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October 9, 2008
Dear Customers:
In the past several weeks, you have most likely either read in a variety of newspapers, or viewed news reports of larger financial institutions in distress and wondered if your bank will be affected.
Please let me assure you, Carolina Bank is as solid as ever. As the Triad’s community bank, we have not stopped providing loans to our customers and prospects for any worthwhile need that they may have. Nor, as many of the nationally chartered banks, have we rescinded our equity line offerings to our current customers. In fact, we have not needed to.
The bulk of the problems that we are experiencing in the financial services sector, is centered in Wall Street investment banking firms, who want to use the term “bank” in their name. They are no more a bank than we are a railroad company. Those few, along with several of the largest commercial banks in the United States, including several headquartered in North Carolina, have felt the financial impact of investing in sub-prime mortgages. A sub-prime mortgage is the definition of a type of first mortgage loan on personal real estate to someone who does not have a credit rating, debt-to-income level, or loan-to-value ratio, which heretofore has been the standard requirement and practice of the banking industry for tens of years. Carolina Bank has none of these types of loans, nor have we bought any, or produced any.
The majority of the banks that are having financial difficulty tend to be headquartered in states such as Georgia, Florida, California, Nevada, and to a lesser extent, Arizona. All these states, enjoyed for numerous years, double-digit increases in the value of their personal real estate, only to find that those were unsupportable, and subsequently those values fell as fast as they went up. We are fortunate in North Carolina that we have not experienced this “bubble.” Our real estate values across the state and in the Piedmont Triad have all remained relatively stable, which has prevented us from experiencing dramatic problems, as has been noted in the media.
Unquestionably, there are neighbors of ours who have suffered in any number of different ways due to this media inflamed economic slowdown. Our hearts go out to them. However, our local economy is in a satisfactory condition that does not warrant extreme measures. Our Bank continues to grow, has better than peer average credit quality, for which we are proud, and we remain profitable. By definition, Carolina Bank in the eyes of the federal banking regulators is considered “well-capitalized.” Had we not been performing at extremely satisfactory and historically strong levels, our Board of Directors would not have allowed us to build the new corporate headquarters that we have just occupied in downtown Greensboro. Carolina Bank is safe, sound and secure for the future.
We appreciate your business and hope this letter will give you an added degree of reassurance and confidence that your relationship with us is not only valued, but secure.
Sincerely,
Robert T. Braswell
President & Chief Executive Officer
Below is information on FDIC insurance. We have had many questions about coverage over the last several weeks and we hope this will help anyone that may have additional questions.
On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009. For more detailed information please here to view a video (note: video does not reflect the recent $250,000 change by the FDIC noted above) and/or click here to use an updated FDIC calculator concerning coverage.
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