Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q2 2022 Earnings Presentation
45 slides from Carter Bankshares's earnings presentation, Jul 28, 2022
Slide 1: Investor Presentation Second Quarter 2022
Investor Presentation Second Quarter 2022
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, litigation to which the Company is or has been a party and the
Slide 3: Non-GAAP Statements
Non-GAAP Statements 3 Statements in this exhibit 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. Management uses, and this exhibit references, net interest income and net interest
Slide 4: Table of Contents
4 TABLE OF CONTENTS Section Title Slides 1 Overview 05-12 2 Financial Highlights 13-21 3 Balance Sheet Transformation 22-26 4 Asset Quality 27-34 5 Deposit Mix & Cost of Funds 35-39 6 Commercial Loan Portfolio Metrics 40-45
Slide 5: Overview
01 Overview CARE Nasdagi i, ste Nasdag
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
Our Company History 7 $4.1B Assets $3.0B Loans $3.8B Deposits Focused on the Future, a Well-Capitalized Franchise with Momentum ◦ The East Morehead Branch and Commercial Banking Center in Charlotte, NC opened at this location May 4, 2022. ◦ Renovation of 16 branch locations scheduled for 2022. ◦ In
Slide 8: Our Leadership Team
8 Our Leadership Team ‘We are intentional and work with purpose to create a culture of leadership excellence - attracting, developing and retaining the best leaders - to achieve mission objectives and to experience break-out performances across the organization.’ Litz Van Dyke, CEO
Slide 9: Our Footprint
Our Footprint YE 2020 92 Branches YE 2019 101 Branches YE 2018 105 Branches June 2022 68 Branches Branches in VA and NC Metropolitan Statistical Areas June 30, 2022 'Over the past three years, we have executed a strategic plan to right-size our retail network as we focus on expanding in emerging gro
Slide 10: Our Commitment
10 Our Commitment 425 Volunteer Community Service Hours Q2 2022 $68,000 Local & National Non- Profit Donations Q2 2022 'Our influence for positive change is in alignment with our purpose and mission. Our commitment to ESG actions benefit our communities, our organization, our environment, and our ec
Slide 11: Our Culture of Care in the Community
11 Our Culture of Care in the Community Environmental Social Governance 65 Community Service Hours 115 Financial Literacy-based Community Service Hours$28,000+ Donations to 23 local & national non-profits CARE Forward is a program in which $10 is donated to a designated nonprofit in each community f
Slide 12: Strategic Initiatives Update
Strategic Initiatives Update
Slide 13: Financial Highlights
Financial Highlights 02 13 Insert CB&T photo here
Slide 14: Balance Sheet and Income Statement
• Net interest income increased $4.2M QoQ and $5.3M YoY primarily due to increased yields on earning assets as a result of the rising interest rate environment and the ongoing reduction in funding costs. • Provision for credit losses increased $1.2M QoQ and $0.8M YoY driven by deterioration of one p
Slide 15: Financial and Shareholder Ratios
• Financial metrics have improved QoQ primarily due to: ◦ net interest income expansion; ◦ controlled expenses and; ◦ the success of our share repurchase program • Net interest margin (FTE) has improved QoQ and YoY primarily due to: ◦ an increase in the yield on earning assets QoQ; ◦ the continued s
Slide 16: Capital Management
Capital Management 16 As of June 30, 2022 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. • Estab
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 borrowing capacity subject to the amount of eligible collateral pledged at any given time. • Co
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 $196.7M or 13.5% YoY • Non-maturing deposit categories showed an increase QoQ and YoY For the Period Ending Variance 06/30/22 03/31/22 06/30/21 Quarter Year L
Slide 19: Total Portfolio Loan Growth and Loan Composition
Total Portfolio Loan Growth $2,704 $2,885 $2,947 $2,812 $2,997 0.75% 6.69% 2.15% (4.58)% 13.27% Portfolio Loans Growth YE 2018 YE 2019 YE 2020 YE 2021 Q2 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 (4.00%) (2.00%) 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Loan Composition 19 $ in thousa
Slide 20: Loan Portfolio Repricing & Index
20 Loan Portfolio Repricing & Index Q2 2022 $ 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 t
Slide 21: Top Ten Relationships
21 Top Ten (10) Relationships (Total Commitment) $ in thousands Segment For the Periods Ending Variance 06/30/22 to 12/31/21 06/30/22 % of Gross Loans 06/30/22 % of RBC06/30/22 12/31/21 1. Hospitality, agriculture & energy $338,790 $350,010 ($11,220) 11.30 % 73.47 % 2. Retail real estate & food serv
Slide 22: Balance Sheet Transformation
22 Balance Sheet Transformation 03
Slide 23: Earning Assets
23 Earning Assets Goal is to deploy cash into higher yielding loans and investments while foregoing undue concentration risk. • Earning Assets stand at $3.9B • 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 24: Loans: Past, Present, Future
Commercial Real Estate Commercial & Industrial Residential Mortgages Other Consumer Construction Other 24 Loans Past Present Future 57% 46% 45% 20% 19% 5% 3% 2% 7% Loan Portfolio - 12/31/17 Loan Portfolio - 06/30/22 Loan Portfolio - Target 5% 11% 5% 30% 11% 23% Goal is to further diversify and de-ri
Slide 25: Bond Portfolio
Muni MBS Corporates Agencies & Treasuries ABS SBA CMBS CMO 25 Bond Portfolio Past Present Future 12% 8% 25% 41% 9% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 06/30/22 Bond Portfolio - Target 10% 34% 27% 28% 15%8% 31% 6% 25% Goal is to maintain diversification and strong credit quality, while del
Slide 26: Deposits
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings 26 Deposits Past Present Future 56% 34% 30% 15%15% 3% 10% Deposit Mix - 12/31/17 Deposit Mix - 06/30/22 Deposit Mix - Target 20% 19% 20% 7% 19% 25% 14% 13% Goal is to restructure and diversify funding sources with a focus on lower cost/cor
Slide 27: Asset Quality
Asset Quality 04 27 Insert CB&T photo here
Slide 28: Delinquency Trends
28 Delinquency Trends Past Due Loans / Total Portfolio Loans 0.07% 0.09% 0.19% 0.05% 0.08% 0.22% 0.05% 0.03% 0.01% 0.01% —% 0.00% 0.00% 0.00% 0.00% 0.28% 0.14% 0.22% 0.06% 0.09% $7,618 $4,070 $6,404 $1,670 $2,558 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans Total PD Amt YE 2018 YE 2019 YE
Slide 29: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $52 $43 $31 $7 $12 37 31 22 3 3 5 3 3 5 3 2 3 11 8 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2018 YE 2019 YE 2020 YE 2021 Q2 2022 $0 $6 $12 $18 $24 $30 $36 $42 $48 $54 $60 29 Nonperforming Loans $ in milli
Slide 30: Top Nonperforming Loans
30 Top 5 Nonperforming Loans $ in thousands Dollars in Thousands For the Periods Ending Change Comments6/30/2022 12/31/2021 1. Syndicated C&I $4,945 $4,811 $134 C&I secured with UCCs 2. CRE $2,668 $2,742 ($74) Commercial Property 3. Residential 825 825 — Residential mortgage Loan 4. Construction 808
Slide 31: Nonperforming Assets
Nonperforming Assets $84 $60 $48 $18 $20 33 18 16 11 8 51 42 32 7 12 OREO Nonperforming Loans YE 2018 YE 2019 YE 2020 YE 2021 Q2 2022 $0 $14 $28 $42 $56 $70 $84 $98 $112 $126 $140 31 Nonperforming Assets $ in millions As of June 30, 2022 (1) During the 2nd quarter of 2021 twenty branch closures were
Slide 32: Loan Portfolio – Risk Ratings
Portfolio Credit Quality Trend $2,704 $2,885 $2,947 $2,812 $2,998 2,232 2,451 2,523 2,616 2,807 461 430 238 186 174186 Pass Substandard Special Mention YE 2018 YE 2019 YE 2020 YE 2021 Q2 2022 $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 Non-Pass Credit Quality Trend $472 $434 $424 $196 $19
Slide 33: Net Charge-off & Provision Expense Trends
33 Net Charge-off & Provision Expense Trends $ in thousands As of June 30, 2022 (1) YTD Net charge-offs for 2021 consist of $9.2 million for nine sold loans that were a part of two relationships in 3Q21 and $6.3 million and $1.9 million in 2Q21 for the resolution of our two largest nonperforming cre
Slide 34: ACL Composition & ACL Coverage Ratio Trends
34 ACL Composition & ACL Coverage Ratio Trends $ in thousands As of June 30, 2022 $109,319 $99,294 $95,939 $96,376 $97,981 107,446 96,619 94,974 95,448 94,512 1,873 2,675 965 928 3,469 3.75% 3.44% 3.41% 3.33% 3.27% General Reserves Specific Reserves ACL to Total Portfolio Loans Q2 2021 Q3 2021 Q4 20
Slide 35: Deposit Mix and Cost of Funds
35 Deposit Mix and Cost of Funds 05
Slide 36: Total Deposit Composition
Total Deposit Composition $3,592 $3,504 $3,685 $3,698 $3,753 3,067 2,949 2,976 2,950 3,049 525 555 709 748 704 Interest-bearing deposits Nonnterest-bearing deposits YE 2018 YE 2019 YE 2020 YE 2021 Q2 2022 $0 $700 $1,400 $2,100 $2,800 $3,500 $4,200 36 Deposits $ in millions (1) (1) Period end balance
Slide 37: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,097 $3,020 $2,937 $2,945 $3,005 2,090 2,054 1,819 1,485 1,289 664 582 600 663 721 247 249 321 414 476 96 135 197 383 519 1.23% 1.54% 1.21% 0.76% 0.59% Certificates of Deposit Savings Interest-bearing Deposits Money Market Deposit Rate YE 2018 Y
Slide 38: Total Deposits and Cost of Deposits
Total Deposits and Cost of Deposits $3,682 $3,685 $3,697 $3,701 $3,756 755 736 747 712 734 2,927 2,949 2,950 2,989 3,0220.63% 0.58% 0.52% 0.48% 0.47% Noninterest-bearing Deposits Interest-bearing Deposits Total Cost of Deposits Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 $0 $1,000 $2,000 $3,000 $4,000 0
Slide 39: Net Interest Margin
39 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds (2) Net Interest Margin has been computed on a fully taxable equivalent basis
Slide 40: Commercial Loan Portfolio Metrics
40 Commercial Loan Portfolio Metrics 06
Slide 41: CRE Segment Overview By Collateral Code
41 CRE Segment Overview By Collateral Code ($ in millions) (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 June 30, 2022 (1) Grand Total of Segments $1,948.
Slide 42: Hospitality Metrics by State
42 Hospitality Metrics by State ($ in millions) As of June 30, 2022 (1) (1) State Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment North Carolina $162,414 43 % 59.6 % $4,512 $73 South Carolina 96,420 25 % 61.9 % 7,417 101
Slide 43: Hospitality Metrics by Brand
43 Hospitality Metrics by Brand ($ in millions) As of June 30, 2022 (1) (1) Brand Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $108,516 29 % 65.5 % $9,865 $114 IHG 78,608 21 % 58.1 % 4,913 70 Marriott 44,461 12
Slide 44: Retail Metrics by State
44 Retail Metrics by State ($ in millions) As of June 30, 2022 (1) Excludes restaurant loans of $34.5 million. State Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square Foot Virginia $ 175,122 61 % 65.3 % $ 2,162 $ 149 South Carolina 87,339 3
Slide 45: Retail Metrics by Brand
45 Retail Metrics by Brand ($ in millions) As of June 30, 2022 (1) Excludes restaurant loans of $34.5 million. (1) (1) Type Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square Foot Anchored Strip Centers $ 144,372 51 % 69.5 % $ 4,246 $ 173 Un