis point decline in the net interest margin to a 3.28% average for the year. Mr. Braswell noted, "We have focused on financing the many high-quality lending opportunities we see in our marketplace, although it has become more difficult to attract low-cost core deposits to fund these loans. We are pleased with the rebound in net interest margin over the course of 2005; our fourth quarter margin is once again at its year-ago level of 3.41%." Non-interest income was relatively stable for the year at $1.2 million, down 2.6%. A lower level of deposit overdraft fees was partially offset by a 42.4% improvement in other income, mainly from a $112 thousand, or 219.6%, increase in investment services income.
For the fourth quarter of 2005, total revenue was $3.2 million compared with $2.7 million for the prior-year fourth quarter, an increase of 17.4%. Net interest income increased 20.0% to $2.8 million from the impact of a 19.8% increase in average earning assets; the net interest margin was unchanged at 3.41%. Non-interest income for both quarterly periods was $300 thousand.
Non-interest expense remained well-controlled, up 9.6% to $6.9 million for the 2005 fiscal year. The increase primarily reflects corporate growth over the past twelve months, including the third quarter 2005 opening of a loan production office in Burlington. Salaries and employee benefits, up $245 thousand or 7.5%, accounted for approximately 40% of the $610 thousand increase. The efficiency ratio for fiscal year 2005 improved to 60.62% from 66.15% for the year earlier, driven by strong revenue growth.
Non-interest expense for the fourth quarter of 2005 was $2.0 million compared with $1.7 million for the year-earlier quarter, up 12.2%. The increase again reflected overall corporate growth. The efficiency ratio improved to 62.06% for the fourth quarter of 2005 from 64.90% for the 2004 quarter.
Assets at December 31, 2005 totaled $365.2 million compared with $311.5 million twelve months ago, an increase of 17.2%. Loans held for investment grew $39.1 million, or 17.5%, during the past twelve months, reaching $262.6 million at year-end 2005. Commercial real estate loans accounted for the majority of this growth; they increased $29.9 million, or 23.1%, and now account for 60.7% of the loan portfolio.
Deposits increased $48.2 million, or 18.7%, reaching $306.3 million at December 31, 2005. Mr. Braswell noted that the Company's initiatives to grow lower-cost deposits have been highly successful. Transaction accounts (DDA, NOW, MM and savings) grew $56.1 million or 52.8% over the past twelve months and now account for $162.6 million or 53.1% of total deposits. This compares with $106.4 million or 41.2% of deposits at year-end 2004. "Since much of this deposit growth is variable-rate," Mr. Braswell added, "it has protected our margin through this period of rate increases, and it should also help to protect our margin as rates decline."
Mr. Braswell noted, "We are beginning to show improvement in asset quality after the surprises that surfaced early in 2005. Our largest nonperforming asset, a $2.5 million restructured commercial loan, has been performing according to the modified terms we've established in the third quarter of 2005, and we are hopeful that the loan will be meaningfully reduced by the second quarter of 2006 from liquidation of the real estate we hold as collateral." Nonperforming assets were $5.4 million or 1.48% of assets at December 31, 2005 compared with $5.9 million or 1.77% of assets for the previous quarter, and $1.8 million or 0.57% of assets twelve months ago. Net charge-offs for 2005 were $904 thousand or 0.38% of average loans compared with $111 thousand or 0.06% for the prior year. The allowance for loan and lease losses was 1.22% of total loans at December 31, 2005.
Shareholders' equity totaled $22.8 million at December 31, 2005, up $1.7 million from twelve months ago. Leverage remains at comfortable levels. Shares outstanding were 2,720,496. Mr. Braswell concluded, "We are well-positioned to improve on our 2005 performance in the coming year with a growing footprint, an experienced team of local lenders, and the capital for further expansion. We remain positive on our outlook for 2006."
About the Company
Carolina Bank Holdings, Inc., the parent company for Carolina Bank, operates four full- service branches in North Carolina: three in Greensboro and one in Asheboro, in addition to a loan production office in Burlington. Further information is available on the Company's web site: www.carolinabank.com.
Forward-Looking Statements
This press release contains forward-looking statements regarding future events. These statements are only predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include risks of managing our growth, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other financial institutions, and changes in real estate values and the real estate market. Additional information concerning factors that could cause actual results to be materially different from those in the forward-looking statements is contained in the Company's filings with the Securities and Exchange Commission.
The Carolina Bank Holdings, Inc. logo is available at: http://www.primezone.com/newsroom/prs/?pkgid=2257
Carolina Bank Holdings, Inc.
Consolidated Financial Highlights
Fourth Quarter and FY 2005
(unaudited)
($ in thousands except for share data)
Quarterly
---------------------------------------------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
2004 2005 2005 2005
--------- --------- --------- ---------
EARNINGS
Net interest income $ 2,836 2,576 2,405 2,411
Provision for
loan loss $ 331 245 450 280
Noninterest income $ 327 279 316 308
Noninterest expense $ 1,963 1,695 1,654 1,634
Net income $ 555 548 402 532
Basic earnings per
share (b) $ 0.20 0.20 0.15 0.20
Diluted earnings per
share (b) $ 0.20 0.20 0.14 0.19
Average shares
outstanding 2,720,491 2,720,336 2,719,750 2,706,887
Average diluted
shares outstanding 2,794,686 2,796,181 2,797,046 2,795,635
PERFORMANCE RATIOS
Return on average
assets (a) 0.64% 0.68% 0.51% 0.67%
Return on average
common equity (a) 9.85% 9.85% 7.42% 10.04%
Net interest margin
(fully-tax equivalent) 3.41% 3.32% 3.15% 3.21%
Efficiency ratio 62.06% 59.37% 60.79% 60.10%
CAPITAL
Average equity to
average assets 6.50% 6.88% 6.82% 6.72%
Tier 1 leverage
capital ratio Not avail. 9.39% 9.32% 9.22%
Tier 1 risk-based
capital ratio Not avail. 11.17% 10.97% 11.18%
Total risk-based
capital ratio Not avail. 13.14% 13.11% 13.40%
Book value per
share (b) $ 8.38 8.25 8.06 7.89
ASSET QUALITY
Net charge-offs $ 65 497 330 12
Net charge-offs to
average loans (a) 0.10% 0.83% 0.56% 0.02%
Allowance for loan
losses $ 3,210 2,944 3,196 3076
Allowance for loan
losses to
total loans 1.22% 1.23% 1.38% 1.36%
Nonaccrual loans $ 2,834 3,252 4,410 3,039
Restructured loans $ 2,474 2,574 48 118
Other real estate
owned $ 111 37 652 691
Nonperforming loans
to total loans 2.02% 2.43% 1.92% 1.40%
Nonperforming assets
to total assets 1.48% 1.77% 1.57% 1.23%
END OF PERIOD BALANCES
Total assets $ 365,170 331,359 324,524 313,498
Total earning assets $ 344,522 309,913 300,386 295,706
Total loans $ 262,609 239,294 232,180 225,793
Total deposits $ 306,334 276,893 270,229 259,922
Stockholders' equity $ 22,787 22,453 21,949 21,471
AVERAGE BALANCES
Total assets $ 346,434 323,461 317,878 315,691
Total earning assets $ 332,575 310,297 305,297 300,808
Total loans $ 256,904 239,340 235,144 228,085
Total interest-
bearing deposits $ 262,342 243,509 240,503 212,021
Stockholders' equity $ 22,532 22,265 21,676 21,199
4th Qtr Year-To-Date
2004 2005 2004
--------- --------- ---------
EARNINGS
Net interest income $ 2,364 10,228 8,315
Provision for loan loss $ 22 1,306 769
Noninterest income $ 331 1,230 1,263
Noninterest expense $ 1,749 6,946 6,336
Net income $ 477 2,037 1,633
Basic earnings per share (b) $ 0.18 0.75 0.60
Diluted earnings per share (b) $ 0.17 0.73 0.59
Average shares outstanding 2,702,504 2,716,866 2,699,926
Average diluted shares
outstanding 2,783,656 2,795,887 2,767,587
PERFORMANCE RATIOS
Return on average assets (a) 0.65% 0.63% 0.64%
Return on average common
equity (a) 9.11% 9.29% 7.99%
Net interest margin
(fully-tax equivalent) 3.41% 3.28% 3.30%
Efficiency ratio 64.90% 60.62% 66.15%
CAPITAL
Average equity to average assets 7.16% 6.73% 7.16%
Tier 1 leverage capital ratio 9.64% Not avail. 9.64%
Tier 1 risk-based capital ratio 11.30% Not avail. 11.30%
Total risk-based capital ratio 13.61% Not avail. 13.61%
Book value per share (b) $ 7.81 8.38 7.81
ASSET QUALITY
Net charge-offs $ 40 904 111
Net charge-offs to average
loans (a) 0.07% 0.38% 0.06%
Allowance for loan losses $ 2,808 3,210 2,808
Allowance for loan losses to
total loans 1.26% 1.22% 1.26%
Nonaccrual loans $ 882 2,834 882
Restructured loans $ 48 2,474 48
Other real estate owned $ 857 111 857
Nonperforming loans to
total loans 0.42% 2.02% 0.42%
Nonperforming assets to
total assets 0.57% 1.48% 0.56%
END OF PERIOD BALANCES
Total assets $ 311,537 365,170 311,537
Total earning assets $ 295,774 344,522 295,774
Total loans $ 223,470 262,609 223,470
Total deposits $ 258,155 306,334 258,155
Stockholders' equity $ 21,110 22,787 21,110
AVERAGE BALANCES
Total assets $ 292,474 325,866 255,374
Total earning assets $ 277,622 312,244 242,095
Total loans $ 217,712 239,868 197,384
Total interest-bearing
deposits $ 201,131 239,594 212,343
Stockholders' equity $ 20,950 21,918 20,430
(a) Annualized for quarterly data
(b) All per share information has been presented or restated to
reflect the effect of the six-for-five stock splits in 2005 and
2004
Carolina Bank Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
For the three months and years ended December 31, 2005 and 2004
For the Three
Months Ended For the Years Ended
December 31 December 31
----------------------- -----------------------
2005 2004 2005 2004
------------------------------------------- -----------------------
Unaudited Unaudited Unaudited Audited
(in thousands, except per share data)
Interest income:
Loans $ 4,862 $ 3,383 $ 16,369 $ 11,325
Securities --
taxable 609 351 2,127 1,292
Interest from
federal funds
sold 93 95 381 141
Other interest
income 12 12 34 17
Total interest
income 5,576 3,841 18,911 12,775
Interest expense:
Deposits 2,340 1,297 2,910 3,878
FHLB advances and
other 239 135 4,470 421
Junior
subordinated
debentures 161 45 1,303 161
---------- ---------- ---------- ----------
Total interest
expense 2,740 1,477 8,683 4,460
---------- ---------- ---------- ----------
Net interest
income 2,836 2,364 10,228 8,315
Provision for loan
losses 331 220 1,306 769
---------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 2,505 2,144 8,922 7,546
Noninterest
income:
Service charges 159 176 636 784
Mortgage banking
income 45 68 258 243
Gain on sale of
securities -- -- -- --
Other 123 87 336 236
---------- ---------- ---------- ----------
Total
noninterest
income 327 331 1,230 1,263
Noninterest
expense:
Salaries and
benefits 935 858 3,515 3,270
Occupancy and
equipment 254 208 935 816
Professional fees 279 265 880 725
Outside data
processing 132 117 532 452
Advertising and
promotion 131 72 348 305
Stationery,
printing and
supplies 92 87 327 334
Other 140 142 409 434
---------- ---------- ---------- ----------
Total
noninterest
expense 1,963 1,749 6,946 6,336
---------- ---------- ---------- ----------
Income before
income taxes 869 726 3,206 2,473
Income taxes
expense 314 249 1,169 840
---------- ---------- ---------- ---------
Net income $ 555 $ 477 $ 2,037 $ 1,633
========== ========== ========== ==========
Basic earnings per
common share (b) $ 0.20 $ 0.18 $ 0.75 $ 0.60
Diluted earnings
per common
share (b) $ 0.20 $ 0.17 $ 0.73 $ 0.59
Average common
shares
outstanding 2,720,491 2,702,504 2,716,866 2,699,926
Average common
shares and
dilutive
potential common
shares outstanding 2,794,686 2,783,656 2,795,887 2,767,587
Total Shares
outstanding at end
of period 2,720,496 2,703,287 2,720,496 2,703,287
(b) All per share information has been presented or restated to
reflect the effect of the six-for-five stock splits in 2005 and
2004
Carolina Bank Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
At December 31, 2005 and 2004
December 31 December 31
2005 2004
---------------------------------------------------------------------
Unaudited Audited
(in thousands)
ASSETS
Cash and due from banks $ 4,470 $ 2,824
Short-term investments and interest-earning
deposits 12,770 49
Federal funds sold 3,519 25,536
--------- ---------
Total cash and cash equivalents 20,759 28,409
Securities available for sale, at fair value 64,461 43,035
Securities held-to-maturity, at amortized cost 3,997 4,566
Loans 262,609 223,470
Allowance for loan losses (3,210) (2,808)
--------- ---------
Net loans 259,399 220,662
Premises and equipment, net 7,728 6,588
Other assets 8,826 8,277
--------- ---------
Total assets $ 365,170 $ 311,537
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $ 27,168 $ 18,416
Interest-bearing 279,166 239,739
--------- ---------
Total deposits 306,334 258,155
Short-term borrowings 2,844 2,472
Federal Home Loan Bank advances 21,300 18,368
Junior subordinated debentures 10,310 10,310
Other liabilities 1,595 1,112
--------- ---------
Total liabilities 342,383 290,417
STOCKHOLDERS' EQUITY
Common stock and paid-in-capital, no par
value, 20,000,000 shares authorized;
issued and outstanding -- 2,720,496
shares at December 31, 2005 and 2,252,739
shares at December 31, 2004 2,720 2,253
Additional paid-in capital 15,580 15,896
Retained earnings 5,040 3,004
Accumulated other comprehensive income
(loss) (553) (33)
--------- ---------
Total stockholders' equity 22,787 21,120
--------- ---------
Total liabilities and
stockholders' equity $ 365,170 $ 311,537
========= =========