Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q1 2022 Earnings Presentation
44 slides from Carter Bankshares's earnings presentation, Apr 26, 2022
Slide 1: Investor Presentation First Quarter 2022
Investor Presentation First 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, results of operations, plans, objectives, outlook for earnings
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 05-13 2 Financial Highlights 14-22 3 Balance Sheet Transformation 23-27 4 Asset Quality 28-35 5 Deposit Mix & Cost of Funds 36-40 6 Commercial Loan Portfolio Metrics 41-44
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 $2.8B Loans $3.7B Deposits Focused on the Future, a Well-Capitalized Franchise with Momentum ◦ Build-out completed at East Morehead, Charlotte commercial center. Branch will open at this location May 4, 2022. ◦ Renovation of 16 branch locations scheduled for 2022.
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 ‘We are intentional and work with purpose to create a culture of leadership excellence - attracting, developing and retaining
Slide 9: Our Footprint
Our Footprint YE 2020 92 Branches YE 2019 101 Branches YE 2018 105 Branches March 2022 67 Branches Branches in VA and NC Metropolitan Statistical Areas March 31, 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 g
Slide 10: Our Commitment
10 Our Commitment Installed iWaves Air Purifiers in all air handler units to clean & purify the air in buildings 400 Volunteer Community Service Hours Q1 2022 $150,000 Local & National Non- Profit Donations Q1 2022 'Our influence for positive change is in alignment with our purpose and mission. Our
Slide 11: Our Culture of Care in the Community
11 Our Culture of Care in the Community Partnered with The TAD Space, an event and co-working space, to offer a monthly Family Finance Series. The bank facilitated a Banking Basics class in February and a Savings class in March. Credit Score Classes are scheduled for April and May. Held a drive for
Slide 12: Our Culture of Care in the Workplace
12 Our Culture of Care in the Workplace Environmental Social Governance COVID-19 Response: Bank Approved Paid Leave (BAPL) continued to keep our associates and customers safe while maintaining bank operations. Wellness Programs: We now offer a premium-reduction program if the associate visits a prim
Slide 13: Strategic Initiatives Update
Strategic Initiatives Update
Slide 14: Financial Highlights
Financial Highlights 02 14 Insert CB&T photo here
Slide 15: Quarterly Operational Results and Balance Sheet Condition
• Net interest income increased $0.2M QoQ and $1.7M YoY due primarily to increased yields on earning assets and the ongoing reduction in funding costs. • Provision for credit losses declined $0.3M QoQ and $1.2M YoY driven by improved qualitative reserves and lower net charge-offs, offset by loan gro
Slide 16: Shareholder and Financial Ratios
• Financial metrics have improved QoQ primarily due to: ◦ net interest income expansion; ◦ better credit quality; ◦ 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 asse
Slide 17: Capital Management
Capital Management 17 As of March 31, 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. • Esta
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 $238.0M or (15.6)% YoY, as well as an increase in non-maturing deposits. For the Period Ending Variance 03/31/22 12/31/21 03/31/21 Quarter Year Lifetime Free
Slide 20: Total Portfolio Loan Growth and Loan Composition
Total Portfolio Loan Growth $2,704 $2,885 $2,947 $2,812 $2,894 0.75% 6.69% 2.15% (4.58)% 11.83% Portfolio Loans Growth YE 2018 YE 2019 YE 2020 YE 2021 Q1 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% Loan Composition 20 $ in thousands LOA
Slide 21: Loan Portfolio Repricing & Index
21 Loan Portfolio Repricing & Index Q1 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 03/31/22 to 12/31/21 03/31/22 % of Gross Loans 03/31/22 % of RBC03/31/22 12/31/21 1. Hospitality, agriculture & energy $349,818 $350,010 ($192) 12.09 % 76.62 % 2. Retail real estate & food service
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% 46% 45% 20% 17% 5% 3% 2% 7% Loan Portfolio - 12/31/17 Loan Portfolio - 03/31/22 Loan Portfolio - Target 5% 11% 5% 30% 12% 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% 9% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 03/31/22 Bond Portfolio - Target 10% 34% 28% 28% 15%7% 31% 7% 25% Goal is to increase diversification, maintain strong credit quality, and
Slide 27: Deposits
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings 27 Deposits Past Present Future 56% 34% 30% 15%14% 3% 10% Deposit Mix - 12/31/17 Deposit Mix - 03/31/22 Deposit Mix - Target 20% 20% 20% 7% 19% 25% 14% 13% 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% 0.02% 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% 0.03% 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans YE 2018 YE 2019 YE 2020 YE 2021 Q1 2022 0.00% 0.10% 0.20% 0.30%
Slide 30: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $52 $43 $31 $7 $7 37 31 22 3 3 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 Q1 2022 $0 $6 $12 $18 $24 $30 $36 $42 $48 $54 $60 30 Nonperforming Loans $ in millions
Slide 31: Top Nonperforming Loans
31 Top 5 Nonperforming Loans $ in thousands Dollars in Thousands For the Periods Ending Change Comments3/31/2022 12/31/2021 1. CRE $2,705 $2,742 ($37) Commercial Property 2. Residential 825 825 — Residential mortgage Loan 3. Construction 809 809 — Residential Lot Developer 4. CRE 308 314 (6) CRE Non
Slide 32: Nonperforming Assets
Nonperforming Assets $84 $60 $48 $18 $19 33 18 16 11 11 47 35 25 3 4 4 7 7 4 4 OREO Nonperforming TDRs Nonperforming Loans YE 2018 YE 2019 YE 2020 YE 2021 Q1 2022 $0 $14 $28 $42 $56 $70 $84 $98 $112 $126 $140 32 Nonperforming Assets $ in millions As of March 31, 2022 (1) During the 2nd quarter of 20
Slide 33: Loan Portfolio – Risk Ratings
Portfolio Credit Quality Trend $2,704 $2,885 $2,947 $2,812 $2,894 2,232 2,451 2,523 2,616 2,700 461 430 238 186 185186 Pass Substandard Special Mention YE 2018 YE 2019 YE 2020 YE 2021 Q1 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 34: Net Charge-off & Provision Expense Trends
34 Net Charge-off & Provision Expense Trends $ in thousands As of March 31, 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 cr
Slide 35: ACL Composition & ACL Coverage Ratio Trends
35 ACL Composition & ACL Coverage Ratio Trends $ in thousands As of March 31, 2022 (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 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 $3,728 3,067 2,949 2,976 2,950 3,020 525 555 709 748 708 Interest-bearing deposits Nonnterest-bearing deposits YE 2018 YE 2019 YE 2020 YE 2021 Q1 2022 $0 $700 $1,400 $2,100 $2,800 $3,500 $4,200 37 Deposits $ in millions (1) (1) Period end balance
Slide 38: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,097 $3,020 $2,937 $2,945 $2,989 2,090 2,054 1,819 1,485 1,309 664 582 600 663 706 247 249 321 414 464 96 135 197 383 510 1.23% 1.54% 1.21% 0.76% 0.60% 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 $3,665 $3,682 $3,685 $3,697 $3,701 711 755 736 747 712 2,954 2,927 2,949 2,950 2,989 0.70% 0.63% 0.58% 0.52% 0.48% Noninterest-bearing Deposits Interest-bearing Deposits Total Cost of Deposits Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 $0 $1,000 $2,000 $3,000 $4,000
Slide 40: Net Interest Margin
40 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds (2) Net Interest Margin has been computed on a fully taxable equivalent basis
Slide 41: Commercial Loan Portfolio Metrics
41 Commercial Loan Portfolio Metrics 06
Slide 42: CRE Segment Overview By Collateral Code
42 CRE Segment Overview By Collateral Code ($ in millions) (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, 2022 (1) Grand Total of Segments $1,939
Slide 43: Hospitality Metrics by State
43 Hospitality Metrics by State ($ in millions) As of March 31, 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 $150,238 37 % 59.4 % $4,293 $68 South Carolina 134,578 33 % 62.1 % 7,916 9
Slide 44: Hospitality Metrics by Brand
44 Hospitality Metrics by Brand ($ in millions) As of March 31, 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 $121,634 30 % 65.1 % $10,136 $107 IHG 79,223 19 % 58.5 % 4,951 70 Marriott 55,790