Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q3 2022 Earnings Presentation
48 slides from Carter Bankshares's earnings presentation, Nov 2, 2022
Slide 1: Investor Presentation Third Quarter 2022
Investor Presentation Third 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, market conditions, results of operations, plans, objectives, o
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 40-47
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 $3.7B Deposits Focused on the Future, a Well-Capitalized Franchise with Momentum ◦ Completed Market Segmentation Study to identify key growth and retention target audiences. ◦ Continue to strengthen Commercial Banking Team with lending and Treasury Mana
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 September 2022 67 Branches Branches in VA and NC Metropolitan Statistical Areas September 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 em
Slide 10: Our Commitment
10 Our Commitment Environmental Social Governance Community Stats YTD as of September 30, 2022 Provided SBA 7a financing of $590,000 for the Clean Eatz Kitchen franchise in Concord Mills, NC. Clean Eatz has helped thousands of customers live healthier lifestyles. Through the Bank’s FHLB Down Payment
Slide 11: Our Culture of Care in the Community
11 Our Culture of Care in the Community North Carolina A&T State University students, Trinity Irby and Jayla Bryant, were each awarded a $5,000 scholarship for the 2022/2023 academic year. The Bank hosted a special dinner and program in September to honor the students and extend well wishes for thei
Slide 12: Our Talent Lifecycle
Our Talent Lifecycle @ Transition + Support associate transition + Ensure continuity + Develop alumni relationships @ Retain + Develop and encourage knowledge management + Encourage internal mobility * Develop career pathing r) Reward & Recognize + Reward performance + Build and sustain motivation *
Slide 13: Strategic Initiatives Update
Strategic Initiatives Update
Slide 14: Financial Highlights
Financial Highlights 02 14 Insert CB&T photo here
Slide 15: Balance Sheet and Income Statement
• Net interest income increased $5.3M QoQ and $8.3M 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 decreased $1.9M QoQ driven by the release of $3.7M in the other se
Slide 16: Financial and Shareholder Ratios
• Financial metrics have improved QoQ primarily due to: ◦ net interest income expansion; ◦ lower provision for credit losses; ◦ 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
Slide 17: Capital Management
Capital Management 17 As of September 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. • Establishment of bank holding company provides flexi
Slide 18: Liquidity
Liquidity 18 (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 19: Deposit Composition
Deposit Composition 19 $ in thousands IMPROVING DEPOSIT MIX • Reliance on Certificates of Deposit continues to decline with a net decrease of $154.3M or 11.0% YoY • Non-maturing deposit categories showed an increase QoQ and YoY For the Period Ending Variance 09/30/22 06/30/22 09/30/21 Quarter Year L
Slide 20: Total Portfolio Loan Growth and Loan Composition
Total Portfolio Loan Growth $2,704 $2,885 $2,947 $2,812 $3,0310.75% 6.69% 2.15% (4.58)% 10.43% Portfolio Loans Growth YE 2018 YE 2019 YE 2020 YE 2021 Q3 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 (4.00%) (2.00%) 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Loan Composition 20 $ in
Slide 21: Loan Portfolio Repricing & Index
21 Loan Portfolio Repricing & Index Q3 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 22: Top Ten Relationships
22 Top Ten (10) Relationships (Total Commitment) $ in thousands Segment For the Periods Ending Variance 09/30/22 to 12/31/21 09/30/22 % of Gross Loans 09/30/22 % of RBC09/30/22 12/31/21 1. Hospitality, agriculture & energy $321,893 $350,010 ($28,117) 10.61 % 68.72 % 2. Retail real estate & food serv
Slide 23: Balance Sheet Transformation
23 Balance Sheet Transformation 03
Slide 24: Earning Assets
24 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 25: Loans: Past, Present, Future
Commercial Real Estate Commercial & Industrial Residential Mortgages Other Consumer Construction Other 25 Loans Past Present Future 57% 45% 45% 20% 20% 5% 3% 1% 7% Loan Portfolio - 12/31/17 Loan Portfolio - 09/30/22 Loan Portfolio - Target 5% 12% 5% 30% 11% 23% Goal is to further diversify and de-ri
Slide 26: Bond Portfolio
Muni MBS Corporates Agencies & Treasuries ABS SBA CMBS CMO 26 Bond Portfolio Past Present Future 12% 8% 25% 41% 10% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 09/30/22 Bond Portfolio - Target 10% 34% 27% 28% 15%7% 31% 6% 25% Goal is to maintain diversification and strong credit quality, while de
Slide 27: Deposits: Past, Present, Future
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings 27 Deposits Past Present Future 56% 33% 30% 15%14% 3% 10% Deposit Mix - 12/31/17 Deposit Mix - 09/30/22 Deposit Mix - Target 20% 20% 20% 7% 19% 25% 14% 14% Goal is to restructure and diversify funding sources with a focus on lower cost/cor
Slide 28: Asset Quality
Asset Quality 04 28 Insert CB&T photo here
Slide 29: Delinquency Trends
29 Delinquency Trends Past Due Loans / Total Portfolio Loans 0.07% 0.09% 0.19% 0.05% 0.03% 0.22% 0.05% 0.03% 0.01% 0.01% 0.00% —% —% —% —% 0.28% 0.14% 0.22% 0.06% 0.04% $7,618 $4,070 $6,404 $1,670 $1,104 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans Total PD Amt YE 2018 YE 2019 YE 2020 YE 2
Slide 30: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $52 $43 $31 $7 $7 37 31 22 3 2 0 3 3 5 3 2 4 11 8 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2018 YE 2019 YE 2020 YE 2021 Q3 2022 $0 $6 $12 $18 $24 $30 $36 $42 $48 $54 $60 30 Nonperforming Loans $ in millio
Slide 31: Top Nonperforming Loans
31 Top 5 Nonperforming Loans $ in thousands Dollars in Thousands For the Periods Ending Change Comments9/30/2022 12/31/2021 1. CRE $2,137 $2,742 ($605) Commercial Property 2. Residential $1,212 $— $1,212 Residential Mortgage Loan 3. Residential 825 825 — Residential Mortgage Loan 4. Construction 808
Slide 32: Nonperforming Assets
Nonperforming Assets $84 $60 $48 $18 $15 33 18 16 11 8 51 42 32 7 7 OREO Nonperforming Loans YE 2018 YE 2019 YE 2020 YE 2021 Q3 2022 $0 $14 $28 $42 $56 $70 $84 $98 $112 $126 $140 32 Nonperforming Assets $ in millions As of September 30, 2022 Nonperforming Assets / Total Assets 84 60 48 18 15 4,040 4
Slide 33: Loan Portfolio – Risk Ratings
Portfolio Credit Quality Trend $2,704 $2,885 $2,947 $2,812 $3,031 2,232 2,451 2,523 2,616 2,861 461 430 238 186 157 186 Pass Substandard Special Mention YE 2018 YE 2019 YE 2020 YE 2021 Q3 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 $1
Slide 34: Net Charge-off & Provision Expense Trends
34 Net Charge-off & Provision Expense Trends $ in thousands As of September 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 nonperformin
Slide 35: ACL Composition & ACL Coverage Ratio Trends
35 ACL Composition & ACL Coverage Ratio Trends $ in thousands As of September 30, 2022 $99,294 $95,939 $96,376 $97,981 $94,164 96,619 94,974 95,448 94,512 93,817 2,675 965 928 3,469 347 3.44% 3.41% 3.33% 3.27% 3.11% General Reserves Specific Reserves ACL to Total Portfolio Loans Q3 2021 Q4 2021 Q1 2
Slide 36: Deposit Mix and Cost of Funds
36 Deposit Mix and Cost of Funds 05
Slide 37: Total Deposit Composition
Total Deposit Composition $3,592 $3,504 $3,685 $3,698 $3,726 3,067 2,949 2,976 2,950 3,007 525 555 709 748 719 Interest-bearing deposits Noninterest-bearing deposits YE 2018 YE 2019 YE 2020 YE 2021 Q3 2022 $0 $700 $1,400 $2,100 $2,800 $3,500 $4,200 37 Deposits $ in millions (1) (1) Period end balanc
Slide 38: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,097 $3,020 $2,937 $2,945 $3,018 2,090 2,054 1,819 1,485 1,279 664 582 600 663 724 247 249 321 414 484 96 135 197 383 531 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 39: Total Deposits and Cost of Deposits
Total Deposits and Cost of Deposits $3,685 $3,697 $3,701 $3,756 $3,749 736 747 712 734 706 2,949 2,950 2,989 3,022 3,043 0.58% 0.52% 0.48% 0.47% 0.47% Noninterest-bearing Deposits Interest-bearing Deposits Total Cost of Deposits Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 $0 $1,000 $2,000 $3,000 $4,000
Slide 40: Net Interest Margin
40 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds. (2) Net Interest Margin has been computed on a fully taxable equivalent basi
Slide 41: Commercial Loan Portfolio Metrics
41 Commercial Loan Portfolio Metrics 06
Slide 42: CRE Segment Overview By Collateral Code
42 CRE Segment Overview By Collateral Code ($ in millions) As of September 30, 2022 (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 (1) Grand Total of Segments $1
Slide 43: Hospitality Metrics by State
43 Hospitality Metrics by State ($ in thousands) As of September 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 $153,355 42 % 59.1 % $4,647 $75 South Carolina 94,773 26 % 62.4 % 7,8
Slide 44: Hospitality Metrics by Brand
44 Hospitality Metrics by Brand ($ in thousands) As of September 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 $108,484 29 % 65.5 % $9,862 $114 IHG 76,941 21 % 57.0 % 4,809 69 Marriott 44,
Slide 45: Multifamily/Student Housing Metrics by State
45 Multifamily/Student Housing Metrics by State ($ in thousands) As of September 30, 2022 (1) (1) State Retail Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Unit - Total Commitment MULTIFAMILY Virginia $ 65,112 23 % 60.3 % $ 1,415 $ 56 South Carolina 16
Slide 46: Multifamily Metrics by Property Type
46 Multifamily Metrics by Property Type ($ in thousands) As of September 30, 2022 (1) The Other category consists of multifamily properties for which we do not have the data for. (1) (1) Type Retail Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square F
Slide 47: Retail Metrics by State
47 Retail Metrics by State ($ in thousands) As of September 30, 2022 (1) Excludes restaurant loans of $29.9 million. State Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square Foot North Carolina $ 190,012 60 % 48.7 % $ 2,436 $ 180 Virginia 80
Slide 48: Retail Metrics by Brand
48 Retail Metrics by Brand ($ in thousands) As of September 30, 2022 (1) Excludes restaurant loans of $29.9 million. (2) A Power Center is a large outdoor shopping mall that usually includes three or more "Big Box" stores. (1) (1) Type Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV