Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q2 2021 Earnings Presentation
45 slides from Carter Bankshares's earnings presentation, Jul 29, 2021
Slide 1: Investor Presentation Second Quarter 2021
Investor Presentation Second 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 39-40 7 Commercial Loan Portfolio Metrics 41-44 8 PPP Loan Update 45
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 2020 with the assets of Carter Bank & Trust. Our Company History 7 As of June 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 ‘Our leadership team is collaborative and courageous. Together we continue to press forward, through the uncertainties and op
Slide 9: Our Footprint
North Carolina | Total Deposits: $0.4MM 1 5 2 1 4 13 Charlotte Greensboro Raleigh Durham Fayetteville Non MSA TOTAL CRA Assessment area includes two new counties. Randolph, NC: Greensboro MSA Niagra, NY: Varsity Bank Our Footprint YE 2020 92 Branches YE 2019 101 Branches YE 2018 105 Branches July 20
Slide 10: ESG metrics and initiatives
10 PPP Totals # Funded: 650 $ Funded: $51,000,000 March 2021: Municipal bond - Refinance of funds used to make improvements to Laurel Park Middle School & Magna Vista High School in Henry County in VA in which 100% of tracts are LMI or Distressed or Underserved May 2021: Through FHLB membership, the
Slide 11: Our Culture of Care
Our Culture of Care 11 Club Care is a biweekly interactive program designed to energize and inspire our teammates. World-class athletes, celebrities and our own heroes share tips for holistic well-being and personal stories of fortitude, resilience and care. $32,000 Contribution to the American Red
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
2Q2021 1Q2021 2Q2020 Operational Results Net Interest Income $ 27,203 $ 26,529 $ 26,262 Provision for Credit Losses 967 1,857 5,473 Provision for Unfunded Commitments (603) (282) — Noninterest income 7,238 8,952 6,201 Noninterest expense 27,759 23,605 23,023 Income tax expense 886 926 (488) Net Inco
Slide 15: Financial / Shareholder Ratios
2Q2021 1Q2021 2Q2020 Shareholder Ratios Diluted Earnings Per Share (QTD) $ 0.21 $ 0.36 $ 0.17 Diluted Earnings Per Share (YTD) $ 0.56 $ 0.36 $ 0.34 Financial Ratios Return on Assets (YTD) 0.72 % 0.92 % 0.44 % Return on Equity (YTD) 7.62 % 9.72 % 3.71 % Total Capital Ratio 14.66 % 14.14 % 14.57 % Tie
Slide 16: Capital Management
Capital Management 16 As of June 30, 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. • 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 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 $368.6M (20.19%) from Q2 2020 to Q2 2021 while all Non Maturing Deposit categories showed an increase in ending balances for the same period. For the Period End
Slide 19: Loan Composition
Total Portfolio Loan Growth $2,684 $2,704 $2,885 $2,947 $2,917 (1.76)% 0.75% 6.69% 2.15% (2.05)% Portfolio Loans Growth YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 (3.00%) (2.00%) (1.00%) 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% Loan Composition 19 $ in
Slide 20: Loan Portfolio Repricing & Index
20 LOAN PORTFOLIO REPRICING & INDEX Q2 2021 $ 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: 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 $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 23: Loans
Commercial Real Estate Commercial & Industrial Residential Mortgages Construction Other Consumer Other(1) 23 Loans Past Present Future 57% 46% 40% 20% 15% 5% 3% 1% 5% Loan Portfolio - 12/31/17 Loan Portfolio - 06/30/21 Loan Portfolio - Target 5% 11% 5% 30% 14% 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 7% 8% 25% 41% 16% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 06/30/21 Bond Portfolio - Target 10% 34% 27% 28% 15% 5% 31% 12% 25% Goal is to increase diversification, maintain strong credit quality, a
Slide 25: Deposits
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings 25 Deposits Past Present Future 56% 40% 35% 15%11%3% 10% Deposit Mix - 12/31/17 Deposit Mix - 06/30/21 Deposit Mix - Target 20% 18% 15% 7% 20% 25% 14% 11% Goal is to restructure and diversify funding sources with a focus on lower cost/core
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% 0.03% 0.01% 0.22% 0.05% 0.03% 0.21% 0.02% 0.00% 0.00% 0.00% 0.00% 0.24% 0.28% 0.14% 0.22% 0.24% 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 0.00% 0.10% 0.20% 0.30%
Slide 28: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $93 $52 $43 $31 $10 $78 $37 $31 $22 $0 $1 $1 $1 $1 $1 $3 $3 $5 $5 $4 $14 $11 $8 $3 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 $0 $10 $19 $29 $38 $48 $58 $67 $77 $86 $96
Slide 29: Nonperforming Relationships
29 Nonperforming Relationships $ in thousands Type Nonaccrual Balance 6/30/21 Nonaccrual Balance 3/31/21 Variance Q1 2021 to Q4 2020 Comments 1. Construction $1,741 $1,741 $0 Commercial lot development 2. Construction $1,739 $1,739 $0 Residential lot developer; has a specific reserve of $1.5 million
Slide 30: Nonperforming Assets
Nonperforming Assets $133 $84 $60 $48 $31 $40 $33 $18 $16 $21 $42 $47 $35 $25 $3 $51 $4 $7 $7 $7 OREO Nonperforming TDRs Nonperforming Loans YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 $0 $14 $28 $42 $56 $70 $84 $98 $112 $126 $140 30 Nonperforming Assets $ in millions As of June 30, 2021 (1) During the
Slide 31: Loan Portfolio – Risk Ratings
Portfolio Credit Quality Trend $2,684 $2,704 $2,885 $2,947 $2,917 $1,868 $2,232 $2,451 $2,523 $2,470 $719 $461 $430 $238 $243$97 $186 $204 Pass Substandard Special Mention YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 $0 $1,000 $2,000 $3,000 $4,000 Non-Pass Credit Quality Trend $816 $472 $434 $424 $447 $7
Slide 32: Net Charge-off & Provision Expense Trends
32 Net Charge-off & Provision Expense Trends $ in thousands As of June 30, 2021 (1) Net charge-offs for the 2nd quarter of 2021 consist of $6.3 million and $1.9 million for the resolution of our two largest nonperforming credits of which $13.1 million was previously reserved. $42,379 $12,989 $3,841
Slide 33: ACL Composition & ACL Coverage Ratio Trends
33 ACL Composition & ACL Coverage Ratio Trends $ in thousands As of June 30, 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 F
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 $3,659 3,139 3,067 2,949 2,976 2,939 530 525 555 709 720 Interest-bearing deposits Nonnterest-bearing deposits YE 2017 YE 2018 YE 2019 YE 2020 Q2 2021 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 35 Deposits $ in millions (1) (1) Peri
Slide 36: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,312 $3,097 $3,020 $2,937 $2,940 $2,199 $2,090 $2,054 $1,819 $1,566 $727 $664 $582 $600 $651 $245 $247 $249 $321 $392 $141 $96 $135 $197 $331 Certificates of Deposit Savings Interest-bearing Deposits Money Market Deposit Rate YE 2017 YE 2018 YE
Slide 37: Total Deposits and Cost of Deposits
Total Deposits and Cost of Deposits $3,485 $3,570 $3,617 $3,641 $3,665 $3,681 $2,934 $2,919 $2,949 $2,946 $2,954 $2,926 $551 $651 $668 $695 $711 $755 Interest-bearing Deposits Noninterest-bearing Deposits Total Cost of Deposits Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 $0 $1,000 $2,000 $3,000
Slide 38: Net Interest Margin
38 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds (2) Net Interest Margin has been computed on a fully taxable equivalent basis
Slide 39: Loan Deferral Update
39 Loan Deferral Update 06
Slide 40: COVID-19 Loan Deferral Program Update
40 COVID-19 Loan Deferral Program Update The Company has offered loan deferrals in three parts: ◦ Deferrals allow the operating company and its principals to preserve liquidity and develop strategies to operate at a lower break even level to ensure long term survival ◦ The Part I program began in Ma
Slide 41: Commercial Loan Portfolio Metrics
41 Commercial Loan Portfolio Metrics 07
Slide 42: CRE Segment Overview By Collateral Code
25% 16% 15% 11% 9% 9% 7% 5% 3% 42 CRE Segment Overview By Collateral Code ($ 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 June 30, 2021 Seg
Slide 43: Hospitality Metrics By State
38% 32% 12% 12% 3% 2% 1% 43 Hospitality Metrics By State $ in thousands As of June 30, 2021 State Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment NC $185,048 38 % 61.7 % $4,513 $69 SC 156,006 32 % 61.3 % 6,240 90 VA 59,4
Slide 44: Hospitality Metrics By Brand
27% 24% 14% 12% 7% 5% 4% 4% 3% 44 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 $132,367 27 % 63.6 % $8,824 $101 IHG 116,000 24 % 60.4 % 5,273 65 Marriott 69,979
Slide 45: Paycheck Protection Program
Paycheck Protection Program PROGRAM TIMING APPLICATIONS APPROVED FUNDS APPROVED (1) ($ 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 - June 30, 2021 136 $11.0 $0.6 TOTAL 1,102 $68.8