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Carter Bankshares, Inc. Announces First Quarter 2022 Financial Results

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, 276-656-1776
Senior Executive Vice President & Chief Financial Officer
wendy.bell@CBTCares.com

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 Securities3
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.



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