Carolina Trust Bank Reports First Quarter 2016 Earnings of $0.08 per Share

LINCOLNTON, N.C., April 28, 2016 (GLOBE NEWSWIRE) -- Carolina Trust Bank (NASDAQ:CART) announced today its financial results for the first quarter that ended March 31, 2016 (“1Q 2016”).  The Bank earned net income of $417,000 in 1Q 2016 as compared to $175,000 for the same period in 2015 (“1Q 2015”).  After deducting the preferred stock dividends, net income available to common stockholders was $358,000 and $117,000, respectively, for 1Q 2016 as compared to 1Q 2015.  The increases in net income and net income available to common stockholders were 138% and 206%, respectively, from 1Q 2015 to 1Q 2016.   Diluted earnings per share for the first quarter were $0.08, as compared to $0.03 for the same period last year.  Return on average total assets was 0.48%, and return on average shareholder’s equity was 5.08% for 1Q 2016.

The earnings increase was driven primarily by loan growth.  Average loans for the 1Q 2016 of approximately $294 million were 18% higher than average loans for 1Q 2015 of approximately $250 million.  Earnings were also impacted by an $80,000 recovery of prior loan loss provisions for 1Q 2016 as compared to zero loan loss provision in 1Q 2015.

Jerry L. Ocheltree, President and Chief Executive Officer stated, “We are pleased to report a successful first quarter of 2016, highlighted by earnings and loan growth.  Our loan portfolio grew by $5.4 million in the first quarter, an annualized increase of 7.4%. In addition we improved liquidity and added to our securities portfolio.  Our branch employees worked hard to fund the asset growth with core deposits.  Non-interest bearing deposits grew by $5.4 million and interest-bearing checking and money market accounts by $7.8 million.  We continue to focus on earning assets, core deposits, profitability, and consistently serving our customers well.” 

Select financial highlights for the quarter ended March 31, 2016:

• Pre-tax earnings of $650,000, an increase of $350,000 or 117% compared to 1Q 2015.
• Increase in total loans outstanding of $5,384,000 or 7.4%, annualized, from the balance at December 31, 2015
• Increase in deposits of $35,895,000 or 50.7%, annualized, from December 31, 2015.  Excluding time deposits obtained from institutional shareholders, the deposit growth was $14,442,000 or 23.4%, annualized.
• Increase in net interest income of $513,000 or 17.8% as compared to 1Q 2015.
• Total nonperforming assets (“NPAs”) decreased $258,000 from $4,158,000 at December 31, 2014 to $3,900,000 at March 31, 2016.  This resulted in a 19 basis point reduction in the Bank’s NPAs as a percentage of total assets, from 1.24% at December 31, 2015 to 1.05% at March 31, 2016.
• The Bank’s Allowance for Loan and Lease Losses (“ALLL”) to total loans decreased from 1.27% at December 31, 2015 to 1.18% at March 31, 2016 due to continued improved credit quality as NPAs decreased, and quarterly net charge-offs to average loans remained below 0.20%, annualized.

CAPITAL LEVELS
Capital for the Bank exceeded "well-capitalized" requirements for each of the four primary capital levels monitored by state and federal regulators. As of March 31, the common equity tier 1 capital ratio was 8.60%; the tier 1 capital ratio was 9.17%; the total capital ratio was 10.30%; and the tier 1 leverage ratio was 8.27%.

NET INTEREST INCOME IMPROVES YEAR OVER YEAR
Net interest income was $3,389,000 for the quarter ended March 31, 2016, an increase of $513,000 or 17.8% compared to 1Q 2015.  The Bank’s net interest margin for 1Q 2016 was 4.11%, down 8 basis points compared to the 4.19% reported for the same period last year.  The slight margin compression was due primarily to a shift in the mix of average assets from loans and investments to overnight funds.

NONINTEREST INCOME
For the first quarter of 2016, noninterest income was $286,000, a $58,000 increase or 25.4% when compared to 1Q 2015.  The Bank experienced increases in overdraft fees, card interchange fees, and mortgage fee income.

• The ratio of noninterest income to average assets was 0.33%, annualized, as compared to 0.31% a year ago.

NONINTEREST EXPENSE
Noninterest expense for 1Q 2016 totaled $3,105,000, up $301,000 or 10.7% as compared to the $2,804,000 recorded for 1Q 2015.  Specific items to note are as follows:

• Compensation expense increased $128,000 in comparison to 2015 as the result of equity and merit increases for all employees, new production oriented positions which contributed to the continued loan growth for the bank.  As a result of the increased number of employees, the bank also saw increases in performance bonuses, health insurance and 401(K) expense. 
• Occupancy expense remained nearly flat at $217,000, increasing by only $1,000.
• Data processing expense increased $13,000 or 8.0% due to increased customer transactions across all business lines.
• Professional fees increased $161,000 or 278% primarily due to consulting expenses related to accounting services, audit fees, compliance support, and strategic planning.
• The ratio of noninterest expenses to average assets was 3.57%, as compared to 3.81% a year ago.

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