Carter Bankshares, Inc. · NASDAQ:CARE
Carter Bankshares — Q3 2024 Earnings Presentation
50 slides from Carter Bankshares's earnings presentation, Nov 1, 2024
Slide 1: Third Quarter 2024 Investor Presentation
THIRD QUARTER 2024 INVESTOR PRESENTATION
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 4-12 2 Financial Highlights 13-24 3 Asset Quality 25-31 4 Deposit Mix 32-34 5 Commercial Loans 35-44 6 Non-GAAP Reconciliation 45-50 3
Slide 4: Overview
OVERVIEW S E C T I O N 0 1
Slide 5: 2024 Focused on the Future
5 As of September 30, 2024 FOCUSED ON THE FUTURE 65 CORPORATE CENTERS BRANCHES ◦ Strong Deposit Growth in Q3 2024, 20.9%, annualized ◦ Strong and Improving Available Liquidity Position in Q3 2024, 207.8% available liquidity to uninsured deposits ◦ Diversified and granular deposit base, approximately
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 38 years in Industry 8 years at the Bank Bradford Langs President Chief Strategy Officer 37 years in Industry 7+ years at the Bank Wendy Bell Senior Executive Vice President Chief Financial Officer 39 years in Industry 7+ years at t
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 N T V I R G I N I A N O R T H C A R O L I N A 53 BRANCHES TOTAL $3.6 DEPOSITS TOTAL BILLION Washington DC Roanoke Lynchburg Charlottesville Blacksburg- Christiansburg Non MSA VIRGINIA NORTH CAROLINA 12 BRANCHES TOTAL Charlott
Slide 8: Rewarding Relationships
8 R E W A R D I N G R E L A T I O N S H I P S CMO 20% SBA 8% MBS 13% Nurturing Relationships and Rewarding Customers, Associates, and Shareholders Rewarding Relationships Regulators Customers Communities Associates Investors
Slide 9: Corporate & Social Responsibility
CLASSES FACILITATED FOR 1,130 STUDENTS 9 * C O R P O R A T E & S O C I A L R E S P O N S I B I L I T Y The Facilities team engaged a local small business’ herd of goats to transform a wooded area at the Bank’s headquarters that had become overgrown. This economical and environmentally friendly move
Slide 10: Investment Highlights
• Investments in Human Capital & Technology Should Provide Operational Leverage Going Forward • Well Positioned in Virginia & North Carolina including Fast Growing Markets such as Charlottesville, Charlotte & Raleigh • Extraordinarily well-reserved with our other segment reserve for the largest lend
Slide 11: Strategic Initiatives
11 S T R A T E G I C I N I 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
Slide 12: Safety and Soundness
12 8.00% ACL/Total Portfolio Loans 2 NPL/Portfolio Loans 1 Net Chg-offs/ Portfolio Loans (YTD) 0.61% Delinquency/ Portfolio Loans S A F E T Y A N D S O U N D N E S S 2.25% 0.08% Asset Quality Earnings LiquidityCapital Return on Avg Assets (YTD)0.48% 5.99% NIM(FTE)(YTD) 2.59% Adj. Efficiency Ratio (Y
Slide 13: Financial Highlights
FINANCIAL HIGHLIGHTS S E C T I O N 0 2
Slide 14: Quarterly Financial Highlights
14 $ in thousands 3Q 2024 2Q 2024 QTD Q/Q Change % 3Q 2023 QTD Y/Y Change % Operational Results Net Interest Income $28,798 $28,092 2.5 % $27,394 5.1 % (Recovery) Provision for Credit Losses (432) 491 (188.0) % 1,105 (139.1) % Provision (Recovery) for Unfunded Commitments 191 (236) (180.9) % (130) (
Slide 15: Financial / Shareholder Ratios
3Q 2024 2Q 2024 QTD Q/Q Change % 3Q 2023 QTD Y/Y Change % Shareholder Ratios Diluted Earnings Per Share (QTD) $0.24 $0.21 14.3 % $0.16 50.0 % Financial Ratios Return on Avg Assets (QTD) 0.49 % 0.43 % 14.0 % 0.33 % 48.5 % Return on Avg Shareholders' Equity (QTD) 5.99 % 5.40 % 10.9 % 4.19 % 43.0 % Net
Slide 16: Financial Performance Trends
Efficiency Ratio 75.20% 73.51% 60.67% 72.54% 80.33% 2020 2021 2022 2023 YTD 3Q 2024 Net Income, in millions $(45,858) $31,590 $50,118 $23,384 $21,697 2020 2021 2022 2023 3Q 2024 16 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 (1.12)% 0.76% 1.21% 0.53% 0.48% 2020 2021 2022 2023 YTD 3Q 2024
Slide 17: Capital Ratios and Regulatory Capital
17 As of September 30, 2024 1 During the second and third quarters of 2024, $3.1M of the other segment reserve release from the $21.0M curtailment payments resulted in a $0.11 per share increase in book value. 2 Non-GAAP Financial measure - see Non-GAAP reconciliation Carter Bankshares September 30,
Slide 18: Liquidity Sources
$ in thousands September 30, 2024 December 31, 2023 YoY Change Cash and Due From Banks, including Interest-bearing Deposits $ 104,992 $ 54,529 $ 50,463 FHLB Borrowing Availability1 791,403 480,266 311,137 Unsecured Lines of Credit 30,000 50,000 (20,000) Collateralized Lines of Credit 45,000 — 45,000
Slide 19: Loan Composition
19 For the Period Ending Variance $ in thousands 09/30/24 06/30/24 09/30/23 Quarter Year Commercial Real Estate $ 1,857,997 $ 1,801,397 $ 1,688,947 $ 56,600 $ 169,050 Commercial and Industrial 241,474 240,611 264,329 863 (22,855) Residential Mortgages 782,930 783,903 738,368 (973) 44,562 Other Consu
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 3Q 2024 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 l
Slide 21: Top Ten Relationships
21 For the Periods Ending Change % of Gross Loans % of RBC $ in thousands 09/30/24 12/31/23 1. Hospitality, Agriculture & Energy $ 280,905 $ 301,913 $ (21,008) 7.81% 57.17% 2. Multifamily 58,935 15,000 43,935 1.64% 12.00% 3. Health Care Facility / Long-Term Care 53,087 53,683 (596) 1.48% 10.81% 4. R
Slide 22: Bond Portfolio
22 9/30/2024 12/31/2023 $ in thousands Amortized Cost Net Unrealized (Losses)/ Gains Fair Value Amortized Cost Net Unrealized (Losses)/ Gains Fair Value U.S. Government Agency Securities 27,986 (511) 27,475 44,185 (358) 43,827 Residential Mortgage-Backed Securities 107,515 (8,706) 98,809 110,726 (11
Slide 23: Deposit Composition
23 D E P O S I T C O M P O S I T I O N Total Deposits Composition $3,685 $3,698 $3,633 $3,722 $4,085 709 748 706 685 629 2,976 2,950 2,927 3,037 3,456 Noninterest-bearing Deposits Interest-bearing Deposits YE 2020 YE 2021 YE 2022 YE 2023 Q3 2024 DEPOSIT STATISTICS • Total deposits increased $525.5M
Slide 24: Deposits
24 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 $4.1B • CD Portfolio ($1.9B) is relatively short with 93.0% of the retail portfolio scheduled to mature within 12 months and 9
Slide 25: Asset Quality
ASSET QUALITY S E C T I O N 0 3
Slide 26: Asset Quality: Nonperforming Loans
26 A S S E T Q U A L I T Y Nonperforming Loans / Total Portfolio Loans $2,947 $2,812 $3,149 $3,506 $3,596 32 7 7 310 288 2,915 2,805 3,142 3,196 3,308 1.09% 0.26% 0.21% 8.83% 8.00% Nonperforming Loans Performing Loans Nonperforming Loans/ Total Portfolio Loans YE 2020 YE 2021 YE 2022 YE 2023 Q3 2024
Slide 27: Delinquency Trends
27 D E L I N Q U E N C Y T R E N D S Past Due Loans / Total Portfolio Loans 0.19% 0.05% 0.08% 0.16% 0.07% 0.03% 0.01% 0.07% 0.01% 0.01% —% —% —% —% —% 0.22% 0.06% 0.15% 0.17% 0.08% $6,404 $1,670 $4,837 $6,032 $2,778 30-59 Days PD 60-89 Days PD 90+ Days PD and still accruing Total PD Loans Total PD A
Slide 28: Delinquency Trends by Segment
28 D E L I N Q U E N C Y T R E N D S 1 Represents the Bank’s largest lending relationship with a current principal balance of $280.9 million placed on nonaccrual status during the second quarter of 2023. Note: Other Real Estate Owned was $1.5M as of Q3 2024. Note: Peers include BHB, AROW, BHB, CCBG,
Slide 29: Nonperforming Loans
29 Nonaccrual Balance Change Comments $ in thousands 09/30/24 12/31/23 1. Other 1 $ 280,905 $ 301,913 $ (21,008) Other 2. Residential Construction 2,106 2,090 16 Residential Construction 3. Commercial & Industrial 1,037 — 1,037 Purchase Business Equipment 4. CRE 434 689 (255) Commercial Property 5.
Slide 30: Loan Portfolio Risk Ratings
Portfolio Credit Quality Trend $2,947 $2,812 $3,149 $3,506 $3,596 2,523 2,616 2,992 3,192 3,300 238 186 142 310 296 186 85.6% 93.0% 95.0% 91.1% 91.8% Pass Substandard Special Mention % of Pass to Total YE 2020 YE 2021 YE 2022 YE 2023 Q3 2024 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 3
Slide 31: ACL, Net Charge-Offs & Provision Expense
31 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 $2,694 $23,127 $4,506 $2,300 $15,345 $18,006 $3,350 $2,419 $5,500 $(432) 0.09% 0.79% 0.15% 0.07% 1.71% Net Charge-offs Provision Expense Net Charge-offs (annualized)/ Average Loans YE 2020 YE
Slide 32: Deposit Mix
DEPOSIT MIX S E C T I O N 0 4
Slide 33: Deposits
Total Deposit Composition $3,685 $3,698 $3,633 $3,722 $4,085 2,976 2,950 2,927 3,037 3,456 709 748 706 685 629 Interest-bearing deposits Noninterest-bearing deposits YE 2020 YE 2021 YE 2022 YE 2023 Q3 2024 $0 $600 $1,200 $1,800 $2,400 $3,000 $3,600 $4,200 $4,800 33 D E P O S I T S 1 Period end balan
Slide 34: Net Interest Income
Net Interest Income & NIM 0.94% 0.57% 0.50% 1.73% 2.49% 3.74% 3.41% 4.01% 4.60% 5.08% 2.80% 2.84% 3.51% 2.87% 2.59% Total Cost of Funds Yield on Interest-earning Assets Net Interest Margin YE 2020 YE 2021 YE 2022 YE 2023 Q3 2024 Avg. Earning Assets & Yield $3,834 $3,972 $4,024 $4,294 $4,447 3.74% 3.
Slide 35: Commercial Loans
COMMERCIAL LOANS S E C T I O N 0 5
Slide 36: CRE Segment Overview
36 C R E S E G M E N T O V E R V I E W As of September 30, 2024, $ 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 $35.4 million By C
Slide 37: Hospitality Metrics
37 H O S P I T A L I T Y M E T R I C S As of September 30, 2024 *Relates to the Company's largest lending relationship. 1 Commitment Level • Total portfolio balance $354.7M • Geographic diversification (see map) • Mean loan size in portfolio $6.0M1 • Median of loans in portfolio $4.1M1 • The largest
Slide 38: Hospitality Metrics
38 H O S P I T A L I T Y M E T R I C S As of September 30, 2024, $ in thousands Category Hospitality Portfolio Balance Percentage of Total Balance Hospitality Commitment Balance Weighted Avg. Commitment LTV Avg. GL Balance Size Avg. of Debt per Key - Total Commitment Hilton $116,498 32.9 % $138,636
Slide 39: Multifamily Metrics
39 M U L T I F A M I L Y M E T R I C S As of September 30, 2024 1Commitment Level • Total portfolio balance $391.5M • Geographic diversification (see map) • Mean loan size in portfolio $3.6M1 • Median of loans in portfolio $252K1 • The largest loan in portfolio $35.5M1 • 50.17% are under constructio
Slide 40: Multifamily Metrics
40 M U L T I F A M I L Y M E T R I C S As of September 30, 2024, $ in thousands (1) The Other category consists of multifamily properties for which we do not have the data. Category Multifamily Portfolio Balance Percentage of Total Balance Multifamily Commitment Balance Weighted Avg. Commitment LTV
Slide 41: Retail Metrics
41 R E T A I L M E T R I C S As of September 30, 2024 ** Excludes restaurant loans of $35.4 million 1Commitment Level • Total portfolio balance $435.6M** • Geographic diversification (see map) • Mean loan size in portfolio $2.8M1 • Median of loans in portfolio $1.1M1 • The largest loan in portfolio
Slide 42: Retail Metrics
42 R E T A I L M E T R I C S As of September 30, 2024, $ in thousands (1) Excludes restaurant loans of $36.1 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 43: Office Metrics
43 O F F I C E M E T R I C S As of September 30, 2024 1Commitment Level • Total portfolio balance $221.6M • Geographic diversification (see map) • Mean loan size in portfolio $1.84M1 • Median of loans in portfolio $373K1 • The largest loan in portfolio $23M1 • 2.39% are under construction1 • Top 10
Slide 44: Office Metrics
44 O F F I C E M E T R I C S As of September 30, 2024, $ 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 $187,817 84.8 % $205,899 $ 2,041 $117 Medical Offices 2
Slide 45: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION S E C T I O N 0 6
Slide 46: Non-GAAP Statement
46 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 47: Non-GAAP Reconciliation
47 N O N - G A A P R E C O N C I L I A T I O N Net Interest Income (FTE) (Non-GAAP) Quarter-to-Date (Dollars in Thousands) 3Q 2024 2Q 2024 3Q 2023 Interest Income (FTE)(Non-GAAP) Interest and Dividend Income (GAAP) $ 56,595 $ 54,583 $ 48,886 Tax Equivalent Adjustment 3 190 197 247 Interest and Divid
Slide 48: Adjusted Efficiency Ratio (Non-GAAP)
48 Adjusted Efficiency Ratio (Non-GAAP) Quarter-to-Date (Dollars in Thousands) 3Q 2024 2Q 2024 3Q 2023 Noninterest Expense $ 27,433 $ 27,446 $ 27,282 Less: Losses on Sales and Write-downs of Branch Premises, net (9) (44) (18) Less: Gains on Sales and Write-downs of OREO, net 502 8 (904) Less: Non-re
Slide 49: Non-GAAP Reconciliation: Adjusted Book Value
49 N O N - G A A P R E C O N C I L I A T I O N Adjusted Book Value (Non-GAAP) Quarter-to-Date Q3 2024 (Dollars in Thousands) Adjusted Book Value (Non-GAAP) Total Shareholders' Equity 0 0$ 386,825 Add: AOCI 53,305 Add: Other Segment Reserve Release, net of tax 29,137 Total Shareholders' Equity, exclu
Slide 50: Non-GAAP Reconciliation: Adjusted NPL and ACL
50 N O N - G A A P R E C O N C I L I A T I O N Adjusted Nonperforming Loans ("NPL") to Total Portfolio Loans (Non-GAAP) Quarter-to-Date Q3 2024 (Dollars in Thousands) Adjusted NPLs (Non-GAAP) Total NPL 0 0$ 287,710 Less: Bank's Largest Lending Relationship 280,905 Total NPL, excluding Bank's Largest