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

View source version on accesswire.com:
https://www.accesswire.com/563919/Carter-Bank-Trust-Announces-Third-Quarter-2019-Financial-Results

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