Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q1 2021 Earnings Presentation
47 slides from Carter Bankshares's earnings presentation, May 5, 2021
Slide 1: Investor Presentation First Quarter 2021
Investor Presentation First Quarter 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 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
Slide 3: Non-GAAP Statements
Non-GAAP Statements 3 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 me
Slide 4: Table of Contents
4 TABLE OF CONTENTS Section Title Slides 1 Overview 05-12 2 Financial Highlights 13-20 3 Balance Sheet Transformation 21-25 4 Asset Quality 26-33 5 Deposit Mix & Cost of Funds 34-38 6 Loan Deferral Update 39-42 7 Commercial Loan Portfolio Metrics 43-46 8 PPP Loan Update 47
Slide 5: Overview
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Slide 6: Our Mission, Purpose and Values
Our Mission At Carter Bank & Trust, we strive to be the preferred lifetime financial partner for our customers and shareholders, and the employer of choice in the communities we are privileged to serve. Our Purpose Enrich lives and enhance communities today, to build a better tomorrow. Our Values Lo
Slide 7: Our Company History
Bank established denovo in 1974 as First National Bank of Rocky Mount, VA Carter Bank & Trust charter established in 2006 with the merger of ten banks. Carter Bancshares, Inc. holding company established in Q4 20 with the assets of Carter Bank & Trust. Our Company History 7 *As of April 30, 2021 Hea
Slide 8: Our Leadership Team
8 Our Leadership Team Litz Van Dyke Chief Executive Officer Wendy Bell Senior Executive Vice President Chief Financial Officer Bradford Langs President Chief Strategy Officer ‘I'm very proud of our leadership team, their hard work and unwavering commitment to every aspect of performance exceptionali
Slide 9: Our Footprint
Our Footprint YE 2020 92 Branches YE 2019 101 Branches YE 2018 104 Branches *MAY 2021 70 Branches* Branches in VA and NC Metropolitan Statistical Areas May 2021 * *Note: 3 branches in the Harrisonburg, Virginia market are slated to be sold in May 2021. In addition, the existing Wendover branch (Gree
Slide 10: Our Commitment
Our Commitment Environmental Governance More than $180,000 in donations to local & national non- profits in 2020. A monetary donation to local charities for every checking account opened. Social Renovations focused on sustainability; water & energy efficiencies and decreased carbon footprint Formed
Slide 11: Our Culture of Care
Our Culture of Care The Carter Cares Task Force has conducted daily COVID-19 status calls and hosted weekly bank-wide leadership calls since March 2020. Club Care, a teammate wellness program, offers bi-weekly virtual sessions featuring world-class sports and celebrity speakers sharing self-care and
Slide 12: Strategic Initiatives Update
Strategic Initiatives Update • Ongoing diversification of earning asset mix to maximize yield without increasing risk profile of the Bank. • Renewed focus on noninterest income sources (fee revenue) to supplement the Net Interest Income. • Improved funding cost and deposit mix to reduce reliance on
Slide 13: Financial Highlights
Financial Highlights 02 13 Insert CB&T photo here
Slide 14: Balance Sheet and Income Statement
1Q2021 4Q2020 1Q2020 Operational Results Net Interest Income $ 26,529 $ 26,153 $ 27,264 Provision for credit losses 1,575 4,821 4,798 Noninterest income 8,952 5,589 6,952 Noninterest expense 23,605 23,841 24,748 Income tax expense 926 138 247 Net Income $ 9,375 $ 2,942 $ 4,423 Balance Sheet Conditio
Slide 15: Financial / Shareholder Ratios
Financial / Shareholder Ratios 15 1Q2021 4Q2020 1Q2020 Shareholder Ratios Earnings Per Share $ 0.36 $ 0.11 $ 0.17 Financial Ratios Return on Assets 0.92 % (1.12) % 0.44 % Return on Equity 9.72 % (9.78) % 3.70 % Total Capital Ratio 14.14 % 14.33 % 14.29 % Tier I Capital 12.88 % 13.08 % 13.03 % Levera
Slide 16: Capital Management
Capital Management 16 As of March 31, 2021 We adopted CECL effective January 1, 2021 and elected to implement the capital transition relief over the permissible three-year period. • Focus on maintaining a "well capitalized" capital position allowing for the resolution of legacy credit issues. • Esta
Slide 17: Liquidity
Liquidity 17 (1) For the periods presented above, the Company maintained a secured FHLB Borrowing Facility with FHLB of Atlanta equal to 25% of the Bank's assets approximating $1.0 billion, with available borrow capacity subject to the amount of eligible collateral pledged at any given time. • Conti
Slide 18: Deposit Composition
Deposit Composition 18 $ in thousands Improving Deposit Mix Reliance on Certificates of Deposit continues to decline with a net decrease of $92.3 MM (5.71%) from Q4 20 to Q1 21 while all Non Maturing Deposit categories showed an increase in ending balances for the same period. For the Period Ending
Slide 19: Loan Composition
Loan Composition 19 $ in thousands Loan Portfolio Growth: Continued growth of 3.44% during Q1 21 (annualized) despite the headwinds of COVID-19, PPP forgiveness, and mortgage and municipal loan refinances due to historically low interest rates. For the Period Ending Variance 03/31/21 12/31/20 03/31/
Slide 20: Loan Portfolio Repricing & Index
20 LOAN PORTFOLIO REPRICING & INDEX Q1 21 $ in millions (1) Floating Rate Loans are defined as loans with contractual interest rate terms that allow the loan to reprice at lease once each month. (2) Variable Rate Loans are defined as loans with contractual interest rate terms that allow the loan to
Slide 21: Balance Sheet Transformation
21 Balance Sheet Transformation 03
Slide 22: Earning Assets
22 Earning Assets Goal is to deploy cash into higher yielding loans and investments while foregoing undue concentration risk: • Earning Assets stand at $4.0B • Our primary mandate is to use cash to grow the loan book with well diversified, higher yielding loan products to increase the NIM and mitiga
Slide 23: Loans: Past, Present, Future
Commercial Real Estate Commercial & Industrial Residential Mortgages Construction Other Consumer Other(1) 23 Loans Past Present Future 57% 47% 40% 20% 14% 5% 3% 2% 5% Loan Portfolio - 12/31/17 Loan Portfolio - 03/31/21 Loan Portfolio - Target 5% 10% 5% 30% 15% 30% Goal is to further diversify and de
Slide 24: Bond Portfolio
Muni MBS Corporates Agencies & Treasuries ABS SBA CMBS CMO 24 Bond Portfolio Past Present Future 4% 8% 25% 41% 18% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 03/31/21 Bond Portfolio - Target 10% 34% 27% 28% 15% 8% 25% 14% 25% Goal is to increase diversification, maintain strong credit quality, a
Slide 25: Deposits: Past, Present, Future
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings Deposits HFS 25 Deposits Past Present Future 56% 41% 35% 15%9%3% 2% 10% Deposit Mix - 12/31/17 Deposit Mix - 03/31/21 Deposit Mix - Target 20% 18% 15% 7% 20% 25% 14% 10% Goal is to restructure and diversify funding sources with a focus on
Slide 26: Asset Quality
Asset Quality 04 26 Insert CB&T photo here
Slide 27: Delinquency Trends
27 Delinquency Trends Past Due Loans / Total Portfolio Loans 0.21% 0.07% 0.09% 0.19% 0.20% 0.01% 0.22% 0.05% 0.03% 0.02%0.02% 0.00% 0.00% 0.00% 0.00% 0.24% 0.28% 0.14% 0.22% 0.22% 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans YE 2017 YE 2018 YE 2019 YE 2020 Q1 2021 0.00% 0.10% 0.20% 0.30%
Slide 28: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $93 $52 $43 $32 $32 $78 $37 $31 $22 $22 $0 $1 $1 $1 $1 $1 $3 $3 $4 $4 $14 $11 $8 $5 $5 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2017 YE 2018 YE 2019 YE 2020 Q1 2021 $0 $10 $19 $29 $38 $48 $58 $67 $77 $86
Slide 29: Nonperforming Relationships
29 Nonperforming Relationships $ in thousands Type Nonaccrual Balance 3/31/21 Nonaccrual Balance 12/31/20 Variance Q1 2021 to Q4 2020 Comments 1. CRE / Construction $17,553 $17,910 ($357) Commercial and residential lot developer. Golf courses previously held as collateral were sold in Q4 20 resultin
Slide 30: Nonperforming Assets
Nonperforming Assets $133 $84 $60 $48 $46 $40 $33 $18 $16 $14 $42 $47 $35 $25 $25 $51 $4 $7 $7 $7 OREO Nonperforming TDRs Nonperforming Loans YE 2017 YE 2018 YE 2019 YE 2020 Q1 2021 $0 $14 $28 $42 $56 $70 $84 $98 $112 $126 $140 30 Nonperforming Assets $ in millions *As of March 31, 2021 Nonperformin
Slide 31: Loan Portfolio – Risk Ratings
Portfolio Credit Quality Trend $2,684 $2,704 $2,885 $2,947 $2,972 $1,868 $2,232 $2,451 $2,523 $2,509 $719 $461 $430 $238 $268$97 $186 $195 Pass Substandard Special Mention YE 2017 YE 2018 YE 2019 YE 2020 Q1 2021 $0 $1,000 $2,000 $3,000 $4,000 Non-Pass Credit Quality Trend $816 $472 $434 $424 $463 $7
Slide 32: Net Charge-off & Provision Expense Trends
32 Net Charge-off & Provision Expense Trends $ in thousands *As of March 31, 2021 $42,379 $12,989 $3,841 $2,694 $701 $43,197 $16,870 $3,404 $18,006 $1,575 1.56% 0.47% 0.13% 0.09% 0.10% Net Charge-offs Provision Expense Net Charge-offs (annualized)/ Average Loans YE 2017 YE 2018 YE 2019 YE 2020 Q1 20
Slide 33: ACL Composition & ACL Coverage Ratio Trends
33 ACL Composition & ACL Coverage Ratio Trends $ in thousands *As of March 31, 2021 (1) Included in the three months ended March 31, 2021 is the $61.6 million Day 1 adjustment related to the adoption ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on
Slide 34: Deposit Mix and Cost of Funds
34 Deposit Mix and Cost of Funds 05
Slide 35: Total Deposit Composition
Total Deposit Composition $3,669 $3,592 $3,504 $3,685 $3,692 3,139 3,067 2,949 2,976 2,950 530 525 555 709 742 Interest-bearing deposits Nonnterest-bearing deposits YE 2017 YE 2018 YE 2019 YE 2020 1Q2021 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 35 Deposits $ in millions (2) (1) (1) P
Slide 36: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,312 $3,097 $3,020 $2,937 $2,954 $2,199 $2,090 $2,054 $1,819 $1,620 $727 $664 $582 $600 $645 $245 $247 $249 $321 $379 $141 $96 $135 $197 $310 1.12% 1.23% 1.54% 1.21% 0.86% Certificates of Deposit Savings Interest-bearing Deposits Money Market De
Slide 37: Total Deposits and Cost of Deposits
Total Deposits and Cost of Deposits $3,526 $3,485 $3,570 $3,617 $3,641 $3,665 $2,959 $2,934 $2,919 $2,949 $2,946 $2,954 $567 $551 $651 $668 $695 $711 1.04% 0.93% 0.79% 0.70% Interest-bearing Deposits Noninterest-bearing Deposits Total Cost of Deposits Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
Slide 38: Net Interest Margin
38 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds (2) Net Interest Margin has been computed on a fully taxable equivalent basis
Slide 39: Loan Deferral Update
39 Loan Deferral Update 06
Slide 40: COVID-19 Loan Deferral Program Update
40 COVID-19 Loan Deferral Program Update The bank has offered loan deferrals in three phases: ◦ The Phase I program began in March 2020 and expired August 31, 2020 ◦ The Phase II program began in August 2020 and expired on December 31, 2020 ◦ The Phase III program began in December 2020 and will exp
Slide 41: Phase III Loan Deferrals
41 Phase III Loan Deferrals For Total Loan Portfolio $ in millions (1) The Phase I deferment period ended on August 31, 2020. The Phase II deferment period ended December 31, 2020. The Phase III deferment period terminates on June 30, 2021. (2) Excludes loans held-for-sale. Results of Phase I Deferr
Slide 42: Phase III Hospitality Loan Deferrals
42 Phase III Hospitality Loan Deferrals $ in thousands * As of March 31, 2021 Phase III Payment Type Election Loan Count Outstanding Hospitality Portfolio Balance % of Outstanding Hospitality Portfolio Balance Full Principal & Interest 16 $ 118,263 23.58 % Principal Only 42 202,121 40.31 % Phase III
Slide 43: Commercial Loan Portfolio Metrics
43 Commercial Loan Portfolio Metrics 07
Slide 44: CRE Segment Overview By Collateral Code
44 CRE Segment Overview By Collateral Code ($ in thousands) (1) Other CRE & Other Commercial Construction Segments include, but are not limited to, Special / Limited Use, Church, Mobile Home Park, Gas Station, Self-Storage Facilities, Auto Shops *As of March 31, 2021 Row Labels CRE Portfolio Balance
Slide 45: Hospitality Metrics By State
2.5% 2.3% 0.9% 45 Hospitality Metrics By State $ in thousands *As of March 31, 2021 State Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment NC $189,969 37.9 % 61.1 % $4,418 $67 SC 157,001 31.3 % 60.0 % 6,038 87 VA 62,949 1
Slide 46: Hospitality Metrics By Brand
46 Hospitality Metrics By Brand $ in thousands Brand Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $131,379 26.2 % 62.0 % $8,759 $99 IHG 115,563 23.0 % 59.0 % 5,024 64 Marriott 70,143 14.0 % 56.9 % 7,794 79 Upsc
Slide 47: Paycheck Protection Program
Paycheck Protection Program PROGRAM TIMING APPLICATIONS APPROVED FUNDS APPROVED ($ in millions) TOTAL IN FEES ($ in millions) ROUND ONE: April 3 - 16, 2020 451 $17.9 $1.5 ROUND TWO: April 29– June 30, 2020 515 $39.9 ROUND THREE: January 22, 2021 - TBD 101 $8.2 $0.3 TOTAL 1,067 $66.0 $1.8 47 The Payc