Carolina Trust Bank Reports 4th Quarter, Full Year 2013 Results

Increase in Non-Interest Expense, Loan Loss Provision Result in 4Q Loss

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| Source: Carolina Trust Bank

LINCOLNTON, N.C., Jan. 17, 2014 (GLOBE NEWSWIRE) -- Carolina Trust Bank (Nasdaq: CART) today reported a full year 2013 net loss of $1.64 million, or $0.35 per diluted share attributable to common shareholders, compared to a 2012 net profit of $146,000, or $0.03 per diluted share available to common shareholders. Excluding payment of dividends on preferred shares, the bank reported a net loss of $1.45 million for the full year 2013.

The company posted a fourth quarter 2013 net loss of $380,000, or $0.08 per diluted share attributable to common shareholders, compared to a net loss of $572,000 for the fourth quarter of 2012, or $0.12 per diluted share attributable to common shareholders. Fourth quarter earnings were impacted by loan loss provisions and non-interest expense due to valuation write-downs on foreclosed property held by the bank.

Despite losses incurred for the year and the fourth quarter, core earnings remained strong. For the fourth quarter 2013, loans were up and interest expense decreased for the 16th straight quarter.

"Despite the challenges of the past few years, our bank is strong fundamentally." said Jerry L. Ocheltree, who assumed the role of president and chief executive officer on Jan. 1, 2014, following the retirement of J. Michael Cline. "I look forward to becoming a part of the growing success of our bank in the communities we serve."

Financial Highlights

2013-2012 Comparisons

  • Total loans grew $2.41 million, or 1.09%
  • Net interest income increased $214,000, or 2.05%
  • Interest expense declined by $736,000, or 25.59%, due to disciplined deposit pricing
  • Non-interest expense rose $1.70 million, or 18.56%
  • Non-accrual loans decreased $5.21 million, or 61.31%
  • Total nonperforming assets fell $5.46 million, or 43.11%

4Q-3Q 2013 Comparisons

Income Statement

  • Total revenues, less interest expense, were down marginally from third quarter 2013
    -- Net interest income up $12,000, or 0.43%
    -- Interest expense decreased $29,000, or 5.57%
    -- Non-interest income down $18,000, or 6.95%
    -- Non-interest expense increased $336,000, or 14.14%
    -- Net interest margin remained at 4.37%
    -- Provision for loan loss increased $238,000, or 59.65%

Balance Sheet

  • Total loans of $223.89 million increased $1.30 million from third quarter 2013
  • Total deposits of $228.89 million, down $4.09 million from previous quarter 2013
  • Total assets were $266.44 million, compared to $268.56 million from prior quarter 2013
  • Reserve for Loan Loss increased $81,000 from third quarter 2013
  • Credit quality improved in the fourth quarter 2013 as a result of loan charge-offs
    -- Total nonperforming assets declined $901,000, or 11.12%
    -- Other Real Estate Owned, or foreclosed property, decreased $110,000 or 2.74%
    -- Non-accrual loans fell $801,000, or 19.60%
    -- Net loan charge-offs totaled $555,000, up $81,000, or 17.09%
    -- Net loan charge-offs to average loans were 0.25%, up marginally from 0.21%
  • Capital levels continued to exceed "well-capitalized" requirements in fourth quarter 2013 with Tier 1 Leverage Ratio of 8.24%, Tier 1 Risk-based Capital Ratio of 9.53%, and Total Risk-based Capital Ratio of 10.79%

Revenue

Link-quarter improvements in net interest income were offset by an increase in non-interest expense of $336,000 and an increase of $238,000 to loan loss provisions. Net interest income was $2.78 million in the fourth quarter 2013, compared to $2.77 million in the third quarter and $2.68 million from fourth quarter 2012. For full year 2013, net interest income increased $214,000 to $10.68 million, or 2.05%, from 2012.

Due to ongoing management of funding costs, net interest margin improved to 4.37% on a year-over-year basis from 4.27% at Dec. 31, 2012. Though net interest margin saw no change from prior quarter, interest expense has trended favorably 16 straight quarters. Interest expense was $492,000, down $29,000 from third quarter, and $156,000 from fourth quarter 2012. On a year-over-year basis, interest expense declined by $736,000, or 25.59%. Provision for loan loss was $637,000 for the fourth quarter 2013, compared to $399,000 for the prior quarter, and $1.10 million from fourth quarter 2012.

Loans and deposits

Total loans increased for the fourth straight quarter as the company's portfolio grew by a net $1.30 million in loans from third quarter 2013, and $2.41 million from fourth quarter 2012. Total deposits were $228.89 million at December 31, 2013, compared to $232.98 million at Sept. 30, 2013 and $233.86 at Dec. 31, 2012.

A reduction of higher-priced brokered deposits over the past year has contributed to lower interest expenses and higher net interest margins. Core deposits, in the form of checking, savings and certificate of deposit accounts, remained strong.

Capital

Total shareholders' equity was $22.26 million at Dec. 31, 2013, compared to $22.97 million at Sept. 30, 2013, and $24.94 million at Dec. 31, 2012. Capital levels continue to exceed regulatory requirements for being "well-capitalized." Tier 1 Leverage Ratio was 8.24% compared to 8.44% at the prior quarter end; Tier 1 Risk-based Capital Ratio was 9.53% compared to 9.84% at the previous quarter end; and Total Risk-based Capital Ratio was 10.79% compared to 11.09% at the prior quarter end.

Asset Quality

Asset quality continued to show improvement on a linked-quarter and year-over-year basis. Total nonperforming assets were $7.20 million at Dec. 31, 2013, compared to $8.11 million at Sept. 30, 2013, and $12.66 million at Dec. 31, 2012. Nonperforming assets were 2.70% of total assets, compared to 3.02% at the previous quarter end and 4.67% Dec. 31, 2012.

Non-accrual loans were $3.29 million at Dec. 31, 2013, down $801,000 on a linked-quarter basis and $5.21 million from Dec. 31, 2012. Other Real Estate, or foreclosed property, declined $110,000 from Sept. 30, 2013, and $261,000 from Dec. 31, 2012. Loans 30 to 89 days past due were $2.22 million at Dec. 31, 2013, down $1.10 million from Sept. 30, 2013, and down $1.42 million from Dec. 31, 2012.

Net loan charge-offs of $555,000 for fourth quarter 2013 reflect an increase of $81,000 when compared to the third quarter of 2013, but declined $218,000 when compared to the fourth quarter of 2012. Allowance for loan losses to total loans was 1.82%, up slightly from 1.79% at Sept. 30, 2013, but down from 2.16% at Dec. 31, 2012.

Carolina Trust Bank is a full service state chartered bank headquartered in Lincolnton, N.C., operating seven full service branches in Lincoln, Catawba, Gaston and Rutherford Counties in western North Carolina and a loan production office in Hickory, N.C.

Forward-Looking Statement;

This news release contains forward-looking statements. Words such as "anticipates," " believes," "estimates," "expects," "intends," "should," "will," variations of such words and similar expressions are intended to identify forward-looking statements. These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand and asset quality, including real estate and other collateral values; changes in banking regulations and accounting principles, policies or guidelines; and the impact of competition from traditional or new sources. These and other factors that may emerge could cause decisions and actual results to differ materially from current expectations. Carolina Trust Bank takes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Carolina Trust Bank              
               
   (Dollars in thousands)    
  December 31 September 30 June 30 March 31 December 31    
  2013 2013 2013 2013 2012    
Balance Sheet Data:              
Total Assets  266,435  268,555  265,554  275,597  271,051    
Total Deposits  228,885  232,978  232,621  240,589  233,861    
Total Loans  223,891  222,594  216,055  215,984  221,480    
Reserve for Loan Loss  4,066  3,985  4,060  4,836  4,773    
Total Shareholders Equity  22,256  22,973  22,523  24,871  24,935    
               
               
  (Dollars in thousands, except per share data)
   For the three months ended  For the Year Ended
  December 31 September 30 June 30 March 31 December 31 December 31 December 31
  2013 2013 2013 2013 2012 2013 2012
Income and Per Share Data:              
Interest Income  3,270  3,287  3,162  3,095  3,324  12,815  13,337
Interest Expense  492  521  538  588  648  2,140  2,876
Net Interest Income  2,778  2,766  2,624  2,507  2,676  10,675  10,461
Provision for Loan Loss  637  399  835  413  1,100  2,285  2,367
Net Interest Income After Provision  2,141  2,367  1,789  2,094  1,576  8,390  8,094
Non-interest Income  241  259  268  251  348  1,019  1,281
Non-interest Expense  2,713  2,377  3,500  2,268  2,593  10,858  9,158
Income (loss) Before Taxes  (331)  249  (1,443)  77  (669)  (1,449)  217
Income Tax Expense (benefit)  --  --  --  --  --  --  --
Net Income (loss)  (331)  249  (1,443)  77  (669)  (1,449)  217
               
Preferred Stock Dividend  49  49  48  45  (97)  190  71
               
Income available (loss) attributable to common shareholders  (380)  200  (1,491)  32  (572)  (1,639)  146
               
Net Income (loss) Per Common Share:              
Basic  (0.08)  0.04  (0.32)  0.01  (0.12)  (0.35)  0.03
Diluted  (0.08)  0.04  (0.32)  0.01  (0.12)  (0.35)  0.03
Average Common Shares Outstanding:              
Basic  4,634,702  4,634,702  4,634,482  4,634,482  4,634,482  4,634,565  4,634,379
Diluted  4,634,702  4,639,053  4,634,482  4,637,422  4,634,482  4,634,565  4,635,954
               
               
               
  December 31 September 30 June 30 March 31 December 31    
  2013 2013 2013 2013 2012    
Capital Ratios:              
Tier 1 Leverage Ratio 8.24% 8.44% 8.24% 8.71% 8.61%    
Tier 1 Risk-based Capital Ratio 9.53% 9.84% 9.80% 10.79% 10.60%    
Total Risk-based Capital Ratio 10.79% 11.09% 11.06% 12.05% 11.86%    
               
Tangible Common Equity  18,934  19,585  19,188  21,529  21,581    
Common Shares Outstanding  4,634,702  4,634,702  4,634,482  4,634,482  4,634,482    
Book Value Per Common Share  4.09  4.23  4.14  4.65  4.66    
               
Performance Ratios:              
Return on Average Assets (%) -0.49% 0.37% -2.12% 0.11% -0.95%    
Return on Average Equity (%) -5.78% 4.32% -23.20% 1.24% -9.93%    
Net Interest Margin (%) 4.37% 4.37% 4.09% 4.00% 4.27%    
               
Asset Quality:              
Delinquent Loans ( 30-89 days )  2,219  3,317  3,581  2,835  3,639    
               
Delinquent Loans ( 90 days or more )  10  --  --  --  --    
Non-accrual Loans  3,286  4,087  3,891  9,107  8,494    
OREO and repossessed property  3,908  4,018  4,811  3,542  4,169    
Total Nonperforming Assets  7,204  8,105  8,702  12,649  12,663    
               
Restructured Loans  4,219  5,247  4,465  4,711  4,983    
               
Nonperforming Assets to Total Assets 2.70% 3.02% 3.28% 4.59% 4.67%    
Nonperforming Assets to Equity Capital & ALLL 27.37% 30.07% 32.74% 42.58% 42.62%    
Allowance for Loan Losses to Non-performing Assets 56.44% 49.17% 46.66% 38.23% 37.69%    
Allowance for Loan Losses to Total Loans 1.82% 1.79% 1.88% 2.24% 2.16%    
Net Loan Charge-Offs   555  474  1,609 350 773    
Net Loan Charge-Offs to Average Loans (%) 0.25% 0.21% 0.73% 0.16% 0.35%    
               
Note: Financial information is unaudited.               
Jerry L. Ocheltree
President and CEO
Carolina Trust Bank
(704) 735-1104