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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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