Carolina Trust Bank Reports Profit in First Quarter 2014

Loan Loss Provision Declines as Credit Trends Continue to Improve; 'Hard work and commitment of our staff beginning to show benefits,' says bank president

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| Source: Carolina Trust Bank

LINCOLNTON, N.C., April 17, 2014 (GLOBE NEWSWIRE) -- Aided by improving credit trends, Carolina Trust Bank (Nasdaq:CART) today reported net income of $502,000 for the first quarter 2014 or $0.11 per diluted share available to common shareholders, compared to net income of $32,000 for the same period a year ago or $0.01 per diluted share available to common shareholders.

Excluding payment of dividends on preferred shares, the bank realized net income of $553,000. On a linked-quarter basis, results compared to a net loss of $331,000 for the quarter ended December 31, 2013 or $0.08 per diluted share.

"Our progress through the years is evidence of the hard work and commitment of the credit team and our staff," said President and CEO Jerry L. Ocheltree. "I believe that we are beginning to show the benefits of our efforts."

Selected Financial Highlights

Year-Over-Year Comparisons

March 31, 2014 compared to March 31, 2013

  • Net interest income up $199,000 or 7.94%
  • Interest expense decreased $107,000 or 18.20%
  • Non-interest income down $9,000 or 3.59%
  • Non-interest expense increased $82,000 or 3.62%
  • Net interest margin was 4.35% compared to 4.00%
  • Provision for loan losses declined by $368,000 or 89.10%

Linked-Quarter Comparisons

March 31, 2014 compared to December 31, 2013

Income Statement

  • Total revenues, less interest expense, down $71,000 from December 31, 2013
    -- Interest expense decreased $11,000
    -- Net interest income decreased $72,000
    -- Provision for loan losses decreased $592,000
    -- Net interest income after provision increased $520,000
    -- Non-interest income increased $1,000
    -- Non-interest expense decreased $363,000
    -- Total income increased by $884,000

Balance Sheet

  • Total deposits of $230.65 million increased $1.76 million
  • Total loans of $221.89 million decreased $2.00 million
  • Total assets of $266.55 million increased $114,000
  • Reserve for loan losses of $4.17 million increased $99,000
  • Credit quality continued favorable trends in the first quarter of 2014
    -- Total nonperforming assets decreased $880,000 or 11.41%
    -- Other Real Estate Owned and repossessed property decreased $674,000 or 17.25%
    -- Non-accrual loans and loans delinquent 90 days or more decreased $200,000 or 5.26%
    -- Net recoveries of loans previously charged off were $54,000 or 0.02% of average total loans
  • Capital levels, exceeding "well-capitalized" requirements, improved in each of the three primary categories monitored by state and federal regulators: Tier 1 Leverage Ratio of 8.51%; Tier 1 Risk-based Capital Ratio of 10.01%; and Total Risk-based Capital Ratio of 11.27%.

Revenue

Positive trends in net income for first quarter 2014 were primarily due to reductions in loan loss provisions and non-interest expense. Provision for loan losses decreased $592,000 or 92.94% from the previous quarter and non-interest expense, which includes expenses from the upkeep and sale of foreclosed property, also fell during the same period by $363,000 or 13.38%. While net interest income was down by $72,000, net interest income after provision for loan losses increased $520,000 or 24.29% from December 31, 2013.

Interest expense declined for the 17th straight quarter as management's disciplined approach to deposit pricing over the past several years has resulted in ongoing improvement in net interest margin. Decreases of $11,000 and $107,000 in interest expense for the quarters ended December 31, 2013 and March 31, 2013 respectively, resulted in a net interest margin of 4.35%. Additionally, Carolina Trust realized a $54,000 net recovery of loans previously charged off or 0.02% of average total loans.

Balance Sheet

Total shareholder equity was $23.07 million at March 31, 2014, an increase of $812,000 or 3.65% from December 31, 2013. Total deposits increased to $230.65 million at March 31, 2014, a $1.76 million increase from December 31, 2013. At March 31, 2014 total loans were $221.89 million, a decrease of $2.00 million from December 31, 2013. Reserve for Loan Losses increased by $99,000 to $4.17 million at March 31, 2014 from December 31, 2013.

Capital

On a linked-quarter basis, capital levels – which exceeded regulatory requirements for being "well-capitalized" - increased in the first quarter of 2014 in each of the three primary areas monitored by state and federal regulators: Tier 1 Leverage Ratio of 8.51% increased from 8.24%; Tier 1 Risk-based Capital Ratio of 10.01% increased from 9.54%; and Total Risk-based Capital ratio of 11.27% increased from 10.80%.

Asset Quality

Asset quality improved in nearly every measure on a linked-quarter basis. Total nonperforming assets were $6.84 million at March 31, 2014, down 11.33% from December 31, 2013. Other Real Estate Owned decreased $680,000 or 17.40% from December 31, 2013. Nonperforming assets were 2.57% of total assets at March 31, 2014, compared to 2.89% at December 31, 2013. Nonperforming assets to equity capital and allowance for loan and lease losses declined to 25.11% at March 31, 2014 from 29.29% at December 31, 2013 and 42.58% at March 31, 2013.

Delinquent loans (30 to 89 days past due accruing interest) were $1.94 million at March 31, 2014, down $276,000 from December 31, 2013. For the quarter ended March 31, 2014 the Bank had $54,000 in net recoveries of loans previously charged off or 0.02% of average total loans, compared to $555,000 in charge-offs or 0.25% of average total loans for the quarter ended December 31, 2013. Non-accrual loans were $3.60 million at March 31, 2014 compared to $3.29 million at December 31, 2013 and $9.11 million at March 31, 2013.

Return on average assets was 0.84% for the quarter ended March 31, 2014 compared to (0.49%) for the quarter ended December 31, 2013 and 0.11% for the quarter ended March 31, 2013. Return on average equity was 9.83% for the quarter ended March 31, 2014 compared to (5.78%) for the quarter ended December 31, 2013 and 1.24% for the quarter ended March 31, 2013.

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)
  March 31 December 31 September 30 June 30 March 31
  2014 2013 2013 2013 2013
Balance Sheet Data:          
Total Assets  266,549  266,435  268,555  265,554  275,597
Total Deposits  230,646  228,885  232,978  232,621  240,589
Total Loans  221,887  223,891  222,594  216,055  215,984
Reserve for Loan Loss  4,165  4,066  3,985  4,060  4,836
Total Shareholders Equity  23,068  22,256  22,973  22,523  24,871
           
           
  (Dollars in thousands, except per share data)
   For the three months ended
  March 31 December 31 September 30 June 30 March 31
  2014 2013 2013 2013 2013
Income and Per Share Data:          
Interest Income  3,187  3,270  3,287  3,162  3,095
Interest Expense  481  492  521  538  588
Net Interest Income  2,706  2,778  2,766  2,624  2,507
Provision for Loan Loss  45  637  399  835  413
Net Interest Income After Provision  2,661  2,141  2,367  1,789  2,094
Non-interest Income  242  241  259  268  251
Non-interest Expense  2,350  2,713  2,377  3,500  2,268
Income (loss) Before Taxes  553  (331)  249  (1,443)  77
Income Tax Expense (benefit)  --  --  --  --  --
Net Income (loss)  553  (331)  249  (1,443)  77
           
Preferred Stock Dividend  51  49  49  48  45
           
Income available (loss) attributable to common shareholders  502  (380)  200  (1,491)  32
           
Net Income (loss) Per Common Share:          
Basic  0.11  (0.08)  0.04  (0.32)  0.01
Diluted  0.11  (0.08)  0.04  (0.32)  0.01
Average Common Shares Outstanding:          
Basic  4,634,894  4,634,702  4,634,702  4,634,482  4,634,482
Diluted  4,649,981  4,634,702  4,639,053  4,634,482  4,637,422
           
           
           
  March 31 December 31 September 30 June 30 March 31
  2014 2013 2013 2013 2013
Capital Ratios:          
Tier 1 Leverage Ratio 8.51% 8.24% 8.44% 8.24% 8.71%
Tier 1 Risk-based Capital Ratio 10.01% 9.54% 9.84% 9.80% 10.79%
Total Risk-based Capital Ratio 11.27% 10.80% 11.09% 11.06% 12.05%
           
Tangible Common Equity  20,187  19,358  20,072  19,614  21,955
Common Shares Outstanding  4,634,702  4,634,702  4,634,702  4,634,482  4,634,482
Book Value Per Common Share  4.36  4.18  4.33  4.23  4.74
           
Performance Ratios:          
Return on Average Assets (%) 0.84% -0.49% 0.37% -2.12% 0.11%
Return on Average Equity (%) 9.83% -5.78% 4.32% -23.20% 1.24%
Net Interest Margin (%) 4.35% 4.37% 4.37% 4.09% 4.00%
           
Asset Quality:          
Delinquent Loans ( 30-89 days accruing interest)  1,943  2,219  3,317  3,581  2,835
           
Delinquent Loans ( 90 days or more )  --  517  --  --  --
Non-accrual Loans  3,603  3,286  4,087  3,891  9,107
OREO and repossessed property  3,234  3,908  4,018  4,811  3,542
Total Nonperforming Assets  6,837  7,711  8,105  8,702  12,649
           
Restructured Loans  5,546  4,219  5,247  4,465  4,711
           
Nonperforming Assets to Total Assets 2.57% 2.89% 3.02% 3.28% 4.59%
Nonperforming Assets to Equity Capital & ALLL 25.11% 29.29% 30.07% 32.74% 42.58%
Allowance for Loan Losses to Non-performing Assets 60.92% 52.73% 49.17% 46.66% 38.23%
Allowance for Loan Losses to Total Loans 1.88% 1.82% 1.79% 1.88% 2.24%
Net Loan Charge-Offs (recoveries)  (54)  555  474  1,609 350
Net Loan Charge-Offs to Average Loans (%) -0.02% 0.25% 0.21% 0.73% 0.16%
           
Note: Financial information is unaudited. 
Jerry L. Ocheltree
President and CEO
Carolina Trust Bank
(704) 735-1104