Carter Bank & Trust Announces Second Quarter 2020 Financial Results

MARTINSVILLE, VA / ACCESSWIRE / July 23, 2020 / Carter Bank & Trust (the "Bank") (NASDAQ:CARE) today announced net income of $4.5 million, or $0.17 diluted earnings per share, for the second quarter of 2020, as compared to net income of $4.4 million, or $0.17 diluted earnings per share, in the first quarter of 2020 and net income of $7.8 million, or $0.30 diluted earnings per share, for the second quarter of 2019. Pre-tax pre-provision earnings1 were $9.4 million, $9.5 million and $9.7 million for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

For the six months ended June 30, 2020, net income was $8.9 million, or $0.34 diluted earnings per share, as compared to net income of $15.4 million, or $0.58 diluted earnings per share in the first six months of 2019. Pre-tax pre-provision earnings were $18.9 million and $19.3 million for the six months ended June 30, 2020 and 2019, respectively.

Second Quarter 2020 Financial Highlights

  • Net interest income declined $1.0 million, or 3.7%, to $26.3 million as compared to the linked quarter primarily due to balance sheet repricing driven by the impact of the lower interest rate environment, offset by a 17 basis point decrease in funding costs compared to the first quarter of 2020, and decreased $1.7 million, or 6.1%, over the same quarter in 2019;
  • Net interest margin, on a fully taxable equivalent basis, declined 18 basis points to 2.79% over the linked quarter and decreased 23 basis points over the same quarter last year;
  • Portfolio loan growth of $17.4 million, or 2.4% on an annualized basis, as compared to the linked quarter, and growth of $91.9 million, or 3.2%, as compared to June 30, 2019;
  • Total deposits increased $133.7 million, or 15.4% on an annualized basis, to $3.6 billion as of June 30, 2020 as compared to the linked quarter. Noninterest-bearing and interest bearing demand deposits, money market accounts and savings, increased by $195.6 million, or 12.3%, as compared to linked quarter;
  • The provision for loan losses totaled $5.5 million for the quarter ended June 30, 2020, $4.8 million for the quarter ending March 31, 2020 and $1.4 million for the same quarter of 2019. Included is the impact of a reserve build of $3.4 million, or $(0.10) per share, and $2.6 million, or $(0.08) per share, driven by economic and market conditions as a result of COVID-19 for the second and first quarters of 2020, respectively;
  • Nonperforming loans declined $1.5 million, or 3.6% as compared to December 31, 2019 and decreased $4.3 million, or 9.6%, from June 30, 2019. Nonperforming loans as a percentage of total portfolio loans were 1.37%, 1.38% and 1.57% as of June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

"Our financial results this quarter continue to reflect the impact from the unusual economic and social environment we are experiencing as a result of COVID-19." stated Litz H. Van Dyke, Chief Executive Officer. "As a community bank, we are committed to support the communities in which we do business, including direct financial assistance to local relief programs, and providing financial flexibility to our individual and business customers to help them deal with the challenges from this crisis. We have also taken unprecedented measures to assure we provide a safe environment for both our employees and customers as we continue to be operational while trying to minimize the disruption to our Bank."

Van Dyke continued, "I would like to commend our many associates whose resilience and commitment during these very difficult circumstances has been nothing short of amazing. We continue to open accounts, make loans, and process transactions. We experienced loan growth as well as growth in lower cost deposits for the quarter. While there still remains tremendous uncertainty as to the longer term impact that this crisis will have on our markets and customers, we are confident that our strong capital and liquidity position, combined with our robust technology capabilities and risk management infrastructure, we are well prepared to navigate these uncertain times."

Operating Highlights

Net interest income decreased $2.3 million, or 4.2%, to $53.5 million during the first six months of 2020 as compared to the same period of 2019. The net interest margin, on a fully taxable equivalent basis, decreased 18 basis points to 2.88% over the past twelve months. The decreases in short-term interest rates had a negative impact on both net interest income and net interest margin, but are offset by a lower cost of funds. The yield on interest-earning assets decreased 35 basis points, offset by an 18 basis point decline in funding costs as compared to the same period of 2019.

The provision for loan losses totaled $10.3 million for the six month period ended June 30, 2020 and $3.0 million for the same period of 2019. The Bank was subject to the adoption of the Current Expected Credit Losses ("CECL") accounting method under Financial Accounting Standards Board ("FASB") Accounting Standards Update 2016-03 and related amendments, Financial Instruments - Credit Losses (Topic 326). However, the Bank elected under the Coronavirus, Aid, Relief, and Economic Security ("CARES") Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends or December 31, 2020. Included in the provision expense for the six months ended June 30, 2020 is the impact of a reserve build of $6.0 million, or $(0.18) per share, driven by economic and market conditions as a result of COVID-19. This represents a 243% increase in the provision expense as compared to the same period of 2019. The Bank adjusted qualitative risk factors under its incurred loss model for economic conditions, changes in payment deferral procedures, expected changes in collateral values due to reduced cash flows and external factors such as government actions. Management believes the uncertainty regarding customers' ability to repay loans could be adversely impacted by the COVID-19 pandemic given higher unemployment rates, requests for payment deferrals, temporary business shutdowns and reduced consumer and business spending.

At June 30, 2020, nonperforming loans were $40.6 million, a decrease of $1.5 million, or 3.6% as compared to December 31, 2019. Net charge-offs were $1.6 million in the first six months of 2020 as compared to $2.2 million in the same period of 2019. As a percentage of total portfolio loans, on an annualized basis, net charge-offs were 0.11% and 0.15% for the periods ending June 30, 2020 and 2019, respectively. Nonperforming loans as a percentage of total portfolio loans were 1.37%, 1.38% and 1.57% as of June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

Noninterest income at June 30, 2020, excluding net securities gains, increased $2.2 million, or 30.4%, for the six months ending June 30, 2020 as compared to the same period of 2019. The increase was primarily due to $1.5 million of commercial loan swap fee income due to the high demand for this product in the current rate environment, $1.0 million of higher insurance commissions, related to the adoption of ASU 2014-09, Topic 606 by our provider, $0.2 million of higher debit card interchange fees, which were offset by lower service charges on deposit accounts of $0.3 million due to COVID-19 fee waivers. Other Real Estate Owned ("OREO") income declined $0.3 million due to the sale of several large commercial properties over the last 12 months that generated income. Securities gains of $3.5 million and $0.9 million were realized during the first six months of 2020 and 2019, respectively, to take advantage of market opportunities and reposition and diversify holdings in the securities portfolio.

Total noninterest expense increased $2.9 million, or 6.4%, to $47.6 million for the six months ending June 30, 2020 as compared to the same period of 2019. The increase was primarily driven by salaries and employee benefits and occupancy expenses. The increase of $1.2 million in salaries and benefits were primarily attributable to a $0.8 million increase of normal merit increases and a $0.4 million decrease in salary deferrals on new loan originations in the first six months of 2020. There have not been any permanent or temporary reductions in employees as a result of COVID-19. The $1.0 million increase in occupancy expense is a result of higher depreciation for software and equipment for ancillary products and services. The $0.5 million increase in advertising is related to our deposit acquisition strategy. The $0.4 million increase in the unfunded loan commitment reserve was due to several new commitments approved during the first quarter of 2020 and increased commitments on existing lines of credit. Offsetting these increases were decreases of $0.5 million in debit card expenses and data processing.

Financial Condition

Total assets were $4.2 billion at June 30, 2020 and $4.0 billion at December 31, 2019. Total portfolio loans increased $72.6 million, or 5.0% on an annualized basis, to $3.0 billion as of June 30, 2020 as compared to December 31, 2019. Nonperforming loans decreased $1.5 million to $40.6 million, or 3.6% as of June 30, 2020 as compared to $42.1 million at December 31, 2019. OREO decreased $1.1 million at June 30, 2020 as compared to December 31, 2019. Closed retail bank offices carrying values declined $0.5 million from December 31, 2019 and have a remaining book value of $2.5 million at June 30, 2020.

Federal Reserve Bank excess reserves increased $96.0 million at June 30, 2020 as compared to December 31, 2019 due to maintaining higher liquidity levels as a result of COVID-19.

The securities portfolio increased $6.4 million and is currently 18.0% of total assets at June 30, 2020 as compared to 18.5% of total assets at December 31, 2019. The increase is a result of active balance sheet management. We have further diversified the securities portfolio as to bond types, maturities and interest rate structures.

Total deposits increased $102.5 million to $3.6 billion as of June 30, 2020 as compared to December 31, 2019. Core deposits, including noninterest-bearing and interest-bearing demand deposits, money market accounts and savings, increased by $237.1 million, or 15.4%, as compared to December 31, 2019. Offsetting these increases was the intentional runoff of $134.6 million of higher cost certificates of deposits. Noninterest-bearing deposits comprised 18.4% and 15.8% of total deposits at June 30, 2020 and December 31, 2019, respectively.

The allowance for loan losses was 1.60%, 1.46% and 1.34% of total portfolio loans as of June 30, 2020, March 31, 2020 and December 31, 2019, respectively. General reserves as a percentage of total portfolio loans were 1.33%, 1.22% and 1.13% at June 30, 2020, March 31, 2020 and December 31, 2019, respectively. Included in the allowance is a reserve build of $6.0 million, or $(0.18) per share, driven by economic and market conditions as a result of COVID-19. The allowance for loan losses was 116.8% of nonperforming loans as of June 30, 2020 as compared to 92.0% of nonperforming loans as of December 31, 2019. In the view of management, the allowance for loan losses is adequate to absorb probable losses inherent in the loan portfolio. For further information regarding the Bank's decision to defer CECL under Section 4014 of the CARES Act, as well as further detail on the increase in provision during the first six months of 2020, please see the discussion above under Provision for Loan Losses.

The Bank is providing deferrals to customers under Section 4013 of the CARES Act and regulatory interagency statements on loan modifications. These deferrals typically provide deferrals of both principal and interest for up to 180 days. At the end of the deferral period, for term loans, payments will be applied to accrued interest first and will resume principal payments once accrued interest is current. Deferred principal will be due at maturity. For interest only loans, such as lines of credit, deferred interest will be due at maturity. As of June 30, 2020, we have had 958 commercial loans opt for deferrals with an aggregate principal balance of $1.2 billion. Approximately $462.5 million of these modifications were in the hospitality industry comprised of deferrals on 85 loans. The average deferment period for these customers has been 3.9 months. The request for loan deferrals has generally stabilized at June 30, 2020. We have participated in the Paycheck Protection Program ("PPP") passed by Congress. As of June 30, 2020, we had 970 PPP loans approved totaling $55.8 million. These PPP loans generated $1.5 million in fees which will be recognized in income when the loan is forgiven or over the remaining life of the loan.

The Bank remains well capitalized. The Bank's Tier 1 Capital ratio decreased to 13.32% as of June 30, 2020 as compared to 13.58% as of December 31, 2019. The Bank's leverage ratio was 10.30% at June 30, 2020 as compared to 10.33% as of December 31, 2019. The Bank's Total Risk-Based Capital ratio was 14.57% at June 30, 2020 as compared to 14.83% at December 31, 2019.

Total capital of $489.1 million at June 30, 2020, reflects an increase of $15.9 million as compared to December 31, 2019. The increase in equity during the first six months of 2020 is due to net income of $8.9 million and a $10.2 million increase in other comprehensive income due to changes in fair value of investment securities. These increases were offset by the $3.7 million special dividend paid in March of 2020. The remaining difference of $0.5 million is related to restricted stock activity during the first six months.

At June 30, 2020, funding sources accessible to the Bank include borrowing availability at the Federal Home Loan Bank ("FHLB"), equal to 25% of the Bank's assets approximating $1.0 billion, subject to the amount of eligible collateral pledged, federal funds unsecured lines with six other correspondent financial institutions in the amount of $115.0 million and access to the institutional CD market through brokered CDs and QwickRate. In addition to the above resources, the Bank also has $624.5 million of unpledged available-for-sale investment securities as an additional source of liquidity.

Based on continued market volatility, consensus forecasts for a prolonged low interest rate environment, and the drop in price of the Banks's common stock during the quarter, the Bank is currently analyzing the value of goodwill related to its prior acquisitions. Based on our preliminary analysis, we do not believe that our goodwill is impaired. Any potential goodwill impairment could be material to reported earnings, but would be a non-cash charge and have no effect on the Bank's cash balances, liquidity or tangible equity. In addition, because goodwill and other intangible assets are not included in the calculation of regulatory capital, the Bank's well-capitalized regulatory capital ratios would not be affected by this potential non-cash expense. The Bank anticipates the analysis will be completed prior to filing the Quarterly Report on Form 10-Q with the Federal Deposit Insurance Corporation in August 2020.

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 $4.2 billion in assets and 99 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, and specifically including information related to the pending appraisal of collateral for one impaired loan relationship and potential impacts on the Bank's financial results. 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; the Bank's liquidity and capital positions; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as the current COVID-19 pandemic), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Bank's borrowers to satisfy their obligations to the Bank, on the value of collateral securing loans, on the demand for the Bank's loans or its other products and services, on incidents of cyberattack and fraud, on the Bank's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Bank's business operations and on financial markets and economic growth; 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
CONSOLIDATED SELECTED FINANCIAL DATA
BALANCE SHEETS
(Unaudited)

          
(Dollars in Thousands, except per share data)  June 30,    December 31,    June 30, 
   2020    2019    2019 
ASSETS              
Cash and Due From Banks  47,175    41,386    47,071 
Interest-Bearing Deposits in Other Financial Institutions    6,846      45,156      55,138 
Federal Reserve Bank Excess Reserves    135,237      39,270      36,806 
Total Cash and Cash Equivalents    189,258       125,812       139,015  
                        
Securities, Available-for-Sale, at Fair Value    749,029      742,617      803,673 
Loans Held-for-Sale    9,345      19,714      9,841 
Portfolio Loans    2,957,344      2,884,766      2,865,461 
Allowance for Loan Losses    (47,405)    (38,762)    (40,008)
Portfolio Loans, net    2,909,939       2,846,004       2,825,453  
                        
Bank Premises and Equipment, net    89,493      85,942      85,641 
Other Real Estate Owned, net    17,245      18,324      24,622 
Goodwill    62,192      62,192      62,192 
Federal Home Loan Bank Stock, at Cost    5,093      4,113      3,688 
Bank Owned Life Insurance    53,300      52,597      51,878 
Other Assets    66,839      48,793      56,905 
TOTAL ASSETS  4,151,733     4,006,108     4,062,908  
                        
                        
LIABILITIES                       
Deposits:                       
Noninterest-Bearing Demand  662,639    554,875    571,421 
Interest-Bearing Demand    318,903      286,561      234,953 
Money Market    190,664      140,589      132,297 
Savings    608,716      561,814      576,145 
Certificates of Deposits    1,825,785      1,960,406      2,062,664 
Total Deposits    3,606,707       3,504,245       3,577,480  
FHLB Borrowings    35,000      10,000      - 
Other Liabilities    20,967      18,752      21,195 
TOTAL LIABILITIES    3,662,674       3,532,997       3,598,675  
                        
                        
SHAREHOLDERS' EQUITY                       
Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;                       
26,384,801 outstanding at June 30, 2020,                       
26,334,229 outstanding at December 31, 2019 and 26,333,929 at June 30, 2019    26,385      26,334      26,334 
Additional Paid-in-Capital    143,016      142,492      142,268 
Retained Earnings    309,347      304,158      292,951 
Accumulated Other Comprehensive Income    10,311      127      2,680 
TOTAL SHAREHOLDERS' EQUITY    489,059       473,111       464,233  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  4,151,733     4,006,108     4,062,908  
                        
PROFITABILITY RATIOS (ANNUALIZED)                       
Return on Average Assets    0.44%    0.65%    0.76%
Return on Average Shareholders' Equity    3.70%    5.76%    6.87%
Portfolio Loan to Deposit Ratio    82.00%    82.32%    80.10%
Allowance to Total Portfolio Loans    1.60%    1.34%    1.40%
                        
CAPITALIZATION RATIOS                       
Shareholders' Equity to Assets    11.78%    11.81%    11.43%
Tier 1 Leverage Ratio    10.30%    10.33%    9.78%
Risk-Based Capital - Tier 1    13.32%    13.58%    13.23%
Risk-Based Capital - Total    14.57%    14.83%    14.48%
             

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

       
(Dollars in Thousands, except per share data)  Quarter-to-Date    Year-to-Date 
   June 30,    March 31,    June 30,    June 30,    June 30, 
   2020    2020    2019    2020    2019 
Interest Income  35,617    37,836    40,068    73,453    79,207 
Interest Expense    9,355      10,572      12,113      19,927      23,356 
NET INTEREST INCOME    26,262       27,264       27,955       53,526       55,851  
                                        
Provision for Loan Losses    5,473      4,798      1,369      10,271      2,996 
NET INTEREST INCOME AFTER    20,789       22,466       26,586       43,255       52,855  
PROVISION FOR LOAN LOSSES                                       
                                        
NONINTEREST INCOME                                       
Gains on Sales of Securities, net    2,321      1,214      909      3,535      940 
Service Charges, Commissions and Fees    190      1,650      892      1,840      2,118 
Debit Card Interchange Fees    1,468      1,243      1,320      2,711      2,494 
Insurance    332      1,309      369      1,641      643 
Bank Owned Life Insurance Income    350      353      356      703      717 
Gains on Sales of Other Real Estate Owned, net    137      -      -      -      - 
Gains on Sales of Bank Premises, net    -      -      178      -      8 
Other Real Estate Owned Income    82      139      231      221      521 
Commercial Loan Swap Fee Income    1,125      423      -      1,548      - 
Other    196      621      324      817      772 
TOTAL NONINTEREST INCOME    6,201       6,952       4,579       13,016       8,213  
                                        
NONINTEREST EXPENSE                                       
Salaries and Employee Benefits    12,489      13,581      12,809      26,070      24,844 
Occupancy Expense, net    3,415      3,249      2,836      6,664      5,663 
FDIC Insurance Expense    537      544      433      1,081      1,147 
Other Taxes    788      746      711      1,534      1,354 
Advertising Expense    400      606      326      1,006      497 
Telephone Expense    573      574      562      1,147      1,067 
Professional and Legal Fees    1,399      437      980      1,836      1,629 
Data Processing    595      486      469      1,081      1,219 
Losses on Sales and Write-downs of Other Real Estate Owned, net    -      189      88      52      276 
Losses on Sales and Write-downs of Bank Premises, net    59      12      -      71      - 
Debit Card Expense    671      554      830      1,225      1,540 
Tax Credit Amortization    272      272      563      544      1,126 
Unfunded Loan Commitment Expense    (383)    982      173      599      218 
Other Real Estate Owned Expense    177      140      (31)    317      66 
Other    2,031      2,376      2,085      4,407      4,128 
TOTAL NONINTEREST EXPENSE    23,023       24,748       22,834       47,634       44,774  
                                        
INCOME BEFORE INCOME TAXES    3,967       4,670       8,331       8,637       16,294  
Income Tax (Benefit) Provision    (488)    247      504      (241)    926 
NET INCOME  4,455     4,423     7,827     8,878     15,368  
                                        
Shares Outstanding, at End of Period    26,384,801      26,385,185      26,333,929      26,384,801      26,333,929 
Average Shares Outstanding-Basic    26,384,957      26,362,649      26,333,929      26,373,803      26,313,631 
Average Shares Outstanding-Diluted    26,384,957      26,368,365      26,347,635      26,373,803      26,320,530 
                                        
PER SHARE DATA                                       
Basic Earnings Per Common Share  0.17    0.17    0.30    0.34    0.58 
Diluted Earnings Per Common Share  0.17    0.17    0.30    0.34    0.58 
Book Value  18.54    18.00    17.63    18.54    17.63 
Tangible Book Value2  16.18    15.64    15.27    16.18    15.27 
Market Value  8.07    9.18    19.75    8.07    19.75 
                                        
PROFITABILITY RATIOS (non-GAAP)                                       
Net Interest Margin (FTE)3    2.79%    2.97%    3.02%    2.88%    3.06%
Core Efficiency Ratio4    75.00%    74.00%    71.59%    74.48%    69.29%
                     

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

(Unaudited)

          
(Dollars in Thousands)  June 30, 2020    March 31, 2020    June 30, 2019 
ASSETS  Average Balance    Income/ Expense    Rate    Average Balance    Income/ Expense    Rate    Average Balance    Income/ Expense    Rate 
Interest-Bearing Deposits with Banks  106,710    26      0.10%    62,960    210      1.32%    127,377    763      2.40% 
Tax-Free Investment Securities    49,633      416      3.35%      21,452      204      3.80%      91,148      795      3.50% 
Taxable Investment Securities    685,468      3,594      2.09%      712,104      4,502      2.52%      737,949      4,283      2.33% 
Tax-Free Loans    322,739      2,563      3.17%      337,857      2,660      3.15%      387,053      3,088      3.20% 
Taxable Loans    2,651,873      29,577      4.44%      2,584,917      30,797      4.74%      2,473,376      31,929      5.18% 
Federal Home Loan Bank Stock    5,093      67      5.23%      4,418      64      5.85%      1,581      26      6.60% 
Total Interest-Earning Assets  3,821,516     36,243       3.77%    3,723,708     38,437       4.11%    3,818,484     40,884       4.29% 
                                     
LIABILITIES                                                                       
Deposits:                                                                       
Interest-Bearing Demand  297,815    242      0.33%    297,395    446      0.60%    257,754    595      0.93% 
Money Market    183,542      211      0.46%      154,564      271      0.71%      136,271      517      1.52% 
Savings    592,193      157      0.11%      562,712      145      0.10%      586,923      498      0.34% 
Certificates of Deposit    1,845,294      8,627      1.88%      1,918,841      9,633      2.02%      2,075,899      10,483      2.03% 
Total Interest-Bearing Deposits  2,918,844     9,237       1.27%    2,933,512     10,495       1.44%    3,056,847     12,093       1.59% 
Borrowings:                                                                       
FED Funds Purchased    -      -      -      220      1      1.59%      -      -      - 
FHLB Borrowings    35,000      100      1.13%      17,418      58      1.33%      -      -      - 
Other Borrowings    1,245      18      5.58%      1,481      18      4.81%      1,029      20      7.80% 
Total Borrowings    36,245       118       1.28%      19,119       77       1.62%      1,029       20       7.80% 
Total Interest-Bearing Liabilities  $2,955,089    9,355       1.27%      $ 2,952,631    10,572        1.44%    $3,057,876    12,113       1.59% 
Net Interest Income        26,888                 27,865                 28,771        
Net Interest Margin                2.79%                  2.97%                  3.02% 
                                     

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA

NET INTEREST MARGIN (FTE) (YTD AVERAGES)
(Unaudited)

       
(Dollars in Thousands)  June 30, 2020    June 30, 2019 
ASSETS  Average Balance    Income/ Expense    Rate    Average Balance    Income/ Expense    Rate 
Interest-Bearing Deposits with Banks  84,836    236      0.55%    149,643    1,784      2.40% 
Tax-Free Investment Securities    35,543      620      3.49%      100,997      1,813      3.62% 
Taxable Investment Securities    698,786      8,096      2.31%      719,770      8,405      2.35% 
Tax-Free Loans    330,298      5,223      3.16%      394,021      6,402      3.28% 
Taxable Loans    2,618,395      60,374      4.58%      2,434,977      62,503      5.18% 
Federal Home Loan Bank Stock    4,755      131      5.52%      795      26      6.60% 
Total Interest-Earning Assets  3,772,613     74,680       3.94%    3,800,203     80,933       4.29% 
                                                
LIABILITIES                                               
Deposits:                                               
Interest-Bearing Demand  297,605    688      0.46%    264,447    1,235      0.94% 
Money Market    169,053      481      0.57%      113,562      760      1.35% 
Savings    577,453      302      0.11%      596,566      984      0.33% 
Certificates of Deposit    1,882,067      18,261      1.95%      2,087,216      20,337      1.96% 
Total Interest-Bearing Deposits  2,926,178     19,732       1.36%    3,061,791     23,316       1.54% 
Borrowings:                                               
FED Funds Purchased    110      1      1.62%      -      -      - 
FHLB Borrowings    26,209      159      1.20%      -      -      - 
Other Borrowings    1,363      35      5.16%      692      40      11.66% 
Total Borrowings    27,682       195       1.40%      692       40       11.66% 
Total Interest-Bearing Liabilities  2,953,860     19,927       1.36%    3,062,483     23,356       1.54% 
Net Interest Income        54,753                 57,577        
Net Interest Margin                2.88%                  3.06% 
                         

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

          
   June 30,    December 31,    June 30, 
(Dollars in Thousands)  2020    2019    2019 
Commercial              
Commercial Real Estate  1,374,242    1,365,310    1,396,986 
Commercial and Industrial    279,143      256,798      257,947 
Obligations of State and Political Subdivisions    338,190      364,869      405,212 
Commercial Construction    374,609      292,827      223,711 
Total Commercial Loans    2,366,184       2,279,804       2,283,856  
Consumer                       
Residential Mortgages    508,388      514,538      489,158 
Other Consumer    69,884      73,688      73,096 
Consumer Construction    12,888      16,736      19,351 
Total Consumer Loans    591,160       604,962       581,605  
Total Portfolio Loans    2,957,344       2,884,766       2,865,461  
Loans Held-for-Sale    9,345      19,714      9,841 
Total Loans  2,966,689     2,904,480     2,875,302  
             

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

          
(Dollars in Thousands)  June 30,    December 31,    June 30, 
Nonperforming Loans  2020    2019    2019 
Commercial Real Estate  247    1,017    328 
Commercial and Industrial    155      77      397 
Obligations of State and Political Subdivisions    -      -      - 
Commercial Construction    3,162      3,210      2,976 
Residential Mortgages    3,326      2,857      1,580 
Other Consumer    206      267      142 
Consumer Construction    -      -      - 
Total Nonperforming Loans    7,096       7,428       5,423  
                        
Nonperforming Troubled Debt Restructurings                       
Commercial Real Estate    29,010      30,073      34,329 
Commercial and Industrial    240      390      - 
Obligations of State and Political Subdivisions    -      -      - 
Commercial Construction    4,252      4,242      5,154 
Residential Mortgages    -      -      - 
Other Consumer    -      -      - 
Consumer Construction    -      -      - 
Total Nonperforming Troubled Debt Restructurings    33,502       34,705       39,483  
Total Nonperforming Loans and Troubled Debt Restructurings    40,598       42,133       44,906  
Other Real Estate Owned    17,245      18,324      24,622 
Total Nonperforming Assets  57,843     60,457     69,528  
             
             
   June 30,    December 31,    June 30, 
   2020    2019    2019 
Nonperforming Loans  40,598    42,133    44,906 
Other Real Estate Owned    17,245      18,324      24,622 
Total Nonperforming Assets    57,843       60,457       69,528  
                        
Troubled Debt Restructurings (Nonaccruing)    33,502      34,705      39,483 
Troubled Debt Restructurings (Accruing)    107,284      109,265      113,899 
Total Troubled Debt Restructurings  140,786     143,970     153,382  
                        
Nonperforming Loans to Total Portfolio Loans    1.37%     1.46%     1.57% 
Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned    1.94%     2.08%     2.41% 
Allowance for Loan Losses to Total Portfolio Loans    1.60%     1.34%     1.40% 
Allowance for Loan Losses to Nonperforming Loans    116.77%     92.00%     89.09% 
Net Loan Charge-offs (Recoveries)  1,628    3,841    2,187 
Net Loan Charge-offs (Recoveries) (Annualized) to Average Loans    0.11%     0.13%     0.16% 
             

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA

ALLOWANCE FOR LOAN LOSSES
(Unaudited)

       
   Quarter-to-Date     Year-to-Date  
   June 30,    March 31,    June 30,    June 30,    June 30, 
(Dollars in Thousands)  2020    2020    2019    2020    2019 
Balance Beginning of Year  42,942    38,762    39,572    38,762    39,199 
Provision for Loan Losses    5,473      4,798      1,369      10,271      2,996 
Charge-offs:                                       
Commercial Real Estate    40      -      19      40      69 
Commercial and Industrial    8      38      2      46      2 
Obligations of State and Political Subdivisions    -      -      -      -      - 
Commercial Construction    -      -      -      -      393 
Residential Mortgages    15      5      18      20      23 
Other Consumer    1,094      1,527      1,031      2,621      1,959 
Consumer Construction    -      -      -      -      - 
Total Charge-offs    1,157       1,570       1,070       2,727       2,446  
Recoveries:                                       
Commercial Real Estate    -      707      -      707      - 
Commercial and Industrial    1      1      -      2      - 
Obligations of State and Political Subdivisions    -      -      -      -      - 
Commercial Construction    -      -      -      -      - 
Residential Mortgages    -      -      -      -      - 
Other Consumer    146      244      137      390      259 
Consumer Construction    -      -      -      -      - 
Total Recoveries    147       952       137       1,099       259  
Total Net Charge-offs    1,010       618       933       1,628       2,187  
Balance End of Year  47,405     42,942     40,008     47,405     40,008  
                     

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 
   June 30,    March 31,    June 30,    June 30,    June 30, 
   2020    2020    2019    2020    2019 
Total Shareholders' Equity  489,059    474,821    464,233    489,059    464,233 
Less: Goodwill    62,192      62,192      62,192      62,192      62,192 
Tangible Equity  $426,867     $412,629     $402,041     $426,867     $402,041  
                                        
Shares Outstanding at End of Period    26,384,801      26,385,754      26,333,929      26,384,801      26,333,929 
Tangible Book Value Per Common Share  16.18     15.64     15.27     16.18     15.27  
                     

3Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2020 and 2019 periods.

       
Net Interest Income (FTE) (Non-GAAP)  Quarter-to-Date    Year-to-Date 
   June 30,    March 31,    June 30,    June 30,    June 30, 
   2020    2019    2019    2020    2019 
Interest Income  35,617    37,836    40,068    73,453    79,207 
Interest Expense    (9,355)    (10,572)    (12,113)    (19,927)    (23,356)
Net Interest Income    26,262      27,264      27,955      53,526      55,851 
Tax Equivalent Adjustment3    626      601      816      1,227      1,726 
NET INTEREST INCOME (FTE) (Non-GAAP)  26,888     27,865     28,771     54,753     57,577  
Net Interest Income (Annualized)    106,615      110,537      115,400      108,543      116,108 
Average Earning Assets    3,821,516      3,723,708      3,818,484      3,772,613      3,800,203 
NET INTEREST MARGIN (FTE) (Non-GAAP)    2.79%      2.97%      3.02%      2.88%      3.06% 

4Core Efficiency Ratio (Non-GAAP)

   Quarter-to-Date    Year-to-Date 
   June 30,    March 31,    June 30,    June 30,    June 30, 
   2020    2020    2019    2020    2019 
NONINTEREST EXPENSE  23,023     24,748     22,834     47,634     44,774  
Less: Losses on Sales and Write-downs of Other Real Estate Owned, net    -      (189)    (88)    (52)    (276)
Less: Losses on Sales and Write-downs of Bank Premises, net    (59)    (12)    -      (71)    - 
Less: Tax Credit Amortization    (272)    (272)    (563)    (544)    (1,126)
Plus: Contingent Liability    -      -      331      -      331 
Less: Conversion Expense    -      -      -      -      (2)
Plus: Conversion Vacation Accrual    192      288      291      480      560 
CORE NONINTEREST EXPENSE (Non-GAAP)  22,884     24,563     22,805     47,447     44,261  
                                        
NET INTEREST INCOME  26,262     27,264     27,955     53,526     55,851  
Plus: Taxable Equivalent Adjustment3    626      601      816      1,227      1,726 
NET INTEREST INCOME (FTE) (Non-GAAP)  26,888     27,865     28,771     54,753     57,577  
Less: Gains on Sales of Securities, net    (2,321)    (1,214)    (909)    (3,535)    (940)
Less: Gains on Sales of Other Real Estate Owned, net    (137)    -      -      -      - 
Less: Gains on Sales Bank Premises, net    -      -      (178)    -      (8)
Less: Other Real Estate Owned Income    (82)    (139)    (231)    (221)    (521)
Less: Other Gains    (38)    (269)    (176)    (307)    (447)
Noninterest Income    6,201      6,952      4,579      13,016      8,213 
CORE NET INTEREST INCOME (FTE) (Non-GAAP) plus NONINTEREST INCOME  30,511     33,195     31,856     63,706     63,874  
                                        
CORE EFFICIENCY RATIO (Non-GAAP)    75.00%      74.00%      71.59%      74.48%      69.29% 
                     

Carter Bank & Trust
Wendy Bell, 276-656-1776
Senior Executive Vice President & Chief Financial Officer

wendy.bell@CBTCares.com

SOURCE: Carter Bank & Trust



View source version on accesswire.com:
https://www.accesswire.com/598483/Carter-Bank-Trust-Announces-Second-Quarter-2020-Financial-Results

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.