Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Investor Presentation (October 2023)
50 slides from Carter Bankshares's investor presentation, Oct 31, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION = Carter Bankshares, Inc.
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 4-11 2 Financial Highlights 12-21 3 Balance Sheet Transformation 22-27 4 Asset Quality 28-33 5 Deposit Mix & Cost of Funds 34-36 6 Commercial Loan Portfolio Metrics 37-46 7 Non-GAAP Reconciliation 47-50 3
Slide 4: Overview
O V E R V I E W 4
Slide 5: Focused on the Future: Corporate Highlights
5 As of September 30, 2023 FOCUSED ON THE FUTURE 64 CORPORATE CENTERS BRANCHES ◦ Continued Strong Capital and Liquidity Position ◦ Diversified and granular deposit base, approximately 79.2% Retail Customers ◦ Approximately 88.9% of Deposits, including Collateralized Muni deposits are FDIC Insured ◦
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 Channel Optimization Director Paul Car
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 NT V I R G I N I A N O R T H C A R O L I N A 52 BRANCHES TOTAL $3.2 DEPOSITS TOTAL BILLION Washington DC Roanoke Lynchburg Charlottesville Blacksburg- Christiansburg Non MSA VIRGINIA NORTH CAROLINA 12 BRANCHES TOTAL Charlotte
Slide 8: Commitment to ESG
8 We are committed to maintaining the highest standards of business conduct and governance to serve our customers and communities, create long-term value for our shareholders, and maintain our integrity in the marketplace. C O M M I T M E N T T O E S G The Bank’s Green Team hosted a six month recycl
Slide 9: Care in the Community
9 * C A R E I N T H E C O M M U N I T Y Provided $2,500 scholarship to a female student-athlete with a demonstrated financial need on the Roanoke College Cycling team. With the scholarship offer, the College was able to elevate the program from Club to Varsity status. Reinvested $50,000 to support r
Slide 10: Strategic Initiatives
10 S T R A T E G I C I N 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 w
Slide 11: Safety and Soundness
11 9.14% ACL/Total Portfolio Loans NPA/Total Assets plus OREO Net Chg-offs/ Portfolio Loans (QTD annualized) 0.09% NPL/Portfolio Loans S A F E T Y A N D S O U N D N E S S 2.77% 9.04% Asset Quality Earnings LiquidityCapital Return on Avg Assets (QTD) annualized 0.33% 4.19% Return on Avg Shareholders'
Slide 12: Financial Highlights
F I N A N C I A L H I G H L I G H T S 12
Slide 13: Financial Highlights 3Q2023
$10.3M 13 $ in thousands 3Q2023 2Q2023 QTD Q/Q Change % 3Q2022 QTD Y/Y Change % Operational Results Net Interest Income $ 27,394 $ 26,711 2.6 % $ 37,725 (27.4) % Provision (Recovery) for Credit Losses 1,105 85 1,200.0 % (77) (1,535.1) % (Recovery) Provision for Unfunded Commitments (130) 360 (136.1)
Slide 14: Financial / Shareholder Ratios
3Q2023 2Q2023 QTD Q/Q Change % 3Q2022 QTD Y/Y Change % Shareholder Ratios Diluted Earnings Per Share (QTD) $ 0.16 $ 0.24 (33.3) % $ 0.59 (72.9) % Financial Ratios Return on Avg Assets (QTD) 0.33 % 0.52 % (36.5) % 1.38 % (76.1) % Return on Avg Shareholders' Equity (QTD) 4.19 % 6.38 % (34.3) % 16.75 %
Slide 15: Financial Performance Trends
Core Efficiency Ratio 71.62% 75.20% 73.51% 60.69% 79.55% 2019 2020 2021 2022 Q3 2023 Net Income, in millions $26,575 $(45,858) $31,590 $50,118 $25,272 2019 2020 2021 2022 Q3 2023 15 F I N A N C I A L P E R F O R M A N C E T R E N D S ROA 0.65% (1.12)% 0.76% 1.21% 0.33% 2019 2020 2021 2022 Q3 2023 TC
Slide 16: Capital
16 As of September 30, 2023 We adopted CECL effective January 1, 2021 and elected to implement the capital transition relief over the permissible three-year period. 1 Non-GAAP Financial measure - see Non-GAAP reconciliation Regulatory Well Capitalized Carter Bankshares 9/30/2023 Excess ($) (In Thous
Slide 17: Liquidity Sources
$ in thousands September 30, 2023 December 31, 2022 Favorable / (Unfavorable) Cash and Due From Banks, including Interest-bearing Deposits $ 55,398 $ 46,869 $ 8,529 FHLB Borrowing Availability(1) 357,583 676,746 (319,163) Unsecured Lines of Credit 145,000 127,130 17,870 Unpledged Investment Securiti
Slide 18: Deposit Composition
18 For the Period Ending Variance $ in thousands 09/30/23 06/30/23 09/30/22 Quarter Year Lifetime Free Checking $ 661,454 $ 686,124 $ 718,549 $ (24,670) $ (57,095) Interest-Bearing Demand 469,904 489,971 509,949 (20,067) (40,045) Money Market 426,172 422,780 517,031 3,392 (90,859) Savings 487,105 52
Slide 19: Loan Composition
19 For the Period Ending Variance $ in thousands 09/30/23 06/30/23 09/30/22 Quarter Year Commercial Real Estate $ 1,688,947 $ 1,642,597 $ 1,365,348 $ 46,350 $ 323,599 Commercial and Industrial 264,329 279,156 325,973 (14,827) (61,644) Residential Mortgages 738,368 707,893 617,681 30,475 120,687 Othe
Slide 20: Loan Portfolio Repricing & Index
20 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 Q3 2023 (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 t
Slide 21: Top Ten Relationships
21 For the Periods Ending Variance 09/30/23 to 12/31/22 % of Gross Loans % of RBC $ in thousands 09/30/23 12/31/22 1. Hospitality, agriculture & energy $ 301,913 $ 309,107 $ (7,194) 8.85% 62.12% 2. Retail real estate & food services 53,905 55,625 (1,720) 1.58% 11.09% 3. Industrial & retail real esta
Slide 22: Balance Sheet Transformation
B A L A N C E S H E E T T R A N S F O R M A T I O N 22
Slide 23: Earning Assets
23 E A R N I N G A S S E T S Goal is to grow attractively priced loans and investments while foregoing undue concentration risk. • Earning Assets stand at $4.2B • Our primary mandate is to grow the loan book with well diversified, attractively priced loan products to increase the NIM and mitigate co
Slide 24: Loans
24 L O A N S Goal is to further diversify and de-risk the loan portfolio by reducing dependency on CRE loans and increasing C&I loans, small business and consumer loans. Continuation of increased granularity is also a focus. • Portfolio loans currently stand at $3.4B • Our primary mandate is to alwa
Slide 25: Bond Portfolio
25 B O N D P O R T F O L I O Goal is to maintain diversification and strong credit quality, while delivering above peer performance. • Portfolio stands at $793.4M, or about 17.8% of total assets, target is 15-25% of total assets • Per the charts, diversification has improved significantly over the p
Slide 26: Bond Portfolio: Unrealized Losses
26 9/30/2023 12/31/2022 $ in thousands Number of Securities Fair Value Unrealized Losses Number of Securities Fair Value Unrealized Losses U.S. Treasury Securities 4 $ 13,104 $ (1,279) 5 $ 17,866 $ (1,452) U.S. Government Agency Securities 20 22,012 (909) 15 20,913 (788) Residential Mortgage-Backed
Slide 27: Deposits
27 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 $3.6B • CD Portfolio ($1.5B) is relatively short with 65% of the portfolio scheduled to mature within 12 months and 94% of the
Slide 28: Asset Quality
A S S E T Q U A L I T Y 28
Slide 29: Nonperforming Loans and Assets
$42 $32 $7 $7 31 22 3 5 8 Commercial Real Estate Commercial and Industrial Construction Residential Mortgages Other Consumer Other YE 2019 YE 2020 YE 2021 YE 2022 29 N O N P E R F O R M I N G Nonperforming Loans / Total Portfolio Loans $2,885 $2,947 $2,812 $3,149 $3,411 42 32 7 7 308 2,843 2,915 2,8
Slide 30: Delinquency Trends
30 D E L I N Q U E N C Y T R E N D S Past Due Loans / Total Portfolio Loans 0.09% 0.19% 0.05% 0.08% 0.08% 0.05% 0.03% 0.01% 0.07% 0.01% —% —% —% —% 0.02% 0.14% 0.22% 0.06% 0.15% 0.11% $4,070 $6,404 $1,670 $4,837 $3,735 30-59 Days PD 60-89 Days PD 90+ Days PD and still accruing Total PD Loans Total P
Slide 31: Nonperforming Relationships
31 Nonaccrual Balance Variance 06/30/23 to 12/31/22 Comments $ in thousands 09/30/23 12/31/22 1. Other $ 301,913 $ — $ 301,913 Other 2. Residential Construction 2,090 — 2,090 Residential Construction 3. Residential 825 825 — Residential Mortgage Loan 4. Construction 808 808 — Residential Lot Develop
Slide 32: Loan Portfolio Risk Ratings
Portfolio Credit Quality Trend $2,885 $2,947 $2,812 $3,149 $3,411 2,451 2,523 2,616 2,992 3,097 430 238 186 142 310 186 Pass Substandard Special Mention YE 2019 YE 2020 YE 2021 YE 2022 Q3 2023 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 32 L O A N P O R T F O L I O - R I S K R A T I N G S Non-
Slide 33: ACL, Net Charge-offs & Provision Expense
33 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 $3,841 $2,694 $23,127 $4,506 $775 $3,404 $18,006 $3,350 $2,419 $1,105 0.13% 0.09% 0.79% 0.15% 0.09% Net Charge-offs Provision Expense Net Charge-offs (annualized)/ Average Loans YE 2019 YE 202
Slide 34: Deposit Mix & Cost of Funds
D E P O S I T M I X & C O S T O F F U N D S 34
Slide 35: Deposits
Total Deposit Composition $3,504 $3,685 $3,698 $3,630 $3,556 2,949 2,976 2,950 2,927 2,895 555 709 748 703 661 Interest-bearing deposits Noninterest-bearing deposits YE 2019 YE 2020 YE 2021 YE 2022 Q3 2023 35 D E P O S I T S (1) Period end balances, at September 30, 2023, $ in millions (2) Collatera
Slide 36: Net Interest Income
Net Interest Income & NIM 1.23% 0.94% 0.57% 0.50% 1.97% 4.28% 3.74% 3.41% 4.01% 4.51% 3.05% 2.80% 2.84% 3.51% 2.54% Total Cost of Funds Yield on Interest-earning Assets Net Interest Margin YE 2019 YE 2020 YE 2021 YE 2022 Q3 2023 Avg. Earning Assets & Yield $3,789 $3,834 $3,972 $4,024 $4,320 4.28% 3.
Slide 37: Commercial Loan Portfolio Mix
C O M M E R C I A L L O A N P O R T F O L I O M I X 37
Slide 38: CRE Segment Overview
38 C R E S E G M E N T O V E R V I E W As of September 30, 2023, $ 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 $35.9 million
Slide 39: Hospitality Metrics
39 H O S P I T A L I T Y M E T R I C S As of September 30, 2023 *Relates to the Company's largest NPL relationship. • Total portfolio balance $344.8M • Geographic diversification (see map) • Mean loan size in portfolio $5.9M • Median of loans in portfolio $3.9M • The largest loan in portfolio $51.6M
Slide 40: Hospitality Metrics
40 H O S P I T A L I T Y M E T R I C S As of September 30, 2023, $ in thousands Category Hospitality Portfolio Balance Percentage of Total Balance Hospitality Commitment Balance Weighted Avg. LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $ 107,353 31.1 % $ 118,754 63.2 % $
Slide 41: Multifamily Metrics
41 M U L T I F A M I L Y M E T R I C S As of September 30, 2023 • Total portfolio balance $371.3M • Geographic diversification (see map) • Mean loan size in portfolio $3.4M • Median of loans in portfolio $226K • The largest loan in portfolio $32M • 32.78% are under construction • Top 10 borrowers ma
Slide 42: Multifamily Metrics
42 M U L T I F A M I L Y M E T R I C S As of September 30, 2023, $ in thousands (1) The Other category consists of multifamily properties for which we do not have the data for. Category Multifamily Portfolio Balance Percentage of Total Balance Multifamily Commitment Balance Weighted Avg. LTV Avg. GL
Slide 43: Retail Metrics
43 R E T A I L M E T R I C S As of September 30, 2023 (1) Excludes restaurant loans of $35.9 million • Total portfolio balance $377.3M(1) • Geographic diversification (see map) • Mean loan size in portfolio $2.76M • Median of loans in portfolio $1.07M • The largest loan in portfolio $28M • 14.13% ar
Slide 44: Retail Metrics
44 R E T A I L M E T R I C S As of September 30, 2023, $ in thousands (1) Excludes restaurant loans of $35.9 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 Commitme
Slide 45: Office Metrics
45 O F F I C E M E T R I C S As of September 30, 2023 • Total portfolio balance $221.3M • Geographic diversification (see map) • Mean loan size in portfolio $1.88M • Median of loans in portfolio $388K • The largest loan in portfolio $23M • 1.22% are under construction • Top 10 borrowers make up 55.4
Slide 46: Office Metrics
46 O F F I C E M E T R I C S As of September 30, 2023, $ 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 $ 190,090 85.9 % $ 223,110 $ 1,939,690 $ 150 Medical Of
Slide 47: Non-GAAP Statement
47 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 48: Non-GAAP Reconciliation
48 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) 9/30/2023 6/30/2023 9/30/2022 Interest Income (FTE)(Non-GAAP) Interest and Dividend Income (GAAP) $ 48,886 $ 43,716 $ 42,327 Tax Equivalent Adjustment 3 247 257 279 Interest a
Slide 49: Core Efficiency Ratio (Non-GAAP)
49 2 Core Efficiency Ratio (Non-GAAP) Quarter-to-Date (Dollars in Thousands) 9/30/2023 6/30/2023 9/30/2022 EFFICIENCY RATIO (GAAP) 83.52 % 80.46 % 54.62 % Noninterest Expense $ 27,282 $ 25,536 $ 23,463 Less: (Losses) Gains on Sales and Write-downs of OREO, net (904) 5 (169) Less: Losses on Sales and
Slide 50: Non-GAAP Reconciliation: Adjusted Book Value
50 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) Year-to-Date (Dollars in Thousands) Adjusted Book Value (Non-GAAP) Total Shareholders' Equity 0 0$ 330,621 Add: Accumulated Other Comprehensive Loss ("AOCI") 93,560 Add: Other Segment Reserve Release, net of tax 44,326 T
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