Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q1 2024 Earnings Presentation
47 slides from Carter Bankshares's earnings presentation, May 3, 2024
Slide 1: First Quarter 2024 Investor Presentation
FIRST QUARTER 2024 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statement
2 F O R W A R D - L O O K I N G S T A T E M E N T This information contains or incorporates certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that relate to our financial condition, market cond
Slide 3: Section Title Slides
SECTION TITLE SLIDES 1 Overview 4-10 2 Financial Highlights 11-22 3 Asset Quality 23-29 4 Deposit Mix 30-32 5 Commercial Loans 33-42 6 Non-GAAP Reconciliation 43-47 3
Slide 4: Overview
OVERVIEW S E C T I O N 0 1
Slide 5: 2024 Focused on the Future
5 As of March 31, 2024 FOCUSED ON THE FUTURE 65 CORPORATE CENTERS BRANCHES ◦ Strong Deposit Growth in Q1'24 ◦ Strong and Improving Available Liquidity Position in Q1'24 ◦ Diversified and granular deposit base, approximately 78.8% Retail Customers ◦ Approximately 82.8% of Deposits, including Collater
Slide 6: Leadership Team
6 L E A D E R S H I P T E A M Litz Van Dyke Chief Executive Officer Bradford Langs President Chief Strategy Officer Wendy Bell Senior Executive Vice President Chief Financial Officer Loran Adams Tami Buttrey Executive Vice President Chief Retail Banking Officer Paul Carney Executive Vice President C
Slide 7: Regional Footprint
Branches in Metropolitan Statistical Areas 7 R E G I O N A L F O O T P R I N T V I R G I N I A N O R T H C A R O L I N A 53 BRANCHES TOTAL $3.4 DEPOSITS TOTAL BILLION Washington DC Roanoke Lynchburg Charlottesville Blacksburg- Christiansburg Non MSA VIRGINIA NORTH CAROLINA 12 BRANCHES TOTAL Charlott
Slide 8: Corporate & Social Responsibility
CLASSES FACILITATED FOR 158 STUDENTS 8 * C O R P O R A T E & S O C I A L R E S P O N S I B I L I T Y Associates attended a luncheon in High Point, NC to support Go Red for Women, which is a worldwide initiative of the American Heart Association to increase women’s heart health awareness and serve as
Slide 9: Strategic Initiatives
9 S T R A T E G I C I N I T I A T I V E S E N H A N C E E X P A N DI N V E S T We will invest in human capital strategies to enhance the associate experience. We will continue to drive efficiency and process improvement across all levels of the organization, leveraging technology and automation. We
Slide 10: Safety and Soundness
10 8.76% ACL/Total Portfolio Loans NPL/Portfolio Loans Net Chg-offs/ Portfolio Loans (YTD) 0.06% Delinquency/ Portfolio Loans S A F E T Y A N D S O U N D N E S S 2.75% 0.25% Asset Quality Earnings LiquidityCapital Return on Avg Assets (YTD)0.52% 6.59% NIM(FTE)(YTD) 2.60% Core Efficiency Ratio (YTD)
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS S E C T I O N 0 2
Slide 12: Financial Highlights Summary
12 $ in thousands 1Q2024 4Q2023 QTD Q/Q Change % 1Q2023 QTD Y/Y Change % Operational Results Net Interest Income $ 28,419 $ 27,420 3.6 % $ 40,785 (30.3) % Provision for Credit Losses 16 2,895 (99.4) % 1,415 (98.9) % (Recovery) Provision for Unfunded Commitments (43) 587 (107.3) % 84 (151.2) % Nonint
Slide 13: Financial/Shareholder Ratios
1Q2024 4Q2023 QTD Q/Q Change % 1Q2023 QTD Y/Y Change % Shareholder Ratios Diluted Earnings (Loss) Per Share (QTD) $ 0.25 $ (0.08) (412.5) % $ 0.67 (62.7) % Financial Ratios Return on Avg Assets (QTD) 0.52 % (0.17) % (405.9) % 1.51 % (65.6) % Return on Avg Shareholders' Equity (QTD) 6.59 % (2.24) % (
Slide 14: Financial Performance Trends
Efficiency Ratio 75.20% 73.51% 60.67% 72.54% 79.01% 2020 2021 2022 2023 1Q2024 Net Income, in millions $(45,858) $31,590 $50,118 $23,384 $23,372 2020 2021 2022 2023 1Q2024 14 F I N A N C I A L P E R F O R M A N C E T R E N D S ROA (1.12)% 0.76% 1.21% 0.53% 0.52% 2020 2021 2022 2023 1Q2024 TCE 10.53%
Slide 15: Capital Management
15 As of March 31, 2024 1 Non-GAAP Financial measure - see Non-GAAP reconciliation Regulatory Well Capitalized Carter Bankshares 03/31/2024 Excess ($) (In Thousands) 03/31/2024 Common Equity Tier 1 Ratio ("CET1") 6.50 % 10.89 % $ 172,810 Tier 1 Risk-based Ratio 8.00 % 10.89 % $ 113,722 Total Risk-ba
Slide 16: Liquidity Sources
$ in thousands March 31, 2024 December 31, 2023 Favorable / (Unfavorable) Cash and Due From Banks, including Interest-bearing Deposits $ 108,110 $ 54,529 $ 53,581 FHLB Borrowing Availability1 593,774 480,266 113,508 Unsecured Lines of Credit 50,000 50,000 — Collateralized Lines of Credit 45,000 — 45
Slide 17: Loan Composition
17 For the Period Ending Variance $ in thousands 03/31/24 12/31/23 03/31/23 Quarter Year Commercial Real Estate $ 1,728,929 $ 1,670,631 $ 1,575,675 $ 58,298 $ 153,254 Commercial and Industrial 257,176 271,511 290,293 (14,335) (33,117) Residential Mortgages 788,125 787,929 675,340 196 112,785 Other C
Slide 18: Loan Portfolio Repricing & Index
18 L O A N P O R T F O L I O R E P R I C I N G & I N D E X 1Q2024 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 lo
Slide 19: Top Ten Relationships
19 For the Periods Ending Variance 03/31/24 to 12/31/23 % of Gross Loans % of RBC $ in thousands 03/31/24 12/31/23 1. Hospitality, Agriculture & Energy $ 301,913 $ 301,913 $ — 8.60% 63.07% 2. Retail Real Estate & Food Services 53,243 53,576 (333) 1.52% 11.12% 3. Retail Real Estate 37,622 38,972 (1,3
Slide 20: Bond Portfolio
20 3/31/2024 12/31/2023 $ in thousands Amortized Cost Net Unrealized (Losses)/ Gains Fair Value Amortized Cost Net Unrealized (Losses)/ Gains Fair Value U.S. Government Agency Securities 40,094 (722) 39,372 44,185 (358) 43,827 Residential Mortgage-Backed Securities 110,096 (10,312) 99,784 110,726 (1
Slide 21: Deposit Composition
21 D E P O S I T C O M P O S I T I O N Total Deposits Composition $3,685 $3,698 $3,633 $3,722 $3,831 709 748 706 685 672 2,976 2,950 2,927 3,037 3,159 Noninterest-bearing Deposits Interest-bearing Deposits YE 2020 YE 2021 YE 2022 YE 2023 Q1 2024 DEPOSIT STATISTICS • Total deposits increased $108.6M
Slide 22: Deposits
22 D E P O S I T S Goal is to enhance and diversify funding sources with a focus on lower cost/core relationships (both retail and commercial): • Deposits currently stand at $3.8B • CD Portfolio ($1.7B) is relatively short with 83% of the portfolio scheduled to mature within 12 months and 89% of the
Slide 23: Asset Quality
ASSET QUALITY S E C T I O N 0 3
Slide 24: Asset Quality
24 A S S E T Q U A L I T Y Nonperforming Loans / Total Portfolio Loans $2,947 $2,812 $3,149 $3,506 $3,509 32 7 7 310 307 2,915 2,805 3,142 3,196 3,202 1.09% 0.26% 0.21% 8.83% 8.76% Nonperforming Loans Performing Loans Nonperforming Loans/ Total Portfolio Loans YE 2020 YE 2021 YE 2022 YE 2023 Q1 2024
Slide 25: Delinquency Trends
25 D E L I N Q U E N C Y T R E N D S Past Due Loans / Total Portfolio Loans 0.19% 0.05% 0.08% 0.16% 0.25% 0.03% 0.01% 0.07% 0.01% 0.00%—% —% —% —% —% 0.22% 0.06% 0.15% 0.17% 0.25% $6,404 $1,670 $4,837 $6,032 $8,654 30-59 Days PD 60-89 Days PD 90+ Days PD and still accruing Total PD Loans Total PD Am
Slide 26: Delinquency Trends
26 D E L I N Q U E N C Y T R E N D S 1 Represents the Bank’s largest lending relationship with an aggregate principal value of $301.9 million placed on nonaccrual status during the second quarter of 2023. Delinquency Trends $8,654 $307,297 9% $3,193,120 91% 30-89 Days Past Due NPL Current March 31,
Slide 27: Nonperforming Relationships
27 Nonaccrual Balance Change Comments $ in thousands 03/31/24 12/31/23 1. Other1 $ 301,913 $ 301,913 $ — Other 2. Residential Construction 2,090 2,090 — Residential Construction 3. Residential 825 825 — Residential Mortgage Loan 4. CRE 465 689 (224) Commercial Property 5. Residential 418 — 418 Resid
Slide 28: Loan Portfolio - Risk Ratings
Portfolio Credit Quality Trend $2,947 $2,812 $3,149 $3,506 $3,509 2,523 2,616 2,992 3,192 3,199 238 186 142 310 307 186 Pass Substandard Special Mention YE 2020 YE 2021 YE 2022 YE 2023 Q1 2024 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 28 L O A N P O R T F O L I O - R I S K R A T I N G
Slide 29: ACL, Net Charge-offs & Provision Expense
29 A C L, N E T C H A R G E - O F F S & P R O V I S I O N E X P E N S E Net Charge-offs & Provision Expense $2,694 $23,127 $4,506 $2,300 $532 $18,006 $3,350 $2,419 $5,500 $160.09% 0.79% 0.15% 0.07% 0.06% Net Charge-offs Provision Expense Net Charge-offs (annualized)/ Average Loans YE 2020 YE 2021 YE
Slide 30: Deposit Mix
DEPOSIT MIX S E C T I O N 0 4
Slide 31: Deposits
Total Deposit Composition $3,685 $3,698 $3,633 $3,722 $3,831 2,976 2,950 2,927 3,037 3,159 709 748 706 685 672 Interest-bearing deposits Noninterest-bearing deposits YE 2020 YE 2021 YE 2022 YE 2023 Q1 2024 $0 $600 $1,200 $1,800 $2,400 $3,000 $3,600 $4,200 31 D E P O S I T S 1 Period end balances, at
Slide 32: Net Interest Income
Net Interest Income & NIM 0.94% 0.57% 0.50% 1.73% 2.33% 3.74% 3.41% 4.01% 4.60% 4.93% 2.80% 2.84% 3.51% 2.87% 2.60% Total Cost of Funds Yield on Interest-earning Assets Net Interest Margin YE 2020 YE 2021 YE 2022 YE 2023 Q1 2024 Avg. Earning Assets & Yield $3,834 $3,972 $4,024 $4,294 $4,429 3.74% 3.
Slide 33: Commercial Loans
COMMERCIAL LOANS S E C T I O N 0 5
Slide 34: CRE Segment Overview
34 C R E S E G M E N T O V E R V I E W As of March 31, 2024, $ in millions 1 Other CRE & Other Commercial Segments include, but are not limited to, Special / Limited Use, Church, Mobile Home Park, Gas Station, Self-Storage Facilities & Auto Shops 2 Includes restaurant loans of $32.9 million By Colla
Slide 35: Hospitality Metrics
35 H O S P I T A L I T Y M E T R I C S As of March 31, 2024 *Relates to the Company's largest NPL relationship. 1 Commitment Level • Total portfolio balance $354.2M • Geographic diversification (see map) • Mean loan size in portfolio $6.1M1 • Median of loans in portfolio $4.1M1 • The largest loan in
Slide 36: Hospitality Metrics
36 H O S P I T A L I T Y M E T R I C S As of March 31, 2024, $ in thousands Category Hospitality Portfolio Balance Percentage of Total Balance Hospitality Commitment Balance Weighted Avg. Commitment LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $ 121,199 34.2 % $ 139,313 62
Slide 37: Multifamily Metrics
37 M U L T I F A M I L Y M E T R I C S As of March 31, 2024 1Commitment Level • Total portfolio balance $340.2M • Geographic diversification (see map) • Mean loan size in portfolio $3.2M1 • Median of loans in portfolio $223K1 • The largest loan in portfolio $36M1 • 51.04% are under construction1 • T
Slide 38: Multifamily Metrics
38 M U L T I F A M I L Y M E T R I C S As of March 31, 2024, $ in thousands (1) The Other category consists of multifamily properties for which we do not have the data. Category Multifamily Portfolio Balance Percentage of Total Balance Multifamily Commitment Balance Weighted Avg. Commitment LTV Avg.
Slide 39: Retail Metrics
39 R E T A I L M E T R I C S As of March 31, 2024 ** Excludes restaurant loans of $32.9 million 1Commitment Level • Total portfolio balance $415.0M** • Geographic diversification (see map) • Mean loan size in portfolio $2.8M1 • Median of loans in portfolio $1.1M1 • The largest loan in portfolio $28M
Slide 40: Retail Metrics
40 R E T A I L M E T R I C S As of March 31, 2024, $ in thousands (1) Excludes restaurant loans of $33.2 million (2) A Power Center is a large outdoor shopping mall that usually includes three or more "Big Box" stores. Category Retail Portfolio Balance Percentage of Total Balance Retail Commitment B
Slide 41: Office Metrics
41 O F F I C E M E T R I C S As of March 31, 2024 1Commitment Level • Total portfolio balance $214.9M • Geographic diversification (see map) • Mean loan size in portfolio $1.85M1 • Median of loans in portfolio $380K1 • The largest loan in portfolio $23M1 • 4.28% are under construction1 • Top 10 borr
Slide 42: Office Metrics
42 O F F I C E M E T R I C S As of March 31, 2024, $ in thousands Category Office Portfolio Balance Percentage of Total Balance Office Commitment Balance Avg. GL Balance Size Avg. of Debt per Square Ft- Total Commitment General Office Space $ 182,455 84.9 % $ 208,809 $ 1,983 $ 118 Medical Offices 23
Slide 43: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION S E C T I O N 0 6
Slide 44: Non-GAAP Statement
44 N O N - G A A P S T A T E M E N T 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, the efficiency ratio,
Slide 45: Non-GAAP Reconciliation
45 N O N - G A A P R E C O N C I L I A T I O N 1 Net Interest Income (FTE) (Non-GAAP) Quarter-to-Date (Dollars in Thousands) 1Q2024 4Q2023 1Q2023 Interest Income (FTE)(Non-GAAP) Interest and Dividend Income (GAAP) $ 54,049 $ 51,863 $ 51,955 Tax Equivalent Adjustment 3 206 236 264 Interest and Divide
Slide 46: Efficiency Ratio (Non-GAAP)
46 2 Efficiency Ratio (Non-GAAP) Quarter-to-Date (Dollars in Thousands) 1Q2024 4Q2023 1Q2023 Noninterest Expense $ 26,257 $ 29,072 $ 23,576 Less: Losses on Sales and Write-downs of Branch Premises, net (1) (19) (33) Less: Gains (Losses) on Sales and Write-downs of OREO, net 342 (201) — Less: Associa
Slide 47: Non-GAAP Reconciliation: Adjusted Book Value
47 N O N - G A A P R E C O N C I L I A T I O N 1 Adjusted Book Value (Non-GAAP) Quarter-to-Date 1Q2024 (Dollars in Thousands) Adjusted Book Value (Non-GAAP) Total Shareholders' Equity 0 0$ 359,066 Add: Accumulated Other Comprehensive Loss ("AOCI") 69,796 Add: Other Segment Reserve Release, net of ta