Carolina Bank Holdings Inc. (CLBH, Financial) filed Quarterly Report for the period ended 2010-06-30.
Carolina Bank Holdings Inc. has a market cap of $11.2 million; its shares were traded at around $3.2799 with and P/S ratio of 0.2.
Liabilities. Total deposits increased by $9.1 million, or 1.5%, from $617.5 million at December 31, 2009, to $626.5 million at June 30, 2010. Time deposits increased $22.4 million, noninterest demand accounts increased by $2.9 million, and interest-bearing transaction accounts declined $16.2 million during the first six months of 2010. We plan to continue our efforts to gain deposits through quality service, convenient locations, and competitive pricing. Our branching activities are designed to enhance customer convenience and related deposit gathering activities as well as provide new sources for loans. While deposit growth is an ongoing goal, wholesale sources of funding such as Federal Home Loan Bank advances and repurchase borrowings, may be utilized where cost beneficial and when necessary to meet liquidity requirements. Federal Home Loan Bank advances declined $5.0 million during the first six months to $2.7 million at June 30, 2010 due to maturing advances paid from deposit growth. We had approximately $18.6 million in out-of-market time deposits from other institutions and $53.4 million in brokered deposits at June 30, 2010, an increase of $17.5 million in these two types of accounts from December 31, 2009. Broker deposits and out-of-market time deposits increased because of more favorable pricing, no early withdrawal features, and ability to extend maturities.
General. Net income (loss) for the second quarter of 2010 was $(1,568,000) compared to $335,000 in the second quarter of 2009. Net loss allocable to common stockholders was $1,856,000, or $0.55 per diluted share, for the three months ended June 30, 2010 compared to net income available to common stockholders of $51,000, or $0.02 per diluted share, for the three months ended June 30, 2009. Net income (loss) available (allocable) to common stockholders represents net income (loss) less preferred stock dividends and related discount accretion. The decrease in net income available to common shareholders was primarily due to a higher provision for loan losses, lower mortgage banking income, higher asset impairments, and higher repossessed asset expenses during the second quarter of 2010. The seasonally adjusted unemployment rate in North Carolina decreased to 10.0% at June 30, 2010 from 11.2% at December 31, 2009 but remained higher than the 8.1% at December 31, 2008. Our primary lending market in the Piedmont Triad also experienced a similar unemployment rate change in the past eighteen months with deteriorating economic conditions which have negatively impacted our borrowers. The commercial/retail bank segment reported a net loss of $2,083,000 for the three months ending June 30, 2010 due to higher provisions for loan losses and higher repossessed asset losses and impairments. On the other hand, our wholesale mortgage division reported quarterly net income of $515,000 for the three months ending June 30, 2010 due to low mortgage rates and expanded operations.
General. Net income (loss) for the six months ended June 30, 2010 and 2009, amounted to $(1,269,000) and $1,000,000, respectively. Net income (loss) available (allocable) to common stockholders for the six months ended June 30, 2010 and 2009, amounted to $(1,842,000), or $(0.54) per diluted share and $462,000, or $0.14 per diluted share, respectively. The decrease in net income available to common shareholders in 2010 was primarily due to a sharply higher provision for loan losses, lower mortgage banking income, higher repossessed asset losses, and higher asset impairment charges. The provision for loan losses in 2010 was negatively impacted by an increase in charge-offs which in turn led to a higher loan loss experience used for calculating the allowance for loan losses at June 30, 2010. Higher non-performing assets in 2010 have resulted from continued challenging credit conditions in our markets, especially in construction and development projects.
Non-interest expense. Total non-interest expense amounted to $11,450,000 for the six months ended June 30, 2010, as compared to $9,985,000 for the six months ended June 30, 2009, an increase of 14.7%. Salaries and employee benefits increased $421,000, or 8.5%, in 2010 to $5,384,000 due to higher benefit costs and an increase in the number of full-time equivalent employees by 8.1% in one year to 147. Impairment of repossessed assets increased to $1,469,000 for the six months ended June 30, 2010 compared to an impairment of an investment security of $765,000 for the six months ended June 30, 2009. Other expenses increased $530,000 in 2010 from higher expenses related to repossessed assets and from the accrual of $148,000 in warranty expenses related to the sale of mortgage loans.
Our allowance for loan losses is composed of two parts, a specific portion related to non-performing and problem loans and a general section related to performing loans. We adopted a more conservative loan loss methodology suggested by the FDIC in the second quarter of 2010 which resulted in acceleration of loan charge-offs and in a higher provision for loan losses than would have been experienced under our former loan loss methodology. The specific portion of our allowance for loan losses, which relates to non-performing loans, decreased to $3,512,000 at June 30, 2010 from $5,285,000 at March 31, 2010 and $4,431,000 at December 31, 2009 due to the change in methodology to generally recording loan charge-offs at the time appraisals are received on non-performing real estate loans rather than setting up specific loan loss reserves for these loans until deemed uncollectible. Net loan charge-offs amounted to $5,127,000 and $6,499,000 for the three and six months ending June 30, 2010, respectively, compared to $6,199,000 for all of 2009. The general section of our allowance for loan losses increased to $6,758,000 at June 30, 2010 from $5,412,000 at March 31, 2010 and $5,650,000 at December 31, 2009. The general section of our allowance applies to performing loans and was determined by applying estimated loss ratios inherent in the loan portfolio, ranging from 0.20% on loans secured by stocks and deposits to 11.3% on unsecured consumer revolving loans, to categories of performing loans at each period end. The loss ratios in the general section of the allowance were increased for most of our loan categories due to an increase in historical loss trends resulting from higher loan charge-offs in the current quarter and from shortening the loss trend period to an average of the eight most recent quarters from a modified three year period plus qualitative factors. The change of using a shorter period to calculate historical losses in the current quarter was recommended by the FDIC. The general section also includes higher allowances for substandard loans which are still performing but carry a higher degree of risk because of declining credit factors. Substandard loans totaled $39,806,000 and related allowances for loan losses were $1,068,000 at June 30, 2010.
Read the The complete Report
Carolina Bank Holdings Inc. has a market cap of $11.2 million; its shares were traded at around $3.2799 with and P/S ratio of 0.2.
Highlight of Business Operations:
Assets. Our total assets increased by $7.3 million, or 1.0%, from $697.1 million at December 31, 2009, to $704.3 million at June 30, 2010. During the six months ended June 30, 2010, cash and due from banks and interest-bearing deposits with banks decreased by $3.5 million, while investment securities decreased by $4.4 million. Loans held for sale increased 57.2% during the first six months of 2010 to $46.2 million at June 30, 2010 due to continued strong originations by our wholesale loan division. Loans held for investment increased by $2.9 million or 0.5% during the first six months of 2010. We experienced slowing commercial and consumer loan demand in our primary lending markets, Guilford, Randolph, Alamance and Forsyth Counties, North Carolina in the first half of 2010 and second half of 2009.Liabilities. Total deposits increased by $9.1 million, or 1.5%, from $617.5 million at December 31, 2009, to $626.5 million at June 30, 2010. Time deposits increased $22.4 million, noninterest demand accounts increased by $2.9 million, and interest-bearing transaction accounts declined $16.2 million during the first six months of 2010. We plan to continue our efforts to gain deposits through quality service, convenient locations, and competitive pricing. Our branching activities are designed to enhance customer convenience and related deposit gathering activities as well as provide new sources for loans. While deposit growth is an ongoing goal, wholesale sources of funding such as Federal Home Loan Bank advances and repurchase borrowings, may be utilized where cost beneficial and when necessary to meet liquidity requirements. Federal Home Loan Bank advances declined $5.0 million during the first six months to $2.7 million at June 30, 2010 due to maturing advances paid from deposit growth. We had approximately $18.6 million in out-of-market time deposits from other institutions and $53.4 million in brokered deposits at June 30, 2010, an increase of $17.5 million in these two types of accounts from December 31, 2009. Broker deposits and out-of-market time deposits increased because of more favorable pricing, no early withdrawal features, and ability to extend maturities.
General. Net income (loss) for the second quarter of 2010 was $(1,568,000) compared to $335,000 in the second quarter of 2009. Net loss allocable to common stockholders was $1,856,000, or $0.55 per diluted share, for the three months ended June 30, 2010 compared to net income available to common stockholders of $51,000, or $0.02 per diluted share, for the three months ended June 30, 2009. Net income (loss) available (allocable) to common stockholders represents net income (loss) less preferred stock dividends and related discount accretion. The decrease in net income available to common shareholders was primarily due to a higher provision for loan losses, lower mortgage banking income, higher asset impairments, and higher repossessed asset expenses during the second quarter of 2010. The seasonally adjusted unemployment rate in North Carolina decreased to 10.0% at June 30, 2010 from 11.2% at December 31, 2009 but remained higher than the 8.1% at December 31, 2008. Our primary lending market in the Piedmont Triad also experienced a similar unemployment rate change in the past eighteen months with deteriorating economic conditions which have negatively impacted our borrowers. The commercial/retail bank segment reported a net loss of $2,083,000 for the three months ending June 30, 2010 due to higher provisions for loan losses and higher repossessed asset losses and impairments. On the other hand, our wholesale mortgage division reported quarterly net income of $515,000 for the three months ending June 30, 2010 due to low mortgage rates and expanded operations.
General. Net income (loss) for the six months ended June 30, 2010 and 2009, amounted to $(1,269,000) and $1,000,000, respectively. Net income (loss) available (allocable) to common stockholders for the six months ended June 30, 2010 and 2009, amounted to $(1,842,000), or $(0.54) per diluted share and $462,000, or $0.14 per diluted share, respectively. The decrease in net income available to common shareholders in 2010 was primarily due to a sharply higher provision for loan losses, lower mortgage banking income, higher repossessed asset losses, and higher asset impairment charges. The provision for loan losses in 2010 was negatively impacted by an increase in charge-offs which in turn led to a higher loan loss experience used for calculating the allowance for loan losses at June 30, 2010. Higher non-performing assets in 2010 have resulted from continued challenging credit conditions in our markets, especially in construction and development projects.
Non-interest expense. Total non-interest expense amounted to $11,450,000 for the six months ended June 30, 2010, as compared to $9,985,000 for the six months ended June 30, 2009, an increase of 14.7%. Salaries and employee benefits increased $421,000, or 8.5%, in 2010 to $5,384,000 due to higher benefit costs and an increase in the number of full-time equivalent employees by 8.1% in one year to 147. Impairment of repossessed assets increased to $1,469,000 for the six months ended June 30, 2010 compared to an impairment of an investment security of $765,000 for the six months ended June 30, 2009. Other expenses increased $530,000 in 2010 from higher expenses related to repossessed assets and from the accrual of $148,000 in warranty expenses related to the sale of mortgage loans.
Our allowance for loan losses is composed of two parts, a specific portion related to non-performing and problem loans and a general section related to performing loans. We adopted a more conservative loan loss methodology suggested by the FDIC in the second quarter of 2010 which resulted in acceleration of loan charge-offs and in a higher provision for loan losses than would have been experienced under our former loan loss methodology. The specific portion of our allowance for loan losses, which relates to non-performing loans, decreased to $3,512,000 at June 30, 2010 from $5,285,000 at March 31, 2010 and $4,431,000 at December 31, 2009 due to the change in methodology to generally recording loan charge-offs at the time appraisals are received on non-performing real estate loans rather than setting up specific loan loss reserves for these loans until deemed uncollectible. Net loan charge-offs amounted to $5,127,000 and $6,499,000 for the three and six months ending June 30, 2010, respectively, compared to $6,199,000 for all of 2009. The general section of our allowance for loan losses increased to $6,758,000 at June 30, 2010 from $5,412,000 at March 31, 2010 and $5,650,000 at December 31, 2009. The general section of our allowance applies to performing loans and was determined by applying estimated loss ratios inherent in the loan portfolio, ranging from 0.20% on loans secured by stocks and deposits to 11.3% on unsecured consumer revolving loans, to categories of performing loans at each period end. The loss ratios in the general section of the allowance were increased for most of our loan categories due to an increase in historical loss trends resulting from higher loan charge-offs in the current quarter and from shortening the loss trend period to an average of the eight most recent quarters from a modified three year period plus qualitative factors. The change of using a shorter period to calculate historical losses in the current quarter was recommended by the FDIC. The general section also includes higher allowances for substandard loans which are still performing but carry a higher degree of risk because of declining credit factors. Substandard loans totaled $39,806,000 and related allowances for loan losses were $1,068,000 at June 30, 2010.
Read the The complete Report
