Bank of the Carolinas in Mocksville, N.C., has entered into a consent order with state and federal regulators in which it agreed to improve its credit quality and maintain its "well-capitalized" status.

The $535 million-asset bank also said Tuesday that, in order to preserve capital, it has elected to defer dividend payments on its trust-preferred securities and its preferred stock issued under the Troubled Asset Relief Program.

The agreement with the Federal Deposit Insurance Corp. and the North Carolina Commissioner of Banks calls for the bank to improve its credit risk exposure, comply with regulatory capital requirements of 8% Tier 1 leverage capital and 10% total risk-based capital ratios, and not accept, renew or roll over any brokered deposits unless the bank is in compliance with regulations governing such deposits.

Bank of the Carolinas lost nearly $2.3 million the fourth quarter of 2010, due largely to a spike in problem loans. At Dec. 31, 6.74% of its loans were noncurrent, according to FDIC data, up from 2.36% a year earlier.

Though the bank is currently considered well capitalized, it said it is making efforts to enhance its capital position.

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