Carter Bankshares, Inc. Announces First Quarter 2022 Financial Results

About this update from Carter Bankshares, Inc.

MARTINSVILLE, VA / ACCESSWIRE / April 26, 2022 / Carter Bankshares, Inc. (the "Company") (NASDAQ:CARE), the holding company of Carter Bank & Trust (the "Bank") today announced net income of $9.3 million , or $0.36 diluted earnings per share, for the first quarter of 2022 compared to net income of $5.6 million , or $0.21 diluted earnings per share, in the fourth quarter of 2021 and net income of $9.4 million , or $0.36 diluted earnings per share, for the first quarter of 2021. The pre-tax pre-provision income1 was $11.0 million for the quarter ended March 31, 2022 , $7.6 million for the quarter ended December 31, 2021 and $11.9 million for the quarter ended March 31, 2021 . First Quarter 2022 Financial Highlights During the first quarter of 2022, a total of 1,523,157 shares were purchased at a weighted average price of $16.17 under the Company's previously authorized share repurchase program; Net interest income increased $0.2 million , or 0.6%, to $28.2 million as compared to the fourth quarter of 2021 primarily due to a five basis point increase in earning assets and a five basis point decrease in funding costs; Net interest margin, on a fully taxable equivalent basis ("FTE"), increased nine basis points to 2.91% compared to the fourth quarter of 2021 and increased 13 basis points compared to the first quarter of 2021; Total portfolio loans increased $81.9 million , or 11.8% on an annualized basis, to $2.9 billion at March 31, 2022 compared to December 31, 2021 ; Total deposits increased $29.8 million , or 3.3% on an annualized basis, to $3.7 billion at March 31, 2022 compared to December 31, 2021 , and increased $36.8 million , or 4.0% on an annualized basis, compared to March 31, 2021 . The increases from December 31, 2021 and March 31, 2021 were primarily due to increased core deposits, offset by the intentional runoff of certificates of deposits; Core deposits, including noninterest-bearing and interest-bearing demand deposits, money market accounts and savings, increased $89.6 million compared to December 31, 2021 and increased $356.4 million compared to March 31, 2021 ; Nonperforming loans declined $0.1 million , or 1.4% to $7.3 million at March 31, 2022 compared to December 31, 2021 and decreased $24.7 million , or 77.2%, from March 31, 2021 . The decline from March 31, 2021 is primarily due to the resolution of our two largest nonperforming relationships in 2021. Nonperforming loans as a percentage of total portfolio loans were 0.25%, 0.26% and 1.08% as of March 31, 2022 , December 31, 2021 and March 31, 2021 , respectively; The provision for credit losses totaled $0.6 million for the quarter ended March 31, 2022 compared to $0.9 million for the quarter ended December 31, 2021 . "We continue to be pleased with the trajectory of the financial performance of the Company. The financial results of the first quarter of 2022 continued the positive momentum we established late in 2021. Loans grew by 11.8% annualized since year-end, with strong production in our commercial and residential mortgage portfolios. We continue to make progress in improving the fundamentals of the Company, including a better deposit mix, a continued reduction in our cost of funds and the continued decline in problem assets," stated Litz H. Van Dyke , Chief Executive Officer. "Each of these factors is driving improvement in operational leverage and financial performance. In addition, our balance sheet is positioned to benefit from higher interest rates should the Federal Reserve continue the expected pattern of tightening monetary policy to combat increased inflation." Van Dyke continued, "We are extremely pleased with the success of our previously authorized two million share repurchase program and have completed 78% of the buybacks as of March 31, 2022 . We believe that this program is a prudent way to utilize excess capital in order to generate increased shareholder value." Operating Highlights Net interest income increased $0.2 million , or 0.6%, to $28.2 million compared to the fourth quarter of 2021 and $1.7 million , or 6.4%, compared to the first quarter of 2021. The net interest margin, on an FTE basis3, increased nine basis points to 2.91% compared to the quarter ended December 31, 2021 and increased 13 basis points compared to the first quarter of 2021. The yield on interest-earning assets increased five basis points and decreased eight basis points compared to the quarters ended December 31, 2021 and March 31, 2021 , respectively. Funding costs declined five basis points compared to the previous quarter and 27 basis points compared to the same quarter of 2021. The Company continues to focus on the expansion of net interest income and the net interest margin. The first quarter of 2022 was positively impacted by an increase in the yield on investment securities as well as the continued decline in funding costs. The provision for credit losses decreased $0.3 million to $0.6 million in the first quarter of 2022 compared to $0.9 million in the fourth quarter of 2021. The decrease in the provision for credit losses was primarily driven by improved qualitative reserves and net charge-offs totaling $0.2 million , offset by higher loan balances. The provision for unfunded commitments in the first quarter of 2022 was a release of $0.2 million compared to a release of $0.3 million in the fourth quarter of 2021. At March 31, 2022 nonperforming loans declined $0.1 million , or 1.4%, to $7.3 million since December 31, 2021 . Net charge-offs were $0.2 million for the first quarter of 2022 compared to $0.7 million in the same period of 2021. As a percentage of average portfolio loans, on an annualized basis, net charge-offs were 0.03% and 0.10% for the first quarter of 2022 and 2021, respectively. Nonperforming loans as a percentage of total portfolio loans were 0.25%, 0.26% and 1.08% as of March 31, 2022 , December 31, 2021 and March 31, 2021 , respectively. Total noninterest income was $5.3 million for the first quarter of 2022, a decrease of $0.4 million , or 7.6%, from the fourth quarter of 2021 and a decrease of $3.6 million , or 40.4%, compared to the first quarter of 2021. The decrease of $0.4 million from the fourth quarter of 2021 was driven by a decrease of $0.5 million in insurance commissions, a reduction of $0.4 million in net securities gains and a decrease of $0.4 million in commercial loan swap fee income. These decreases were offset by gains on sales and write-downs on bank premises, net of $0.4 million , a $0.2 million increase in services charges, commissions and fees, a $0.2 million increase in debit card interchange fees and $0.1 million in other noninterest income. The decrease of $3.6 million compared to the first quarter of 2021 was primarily driven by declines in net security gains of $3.6 million , as well as various other fluctuations similar to the decreases compared to the fourth quarter 2021 previously mentioned. The variances shown in commercial loan swap fee income is related to the timing and demand for this product in the current rising interest rate environment. The increases in service charges on deposit accounts and debit card interchange fees was primarily due to new accounts and increased account activity. Total noninterest expense was $22.5 million for the first quarter of 2022, a decrease of $3.7 million , or 14.2%, from the fourth quarter of 2021 and a decrease of $1.1 million , or 4.6%, compared to the first quarter of 2021. The decrease from the fourth quarter of 2021 was primarily driven by a $3.3 million decline in salaries and employee benefits. Salaries decreased $1.4 million due to 32 less full-time equivalent employees, fewer working days in the first quarter of 2022 and the reversal of $0.6 million of vacation carryover that was used in the first quarter of 2022. The decrease in employee benefits was a result of additional profit sharing of $1.1 million and $0.7 million higher medical expenses recorded in the fourth quarter of 2021. The decrease of $1.1 million in total noninterest expense compared to the first quarter of 2021 was driven by $0.8 million in salaries and employee benefits and $0.3 million in FDIC insurance expense due to improved financial metrics. The decrease compared to the year ago period in salaries and employee benefits was primarily related to a decline in salaries as a result of our retail branch optimization project and a decrease in medical costs. Financial Condition Total assets decreased $10.5 million to $4.1 billion at March 31, 2022 compared to $4.1 billion at December 31, 2021 . Total portfolio loans increased $81.9 million , or 11.8% on an annualized basis, to $2.9 billion at March 31, 2022 compared to December 31, 2021 primarily due to higher loan growth in the first quarter of 2022. Other real estate owned, ("OREO"), increased $0.3 million at March 31, 2022 compared to December 31, 2021 . Closed retail bank offices increased $0.5 million and have a remaining book value of $1.5 million at March 31, 2022 compared to $1.0 million at December 31, 2021 . During the first quarter of 2022, two branch closures were completed as part of our branch network optimization project that aligns with our strategic goals to enhance franchise value and improve operating efficiency. Federal Reserve Bank excess reserves decreased $133.2 million to $43.0 million at March 31, 2022 from $176.2 million at December 31, 2021 due to solid loan growth in the first quarter of 2022 and redeploying excess cash into higher yielding securities. The securities portfolio increased $59.6 million and is currently 23.8% of total assets at March 31, 2022 compared to 22.3% of total assets at December 31, 2021 . The increase is due to redeploying excess cash into higher yielding securities. We have further diversified the securities portfolio as to bond types, maturities and interest rate structures. Total deposits increased $29.8 million to $3.7 billion at March 31, 2022 as compared to December 31, 2021 . The increases included $63.8 million in money market accounts, $37.9 million in savings accounts and $27.5 million in interest-bearing demand accounts, offset by the intentional decline of $59.8 million in certificates of deposits ("CDs") and $39.6 million in noninterest-bearing demand accounts. At March 31, 2022 , noninterest-bearing deposits comprised 19.0% compared to 20.2% and 19.9% of total deposits at December 31, 2021 and March 31, 2021 , respectively. CDs comprised 34.5%, 36.3% and 41.2% of total deposits at March 31, 2022 , December 31, 2021 and March 31, 2021 , respectively. The Company remains well capitalized. The Company's Tier 1 Capital ratio was 12.98% at March 31, 2022 as compared to 14.21% at December 31, 2021 . The Company's leverage ratio was 10.00% at March 31, 2022 as compared to 10.62% at December 31, 2021 . The Company's Total Risk-Based Capital ratio was 14.24% at March 31, 2022 as compared to 15.46% at December 31, 2021 . Total capital of $358.6 million at March 31, 2022 , reflects a decrease of $49.0 million compared to $407.6 million at December 31, 2021 . The decrease in total capital during the first quarter of 2022 is primarily due to a $34.0 million decrease in other comprehensive income due to changes in fair value of available-for-sale investment securities, $24.6 million is related to the repurchase of common stock through March 31, 2022 , offset by net income of $9.3 million for the three months ended March 31, 2022 . The remaining difference of $0.3 million is related to restricted stock activity through March 31, 2022 . At March 31, 2022 , funding sources accessible to the Company include borrowing availability at the Federal Home Loan Bank ("FHLB"), equal to 25.0% of the Company's assets or approximately $1.0 billion , subject to the amount of eligible collateral pledged, federal funds unsecured lines with six other correspondent financial institutions in the amount of $145.0 million and access to the institutional CD market. In addition to the above funding resources, the Company also has $817.4 million of unpledged available-for-sale investment securities as an additional source of liquidity. About Carter Bankshares, Inc. Headquartered in Martinsville, VA , Carter Bankshares, Inc. (NASDAQ: CARE ) provides a full range of commercial banking, consumer banking, mortgage and services through its subsidiary Carter Bank & Trust . The Company has $4.1 billion in assets and 67 branches in Virginia and North Carolina . For more information or to open an account visit www.CBTCares.com . Important Note Regarding Non-GAAP Financial Measures In addition to traditional measures presented in accordance with GAAP, our management uses, and this press release contains or references, certain 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 measures that we believe are useful because they enhance the ability of investors and management to evaluate and compare the Company's operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP. Important Note Regarding Forward-Looking Statements 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, litigation to which the Company is or has been a party and the potential impacts thereof, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels and asset quality. Forward looking statements are typically identified by words or phrases such as "will likely result," "expect," "anticipate," "estimate," "forecast," "project," "intend," " believe," "assume," "strategy," "trend," "plan," "outlook," "outcome," "continue," "remain," "potential," "opportunity," "comfortable," "current," "position," "maintain," "sustain," "seek," "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: changes in accounting policies, practices, or guidance, for example, our adoption of CECL; cyber-security threats, attacks or events; rapid technological developments and changes; changes in the Company's liquidity and capital positions; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as the ongoing COVID-19 pandemic), and of any governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight; legislation affecting the financial services industry as a whole, and the Company and the Bank, in particular; the outcome of pending and future litigation and governmental proceedings, including litigation or actions arising from the Company's participation in and administration of programs related to COVID-19, including, among other things, the PPP under the CARES Act; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or more costly than anticipated; material increases in costs and expenses; reliance on significant customer relationships; general economic or business conditions, including unemployment levels, continuing supply chain disruptions and slowdowns in economic growth, particularly related to the sustained economic impacts of the COVID-19 pandemic; changes in the Company's branch expansions and consolidations, including that the anticipated benefits of the Company's branch network optimization project are not fully realized in a timely manner or at all, deterioration of the housing market and reduced demand for mortgages; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our filings with the SEC . Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are prepared. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made. Carter Bankshares, Inc. Wendy Bell , 276-656-1776Senior Executive Vice President & Chief Financial Officer [email protected] CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA BALANCE SHEETS March 31 , 2022 December 31 , 2021 March 31 , 2021 (Dollars in Thousands, except per share data) (unaudited) (audited) (unaudited) ASSETS Cash and Due From Banks $ 38,534 $ 36,698 $ 42,899 Interest-Bearing Deposits in Other Financial Institutions 26,462 64,905 65,624 Federal Reserve Bank Excess Reserves 43,040 176,196 110,631 Total Cash and Cash Equivalents 108,036 277,799 219,154 Securities Available-for-Sale, at Fair Value 982,041 922,400 780,032 Loans Held-for-Sale 196 228 32,737 Loans Held-for-Sale in Connection with Sale of Bank Branches, at the lower of cost or fair value - - 9,423 Portfolio Loans 2,894,004 2,812,129 2,971,875 Allowance for Credit Losses (96,376 ) (95,939 ) (116,872 ) Portfolio Loans, net 2,797,628 2,716,190 2,855,003 Bank Premises and Equipment, net 73,402 75,297 85,349 Bank Premises and Equipment, Held-for-Sale, net - - 2,273 Other Real Estate Owned, net 11,253 10,916 14,031 Federal Home Loan Bank Stock , at Cost 2,067 2,352 3,215 Bank Owned Life Insurance 55,712 55,378 54,337 Other Assets 92,891 73,186 86,576 Total Assets $ 4,123,226 $ 4,133,746 $ 4,142,130 LIABILITIES Deposits: Noninterest-Bearing Demand $ 708,353 $ 747,909 $ 733,291 Interest-Bearing Demand 480,192 452,644 384,425 Money Market 526,838 463,056 323,008 Savings 728,425 690,549 646,722 Certificates of Deposit 1,284,470 1,344,318 1,522,510 Deposits Held-for-Assumption in Connection with Sale of Bank Branches - - 81,565 Total Deposits 3,728,278 3,698,476 3,691,521 Federal Home Loan Bank Borrowings - 7,000 30,000 Other Liabilities 36,392 20,674 32,720 Total Liabilities 3,764,670 3,726,150 3,754,241 SHAREHOLDERS' EQUITY Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares; 24,986,726 outstanding at March 31, 2022 , 26,430,919 outstanding at December 31, 2021 and 26,467,531 at March 31, 2021 24,987 26,431 26,468 Additional Paid-in Capital 121,045 143,988 143,582 Retained Earnings 244,798 235,475 213,260 Accumulated Other Comprehensive (Loss) Income (32,274 ) 1,702 4,579 Total Shareholders' Equity 358,556 407,596 387,889 Total Liabilities and Shareholders' Equity $ 4,123,226 $ 4,133,746 $ 4,142,130 PERFORMANCE RATIOS Return on Average Assets (QTD Annualized) 0.92 % 0.54 % 0.92 % Return on Average Assets (YTD Annualized) 0.92 % 0.76 % 0.92 % Return on Average Shareholders' Equity (QTD Annualized) 9.57 % 5.47 % 9.72 % Return on Average Shareholders' Equity (YTD Annualized) 9.57 % 7.92 % 9.72 % Portfolio Loans to Deposit Ratio 77.62 % 76.03 % 80.51 % Allowance for Credit Losses to Total Portfolio Loans 3.33 % 3.41 % 3.93 % CAPITALIZATION RATIOS Shareholders' Equity to Assets 8.70 % 9.86 % 9.36 % Tier 1 Leverage Ratio 10.00 % 10.62 % 10.16 % Risk-Based Capital - Tier 1 12.98 % 14.21 % 12.88 % Risk-Based Capital - Total 14.24 % 15.46 % 14.14 % INCOME STATEMENTS Quarter-to-Date March 31 , 2022 December 31 , 2021 March 31 , 2021 (Dollars in Thousands, except per share data) (unaudited) (audited) (unaudited) Interest Income $ 32,678 $ 32,933 $ 32,957 Interest Expense 4,456 4,883 6,428 NET INTEREST INCOME 28,222 28,050 26,529 Provision for Credit Losses 630 939 1,857 Provision for Unfunded Commitments (236 ) (324 ) (282 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 27,828 27,435 24,954 NONINTEREST INCOME (Losses) Gains on Sales of Securities, net (24 ) 419 3,610 Service Charges, Commissions and Fees 1,953 1,704 1,809 Debit Card Interchange Fees 1,932 1,770 1,831 Insurance Commissions 269 802 294 Bank Owned Life Insurance Income 334 349 340 Gains on Sales and Write-downs on Bank Premises, net 383 - - Other Real Estate Owned Income 10 8 71 Commercial Loan Swap Fee Income - 359 219 Other 478 365 778 TOTAL NONINTEREST INCOME 5,335 5,776 8,952 NONINTEREST EXPENSE Salaries and Employee Benefits 11,757 15,073 12,582 Occupancy Expense, net 3,352 3,258 3,514 FDIC Insurance Expense 368 275 643 Other Taxes 804 824 762 Advertising Expense 239 366 170 Telephone Expense 488 501 600 Professional and Legal Fees 1,219 1,347 1,224 Data Processing 841 865 921 Losses on Sales and Write-downs of Other Real Estate Owned, net 159 199 212 Losses on Sales and Write-downs of Bank Premises, net - 117 43 Debit Card Expense 633 732 632 Tax Credit Amortization 615 427 427 Other Real Estate Owned Expense 41 127 54 Other 1,995 2,125 1,821 TOTAL NONINTEREST EXPENSE 22,511 26,236 23,605 INCOME BEFORE INCOME TAXES 10,652 6,975 10,301 Income Tax Provision 1,329 1,365 926 NET INCOME $ 9,323 $ 5,610 $ 9,375 Shares Outstanding, at End of Period 24,986,726 26,430,919 26,467,531 Average Shares Outstanding-Diluted 25,740,636 26,350,877 26,276,890 PER SHARE DATA Basic Earnings Per Common Share $ 0.36 $ 0.21 $ 0.36 Diluted Earnings Per Common Share $ 0.36 $ 0.21 $ 0.36 Book Value $ 14.35 $ 15.42 $ 14.66 Market Value $ 17.37 $ 15.39 $ 13.96 PROFITABILITY RATIOS (non-GAAP) Net Interest Margin (FTE)3 2.91 % 2.82 % 2.78 % Core Efficiency Ratio4 66.35 % 76.58 % 73.37 % NET INTEREST MARGIN (FTE) (QTD AVERAGES) (Unaudited) March 31, 2022 December 31, 2021 March 31, 2021 (Dollars in Thousands) Average Balance Income/ Expense Rate Average Balance Income/ Expense Rate Average Balance Income/ Expense Rate ASSETS Interest-Bearing Deposits with Banks $ 140,080 $ 62 0.18 % $ 220,871 $ 89 0.16 % $ 174,731 $ 50 0.12 % Tax-Free Investment Securities 3 26,579 211 3.22 % 25,586 210 3.26 % 51,589 413 3.25 % Taxable Investment Securities 960,645 3,732 1.58 % 881,866 3,154 1.42 % 708,250 2,987 1.71 % Total Securities 987,224 3,943 1.62 % 907,452 3,364 1.47 % 759,839 3,400 1.81 % Tax-Free Loans3 154,117 1,206 3.17 % 164,587 1,288 3.10 % 223,012 1,787 3.25 % Taxable Loans 2,690,781 27,745 4.18 % 2,689,767 28,483 4.20 % 2,777,423 28,145 4.11 % Total Loans 2,844,898 28,951 4.13 % 2,854,354 29,771 4.14 % 3,000,435 29,932 4.05 % Federal Home Loan Bank Stock 2,139 20 3.79 % 2,475 23 3.69 % 4,805 37 3.12 % Total Interest-Earning Assets 3,974,341 32,976 3.36 % 3,985,152 33,247 3.31 % 3,939,810 33,419 3.44 % Noninterest Earning Assets 154,971 160,952 182,283 Total Assets $ 4,129,312 $ 4,146,104 $ 4,122,093 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-Bearing Demand $ 463,980 $ 277 0.24 % $ 446,506 $ 280 0.25 % $ 378,886 $ 215 0.23 % Money Market 510,286 284 0.23 % 449,229 253 0.22 % 309,624 266 0.35 % Savings 705,759 178 0.10 % 682,018 175 0.10 % 644,806 162 0.10 % Certificates of Deposit 1,308,799 3,660 1.13 % 1,371,829 4,099 1.19 % 1,620,543 5,652 1.41 % Total Interest-Bearing Deposits 2,988,824 4,399 0.60 % 2,949,582 4,807 0.65 % 2,953,859 6,295 0.86 % Federal Funds Purchased - - - % 1 - 1.15 % - - - % Federal Home Loan Bank Borrowings 1,400 6 1.74 % 10,272 36 1.39 % 33,889 96 1.15 % Other Borrowings 4,358 51 4.75 % 3,396 40 4.67 % 2,307 37 6.50 % Total Borrowings 5,758 57 4.01 % 13,669 76 2.21 % 36,196 133 1.49 % Total Interest-Bearing Liabilities 2,994,582 4,456 0.60 % 2,963,251 4,883 0.65 % 2,990,055 6,428 0.87 % Noninterest-Bearing Liabilities 739,556 775,914 740,892 Shareholders' Equity 395,174 406,939 391,146 Total Liabilities and Shareholders' Equity $ 4,129,312 $ 4,146,104 $ 4,122,093 Net Interest Income3 $ 28,520 $ 28,364 $ 26,991 Net Interest Margin3 2.91 % 2.82 % 2.78 % LOANS AND LOANS HELD-FOR-SALE (Unaudited) (Dollars in Thousands) March 31 , 2022 December 31 , 2021 March 31 , 2021 Commercial Commercial Real Estate $ 1,343,206 $ 1,323,252 $ 1,384,541 Commercial and Industrial 345,345 345,376 460,264 Total Commercial Loans 1,688,551 1,668,628 1,844,805 Consumer Residential Mortgages 483,382 457,988 414,507 Other Consumer 43,288 44,666 49,516 Total Consumer Loans 526,670 502,654 464,023 Construction 321,190 282,947 289,661 Other 357,593 357,900 373,386 Total Portfolio Loans $ 2,894,004 $ 2,812,129 $ 2,971,875 Loans Held-for-Sale 196 228 32,737 Loans Held-for-Sale in Connection with Sale of Bank Branches, at the lower of cost or fair value - - 9,423 Total Loans $ 2,894,200 $ 2,812,357 $ 3,014,035 ASSET QUALITY DATA (Unaudited) (Dollars in Thousands) March 31 , 2022 December 31 , 2021 March 31 , 2021 Nonperforming Loans Commercial Real Estate $ 265 $ 595 $ 651 Commercial and Industrial 208 451 818 Residential Mortgages 2,816 2,551 3,629 Other Consumer 20 73 109 Construction 166 177 2,124 Other - - - Total Nonperforming Loans 3,475 3,847 7,331 Nonperforming Troubled Debt Restructurings Commercial Real Estate 3,014 2,742 21,306 Commercial and Industrial - - - Residential Mortgages - - - Other Consumer - - - Construction 808 808 3,319 Other - - - Total Nonperforming Troubled Debt Restructurings 3,822 3,550 24,625 Total Nonperforming Loans and Troubled Debt Restructurings 7,297 7,397 31,956 Other Real Estate Owned 11,253 10,916 14,031 Total Nonperforming Assets $ 18,550 $ 18,313 $ 45,987 For the Periods Ended (Dollars in Thousands) March 31 , 2022 December 31 , 2021 March 31 , 2021 Nonperforming Loans $ 7,297 $ 7,397 $ 31,956 Other Real Estate Owned 11,253 10,916 14,031 Total Nonperforming Assets 18,550 18,313 45,987 Troubled Debt Restructurings (Nonaccruing) 3,822 3,550 24,625 Troubled Debt Restructurings (Accruing) 171,478 172,592 106,650 Total Troubled Debt Restructurings $ 175,300 $ 176,142 $ 131,275 Nonperforming Loans to Total Portfolio Loans 0.25 % 0.26 % 1.08 % Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned 0.64 % 0.65 % 1.54 % Allowance for Credit Losses to Total Portfolio Loans 3.33 % 3.41 % 3.93 % Allowance for Credit Losses to Nonperforming Loans and Troubled Debt Restructurings 1320.76 % 1297.00 % 365.73 % Net Loan Charge-offs (Recoveries) QTD $ 193 $ 4,294 $ 701 Net Loan Charge-offs (Recoveries) YTD $ 193 $ 23,127 $ 701 Net Loan Charge-offs (Recoveries) (Annualized) to Average Portfolio Loans QTD 0.03 % 0.60 % 0.10 % Net Loan Charge-offs (Recoveries) (Annualized) to Average Portfolio Loans YTD 0.03 % 0.79 % 0.10 % ALLOWANCE FOR CREDIT LOSSES (Unaudited) Quarter-to-Date (Dollars in Thousands) March 31 , 2022 December 31 , 2021 March 31 , 2021 Balance Beginning of Year $ 95,939 $ 99,294 $ 54,074 Impact of CECL Adoption - - 61,642 Provision for Credit Losses 630 939 1,857 Charge-offs: Commercial Real Estate - 2,237 - Commercial and Industrial - 178 1 Residential Mortgages 17 - 195 Other Consumer 435 423 870 Construction - 1,859 - Other - - - Total Charge-offs 452 4,697 1,066 Recoveries: Commercial Real Estate - 10 - Commercial and Industrial 1 286 1 Residential Mortgages - - 166 Other Consumer 109 107 137 Construction 149 - 61 Other - - - Total Recoveries 259 403 365 Total Net Charge-offs 193 4,294 701 Balance End of Period $ 96,376 $ 95,939 $ 116,872 (Unaudited) (Dollars in Thousands, except per share data) DEFINITIONS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES: 1 Pre-tax Pre-provision Income (Non-GAAP) Quarter-to-Date March 31 , 2022 December 31 , 2021 March 31 , 2021 Net Interest Income $ 28,222 $ 28,050 $ 26,529 Noninterest Income 5,335 5,776 8,952 Noninterest Expense 22,511 26,236 23,605 Pre-tax Pre-provision Income $ 11,046 $ 7,590 $ 11,876 Losses (Gains) on Sales of Securities, net 24 (419 ) (3,610 ) (Gains) Losses on Sales and Write-downs of Bank Premises, net (383 ) 117 43 Losses on Sales and Write-downs of OREO, net 159 199 212 Branch Consolidation Severance and Expenses - 13 4 Non-recurring Fees5 (65 ) (130 ) (446 ) OREO Income (10 ) (8 ) (71 ) FHLB Prepayment Penalty 18 39 4 Contingent Liability 160 - - Professional Finder's Fee6 - 150 - Core Pre-tax Pre-provision Income (Non-GAAP) $ 10,949 $ 7,551 $ 8,012 2 Core Net Income (Non-GAAP) Quarter-to-Date March 31 , 2022 December 31 , 2021 March 31 , 2021 Net Income $ 9,323 $ 5,610 $ 9,375 Losses (Gains) on Sales of Securities, net 24 (419 ) (3,610 ) (Gains) Losses on Sales and Write-downs of Bank Premises, net (383 ) 117 43 Losses on Sales and Write-downs of OREO, net 159 199 212 Branch Consolidation Severance and Expenses - 13 4 Non-recurring Fees5 (65 ) (130 ) (446 ) OREO Income (10 ) (8 ) (71 ) FHLB Prepayment Penalty 18 39 4 Contingent Liability 160 - - Professional Finder's Fee6 - 150 - Total Tax Effect 20 8 811 Core Net Income (Non-GAAP) $ 9,246 $ 5,579 $ 6,322 Average Shares Outstanding - diluted 25,740,636 26,350,877 26,276,890 Core Earnings Per Common Share (diluted) (Non-GAAP) $ 0.36 $ 0.21 $ 0.24 3 Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2022 and 2021 periods. Net Interest Income (FTE) (Non-GAAP) Quarter-to-Date March 31 , 2022 December 31 , 2021 March 31 , 2021 Interest Income $ 32,678 $ 32,933 $ 32,957 Interest Expense 4,456 4,883 6,428 Net Interest Income 28,222 28,050 26,529 Tax Equivalent Adjustment3 298 314 462 NET INTEREST INCOME (FTE) (Non-GAAP) $ 28,520 $ 28,364 $ 26,991 Net Interest Income (Annualized) 115,664 112,531 109,464 Average Earning Assets 3,974,341 3,985,152 3,939,810 NET INTEREST MARGIN (FTE) (Non-GAAP) 2.91 % 2.82 % 2.78 % 4 Core Efficiency Ratio (Non-GAAP) Quarter-to-Date March 31 , 2022 December 31 , 2021 March 31 , 2021 NONINTEREST EXPENSE $ 22,511 $ 26,236 $ 23,605 Less: Losses on Sales and Write-downs of OREO, net (159 ) (199 ) (212 ) Less: Losses on Sales and Write-downs of Bank Premises, net - (117 ) (43 ) Less: Branch Consolidation Severance and Expenses - (13 ) (4 ) Less: FHLB Prepayment Penalty (18 ) (39 ) (4 ) Less: Professional Finder's Fee6 - (150 ) - Less: Contingent Liability (160 ) - - CORE NONINTEREST EXPENSE (Non-GAAP) $ 22,174 $ 25,718 $ 23,342 NET INTEREST INCOME $ 28,222 $ 28,050 $ 26,529 Plus: Taxable Equivalent Adjustment3 298 314 462 NET INTEREST INCOME (FTE) (Non-GAAP) $ 28,520 $ 28,364 $ 26,991 Less: Losses (Gains) on Sales of Securities, net 24 (419 ) (3,610 ) Less: Gains on Sales of Bank Premises, net (383 ) - - Less: Non-recurring Fees5 (65 ) (130 ) (446 ) Less: OREO Income (10 ) (8 ) (71 ) Noninterest Income 5,335 5,776 8,952 CORE NET INTEREST INCOME (FTE) (Non-GAAP) plus NONINTEREST INCOME $ 33,421 $ 33,583 $ 31,816 CORE EFFICIENCY RATIO (Non-GAAP) 66.35 % 76.58 % 73.37 % 5 The Non-recurring fees include PPP related fees. 6The professional finder's fee is related to fees associated with note sales in 2021. SOURCE: Carter Bankshares, Inc. View source version on accesswire.com : https://www.accesswire.com/698638/Carter-Bankshares-Inc-Announces-First-Quarter-2022-Financial-Results

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