Bank Reports Loss as it Takes Aggressive Stand to Strengthen Balance Sheet; Company Maintains Healthy Trends in Core Earnings, Overall Business Operations
Year-to-Date Earnings $718,000, a $1.61 Million Net Improvement Over Same 2011 Period
Net Interest Income Increases for 6th Consecutive Quarter; Loans 4th Straight Quarter
LINCOLNTON, N.C., Oct. 24, 2012 (GLOBE NEWSWIRE) -- Carolina Trust Bank (Nasdaq:CART) today reported a third quarter 2012 net loss of $145,000, or $0.03 loss per diluted common share, available to common shareholders as the company took advantage of opportunities to liquidate and reduce problem assets. Excluding payment of dividends on preferred shares, Carolina Trust Bank reported a net loss of $72,000 for the third quarter of 2012.
Earnings for the first nine months of 2012 were $718,000, compared to a loss of $896,000 for the same period in 2011, reflecting a $1.61 million net improvement as the bank continues to maintain healthy trends in its overall business operations. Results of the third quarter 2012 compared to net income of $301,000, or $0.07 per diluted common share, in the second quarter of 2012, and net income in the third quarter of 2011 of $360,000, or $0.08 per diluted common share.
Core earnings remain strong. Loans have grown for four straight quarters while deposits have increased in each of the past three quarters to $241.14 million at Sept. 30, 2012. Net interest margin and net interest income have steadily improved each quarter since March 31, 2011, due primarily to the bank's disciplined approach in managing funding costs.
"The bottom line is that we've had good loan growth the past 12 months and consistent income, which allowed us to be more aggressive this quarter in eliminating problem assets," said Mike Cline, president and chief executive officer. "We believe loan problems in general are beginning to moderate. We are seeing some improvement in credit quality. Obviously, we strive for profitability each quarter, yet we also recognized the importance of strengthening the balance sheet, which was a priority this quarter.
"While there is no guarantee of a better economy ahead, we do believe the bank is on the other side of this credit cycle," Cline said. "It's time we turned our complete attention to running our business and creating the kind of earnings that Carolina Trust Bank is capable of generating."
Financial Highlights
Balance Sheet
- Total assets were $283.16 million at Sept. 30, 2012, compared to $283.83 million at June 30, 2012, and $270.09 million at Sept. 30, 2011.
- Total deposits totaled $241.14 million at Sept. 30, 2012, representing increases of $1.26 million from June 30, 2012, and $14.28 million from Sept. 30, 2011.
- Total loans grew to $223.72 million at Sept. 30, 2012, an increase of $360,000 from the second quarter of 2012 and up $19.25 million from Sept. 30, 2011.
- Capital levels at Sept. 30, 2012 remain strong, reflecting a Tier 1 leverage ratio of 9.14%, Tier 1 risk-based ratio of 11.16%, and Total risk-based ratio of 12.41%.
Income Statement
- Total revenues, less interest expense, were $3.01 million for the third quarter of 2012, compared to $2.94 million at June 30, 2012, and $2.59 million at Sept. 30, 2011.
- Net interest income was $2.68 million in the third quarter of 2012, representing increases of $83,000 from the second quarter of 2012, and $404,000 from the third quarter of 2011.
- Interest expense continued to trend favorably as funding costs in the third quarter of 2012 declined by $48,000 from the second quarter of 2012, and by $326,000 from the same period a year ago.
- Net Interest margin improved to 4.14% for the third quarter of 2012, compared to 3.99% at June 30, 2012, and 3.52% at Sept. 30, 2011.
Credit Quality
- Nonperforming assets decreased to $10.08 million at Sept. 30, 2012, from $11.62 million at June 30, 2012, and from $12.06 million at Sept. 30, 2011.
- Nonperforming assets to total assets declined to 3.56% at Sept. 30, 2012, from 4.09% at June 30, 2012, and 4.46% at Sept. 30, 2011.
- Non-accrual loans declined to $5.96 million at Sept. 30, 2012, compared to $6.74 million at June 30, 2012, and $5.99 million at Sept. 30, 2011.
- Net loan charge-offs for the third quarter of 2012 were $761,000, compared to $355,000 for the quarter ended June 30, 2012, and $170,000 for the quarter ended Sept. 30, 2011.
Review of Balance Sheet
Total assets of $283.16 million at Sept. 30, 2012, were relatively unchanged from the second quarter of 2012, but grew $13.08 million from the quarter ended Sept. 30, 2011. Total deposits increased to $241.14 million in the third quarter of 2012, compared to $239.88 million at June 30, 2012, and $226.86 million at Sept. 30, 2011. Total loans continued to show resilience in the face of a slowing economy, increasing to $223.72 million at Sept. 30, 2012, compared to $223.36 million at June 30, 2012, and $204.47 million at Sept. 30, 2011. Total loans grew $19.25 million from Sept. 30, 2011.
Total shareholders' equity was $26.98 million at Sept. 30, 2012, compared to $27.00 million at June 30, 2012, and $27.36 million at Sept. 30, 2011. Carolina Trust Bank continued to maintain strong capital levels, reporting Tier 1 leverage ratio of 9.14% at Sept. 30, 2012, compared to 9.33% at June 30, 2012, and 9.57% at Sept. 30, 2011.
Total risk-based capital ratio was 12.41% at Sept. 30, 2012, compared to 12.46% at June 30, 2012 and 13.47% at Sept. 30, 2011. Reserve for loan loss was $4.38 million at Sept. 30, 2012, down slightly from $4.53 million at June 30, 2012, but up from $3.91 million at Sept. 30, 2011.
Review of Income Statement
Disciplined pricing of deposits and loan production continued to drive increases in total revenue and net interest income. Net interest margin also benefited from lower funding costs, improving 15 basis points to 4.14% in the third quarter of 2012, and 62 basis points from the 3.52% reported at Sept. 30, 2011. Interest expense, which has fallen eleven straight quarters, declined to $694,000 in the third quarter of 2012, compared to $742,000 for the quarter ended June 30, 2012, and $1.02 million for the quarter ended Sept. 30, 2011.
Net interest income increased to $2.68 million in the third quarter of 2012 compared to $2.60 million at June 30, 2012, and $2.28 million at Sept. 30, 2011. Non-interest income of $332,000 for the third quarter of 2012 remained relatively consistent with the second quarter of 2012, but increased $16,000 compared with the third quarter of 2011.
Non-interest expense increased by $417,000 to $2.51 million in the third quarter of 2012 compared to the previous quarter, due primarily to losses on property sales and write-downs of real estate currently held in foreclosure.
Review of Credit Quality
Credit quality continued to show marked improvement. Nonperforming assets, which include foreclosed property and non-accrual loans, decreased by $1.53 million to $10.08 million at Sept. 30, 2012, compared to June 30, 2012, and decreased $1.98 million from Sept. 30, 2011. Declines from the previous quarter and from a year ago reflected fewer commercial and commercial real estate nonperforming loans.
Nonperforming assets to total assets declined to 3.56% at Sept. 30, 2012, from 4.09% at June 30, 2012, and 4.46% at Sept. 30, 2011. Allowance for loan losses to total loans was 1.96% at Sept. 30, 2012, compared to 2.03% at June 30, 2012, and 1.91% at Sept. 30, 2011.
Overall, delinquencies fell significantly in the third quarter of 2012. Loans 30 to 89 days past due decreased by $1.85 million to $2.75 million at Sept. 30, 2012, compared to $4.60 million at June 30, 2012. Non-accrual loans, declined $780,000 to $5.96 million at Sept. 30, 2012, compared to $6.74 million at June 30, 2012. Due primarily to an increase in net loan charge-offs, the provision for loan loss increased to $571,000 for the third quarter of 2012, compared to $471,000 for the quarter ended June 30, 2012, and $116,000 for the quarter ended Sept. 30, 2011.
Net loan charge-offs were $761,000 for the quarter ended Sept. 30, 2012, up $406,000 from the quarter ended June 30, 2012. The increase in net loan charge-offs reflected management's decision to leverage its strong core operations to deal more aggressively with problem assets in the third quarter of 2012. Net loan charge-offs to average loans were 0.34% for the quarter ended Sept. 30, 2012, compared to 0.16% for the quarter ended June 30, 2012, and 0.08% for the quarter ended Sept. 30, 2011.
Carolina Trust Bank is a full service state chartered bank headquartered in Lincolnton, N.C., operating six full service branches in Lincoln, Catawba and Gaston Counties and a loan production office in Rutherford County.
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) | |||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |
| 2012 | 2012 | 2012 | 2011 | 2011 | |
| Balance Sheet Data: | |||||
| Total Assets | 283,164 | 283,829 | 276,365 | 266,162 | 270,089 |
| Total Deposits | 241,140 | 239,883 | 231,924 | 224,206 | 226,860 |
| Total Loans | 223,717 | 223,357 | 217,875 | 209,900 | 204,471 |
| Reserve for Loan Loss | 4,383 | 4,534 | 4,417 | 4,366 | 3,909 |
| Total Shareholders Equity | 26,977 | 27,004 | 26,566 | 26,045 | 27,364 |
| (Dollars in thousands, except per share data) | |||||
| For the three months ended | |||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |
| 2012 | 2012 | 2012 | 2011 | 2011 | |
| Income and Per Share Data: | |||||
| Interest Income | 3,374 | 3,339 | 3,299 | 3,238 | 3,296 |
| Interest Expense | 695 | 742 | 791 | 855 | 1,020 |
| Net Interest Income | 2,679 | 2,597 | 2,508 | 2,383 | 2,276 |
| Provision for Loan Loss | 572 | 471 | 224 | 835 | 116 |
| Net Interest Income After Provision | 2,107 | 2,126 | 2,284 | 1,548 | 2,160 |
| Non-interest Income | 332 | 342 | 259 | 295 | 316 |
| Non-interest Expense | 2,511 | 2,094 | 1,959 | 3,220 | 2,096 |
| Income (loss) Before Taxes | (72) | 374 | 584 | (1,377) | 380 |
| Income Tax Expense (benefit) | -- | -- | -- | -- | -- |
| Net Income (loss) | (72) | 374 | 584 | (1,377) | 380 |
| Preferred Stock Dividend | 73 | 73 | 22 | 22 | 21 |
| Income available (loss) attributable to common shareholders | (145) | 301 | 562 | (1,399) | 360 |
| Net Income (loss) Per Common Share: | |||||
| Basic | (0.03) | 0.07 | 0.12 | (0.30) | 0.08 |
| Diluted | (0.03) | 0.07 | 0.12 | (0.30) | 0.08 |
| Average Common Shares Outstanding: | |||||
| Basic | 4,634,286 | 4,634,286 | 4,634,262 | 4,634,262 | 4,634,262 |
| Diluted | 4,634,286 | 4,634,286 | 4,634,262 | 4,634,262 | 4,634,262 |
| September 30 | June 30 | March 31 | December 31 | September 30 | |
| 2012 | 2012 | 2012 | 2011 | 2011 | |
| Capital Ratios: | |||||
| Tier 1 Leverage Ratio | 9.14% | 9.33% | 9.49% | 9.32% | 9.57% |
| Tier 1 Risk-based Capital Ratio | 11.16% | 11.20% | 11.35% | 11.49% | 12.21% |
| Total Risk-based Capital Ratio | 12.41% | 12.46% | 12.61% | 12.75% | 13.47% |
| Tangible Common Equity | 22,262 | 22,285 | 21,509 | 20,922 | 22,631 |
| Common Shares Outstanding | 4,634,482 | 4,634,482 | 4,634,262 | 4,634,262 | 4,634,262 |
| Book Value Per Common Share | 4.80 | 4.81 | 4.64 | 4.51 | 4.88 |
| Performance Ratios: | |||||
| Return on Average Assets (%) | -0.10% | 5.40% | 0.87% | -2.02% | 0.55% |
| Return on Average Equity (%) | -1.04% | 5.57% | 8.91% | -19.88% | 5.55% |
| Net Interest Margin (%) | 4.14% | 3.99% | 3.99% | 3.79% | 3.52% |
| Asset Quality: | |||||
| Delinquent Loans ( 30-89 days ) | 2,751 | 4,599 | 4,102 | 3,571 | 2,995 |
| Delinquent Loans ( 90 days or more ) | -- | -- | 1 | 2 | 236 |
| Non-accrual Loans | 5,957 | 6,739 | 6,290 | 6,297 | 5,987 |
| OREO and repossessed property | 4,127 | 4,876 | 4,459 | 4,272 | 5,836 |
| Total Nonperforming Assets | 10,084 | 11,615 | 10,750 | 10,571 | 12,059 |
| Restructured Loans | 3,413 | 3,229 | 4,106 | 2,487 | 2,293 |
| Nonperforming Assets to Total Assets | 3.56% | 4.09% | 3.89% | 3.97% | 4.46% |
| Nonperforming Assets to Equity Capital & ALLL | 32.16% | 36.83% | 34.70% | 34.76% | 38.56% |
| Allowance for Loan Losses to Non-performing Assets | 43.46% | 39.04% | 41.09% | 41.30% | 32.42% |
| Allowance for Loan Losses to Total Loans | 1.96% | 2.03% | 2.03% | 2.08% | 1.91% |
| Net Loan Charge-Offs | 761 | 355 | 172 | 469 | 170 |
| Net Loan Charge-Offs to Average Loans (%) | 0.34% | 0.16% | 0.08% | 0.23% | 0.08% |