Carter Bank & Trust Announces Third Quarter 2019 Financial Results

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MARTINSVILLE, VA / ACCESSWIRE / October 24, 2019 / Carter Bank & Trust ( the "Bank") 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)

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(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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