Carter Bank & Trust Announces Fourth Quarter 2019 Financial Results
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Carter Bank & Trust Announces Fourth Quarter 2019 Financial Results

Tuesday, January 28, 2020 8:00 AM
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Earnings

MARTINSVILLE, VA / ACCESSWIRE / January 28, 2020 / Carter Bank & Trust (the "Bank") (NASDAQ:CARE) today announced net income of $3.6 million, or $0.14 diluted earnings per share, for the fourth quarter of 2019, as compared to net income of $7.6 million, or $0.29 diluted earnings per share, in the third quarter of 2019 and net income of $3.4 million, or $0.13 diluted earnings per share, for the fourth quarter of 2018. Pre-tax pre-provision earnings were $2.4 million, $9.4 million and $3.2 million for the quarters ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

For the year ended December 31, 2019, net income was $26.6 million, or $1.01 diluted earnings per share, as compared to net income of $11.9 million, or $0.45 diluted earnings per share in 2018. Pre-tax pre-provision earnings were $31.2 million for the years ended December 31, 2019 and 2018.

Fourth Quarter 2019 Financial Highlights

  • Net interest margin, on a fully taxable equivalent basis, increased five basis points to 3.06% over the linked quarter, but declined 10 basis points over the same quarter last year;
  • Net interest income increased $0.4 million, or 1.3%, over the linked quarter, but decreased $0.7 million, or 2.3%, over the same quarter last year;
  • Securities gains of $0.6 million were realized in the fourth quarter of 2019 to take advantage of market opportunities and reposition and diversify holdings in the securities portfolio, as compared to securities gains of $0.7 million in the linked quarter and $0.1 million in the same period of 2018;
  • Loans were essentially flat as compared to the linked quarter due to several large commercial real estate loan pay-offs during the fourth quarter, but loans grew $198.1 million, or 7.3%, as compared to December 31, 2018;
  • Provision for loan losses declined $2.4 million as compared to linked quarter due to loan growth muted by large commercial real estate pay-offs during the fourth quarter of 2019, continued improvement in asset quality and tightened underwriting standards and decreased $0.9 million as compared to the same quarter of 2018;
  • Noninterest expense increased $7.7 million, or 33.8%, compared to linked quarter primarily due to one-time charges of $3.1 million of a write-down of legacy other real estate owned ("OREO") and $1.0 million of write-downs on retail branch offices marketed for sale. Other increases included $1.0 million in FDIC insurance due to the one-time credit in the third quarter of 2019, $2.1 million in salaries and benefits and $0.7 million for marketing expenses associated with our deposit acquisition strategy and
  • Nonperforming loans declined $5.0 million, or 10.6% as compared to linked quarter and declined $8.6 million, or 16.9% as compared to December 31, 2018. Nonperforming loans as a percentage of total portfolio loans were 1.46%, 1.62% and 1.88% as of December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

2019 Year-to-Date Financial Highlights

  • Net interest margin, on a fully taxable equivalent basis, declined five basis points to 3.05% year-over-year;
  • Net interest income decreased $1.6 million, or 1.4%, to $112.3 million year-over-year;
  • Provision for loan losses declined $13.5 million, or 79.8%, as compared to the same year-to-date period 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
  • Securities gains of $2.2 million were realized in 2019 to take advantage of market opportunities and reposition and diversify holdings in the securities portfolio, as compared to securities gains of $1.3 million in 2018.

Chief Executive Officer Litz H. Van Dyke said, "We continue to be pleased with the progress our Bank is making in repositioning key performance drivers of our financial performance. The fourth quarter of 2019 saw continued improvement in credit quality, improvement in our net interest margin, despite a challenging rate environment, and traction in the launch of our core deposit acquisition strategy. We have implemented several strategic initiatives that are beginning to positively affect current performance and better position our Bank to create value for our shareholders in the long-term. We remain focused on continuing to improve the fundamental performance of the Bank and improving our ability to attract and retain core customer relationships. We are excited about our underlying momentum heading into 2020."

Operating Highlights

Net interest income decreased $1.6 million, or 1.4%, to $112.3 million during 2019 as compared to 2018. The net interest margin, on a fully taxable equivalent basis, decreased five basis points to 3.05% over the past twelve months. The yield on interest-earning assets increased 17 basis points, offset by a 32 basis point increase in funding costs as compared to 2018.

The provision for loan losses totaled $3.4 million for the twelve months ended December 31, 2019 and $16.9 million for the same period of 2018. At December 31, 2019, nonperforming loans were $42.1 million, a decrease of $8.6 million, or 16.9% as compared to December 31, 2018. Net charge-offs were $3.8 million during 2019 as compared to $13.0 million in 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, net charge-offs were 0.13% and 0.48% for the periods ended December 31, 2019 and 2018, respectively. Nonperforming loans as a percentage of total portfolio loans were 1.46% and 1.88% as of December 31, 2019 and 2018, respectively.

Noninterest income decreased $1.1 million, or 6.7%, to $14.7 million, excluding net securities gains, for the twelve months ended December 31, 2019 as compared to 2018. This decrease was primarily due to lower income from 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, debit card fees and higher bank owned life insurance earnings. Securities gains of $2.2 million and $1.3 million were realized during 2019 and 2018, respectively, to take advantage of market opportunities and reposition and diversify holdings in the securities portfolio.

Total noninterest expense decreased $1.7 million, or 1.7%, for the twelve months of 2019 to $98.0 million as compared to $99.7 million in 2018. The reduction was primarily driven by decreases of $1.7 million in FDIC insurance expense, $0.8 million in legal and professional fees, $1.8 million in tax credit amortization and $5.1 million in OREO expenses and losses on sales and write-downs of OREO due to fewer properties under management during 2019, offset by increases of $2.9 million in salaries and benefits, $1.5 million in occupancy expense, $0.6 million in data processing and $2.8 million in other expenses.

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 $2.9 million in salaries and benefits, $0.6 million in data processing expense due to our core conversion completed in the fourth quarter of 2018, $1.5 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 $2.8 million in other expenses primarily comprised of increased ancillary systems, subscriptions, employee training and higher marketing expenses related to our deposit acquisition strategy.

Financial Condition

Total assets were $4.0 billion at December 31, 2019 and 2018. Total portfolio loans increased $181.0 million, or 6.7%, to $2.9 billion as of December 31, 2019 as compared to December 31, 2018. Nonperforming loans decreased $8.6 million to $42.1 million, or 16.9% as of December 31, 2019 as compared to $50.7 million at December 31, 2018. OREO decreased $15.4 million at December 31, 2019 as compared to December 31, 2018 due to the sale of properties during 2019. Closed retail bank offices declined $3.8 million from December 31, 2018 and have a remaining book value of $3.0 million at December 31, 2019.

Federal Reserve Bank excess reserves decreased $145.5 million at December 31, 2019 as compared to December 31, 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 $40.1 million and is currently 18.5% of total assets at December 31, 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 December 31, 2019 and $3.6 billion as of December 31, 2018. Noninterest-bearing deposits increased by $7.1 million, or 1.3%, to $554.9 million as of December 31, 2019 as compared to $547.8 million as of December 31, 2018, money market accounts increased $59.8 million, or 73.9%, due to recent special rate promotions during 2019 and interest-bearing demand deposits increased $32.5 million, or 12.8%. Offsetting these increases were decreases of $48.9 million, or 8.0%, in savings accounts and $137.4 million in certificates of deposits as compared to December 31, 2018. Noninterest-bearing deposits comprised 15.8% and 15.3% of total deposits at December 31, 2019 and 2018, respectively.

The allowance for loan losses was 1.34% of total portfolio loans as of December 31, 2019 as compared to 1.45% as of December 31, 2018. General reserves as a percentage of total portfolio loans were 1.13% at December 31, 2019 as compared to 1.26% as of December 31, 2018. The allowance for loan losses was 92.0% of nonperforming loans as of December 31, 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 13.56% as of December 31, 2019 as compared to 13.97% as of December 31, 2018. The Bank's leverage ratio was 10.41% at December 31, 2019 as compared to 9.69% as of December 31, 2018. The Bank's Total Risk-Based Capital ratio was 14.81% at December 31, 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 101 branches in Virginia and North Carolina. For more information visit www.CBTCares.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
Senior Executive Vice President & Chief Financial Officer

[email protected]

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

(Dollars in Thousands, except per share data)
  December 31,     September 30,     December 31,  
 
  2019     2019     2018  
ASSETS
                 
Cash and Due From Banks
  $ 41,386     $ 46,517     $ 47,413  
Interest-Bearing Deposits in Other Financial Institutions
    45,156       44,540       61,612  
Federal Reserve Bank Excess Reserves
    39,270       35,108       184,798  
Total Cash and Cash Equivalents
    125,812       126,165       293,823  
 
                       
Securities, Available-for-Sale, at Fair Value
    742,617       734,453       782,758  
Loans Held-for-Sale
    19,714       20,514       2,559  
Portfolio Loans
    2,884,766       2,903,701       2,703,792  
Allowance for Loan Losses
    (38,762 )     (40,331 )     (39,199 )
Portfolio Loans, net
    2,846,004       2,863,370       2,664,593  
 
                       
Bank Premises and Equipment, net
    85,942       86,531       85,841  
Other Real Estate Owned, net
    18,324       23,112       33,681  
Goodwill
    58,726       58,726       58,726  
Federal Home Loan Bank Stock, at Cost
    4,113       3,688       -  
Bank Owned Life Insurance
    52,597       52,240       51,161  
Other Assets
    52,259       51,277       66,457  
TOTAL ASSETS
  $ 4,006,108     $ 4,020,076     $ 4,039,599  
 
                       
 
                       
LIABILITIES
                       
Deposits:
                       
Noninterest-Bearing Demand
  $ 554,875     $ 566,826     $ 547,773  
Interest-Bearing Demand
    286,561       207,334       254,015  
Money Market
    140,589       157,123       80,835  
Savings
    561,814       569,392       610,757  
Certificates of Deposits
    1,960,406       2,021,306       2,097,801  
Total Deposits
    3,504,245       3,521,981       3,591,181  
Other Liabilities
    28,752       24,047       12,204  
TOTAL LIABILITIES
    3,532,997       3,546,028       3,603,385  
 
                       
 
                       
SHAREHOLDERS' EQUITY
                       
Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;
                       
26,334,229 outstanding at December 31, 2019,
                       
26,333,929 outstanding at September 30, 2019 and 26,270,174 at December 31, 2018
    26,334       26,334       26,270  
Additional Paid-in-Capital
    142,492       142,380       142,175  
Retained Earnings
    304,158       300,552       277,835  
Accumulated Other Comprehensive Income (Loss)
    127       4,782       (10,066 )
TOTAL SHAREHOLDERS' EQUITY
    473,111       474,048       436,214  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 4,006,108     $ 4,020,076     $ 4,039,599  
 
                       
PROFITABILITY RATIOS (ANNUALIZED)
                       
Return on Average Assets
    0.65 %     0.75 %     0.29 %
Return on Average Shareholders' Equity
    5.76 %     6.71 %     2.75 %
Portfolio Loan to Deposit Ratio
    82.32 %     82.45 %     75.29 %
Allowance to Total Portfolio Loans
    1.34 %     1.39 %     1.45 %
 
                       
CAPITALIZATION RATIOS
                       
Shareholders' Equity to Assets
    11.81 %     11.79 %     10.80 %
Tier 1 Leverage Ratio
    10.41 %     10.26 %     9.69 %
Risk-Based Capital - Tier 1
    13.56 %     13.46 %     13.97 %
Risk-Based Capital - Total
    14.81 %     14.71 %     15.22 %
 
                       

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
INCOME STATEMENTS
(Unaudited)

(Dollars in Thousands, except per share data)
  Quarter-to-Date     Year-to-Date  
 
  December 31,     September 30,     December 31,     December 31,     December 31,  
 
  2019     2019     2018     2019     2018  
Interest Income
  39,759     40,154     39,862     159,120     152,019  
Interest Expense
    11,333       12,084       10,773       46,773       38,114  
NET INTEREST INCOME
    28,426       28,070       29,089       112,347       113,905  
 
                                       
Provision for Loan Losses
    (982 )     1,390       (118 )     3,404       16,870  
NET INTEREST INCOME AFTER
    29,408       26,680       29,207       108,943       97,035  
PROVISION FOR LOAN LOSSES
                                       
 
                                       
NONINTEREST INCOME
                                       
Gains on Sales of Securities, net
    606       659       76       2,205       1,271  
Service Charges, Commissions and Fees
    1,733       1,111       1,071       4,962       4,081  
Debit Card Interchange Fees
    1,326       1,340       1,212       5,160       4,750  
Insurance
    128       454       238       1,225       1,855  
Bank Owned Life Insurance Income
    357       362       388       1,436       1,161  
Other Real Estate Owned Income
    72       96       448       689       2,692  
Other
    287       134       399       1,193       1,176  
TOTAL NONINTEREST INCOME
    4,509       4,156       3,832       16,870       16,986  
 
                                       
NONINTEREST EXPENSE
                                       
Salaries and Employee Benefits
    15,083       12,952       12,773       52,879       49,958  
Occupancy Expense, net
    3,082       3,040       2,864       11,785       10,312  
FDIC Insurance Expense
    549       (426 )     765       1,270       2,985  
Other Taxes
    746       747       726       2,847       2,571  
Telephone Expense
    578       557       570       2,202       2,466  
Professional and Legal Fees
    1,560       1,318       806       4,507       5,288  
Data Processing
    449       504       782       2,083       1,505  
Losses on Sales and Write-downs of Other Real Estate Owned, net
    4,163       293       5,797       4,732       8,201  
Losses on Sales and Write-downs of Bank Premises, net
    165       31       128       188       186  
Debit Card Expense
    593       620       751       2,753       2,785  
Tax Credit Amortization
    576       563       1,015       2,265       4,060  
Other Real Estate Owned Expense
    265       166       318       474       2,139  
Other
    2,677       2,412       2,405       10,044       7,257  
TOTAL NONINTEREST EXPENSE
    30,486       22,777       29,700       98,029       99,713  
 
                                       
INCOME BEFORE INCOME TAXES
    3,431       8,059       3,339       27,784       14,308  
Income Tax Provision (Benefit)
    (175 )     458       (67 )     1,209       2,403  
NET INCOME
  3,606     7,601     3,406     26,575     11,905  
 
                                       
Shares Outstanding, at End of Period
    26,334,229       26,333,929       26,270,174       26,334,229       26,270,174  
Average Shares Outstanding-Basic
    26,334,069       26,333,929       26,263,563       26,323,899       26,259,223  
Average Shares Outstanding-Diluted
    26,362,129       26,352,910       26,263,597       26,339,085       26,259,234  
 
                                       
PER SHARE DATA
                                       
Basic Earnings Per Common Share
  0.14     0.29     0.13     1.01     0.45  
Diluted Earnings Per Common Share
  0.14     0.29     0.13     1.01     0.45  
Book Value
  17.97     18.00     16.60     17.97     16.60  
Tangible Book Value2
  15.74     15.77     14.37     15.74     14.37  
Market Value
  23.72     18.89     15.00     23.72     15.00  
 
                                       
PROFITABILITY RATIOS (non-GAAP)
                                       
Net Interest Margin (FTE)3
    3.06 %     3.01 %     3.16 %     3.05 %     3.10 %
Core Efficiency Ratio4
    76.13 %     71.63 %     64.48 %     71.62 %     64.15 %
 
                                       

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

(Dollars in Thousands)
  December 31, 2019     September 30, 2019     December 31, 2018  
ASSETS
  Average Balance     Income/ Expense     Rate     Average Balance     Income/ Expense     Rate     Average Balance     Income/ Expense     Rate  
Interest-Bearing Deposits with Banks
  $ 97,512     $ 410       1.67 %   $ 99,827     $ 557       2.21 %   $ 151,221     $ 920       2.41 %
Tax-Free Investment Securities
    20,337       207       4.04 %     33,452       332       3.94 %     110,148       1,027       3.70 %
Taxable Investment Securities
    730,444       4,723       2.57 %     751,665       4,698       2.48 %     693,162       3,757       2.15 %
Tax-Free Loans
    355,639       2,830       3.16 %     373,167       2,922       3.11 %     407,391       2,965       2.89 %
Taxable Loans
    2,558,192       32,167       4.99 %     2,526,509       32,270       5.07 %     2,394,188       32,033       5.31 %
Federal Home Loan Bank Stock
    4,081       60       5.83 %     3,688       58       6.24 %     -       -       -  
Total Interest-Earning Assets
  $ 3,766,205     $ 40,397       4.26 %   $ 3,788,308     $ 40,837       4.28 %   $ 3,756,110     $ 40,702       4.30 %
 
                                                                       
LIABILITIES
                                                                       
Deposits:
                                                                       
Interest-Bearing Demand
  $ 245,887     $ 364       0.59 %   $ 222,062     $ 404       0.72 %   $ 236,604     $ 549       0.92 %
Money Market
    154,381       358       0.92 %     156,509       552       1.40 %     82,003       170       0.82 %
Savings
    563,401       148       0.10 %     572,716       256       0.18 %     619,703       488       0.31 %
Certificates of Deposit
    1,994,916       10,403       2.07 %     2,048,043       10,853       2.10 %     2,104,294       9,567       1.80 %
Total Interest-Bearing Deposits
  $ 2,958,585     $ 11,273       1.51 %   $ 2,999,330     $ 12,065       1.60 %   $ 3,042,604     $ 10,774       1.40 %
Borrowings:
                                                                       
FHLB Borrowings
    9,239       39       1.67 %     -       -       -       -       -       -  
Other Borrowings
    1,547       21       5.39 %     1,226       19       6.15 %     -       -       -  
Total Borrowings
    10,786       60       2.21 %     1,226       19       6.15 %     -       -       -  
Total Interest-Bearing Liabilities
  $ 2,969,371     $ 11,333       1.51 %   $ 3,000,556     $ 12,084       1.60 %   $ 3,042,604     $ 10,774       1.40 %
Net Interest Income
          $ 29,064                     $ 28,753                     $ 29,928          
Net Interest Margin
                    3.06 %                     3.01 %                     3.16 %
 
                                                                       

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

(Dollars in Thousands)
  December 31, 2019     December 31, 2018  
ASSETS
  Average Balance     Income/ Expense     Rate     Average Balance     Income/ Expense     Rate  
Interest-Bearing Deposits with Banks
  $ 123,946     $ 2,751       2.22 %   $ 134,406     $ 2,682       2.00 %
Tax-Free Investment Securities
    63,641       2,352       3.70 %     153,036       5,375       3.51 %
Taxable Investment Securities
    730,500       17,826       2.44 %     753,023       15,421       2.05 %
Tax-Free Loans
    379,090       12,154       3.21 %     419,981       12,794       3.05 %
Taxable Loans
    2,489,105       126,940       5.10 %     2,331,165       119,563       5.13 %
Federal Home Loan Bank Stock
    2,352       144       6.12 %     -       -       -  
Total Interest-Earning Assets
  $ 3,788,634     $ 162,167       4.28 %   $ 3,791,611     $ 155,835       4.11 %
 
                                               
LIABILITIES
                                               
Deposits:
                                               
Interest-Bearing Demand
  $ 249,086     $ 2,004       0.80 %   $ 246,592     $ 1,959       0.79 %
Money Market
    134,676       1,671       1.24 %     96,068       694       0.72 %
Savings
    582,195       1,388       0.24 %     663,801       2,027       0.31 %
Certificates of Deposit
    2,054,077       41,593       2.02 %     2,090,103       33,414       1.60 %
Total Interest-Bearing Deposits
  $ 3,020,034     $ 46,656       1.54 %   $ 3,096,564     $ 38,094       1.23 %
Borrowings:
                                               
Federal Funds Purchased
    -       -       -       681       20       2.94 %
FHLB Borrowings
    2,329       39       1.67 %     -       -       -  
Other Borrowings
    1,042       79       7.58 %     -       -       -  
Total Borrowings
    3,371       118       3.50 %     681       20       2.94 %
Total Interest-Bearing Liabilities
  $ 3,023,405     $ 46,774       1.55 %   $ 3,097,245     $ 38,114       1.23 %
Net Interest Income
          $ 115,393                     $ 117,721          
Net Interest Margin
                    3.05 %                     3.10 %
 
                                               

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

                   
 
  December 31,     September 30,     December 31,  
(Dollars in Thousands)
  2019     2019     2018  
Commercial
                 
Commercial Real Estate
  $ 1,385,696     $ 1,421,850     $ 1,381,231  
Commercial and Industrial
    620,420       649,190       660,872  
Commercial Construction
    326,654       289,715       238,016  
Total Commercial Loans
    2,332,770       2,360,755       2,280,119  
Consumer
                       
Residential Mortgages
    461,572       446,378       339,307  
Other Consumer
    73,688       72,917       73,058  
Consumer Construction
    16,736       23,651       11,308  
Total Consumer Loans
    551,996       542,946       423,673  
Total Portfolio Loans
    2,884,766       2,903,701       2,703,792  
Loans Held-for-Sale
    19,714       20,514       2,559  
Total Loans
  $ 2,904,480     $ 2,924,215     $ 2,706,351  
                         

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

                   
(Dollars in Thousands)
  December 31,     September 30,     December 31,  
Nonperforming Loans
  2019     2019     2018  
Real Estate
  $ 7,084     $ 7,759     $ 3,289  
Consumer
    267       363       65  
Commercial
    77       606       606  
Total Nonperforming Loans
    7,428       8,728       3,960  
 
                       
Nonperforming Troubled Debt Restructurings
                       
Real Estate
    34,315       38,377       46,771  
Consumer
    -       -       -  
Commercial
    390       -       -  
Total Nonperforming Troubled Debt Restructurings
    34,705       38,377       46,771  
Total Nonperforming Loans and Troubled Debt Restructurings
    42,133       47,105       50,731  
Other Real Estate Owned
    18,324       23,112       33,681  
Total Nonperforming Assets
  $ 60,457     $ 70,217     $ 84,412  
                         
                         
 
  December 31,     September 30,     December 31,  
 
  2019     2019     2018  
Nonperforming Loans
  42,133     47,105     50,731  
Other Real Estate Owned
    18,324       23,112       33,681  
Nonperforming Assets
    60,457       70,217       84,412  
 
                       
Troubled Debt Restructurings (Nonaccruing)
    34,705       38,377       46,771  
Troubled Debt Restructurings (Accruing)
    109,265       113,725       114,806  
Total Troubled Debt Restructurings
  143,970     152,102     161,577  
 
                       
Nonperforming Loans to Total Portfolio Loans
    1.46 %     1.62 %     1.88 %
Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned
    2.08 %     2.40 %     3.08 %
Allowance for Loan Losses to Total Portfolio Loans
    1.34 %     1.39 %     1.45 %
Allowance for Loan Losses to Nonperforming Loans
    92.00 %     85.62 %     77.27 %
Net Loan Charge-offs (Recoveries)
  3,841     3,254     12,989  
Net Loan Charge-offs (Recoveries) (Annualized) to Average Loans
    0.13 %     0.15 %     0.47 %
 
                       

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

 
  Year-to-Date  
 
  December 31,     September 30,     December 31,  
(Dollars in Thousands)
  2019     2019     2018  
Balance Beginning of Year
  $ 39,199     $ 39,199     $ 35,318  
Provision for Loan Losses
    3,404       4,386       16,870  
Charge-offs:
                       
Real Estate Loans
    659       659       11,924  
Consumer Loans
    4,401       3,039       2,710  
Commercial Loans
    22       3       20  
Total Charge-offs
    5,082       3,701       14,654  
Recoveries:
                       
Real Estate Loans
    639       -       1,415  
Consumer Loans
    602       447       250  
Commercial Loans
    -       -       -  
Total Recoveries
    1,241       447       1,665  
Total Net Charge-offs
    3,841       3,254       12,989  
Balance End of Year
  $ 38,762     $ 40,331     $ 39,199  
 
                       

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  
 
  December 31,     September 30,     December 31,     December 31,     December 31,  
 
  2019     2019     2018     2019     2018  
Total Shareholders' Equity
  $ 473,111     $ 474,048     $ 436,214     $ 473,111     $ 436,214  
Less: Goodwill
    58,726       58,726       58,726       58,726       58,726  
Tangible Equity
    414,385       415,322       377,488       414,385       377,488  
 
                                       
Shares Outstanding at End of Period
    26,334,229       26,333,929       26,270,174       26,334,229       26,270,174  
Tangible Book Value Per Common Share
  $ 15.74     $ 15.77     $ 14.37     $ 15.74     $ 14.37  
                                         

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  
 
  December 31,     September 30,     December 31,     December 31,     December 31,  
 
  2019     2019     2018     2019     2018  
Interest Income
  $ 39,759     $ 40,154     $ 39,862     $ 159,120     $ 152,019  
Interest Expense
    (11,333 )     (12,084 )     (10,773 )     (46,773 )     (38,114 )
Net Interest Income
    28,426       28,070       29,089       112,347       113,905  
Tax Equivalent Adjustment3
    638       683       839       3,046       3,816  
NET INTEREST INCOME (FTE) (Non-GAAP)
  $ 29,064     $ 28,753     $ 29,928     $ 115,393     $ 117,721  
Net Interest Income (Annualized)
    115,308       114,074       118,736       115,393       117,721  
Average Earning Assets
    3,766,205       3,788,308       3,756,110     $ 3,788,634     $ 3,791,611  
NET INTEREST MARGIN (FTE) (Non-GAAP)
    3.06%       3.01%       3.16%       3.05%       3.10%  
                                         

4Core Efficiency Ratio (Non-GAAP)

             
 
  Quarter-to-Date     Year-to-Date  
 
  December 31,     September 30,     December 31,     December 31,     December 31,  
 
  2019     2019     2018     2019     2018  
NONINTEREST EXPENSE
  $ 30,486     $ 22,777     $ 29,700     $ 98,029     $ 99,713  
Less: One Time Regulatory and Compliance
    -       -       (5,797 )     -       (1,853 )
Less: Losses on Sales and Write-downs of Other Real Estate Owned, net
    (4,163 )     (293 )     (128 )     (4,732 )     (8,201 )
Less: Losses on Sales and Write-downs of Bank Premises, net
    (165 )     (31 )     -       (188 )     (186 )
Less: Tax Credit Amortization
    (576 )     (563 )     (1,015 )     (2,265 )     (4,060 )
Plus: Regulatory Review
    -       -       -       -       323  
Plus: Contingent Liability
    -       -       (250 )     331       (581 )
Less: Conversion Expense
    -       -       (393 )     (2 )     (841 )
Plus: FDIC Assessment Credits
    -       1,056       -       1,056       -  
Plus: Conversion Vacation Accrual
    (539 )     86       (686 )     107       (686 )
CORE NONINTEREST EXPENSE (Non-GAAP)
  $ 25,043     $ 23,032     $ 21,431     $ 92,336     $ 83,628  
 
                                       
NET INTEREST INCOME
  $ 28,426     $ 28,070     $ 29,089     $ 112,347     $ 113,905  
Plus: Taxable Equivalent Adjustment3
    638       683       839       3,046       3,816  
NET INTEREST INCOME (FTE) (Non-GAAP)
  $ 29,064     $ 28,753     $ 29,928     $ 115,393     $ 117,721  
Less: Gains on Sales of Securities, net
    (606 )     (659 )     (76 )     (2,205 )     (1,271 )
Less: Other Real Estate Owned Income
    (72 )     (96 )     (448 )     (689 )     (2,692 )
Less: Other Gains
    -       -       -       (447 )     (374 )
Noninterest Income
    4,509       4,156       3,832       16,870       16,986  
CORE NET INTEREST INCOME (FTE) (Non-GAAP) plus NONINTEREST INCOME
  $ 32,895     $ 32,154     $ 33,236     $ 128,922     $ 130,370  
 
                                       
CORE EFFICIENCY RATIO (Non-GAAP)
    76.13%       71.63%       64.48%       71.62%       64.15%  
                                         

SOURCE: Carter Bank & Trust

Carter Bank & Trust
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