Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q4 2022 Earnings Presentation
48 slides from Carter Bankshares's earnings presentation, Jan 31, 2023
Slide 1: Investor Presentation Fourth Quarter and Year Ended 2022
Investor Presentation Fourth Quarter and Year Ended 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 05-13 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 41-48
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 As of December 31, 2022 $4.2B Assets $3.1B Loans $3.6B Deposits Focused on the Future, a Well-Capitalized Franchise with Momentum ◦ Record year for Earnings and Commercial Loan Production. ◦ Completed Market Segmentation Study to identify key growth and retention target audienc
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
Virginia | Total Deposits: $3.2M 6 11 7 2 5 22 53 Washington DC Roanoke Lynchburg Charlottesville Blacksburg-Christiansburg Non MSA TOTAL North Carolina | Total Deposits: $0.4M 1 5 2 1 4 13 Charlotte Greensboro Raleigh Durham Fayetteville Non MSA TOTAL The following counties are also included in our
Slide 10: Our Commitment
10 Our Commitment 'Our influence for positive change is in alignment with our purpose and mission. Our commitment to ESG actions benefit our communities, our organization, our environment, and our economy.' Brad Langs, President & CSO Carter Bank associate Bea Ethridge elected to Chair the ABA’s bi-
Slide 11: Our Culture of Care in the Community
Our Culture of Care in the Community 11 * To support small business development, sponsored a short-form social media and website series called Hu$tle Tips. It aims to help entrepreneurs build successful businesses. The series is a new addition to the Hometown Hu$tle platform created by Martinsville,
Slide 12: Our Talent Lifecycle
Our Talent Lifecycle Attract & Recruit Attract & * Successfully recruited highly- Recruit qualified professionals in IT, Credit, and Retail and Commercial Banking Human Resources (tri) Develop & Grow * Carter Bank Emerging Leaders * Graduated 8 in the Class of 2022 Reward & + Introduced 13 for the C
Slide 13: Strategic Initiatives Update
13 Strategic Initiatives Update
Slide 14: Financial Highlights
Financial Highlights 02 14 Insert CB&T photo here
Slide 15: Balance Sheet and Income Statement
Balance Sheet and Income Statement 15 $ in thousands • Net interest income increased $3.8M QoQ, $13.5M year ago quarter and $28.7M YoY primarily due to increased yields on earning assets as a result of the rising interest rate environment and the reduction in funding costs YoY. • The provision (reco
Slide 16: Financial / Shareholder Ratios
Q4/YTD 2022 Q3/YTD 2022 Q4/YTD 2021 Shareholder Ratios Diluted Earnings Per Share (QTD) $ 0.65 $ 0.59 $ 0.21 Diluted Earnings Per Share (YTD) $ 2.03 $ 1.38 $ 1.19 Financial Ratios Return on Assets (YTD) 1.21 % 1.12 % 0.76 % Return on Equity (YTD) 14.30 % 12.80 % 7.92 % Total Capital Ratio 13.86 % 14
Slide 17: Capital Management
Capital Management 17 As of December 31, 2022 We adopted CECL effective January 1, 2021 and elected to implement the capital transition relief over the permissible three-year period. Regulatory Well Capitalized Carter Bankshares 12/31/2022 Excess ($) (In Thousands) 12/31/2022 Common Equity Tier 1 Ra
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. Dece
Slide 19: Deposit Composition
Deposit Composition 19 $ in thousands For the Period Ending Variance 12/31/22 09/30/22 12/31/21 Quarter Year Lifetime Free Checking $ 703,334 $ 718,549 $ 747,909 $ (15,215) $ (44,575) Interest-Bearing Demand 496,948 509,949 452,644 (13,001) 44,304 Money Market 484,238 517,031 463,056 (32,793) 21,182
Slide 20: Total Portfolio Loan Growth and Loan Composition
Total Portfolio Loan Growth $2,704 $2,885 $2,947 $2,812 $3,149 0.75% 6.69% 2.15% (4.58)% 11.98% Portfolio Loans Growth YE 2018 YE 2019 YE 2020 YE 2021 YE 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 (5.00%) 0.00% 5.00% 10.00% 15.00% Loan Composition 20 $ in thousands For the Period Ending
Slide 21: Loan Portfolio by Rate Type
Loan Portfolio by Rate Type Fixed $1,008 32% Floating $845 27% Variable $1,296 41% Loan Portfolio by Rate Index Type Fixed $1,008 32% Libor $232 7% Sofr $198 6% Prime $434 14% Treasury $1,277 41% 21 LOAN PORTFOLIO REPRICING & INDEX YE 2022 $ in millions (1) Floating Rate Loans are defined as loans w
Slide 22: Top Ten Relationships (Total Commitment)
22 Top Ten (10) Relationships (Total Commitment) $ in thousands Segment For the Periods Ending Variance 12/31/22 to 12/31/21 12/31/2022 % of Gross Loans 12/31/2022 % of RBC12/31/22 12/31/21 1. Hospitality, agriculture & energy $ 309,107 $ 350,010 $ (40,903) 9.82 % 63.94 % 2. Retail real estate & foo
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 $4.0B • 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
Commercial Real Estate Commercial & Industrial Residential Mortgages Construction Other Consumer Other 25 Loans Past Present Future 57% 47% 52% 20% 21% 5% 3% 1% 7% Loan Portfolio - 12/31/17 Loan Portfolio - 12/31/22 Loan Portfolio - Target 5% 11% 6% 30% 10% 15% 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 13% 8% 25% 41% 7% 10% Bond Portfolio - 06/30/17 Bond Portfolio - 12/31/22 Bond Portfolio - Target 10% 34% 27% 28% 15% 3% 21% 10% 25% Goal is to maintain diversification and strong credit quality, while d
Slide 27: Deposits
CDs DDA - Int. Free DDA - Int. Bearing Money Markets Savings 27 Deposits Past Present Future 56% 35% 30% 15%13% 3% 10% Deposit Mix - 12/31/17 Deposit Mix - 12/31/22 Deposit Mix - Target 20% 19% 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% 0.08% 0.22% 0.05% 0.03% 0.01% 0.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.28% 0.14% 0.22% 0.06% 0.15% $7,618 $4,070 $6,404 $1,670 $4,837 30-59 Days PD 60-89 Days PD 90+ Days PD Total PD Loans Total PD Amt YE 2018 YE 2019
Slide 30: Nonperforming Loan Breakdown
Nonperforming Loan Breakdown $51 $42 $32 $7 $7 37 31 22 3 2 3 5 4 2 4 11 8 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2018 YE 2019 YE 2020 YE 2021 YE 2022 $0 $6 $12 $18 $24 $30 $36 $42 $48 $54 $60 30 Nonperforming Loans $ in millions A
Slide 31: Nonperforming Relationships
31 Nonperforming Relationships $ in thousands Type Nonaccrual Balance 12/31/22 Nonaccrual Balance 12/31/21 Variance 12/31/22 to 12/31/21 Comments 1. CRE $2,106 $2,742 ($636) Commercial Property 2. Residential 1,212 — 1,212 Residential Mortgage Loan 3. Residential 825 825 — Residential Mortgage Loan
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 YE 2022 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 32 Nonperforming Assets $ in millions As of December 31, 2022 Nonperforming Assets / Total Assets 84 60 48 18 15 4,040 4,00
Slide 33: Portfolio Credit Quality Trend
Portfolio Credit Quality Trend $2,704 $2,885 $2,947 $2,812 $3,149 2,232 2,451 2,523 2,616 2,992 461 430 238 186 142 186 Pass Substandard Special Mention YE 2018 YE 2019 YE 2020 YE 2021 YE 2022 $0 $300 $600 $900 $1,200 $1,500 $1,800 $2,100 $2,400 $2,700 $3,000 $3,300 Non-Pass Credit Quality Trend $47
Slide 34: Net Charge-off & Provision Expense Trends
34 Net Charge-off & Provision Expense Trends $ in thousands As of December 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
Slide 35: ACL Composition & ACL Coverage Ratio Trends
35 ACL Composition & ACL Coverage Ratio Trends $ in thousands As of December 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
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 $3,630 3,067 2,949 2,976 2,950 2,927 525 555 709 748 703 Interest-bearing demand deposits Noninterest-bearing deposits YE 2018 YE 2019 YE 2020 YE 2021 YE 2022 $0 $700 $1,400 $2,100 $2,800 $3,500 $4,200 37 Deposits $ in millions (1) (1) Period end
Slide 38: Interest-bearing Deposit Composition & Deposit Rates
Interest-bearing Deposit Composition & Deposit Rates $3,097 $3,020 $2,937 $2,945 $3,003 2,090 2,054 1,819 1,485 1,272 664 582 600 663 721 247 249 321 414 489 96 135 197 383 521 1.23% 1.54% 1.21% 0.76% 0.62% Certificates of Deposit Savings Interest-bearing Demand Deposits Money Market Deposit Rate YE
Slide 39: Total Deposits and Cost of Deposits
Total Deposits and Cost of Deposits $3,697 $3,701 $3,756 $3,749 $3,671 747 712 734 706 714 2,950 2,989 3,022 3,043 2,957 0.52% 0.48% 0.47% 0.47% 0.58% Noninterest-bearing Deposits Interest-bearing Demand Deposits Total Cost of Deposits Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $0 $525 $1,050 $1,575 $2
Slide 40: Net Interest Margin
40 Net Interest Margin (1) Cost of Funds incorporates the free funds contribution with the rate on total interest-bearing liabilities to illustrate the impact of noninterest-bearing liabilities on the overall cost of funds (2) Net Interest Margin has been computed on a fully taxable equivalent basis
Slide 41: Commercial Loan Portfolio Metrics
41 Commercial Loan Portfolio Metrics 06
Slide 42: CRE Segment Overview By Collateral Code
42 CRE Segment Overview By Collateral Code ($ in thousands) As of December 31, 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 $2
Slide 43: Hospitality Metrics By State
43 Hospitality Metrics By State $ in thousands As of December 31, 2022 State Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment North Carolina $152,392 42 % 53.7 % $4,354 $86 South Carolina 92,416 26 % 62.2 % 8,401 104 West
Slide 44: Hospitality Metrics By Brand
44 Hospitality Metrics By Brand $ in thousands As of December 31, 2022 Brand Hospitality Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $108,479 30 % 65.3 % $9,862 $114 IHG 76,574 21 % 57.1 % 4,786 70 Upscale Independent/Bou
Slide 45: Multifamily/Student Housing Metrics By State
45 Multifamily/Student Housing Metrics By State $ in thousands As of December 31, 2022 State Retail Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Unit - Total Commitment MULTIFAMILY Virginia $ 68,303 23 % 87.7 % $ 1,394 $ 80 South Carolina 38,475 13 % 5
Slide 46: Multifamily Metrics by Property Type
46 Multifamily Metrics by Property Type $ in thousands As of December 31, 2022 (1)The Other category consists of multifamily properties for which we do not have the data. Type Retail Portfolio Balance Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square Foot Multifamily
Slide 47: Retail Metrics by State
47 Retail Metrics by State $ in thousands As of December 31, 2022 (1)Excludes restaurant loans of $31.0 million. State Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV Avg. GL Balance Size Avg. of Debt per Square Foot North Carolina $ 187,884 59 % 41.9 % $ 2,505 $ 169 Virginia 82,461
Slide 48: Retail Metrics by Brand
48 Retail Metrics by Brand $ in thousands As of December 31, 2022 (1)Excludes restaurant loans of $31.0 million. (2)A Power Center is a large outdoor shopping mall that usually includes three or more "Big Box" stores. Type Retail Portfolio Balance(1) Percentage of Total Balance Avg. LTV Avg. GL Bala