Carter Bank & Trust Announces Third Quarter 2019 Financial Results

MARTINSVILLE, VA / ACCESSWIRE / October 24, 2019 / Carter Bank & Trust ( the "Bank") (NASDAQ:CARE) today announced net income of $7.6 million, or $0.29 diluted earnings per share, for the third quarter of 2019, as compared to a net loss of $7.5 million, or $0.29 per share, for the third quarter of 2018. Pre-tax pre-provision earnings were $9.4 million and $7.4 million for the quarters ended September 30, 2019 and 2018, respectively.

For the nine months ended September 30, 2019, net income was $23.0 million, or $0.87 diluted earnings per share, as compared to net income of $8.5 million, or $0.32 diluted earnings per share in the first nine months of 2018. Pre-tax pre-provision earnings were $28.7 million for the nine months ended September 30, 2019 as compared to $28.0 million for the same period of 2018.

Third Quarter 2019 Financial Highlights

Third quarter net income of $7.6 million, or $0.29 diluted earnings per share, as compared to net income of $7.8 million, or $0.30 diluted earnings per share, in the second quarter of 2019 and a net loss of $7.5 million, or $0.29 per share, over the same quarter of 2018;
Net interest margin, on a fully taxable equivalent basis, declined only one basis point to 3.01% over the linked quarter and declined six basis points over the same quarter last year;
Securities gains of $0.7 million were realized in the third quarter of 2019 to take advantage of market opportunities, as compared to securities gains of $0.2 million in the same period of 2018;
Solid loan growth of $48.9 million, or 6.8% on an annualized basis, as compared to the linked quarter and growth of $117.2 million, or 4.2%, as compared to September 30, 2018;
Provision for loan losses declined $12.4 million, or 89.9%, as compared to the same quarter of 2018 primarily due to a $10.1 million charge-off of a legacy commercial real estate relationship in the third quarter of 2018 and
Nonperforming loans declined $3.6 million, or 7.1% as compared to December 31, 2018 and decreased $1.1 million, or 2.2%, from September 30, 2018. Nonperforming loans as a percentage of total portfolio loans were 1.62%, 1.88% and 1.72% as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

2019 Year-to-Date Financial Highlights

Year-to-date net income of $23.0 million, or $0.87 diluted earnings per share, as compared to a net income of $8.5 million, or $0.32 diluted earnings per share, in same period of 2018;
Net interest margin, on a fully taxable equivalent basis, declined five basis points to 3.04% year-over-year;
Net interest income decreased $0.9 million, or 1.1%, to $83.9 million year-over-year;
Provision for loan losses declined $12.6 million, or 74.2%, as compared to the same period of 2018 primarily due to the aforementioned $10.1 million charge-off of a legacy commercial real estate relationship in the third quarter of 2018 and
Securities gains of $1.6 million were realized in 2019 to take advantage of market opportunities, as compared to securities gains of $1.2 million in the same period of 2018.

Chief Executive Officer Litz H. Van Dyke said, "Despite a more challenging interest rate environment, the results in the third quarter were solid. Key factors contributing to our performance were: solid loan growth, continued improvement in credit quality and a net interest margin that remained stable. We are excited about our underlying momentum heading into the next quarter, where our newly launched treasury management services and robust marketing efforts in core deposit acquisition will be in full swing. We also were pleased that expense growth was well controlled, even as we continue to invest in our strategic initiatives."

Van Dyke added, "We remain focused on implementing our strategic initiatives designed to enhance our ability to attract and retain customer relationships, better serve the communities where we do business, and create value for our shareholders."

Operating Highlights

Net interest income decreased $0.9 million, or 1.1%, to $83.9 million during the first nine months of 2019 as compared to the same period of 2018. The net interest margin, on a fully taxable equivalent basis, decreased five basis points to 3.04% over the past twelve months. The yield on interest-earning assets increased 24 basis points, offset by a 37 basis point increase in funding costs as compared to the same period of 2018.

The provision for loan losses totaled $4.4 million for the nine months ended September 30, 2019 and $17.0 million for the same period of 2018. At September 30, 2019, nonperforming loans were $47.1 million, a decrease of $3.6 million, or 7.1% as compared to December 31, 2018. Net charge-offs were $3.3 million in the first nine months of 2019 as compared to $11.9 million in the same period of 2018 primarily due to the aforementioned $10.1 million charge-off of a legacy commercial real estate relationship in the third quarter of 2018. As a percentage of total portfolio loans, on an annualized basis, net charge-offs were 0.15% and 0.57% for the periods ended September 30, 2019 and 2018, respectively. Nonperforming loans as a percentage of total portfolio loans were 1.62%, 1.88% and 1.72% as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

Noninterest income decreased $1.2 million, or 10.0%, to $10.8 million, excluding net securities gains, for the nine months ended September 30, 2019 as compared to the same period of 2018. This decrease was primarily due to lower income from other real estate owned ("OREO") due to the sale of several large commercial properties over the last 12 months that generated income beginning in the first quarter of 2018, offset by higher fees on deposits and higher bank owned life insurance earnings. Securities gains of $1.6 million and $1.2 million were realized during the first nine months of 2019 and 2018, respectively, to take advantage of market opportunities and reduce the credit risk of the securities portfolio.

Total noninterest expense decreased $2.5 million, or 3.5%, for the first nine months of 2019 to $67.5 million as compared to $70.0 million in the same period of 2018. The reduction was primarily driven by decreases of $1.5 million in FDIC insurance expense, $1.5 million in legal and professional fees, $1.4 million in tax credit amortization and $3.4 million in OREO expenses and losses on sales and write-downs of OREO due to fewer properties under management.

The decrease in FDIC expense was primarily due to a lower rate assessment and the one-time credit for the deposit insurance funds taken in the third quarter of 2019. The decrease in legal and professional fees was related to regulatory and compliance reviews which were completed as of September 30, 2018. Offsetting these decreases were increases of $0.9 million in data processing expense due to our core conversion completed in the fourth quarter of 2018, $1.3 million in occupancy expense as a result of higher depreciation for hardware and software and amortization of maintenance agreements related to the aforementioned core conversion and $2.5 million in other expenses primarily comprised of increased ancillary systems, subscriptions, employee training and education.

Financial Condition

Total assets were $4.0 billion at September 30, 2019 and December 31, 2018. Total portfolio loans increased $199.9 million, or 7.4%, to $2.9 billion as of September 30, 2019 as compared to December 31, 2018. Nonperforming loans decreased $3.6 million to $47.1 million, or 7.1% as of September 30, 2019 as compared to $50.7 million at December 31, 2018. OREO decreased $10.6 million at September 30, 2019 as compared to December 31, 2018 due to the sale of properties during the first nine months of 2019. Closed retail bank offices declined $3.4 million from December 31, 2018 and have a remaining book value of $3.3 million at September 30, 2019.

Federal Reserve Bank excess reserves decreased $149.7 million at September 30, 2019 as compared to December 31, 2018. The balance was higher at year-end primarily due to large legacy credit reductions received late in December of 2018. This excess cash was deployed into higher yielding and diversified securities, funded loan growth, and also funded the planned decrease in high cost deposits.

The securities portfolio decreased $48.3 million and is currently 18.3% of total assets at September 30, 2019 as compared to 19.4% of total assets at December 31, 2018. The decrease is a result of loan growth and active balance sheet management. We have further diversified the securities portfolio as to bond types, maturities and interest rate structures.

Total deposits were $3.5 billion as of September 30, 2019 and $3.6 billion as of December 31, 2018. Noninterest-bearing deposits increased by $19.0 million, or 3.5%, to $566.8 million as of September 30, 2019 as compared to $547.8 million as of December 31, 2018 and money market accounts increased $76.3 million, or 94.4%, due to recent special rate promotions during the first nine months of 2019. Offsetting these increases were decreases of $46.7 million, or 18.4%, in interest-bearing demand deposits, $41.4 million, or 6.8%, in savings accounts and $76.5 million in certificates of deposits as compared to December 31, 2018. Noninterest-bearing deposits comprised 16.1% and 15.3% of total deposits at September 30, 2019 and December 31, 2018, respectively.

The allowance for loan losses was 1.39% of total portfolio loans as of September 30, 2019 as compared to 1.45% as of December 31, 2018. General reserves as a percentage of total portfolio loans were 1.18% at September 30, 2019 as compared to 1.26% as of December 31, 2018. The allowance for loan losses was 85.6% of nonperforming loans as of September 30, 2019 as compared to 77.3% of nonperforming loans as of December 31, 2018. In the view of management, the allowance for loan losses is adequate to absorb probable losses inherent in the loan portfolio.

The Bank remains well above the well-capitalized levels of federal banking regulatory agencies. The Bank's Tier 1 Capital ratio decreased to 13.46% as of September 30, 2019 as compared to 13.97% as of December 31, 2018. The Bank's leverage ratio was 10.26% at September 30, 2019 as compared to 9.69% as of December 31, 2018. The Bank's Total Risk-Based Capital ratio was 14.71% at September 30, 2019 as compared to 15.22% at December 31, 2018.

About Carter Bank & Trust

Headquartered in Martinsville, VA, Carter Bank & Trust is a state-chartered community bank in Virginia and trades on the Nasdaq Global Select Market under the symbol CARE. The Bank has $4.0 billion in assets and 104 branches in Virginia and North Carolina. For more information visit www.CarterBankandTrust.com.

Important Note Regarding Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in our definitions and reconciliations of GAAP to non-GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as adjusted noninterest expense, adjusted efficiency ratio, and net interest income on a fully taxable equivalent basis, which are all non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Bank's operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors should consider the Bank's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Bank. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Bank's results or financial condition as reported under GAAP.

Important Note Regarding Forward-Looking Statements

This information contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting Carter Bank & Trust and its future business and operations. Forward looking statements are typically identified by words or phrases such as "will likely result," "expect," "anticipate," "estimate," "forecast," "project," "intend," " believe," "assume," "strategy," "trend," "plan," "outlook," "outcome," "continue," "remain," "potential," "opportunity," "believe," "comfortable," "current," "position," "maintain," "sustain," "seek," "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses; cyber-security concerns; rapid technological developments and changes; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight; legislation affecting the financial services industry as a whole, and Carter Bank & Trust, in particular; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or more costly than anticipated; containing costs and expenses; reliance on significant customer relationships; general economic or business conditions; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our filings with the FDIC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Carter Bank & Trust
Wendy Bell, 276-656-1776
Executive Vice President & Chief Financial Officer
wendy.bell@carterbankandtrust.com

CARTER BANK & TRUST
CONSOLIDATED FINANCIAL DATA
BALANCE SHEETS
(Unaudited)

(Dollars in Thousands, except per share data)

 
September 30,
 
 
December 31,
 
 
September 30,
 

 
2019
 
 
2018
 
 
2018
 

ASSETS

Cash and Due From Banks

 
$
46,517
 
 
$
47,413
 
 
$
45,994
 

Interest-Bearing Deposits in Other Financial Institutions

 
 
44,540
 
 
 
61,612
 
 
 
39,669
 

Federal Reserve Bank Excess Reserves

 
 
35,108
 
 
 
184,798
 
 
 
89,373
 

Total Cash and Cash Equivalents

 
 
126,165
 
 
 
293,823
 
 
 
175,036
 

Securities, Available-for-Sale, at Fair Value

 
 
734,453
 
 
 
782,758
 
 
 
785,128
 

Loans Held-for-Sale

 
 
20,514
 
 
 
2,559
 
 
 
–
 

Portfolio Loans

 
 
2,903,701
 
 
 
2,703,792
 
 
 
2,807,016
 

Allowance for Loan Losses

 
 
(40,331
)
 
 
(39,199
)
 
 
(40,378
)

Portfolio Loans, net

 
 
2,863,370
 
 
 
2,664,593
 
 
 
2,766,638
 

Bank Premises and Equipment, net

 
 
86,531
 
 
 
85,841
 
 
 
83,035
 

Other Real Estate Owned, net

 
 
23,112
 
 
 
33,681
 
 
 
39,338
 

Goodwill

 
 
58,726
 
 
 
58,726
 
 
 
58,726
 

Federal Home Loan Bank Stock, at Cost

 
 
3,688
 
 
 
–
 
 
 
–
 

Bank Owned Life Insurance

 
 
52,240
 
 
 
51,161
 
 
 
50,773
 

Other Assets

 
 
51,277
 
 
 
66,457
 
 
 
69,514
 

TOTAL ASSETS

 
$
4,020,076
 
 
$
4,039,599
 
 
$
4,028,188
 

LIABILITIES

Deposits:

Noninterest-Bearing Demand

 
$
566,826
 
 
$
547,773
 
 
$
556,505
 

Interest-Bearing Demand

 
 
207,334
 
 
 
254,015
 
 
 
211,002
 

Money Market

 
 
157,123
 
 
 
80,835
 
 
 
77,811
 

Savings

 
 
569,392
 
 
 
610,757
 
 
 
634,206
 

Certificates of Deposits

 
 
2,021,306
 
 
 
2,097,801
 
 
 
2,109,861
 

Total Deposits

 
 
3,521,981
 
 
 
3,591,181
 
 
 
3,589,385
 

Other Liabilities

 
 
24,047
 
 
 
12,204
 
 
 
11,139
 

TOTAL LIABILITIES

 
 
3,546,028
 
 
 
3,603,385
 
 
 
3,600,524
 

SHAREHOLDERS' EQUITY

Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;

26,333,929 outstanding at September 30, 2019,

26,270,174 outstanding at December 31, 2018 and 26,257,761 at September 30, 2018

 
 
26,334
 
 
 
26,270
 
 
 
26,258
 

Additional Paid-in-Capital

 
 
142,380
 
 
 
142,175
 
 
 
142,178
 

Retained Earnings

 
 
300,552
 
 
 
277,835
 
 
 
274,429
 

Accumulated Other Comprehensive Income (Loss)

 
 
4,782
 
 
 
(10,066
)
 
 
(15,201
)

TOTAL SHAREHOLDERS' EQUITY

 
 
474,048
 
 
 
436,214
 
 
 
427,664
 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 
$
4,020,076
 
 
$
4,039,599
 
 
$
4,028,188
 

PROFITABILITY RATIOS (ANNUALIZED)

Return on Average Assets

 
 
0.75
%
 
 
0.29
%
 
 
0.28
%

Return on Average Shareholders' Equity

 
 
6.71
%
 
 
2.75
%
 
 
2.62
%

Portfolio Loan to Deposit Ratio

 
 
82.45
%
 
 
75.29
%
 
 
78.20
%

Allowance to Total Portfolio Loans

 
 
1.39
%
 
 
1.45
%
 
 
1.44
%

CAPITALIZATION RATIOS

Shareholders' Equity to Average Assets

 
 
11.59
%
 
 
10.70
%
 
 
10.73
%

Tier 1 Leverage Ratio

 
 
10.26
%
 
 
9.69
%
 
 
9.56
%

Risk-Based Capital – Tier 1

 
 
13.46
%
 
 
13.97
%
 
 
13.43
%

Risk-Based Capital – Total

 
 
14.71
%
 
 
15.22
%
 
 
14.68
%

CARTER BANK & TRUST
INCOME STATEMENTS
(Unaudited)

(Dollars in Thousands, except per share data)

 
Quarter-to-Date
 
 
Year-to-Date
 

 
September 30,
 
 
June 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 

 
2019
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 

Interest Income

 
$ 
40,154
 
 
$ 
40,068
 
 
$ 
38,207
 
 
$ 
119,361
 
 
$ 
112,157
 

Interest Expense

 
 
12,084
 
 
 
12,113
 
 
 
10,079
 
 
 
35,440
 
 
 
27,341
 

NET INTEREST INCOME

 
 
28,070
 
 
 
27,955
 
 
 
28,128
 
 
 
83,921
 
 
 
84,816
 

Provision for Loan Losses

 
 
1,390
 
 
 
1,369
 
 
 
13,743
 
 
 
4,386
 
 
 
16,988
 

NET INTEREST INCOME AFTER

 
 
26,680
 
 
 
26,586
 
 
 
14,385
 
 
 
79,535
 
 
 
67,828
 

PROVISION FOR LOAN LOSSES

NONINTEREST INCOME

Gains on Sales of Securities, net

 
 
659
 
 
 
909
 
 
 
195
 
 
 
1,599
 
 
 
1,195
 

Service Charges, Commissions and Fees

 
 
1,111
 
 
 
892
 
 
 
978
 
 
 
3,229
 
 
 
3,010
 

Debit Card Interchange Fees

 
 
1,340
 
 
 
1,320
 
 
 
1,171
 
 
 
3,834
 
 
 
3,538
 

Insurance

 
 
454
 
 
 
369
 
 
 
1,013
 
 
 
1,097
 
 
 
1,617
 

Bank Owned Life Insurance Income

 
 
362
 
 
 
356
 
 
 
380
 
 
 
1,079
 
 
 
773
 

Gains on Sales of Bank Premises, net

 
 
–
 
 
 
178
 
 
 
13
 
 
 
–
 
 
 
–
 

Other Real Estate Owned Income

 
 
96
 
 
 
231
 
 
 
729
 
 
 
617
 
 
 
2,244
 

Other

 
 
134
 
 
 
324
 
 
 
131
 
 
 
906
 
 
 
777
 

TOTAL NONINTEREST INCOME

 
 
4,156
 
 
 
4,579
 
 
 
4,610
 
 
 
12,361
 
 
 
13,154
 

NONINTEREST EXPENSE

Salaries and Employee Benefits

 
 
12,952
 
 
 
12,809
 
 
 
12,318
 
 
 
37,796
 
 
 
37,185
 

Occupancy Expense, net

 
 
3,040
 
 
 
2,836
 
 
 
2,802
 
 
 
8,703
 
 
 
7,448
 

FDIC Insurance Expense

 
 
(426
)
 
 
433
 
 
 
749
 
 
 
721
 
 
 
2,220
 

Other Taxes

 
 
747
 
 
 
711
 
 
 
725
 
 
 
2,101
 
 
 
1,845
 

Telephone Expense

 
 
557
 
 
 
562
 
 
 
584
 
 
 
1,624
 
 
 
1,896
 

Professional and Legal Fees

 
 
1,318
 
 
 
980
 
 
 
870
 
 
 
2,947
 
 
 
4,482
 

Data Processing

 
 
504
 
 
 
409
 
 
 
255
 
 
 
1,634
 
 
 
723
 

Losses on Sales and Write-downs of Other Real Estate Owned, net

 
 
293
 
 
 
88
 
 
 
2,977
 
 
 
569
 
 
 
2,404
 

Losses on Sales and Write-downs of Bank Premises, net

 
 
31
 
 
 
–
 
 
 
–
 
 
 
23
 
 
 
58
 

Debit Card Expense

 
 
620
 
 
 
830
 
 
 
720
 
 
 
2,160
 
 
 
2,034
 

Tax Credit Amortization

 
 
563
 
 
 
563
 
 
 
1,015
 
 
 
1,689
 
 
 
3,045
 

Other Real Estate Owned Expense

 
 
166
 
 
 
(46
)
 
 
583
 
 
 
209
 
 
 
1,821
 

Other

 
 
2,412
 
 
 
2,659
 
 
 
1,762
 
 
 
7,367
 
 
 
4,852
 

TOTAL NONINTEREST EXPENSE

 
 
22,777
 
 
 
22,834
 
 
 
25,360
 
 
 
67,543
 
 
 
70,013
 

INCOME (LOSS) BEFORE INCOME TAXES

 
 
8,059
 
 
 
8,331
 
 
 
(6,365)
 
 
 
24,353
 
 
 
10,969
 

Income Tax Provision

 
 
458
 
 
 
504
 
 
 
1,164
 
 
 
1,384
 
 
 
2,470
 

NET INCOME (LOSS)

 
$ 
7,601
 
 
$ 
7,827
 
 
$ 
(7,529)
 
 
$ 
22,969
 
 
$ 
8,499
 

Shares Outstanding, at End of Period

 
 
26,333,929
 
 
 
26,333,929
 
 
 
26,257,761
 
 
 
26,333,929
 
 
 
26,257,761
 

Average Shares Outstanding-Basic

 
 
26,333,929
 
 
 
26,333,929
 
 
 
26,257,761
 
 
 
26,320,472
 
 
 
26,257,761
 

Average Shares Outstanding-Diluted

 
 
26,352,910
 
 
 
26,347,635
 
 
 
26,257,761
 
 
 
26,331,268
 
 
 
26,257,761
 

PER SHARE DATA

Basic Earnings Per Common Share

 
$ 
0.29
 
 
$ 
0.30
 
 
$ 
(0.29
)
 
$ 
0.87
 
 
$ 
0.32
 

Diluted Earnings Per Common Share

 
$ 
0.29
 
 
$ 
0.30
 
 
$ 
(0.29
)
 
$ 
0.87
 
 
$ 
0.32
 

Book Value

 
$ 
18.00
 
 
$ 
17.63
 
 
$ 
16.29
 
 
$ 
18.00
 
 
$ 
16.29
 

Tangible Book Value2

 
$ 
15.77
 
 
$ 
15.40
 
 
$ 
14.05
 
 
$ 
15.77
 
 
$ 
14.05
 

Market Value

 
$ 
18.89
 
 
$ 
19.75
 
 
$ 
19.40
 
 
$ 
18.89
 
 
$ 
19.40
 

PROFITABILITY RATIOS (non-GAAP)

Net Interest Margin (FTE)3

 
 
3.01
%
 
 
3.02
%
 
 
3.07
%
 
 
3.04
%
 
 
3.09
%

Core Efficiency Ratio4

 
 
71.63
%
 
 
71.59
%
 
 
63.76
%
 
 
70.08
%
 
 
64.03
%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
NET INTEREST MARGIN (FTE) (QTD AVERAGES)
(Unaudited)

(Dollars in Thousands)

 
September 30, 2019
 
 
June 30, 2019
 
 
September 30, 2018
 

ASSETS

 
Average Balance
 
 
Income/ Expense
 
 
Rate
 
 
Average Balance
 
 
Income/ Expense
 
 
Rate
 
 
Average Balance
 
 
Income/ Expense
 
 
Rate
 

Interest-Bearing Deposits with Banks

 
$
99,827
 
 
$
557
 
 
 
2.21%
 
 
$
127,377
 
 
$
763
 
 
 
2.40%
 
 
$
76,422
 
 
$
400
 
 
 
2.08%
 

Tax-Free Investment Securities

 
 
33,452
 
 
 
332
 
 
 
3.94%
 
 
 
91,148
 
 
 
795
 
 
 
3.50%
 
 
 
121,633
 
 
 
1,146
 
 
 
3.74%
 

Taxable Investment Securities

 
 
751,665
 
 
 
4,698
 
 
 
2.48%
 
 
 
737,949
 
 
 
4,283
 
 
 
2.33%
 
 
 
737,647
 
 
 
3,845
 
 
 
2.07%
 

Tax-Free Loans

 
 
373,167
 
 
 
2,922
 
 
 
3.11%
 
 
 
387,053
 
 
 
3,088
 
 
 
3.20%
 
 
 
414,652
 
 
 
3,219
 
 
 
3.08%
 

Taxable Loans

 
 
2,526,509
 
 
 
32,270
 
 
 
5.07%
 
 
 
2,473,376
 
 
 
31,929
 
 
 
5.18%
 
 
 
2,406,854
 
 
 
30,513
 
 
 
5.03%
 

Federal Home Loan Bank Stock

 
 
3,688
 
 
 
58
 
 
 
6.24%
 
 
 
1,581
 
 
 
26
 
 
 
6.60%
 
 
 
–
 
 
 
–
 
 
 
–
 

Total Interest-Earning Assets

 
$
3,788,308
 
 
$
40,837
 
 
 
4.28%
 
 
$
3,818,484
 
 
$
40,884
 
 
 
4.29%
 
 
$
3,757,208
 
 
$
39,123
 
 
 
4.13%
 

LIABILITIES

Deposits:

Interest-Bearing Demand

 
$
222,062
 
 
$
404
 
 
 
0.72%
 
 
$
257,754
 
 
$
595
 
 
 
0.93%
 
 
$
227,823
 
 
$
491
 
 
 
0.86%
 

Money Market

 
 
156,509
 
 
 
552
 
 
 
1.40%
 
 
 
136,271
 
 
 
517
 
 
 
1.52%
 
 
 
92,861
 
 
 
225
 
 
 
0.96%
 

Savings

 
 
572,716
 
 
 
256
 
 
 
0.18%
 
 
 
586,923
 
 
 
498
 
 
 
0.34%
 
 
 
646,387
 
 
 
500
 
 
 
0.31%
 

Certificates of Deposit

 
 
2,048,043
 
 
 
10,853
 
 
 
2.10%
 
 
 
2,075,899
 
 
 
10,483
 
 
 
2.03%
 
 
 
2,090,147
 
 
 
8,843
 
 
 
1.68%
 

Total Interest-Bearing Deposits

 
$
2,999,330
 
 
$
12,065
 
 
 
1.60%
 
 
$
3,056,847
 
 
$
12,093
 
 
 
1.59%
 
 
$
3,057,218
 
 
$
10,059
 
 
 
1.31%
 

Borrowings:

Federal Funds Purchased

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
2,701
 
 
 
20
 
 
 
2.89%
 

Other Borrowings

 
 
1,226
 
 
 
19
 
 
 
6.15%
 
 
 
1,029
 
 
 
20
 
 
 
7.80%
 
 
 
–
 
 
 
–
 
 
 
–
 

Total Borrowings

 
 
1,226
 
 
 
19
 
 
 
6.15%
 
 
 
1,029
 
 
 
20
 
 
 
7.80%
 
 
 
2,701
 
 
 
20
 
 
 
2.89%
 

Total Interest-Bearing Liabilities

 
$
3,000,556
 
 
$
12,084
 
 
 
1.60%
 
 
$
3,057,876
 
 
$
12,113
 
 
 
1.59%
 
 
$
3,059,919
 
 
$
10,079
 
 
 
1.31%
 

Net Interest Income

 
 
 
 
 
$
28,753
 
 
 
 
 
 
 
 
 
 
$
28,771
 
 
 
 
 
 
 
 
 
 
$
29,044
 
 
 
 
 

Net Interest Margin

 
 
 
 
 
 
 
 
 
 
3.01%
 
 
 
 
 
 
 
 
 
 
 
3.02%
 
 
 
 
 
 
 
 
 
 
 
3.07%
 

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
NET INTEREST MARGIN (FTE) (YTD AVERAGES)
(Unaudited)

(Dollars in Thousands)

 
September 30, 2019
 
 
September 30, 2018
 

ASSETS

 
Average Balance
 
 
Income/ Expense
 
 
Rate
 
 
Average Balance
 
 
Income/ Expense
 
 
Rate
 

Interest-Bearing Deposits with Banks

 
$ 
132,855
 
 
$ 
2,341
 
 
 
2.36
%
 
$ 
126,171
 
 
$ 
1,762
 
 
 
1.87
%

Tax-Free Investment Securities

 
 
78,235
 
 
 
2,145
 
 
 
3.67
%
 
 
167,350
 
 
 
4,348
 
 
 
3.47
%

Taxable Investment Securities

 
 
730,519
 
 
 
13,103
 
 
 
2.40
%
 
 
766,345
 
 
 
11,664
 
 
 
2.03
%

Tax-Free Loans

 
 
386,993
 
 
 
9,324
 
 
 
3.22
%
 
 
424,223
 
 
 
9,829
 
 
 
3.10
%

Taxable Loans

 
 
2,465,823
 
 
 
94,773
 
 
 
5.14
%
 
 
2,312,818
 
 
 
87,531
 
 
 
5.06
%

Federal Home Loan Bank Stock

 
 
1,770
 
 
 
84
 
 
 
6.35
%
 
 
–
 
 
 
–
 
 
 
–
 

Total Interest-Earning Assets

 
$ 
3,796,195
 
 
$ 
121,770
 
 
 
4.29
%
 
$ 
3,796,907
 
 
$ 
115,134
 
 
 
4.05
%

LIABILITIES

Deposits:

Interest-Bearing Demand

 
$ 
250,163
 
 
$ 
1,640
 
 
 
0.88
%
 
$ 
250,070
 
 
$ 
1,410
 
 
 
0.75
%

Money Market

 
 
128,035
 
 
 
1,312
 
 
 
1.37
%
 
 
100,511
 
 
 
525
 
 
 
0.70
%

Savings

 
 
588,529
 
 
 
1,240
 
 
 
0.28
%
 
 
678,308
 
 
 
1,539
 
 
 
0.30
%

Certificates of Deposit

 
 
2,074,015
 
 
 
31,190
 
 
 
2.01
%
 
 
2,047,643
 
 
 
23,847
 
 
 
1.56
%

Total Interest-Bearing Deposits

 
$ 
3,040,742
 
 
$ 
35,382
 
 
 
1.56
%
 
$ 
3,076,532
 
 
$ 
27,321
 
 
 
1.19
%

Borrowings:

Federal Funds Purchased

 
 
–
 
 
 
–
 
 
 
–
 
 
 
910
 
 
 
20
 
 
 
2.89
%

Other Borrowings

 
 
872
 
 
 
59
 
 
 
9.05
%
 
 
–
 
 
 
–
 
 
 
–
 

Total Borrowings

 
 
872
 
 
 
59
 
 
 
9.05
%
 
 
910
 
 
 
20
 
 
 
2.89
%

Total Interest-Bearing Liabilities

 
$ 
3,041,614
 
 
$ 
35,441
 
 
 
1.56
%
 
$ 
3,077,442
 
 
$ 
27,341
 
 
 
1.19
%

Net Interest Income

 
 
 
 
 
$ 
86,329
 
 
 
 
 
 
 
 
 
 
$ 
87,793
 
 
 
 
 

Net Interest Margin

 
 
 
 
 
 
 
 
 
 
3.04
%
 
 
 
 
 
 
 
 
 
 
3.09
%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
LOANS AND LOANS HELD-FOR-SALE
(Unaudited)

 
September 30,
 
 
December 31,
 
 
September 30,
 

(Dollars in Thousands)

 
2019
 
 
2018
 
 
2018
 

Commercial

Commercial Real Estate

 
$
1,421,850
 
 
$
1,381,231
 
 
$
1,409,090
 

Commercial and Industrial

 
 
649,190
 
 
 
660,872
 
 
 
816,124
 

Commercial Construction

 
 
289,715
 
 
 
238,016
 
 
 
188,702
 

Total Commercial Loans

 
 
2,360,755
 
 
 
2,280,119
 
 
 
2,413,916
 

Consumer

Residential Mortgages

 
 
446,378
 
 
 
339,307
 
 
 
294,980
 

Other Consumer

 
 
72,917
 
 
 
73,058
 
 
 
80,790
 

Consumer Construction

 
 
23,651
 
 
 
11,308
 
 
 
14,529
 

Total Consumer Loans

 
 
542,946
 
 
 
423,673
 
 
 
390,299
 

Total Portfolio Loans

 
 
2,903,701
 
 
 
2,703,792
 
 
 
2,804,215
 

Loans Held-for-Sale

 
 
20,514
 
 
 
2,559
 
 
 
–
 

Total Loans

 
$
2,924,215
 
 
$
2,706,351
 
 
$
2,804,215
 

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
ASSET QUALITY DATA
(Unaudited)

(Dollars in Thousands)

 
September 30,
 
 
December 31,
 
 
September 30,
 

Nonperforming Loans

 
2019
 
 
2018
 
 
2018
 

Real Estate

 
$ 
7,759
 
 
$ 
3,289
 
 
$ 
43
 

Consumer

 
 
363
 
 
 
65
 
 
 
–
 

Commercial

 
 
606
 
 
 
606
 
 
 
–
 

Total Nonperforming Loans

 
 
8,728
 
 
 
3,960
 
 
 
43
 

Nonperforming Troubled Debt Restructurings

Real Estate

 
 
38,377
 
 
 
46,771
 
 
 
48,124
 

Consumer

 
 
–
 
 
 
–
 
 
 
–
 

Commercial

 
 
–
 
 
 
–
 
 
 
–
 

Total Nonperforming Troubled Debt Restructurings

 
 
38,377
 
 
 
46,771
 
 
 
48,124
 

Total Nonperforming Loans and Troubled Debt Restructurings

 
 
47,105
 
 
 
50,731
 
 
 
48,167
 

Other Real Estate Owned

 
 
23,112
 
 
 
33,681
 
 
 
39,338
 

Total Nonperforming Assets

 
$ 
70,217
 
 
$ 
84,412
 
 
$ 
87,505
 

 
September 30,
 
 
December 31,
 
 
September 30,
 

 
2019
 
 
2018
 
 
2018
 

Nonperforming Loans

 
$
47,105
 
 
$
50,731
 
 
$
48,167
 

Other Real Estate Owned

 
 
23,112
 
 
 
33,681
 
 
 
39,338
 

Nonperforming Assets

 
 
70,217
 
 
 
84,412
 
 
 
87,505
 

Troubled Debt Restructurings (Nonaccruing)

 
 
38,377
 
 
 
46,771
 
 
 
48,124
 

Troubled Debt Restructurings (Accruing)

 
 
113,725
 
 
 
114,806
 
 
 
291,698
 

Total Troubled Debt Restructurings

 
$
152,102
 
 
$
161,577
 
 
$
339,822
 

Nonperforming Loans to Total Portfolio Loans

 
 
1.62
%
 
 
1.88
%
 
 
1.72
%

Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned

 
 
2.40
%
 
 
3.08
%
 
 
3.07
%

Allowance for Loan Losses to Total Portfolio Loans

 
 
1.39
%
 
 
1.45
%
 
 
1.44
%

Allowance for Loan Losses to Nonperforming Loans

 
 
85.62
%
 
 
77.27
%
 
 
83.83
%

Net Loan Charge-offs (Recoveries)

 
$
3,254
 
 
$
12,989
 
 
$
11,928
 

Net Loan Charge-offs (Recoveries) (Annualized) to Average Loans

 
 
0.15
%
 
 
0.47
%
 
 
0.58
%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
ALLOWANCE FOR LOAN LOSSES
(Unaudited)

 
September 30,
 
 
December 31,
 
 
September 30,
 

(Dollars in Thousands)

 
2019
 
 
2018
 
 
2018
 

Balance Beginning of Year

 
$ 
39,199
 
 
$ 
35,318
 
 
$ 
35,318
 

Provision for Loan Losses

 
 
4,386
 
 
 
16,870
 
 
 
16,988
 

Charge-offs:

Real Estate Loans

 
 
659
 
 
 
11,924
 
 
 
11,749
 

Consumer Loans

 
 
3,039
 
 
 
2,710
 
 
 
1,727
 

Commercial Loans

 
 
3
 
 
 
20
 
 
 
6
 

Total Charge-offs

 
 
3,701
 
 
 
14,654
 
 
 
13,482
 

Recoveries:

Real Estate Loans

 
 
–
 
 
 
1,415
 
 
 
1,415
 

Consumer Loans

 
 
447
 
 
 
250
 
 
 
139
 

Commercial Loans

 
 
–
 
 
 
–
 
 
 
–
 

Total Recoveries

 
 
447
 
 
 
1,665
 
 
 
1,554
 

Total Net Charge-offs

 
 
3,254
 
 
 
12,989
 
 
 
11,928
 

Balance End of Year

 
$ 
40,331
 
 
$ 
39,199
 
 
$ 
40,378
 

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
(Unaudited)
(Dollars in Thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

1Pre-tax pre-provision earnings are computed as net interest income plus noninterest income minus noninterest expense before the provision for loan losses and income tax provision.

2Tangible Equity

 
Quarter-to-Date
 
 
Year-to-Date
 

 
September 30,
 
 
June 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 

 
2019
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 

Total Shareholders' Equity

 
$
474,048
 
 
$
464,233
 
 
$
427,664
 
 
$
474,048
 
 
$
427,664
 

Less: Goodwill

 
 
58,726
 
 
 
58,726
 
 
 
58,726
 
 
 
58,726
 
 
 
58,726
 

Tangible Equity

 
 
415,322
 
 
 
405,507
 
 
 
368,938
 
 
 
415,322
 
 
 
368,938
 

Shares Outstanding at End of Period

 
 
26,333,929
 
 
 
26,333,929
 
 
 
26,257,761
 
 
 
26,333,929
 
 
 
26,257,761
 

Tangible Book Value Per Common Share

 
$
15.77
 
 
$
15.40
 
 
$
14.05
 
 
$
15.77
 
 
$
14.05
 

3Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2019 and 2018 periods.

Net Interest Income (FTE) (Non-GAAP)

 
Quarter-to-Date
 
 
Year-to-Date
 

 
September 30,
 
 
June 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 

 
2019
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 

Interest Income

 
$
40,154
 
 
$
40,068
 
 
$
38,207
 
 
$
119,361
 
 
$
112,157
 

Interest Expense

 
 
(12,084
)
 
 
(12,113
)
 
 
(10,079
)
 
 
(35,440
)
 
 
(27,341
)

Net Interest Income

 
 
28,070
 
 
 
27,955
 
 
 
28,128
 
 
 
83,921
 
 
 
84,816
 

Tax Equivalent Adjustment3

 
 
683
 
 
 
816
 
 
 
916
 
 
 
2,408
 
 
 
2,977
 

NET INTEREST INCOME (FTE) (Non-GAAP)

 
$
28,753
 
 
$
28,771
 
 
$
29,044
 
 
$
86,329
 
 
$
87,793
 

Net Interest Income (Annualized)

 
 
114,074
 
 
 
115,400
 
 
 
115,229
 
 
 
115,422
 
 
 
117,379
 

Average Earning Assets

 
 
3,788,308
 
 
 
3,818,484
 
 
 
3,757,208
 
 
$
3,796,195
 
 
$
3,796,907
 

NET INTEREST MARGIN (FTE) (Non-GAAP)

 
 
3.01%
 
 
 
3.02%
 
 
 
3.07%
 
 
 
3.04%
 
 
 
3.09%
 

4Core Efficiency Ratio (Non-GAAP)

 
Quarter-to-Date
 
 
Year-to-Date
 

 
September 30,
 
 
June
30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 

 
2019
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 

NONINTEREST EXPENSE

 
$
22,777
 
 
$
22,834
 
 
$
25,360
 
 
$
67,543
 
 
$
70,013
 

Less: One Time Regulatory and Compliance

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
(1,853
)

Less: Losses on Sales and Write-downs of Other Real Estate Owned, net

 
 
(293
)
 
 
(88
)
 
 
(2,977
)
 
 
(569
)
 
 
(2,404
)

Less: Losses on Sales and Write-downs of Bank Premises, net

 
 
(31
)
 
 
–
 
 
 
–
 
 
 
(23
)
 
 
(58
)

Less: Tax Credit Amortization

 
 
(563
)
 
 
(563
)
 
 
(1,015
)
 
 
(1,689
)
 
 
(3,045
)

Plus: Regulatory Review

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
323
 

Plus: Contingent Liability

 
 
–
 
 
 
331
 
 
 
(331
)
 
 
331
 
 
 
(331
)

Less: Conversion Expense

 
 
–
 
 
 
–
 
 
 
(177
)
 
 
(2
)
 
 
(448
)

Plus: FDIC Assessment Credits

 
 
1,056
 
 
 
–
 
 
 
–
 
 
 
1,056
 
 
 
–
 

Plus: Conversion Vacation Accrual

 
 
86
 
 
 
291
 
 
 
–
 
 
 
646
 
 
 
–
 

CORE NONINTEREST EXPENSE (Non-GAAP)

 
$
23,032
 
 
$
22,805
 
 
$
20,860
 
 
$
67,293
 
 
$
62,197
 

NET INTEREST INCOME

 
$
28,070
 
 
$
27,955
 
 
$
28,128
 
 
$
83,921
 
 
$
84,816
 

Plus: Taxable Equivalent Adjustment3

 
 
683
 
 
 
816
 
 
 
916
 
 
 
2,408
 
 
 
2,977
 

NET INTEREST INCOME (FTE) (Non-GAAP)

 
$
28,753
 
 
$
28,771
 
 
$
29,044
 
 
$
86,329
 
 
$
87,793
 

Less: Gains on Sales of Securities, net

 
 
(659
)
 
 
(909
)
 
 
(195
)
 
 
(1,599
)
 
 
(1,195
)

Less: Gains on Sales of Other Real Estate Owned, net

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 

Less: Gains on Sales Bank Premises, net

 
 
–
 
 
 
(178
)
 
 
(13
)
 
 
–
 
 
 
–
 

Less: Other Real Estate Owned Income

 
 
(96
)
 
 
(231
)
 
 
(729
)
 
 
(617
)
 
 
(2,244
)

Less: Other Gains

 
 
–
 
 
 
(176
)
 
 
–
 
 
 
(447
)
 
 
(374
)

Noninterest Income

 
 
4,156
 
 
 
4,579
 
 
 
4,610
 
 
 
12,361
 
 
 
13,154
 

CORE NET INTEREST INCOME (FTE) (Non-GAAP) plus NONINTEREST INCOME

 
$
32,154
 
 
$
31,856
 
 
$
32,717
 
 
$
96,027
 
 
$
97,134
 

CORE EFFICIENCY RATIO (Non-GAAP)

 
 
71.63%
 
 
 
71.59%
 
 
 
63.76%
 
 
 
70.08%
 
 
 
64.03%
 

SOURCE: Carter Bank & Trust

ReleaseID: 563919