Bank Reports Loss in 4Q of 2012 as Provision for Losses Increase; Exits Federal TARP Program, Repurchases 35% of Preferred Shares
Core Operations Remain Solid as Net Interest Margin, Net Interest Income and Non-Interest Income All Improve During 2012
Total Revenues - Less Interest Expense - Increase by $1.69 Million in 2012 From 2011
LINCOLNTON, N.C., Feb. 8, 2013 (GLOBE NEWSWIRE) -- Carolina Trust Bank (Nasdaq:CART) today reported full year 2012 net loss of $60,000, or $0.01 per diluted common share attributable to common shareholders, compared to a 2011 net loss of $2.30 million, or $0.50 per diluted share attributable to common shareholders. Excluding payment of dividends on preferred shares, the bank realized net income of $217,000 for the full year 2012.
The company also announced that it has exited the U.S. Treasury's Capital Purchase Program (CPP). This was accomplished through the Treasury's public auction process. The $4.0 million in preferred stock was purchased by private investors and the Bank subsequently repurchased 35% of the total from one of the investors.
Core operating income for the year 2012 remained strong, despite a 2012 fourth quarter that resulted in a net loss of $778,000 attributable to common shareholders, or $0.17 per diluted common share. Excluding payment of dividends for preferred shares, Carolina Trust's net loss for the fourth quarter of 2012 was $669,000. Earnings were reduced by a provision for loan loss of $1.10 million to offset increases in non-accrual loans. A significant portion of the increases in non-accrual loans and the provision for loan losses were related to one borrower. The borrower's ability to repay the loan as agreed became doubtful at the end of December and the Bank increased reserves as a response to that information. Fourth-quarter results compared to a net loss of $1.40 million attributable to common shareholders, or $0.30 per diluted common share, for the same period of 2011.
"Although fundamentals remain strong, the fourth quarter negatively impacted our overall performance for 2012," said President and CEO J. Michael Cline. "Despite the loss for the year, the Bank is on the right track and making significant balance sheet improvements. We're putting quality loans on our books despite an economy that still has many businesses sitting on the sidelines. We continue to see positive trends in lending, deposit pricing, and interest income. Our focus in 2013 is to maintain revenue growth, control expenses, and efficiently manage our operations."
Full Year 2012 Financial Highlights
- Net loss of $60,000 in 2012 reflected a $2.24 million net improvement over 2011.
- Funding costs declined by $1.18 million in 2012 from 2011, due to disciplined deposit pricing.
- Net interest income in 2012 increased by $1.50 million from 2011.
- Non-interest expense declined by $276,000 from 2011.
Total revenues, less interest expense, increased by $1.69 million to $11.74 million in 2012 from 2011. Net interest margin also benefitted from the bank's disciplined pricing, improving by 0.58% to 4.10% in 2012 from 3.52% in 2011.
For the year 2012, net loan charge-offs to average loans declined to 0.93% from 1.13% in 2011. Carolina Trust also realized significant improvements in Return on Average Assets and Return on Average Equity in 2012. ROAA for 2012 was 0.08% compared to -0.77% in 2011, and ROAE improved to 0.81% in 2012 from -7.74% the year before.
The U.S. Treasury recently sold its $4.0 million of preferred stock in Carolina Trust Bank to private investors. The bank subsequently repurchased $1.4 million of the outstanding preferred shares, thereby reducing future dividend payments to 65% of its original level.
"It has been a challenge for community banks that participated in the CPP to exit the program without significantly impacting capital levels," Cline said. "We believe that our ability to repurchase 35% of the outstanding preferred shares underscores the strength of our balance sheet. After the purchase, our capital ratios continue to exceed regulatory requirements for being well capitalized."
Fourth Quarter 2012 Financial Highlights
- Total assets were $271.05 million at Dec. 31, 2012, compared to $283.16 million at Sept. 30, 2012, and $266.16 million at Dec. 31, 2011.
- Deposits totaled $233.86 million at Dec. 31, 2012, compared to $241.14 million at Sept. 30, 2012, and $224.21 million at Dec. 31, 2011.
- Total loans were $221.48 million at Dec. 31, 2012, compared to $223.72 million at Sept. 30, 2012, and $209.90 million at Dec. 31, 2011.
- Capital ratios at Dec. 31, 2012, exceeded regulatory levels for being "well-capitalized," reflecting a Tier 1 Leverage Ratio of 8.61%, Tier 1 Risk-based Capital Ratio of 10.60%, and Total Risk-based Capital Ratio of 11.86%.
- Total revenues, less interest expense, were $3.02 million for the fourth quarter of 2012, compared to $3.01 million at Sept. 30, 2012, and $2.68 million at Dec. 31, 2011.
- Net interest income was $2.68 million in the fourth quarter of 2012, essentially flat from the previous quarter, but up $293,000 from the fourth quarter of 2011.
- Interest expense in the fourth quarter of 2012 was $648,000, compared to $695,000 at Sept. 30, 2012, and $855,000 at Dec. 31, 2011.
- Net Interest margin rose to 4.27% for the fourth quarter of 2012, compared to 4.14% at Sept. 30, 2012, and 3.79% at Dec. 31, 2011.
- Total nonperforming assets were $12.66 million at Dec. 31, 2012, compared to $10.08 million at Sept. 30, 2012, and $10.57 million at Dec. 31, 2011.
- Nonperforming assets to total assets were 4.67% at Dec 31, 2012, compared to 3.56% at Sept. 30, 2012, and 3.97% at Dec. 31, 2011.
- Non-accural loans were $8.49 million at Dec. 31, 2012, compared to $5.96 million at Sept. 30, 2012, and $6.30 million at Dec. 31, 2011.
- Net loan charge-offs for the fourth quarter of 2012 were $773,000, compared to $761,000 for the quarter ended Sept. 30, 2012, and $469,000 for the quarter ended Dec. 31, 2011.
Review of Balance Sheet
Total assets of $271.05 million at Dec. 31, 2012 declined $12.11 million from Sept. 30, 2012, but increased by $4.89 million from Dec. 31, 2011. Total deposits fell slightly to $233.86 million at Dec. 31, 2012, compared to the third quarter of 2012, but increased by $9.66 million from Dec. 31, 2011. Total loans were essentially flat at Dec. 31, 2012, marginally down $2.24 million from the previous quarter, but up $11.58 million from Dec. 31, 2011.
The repurchase of $1.40 million of outstanding preferred shares primarily accounted for a decrease in shareholders' equity to $24.94 million at Dec. 31, 2012, from $26.98 million at Sept. 30, 2012. Even with the bank's repurchase of preferred shares, Carolina Trust Bank continues to maintain strong capital levels that exceed regulatory requirements for being "well-capitalized." At Dec. 31, 2012, the bank reported Tier 1 Leverage Ratio of 8.61%, Tier 1 Risk-based Capital Ratio of 10.60%, and Total Risk-based Capital Ratio of 11.86%.
Review of Income Statement
Net interest margin continued to improve throughout 2012, benefitting from lower funding costs and disciplined pricing. Interest expense was $648,000 for the quarter ended Dec. 31, 2012, declining $47,000 from the quarter ended Sept. 30, 2012, and $207,000 from the quarter ended Dec. 31, 2011. The ongoing management of interest expense, which has trended favorably 12 straight quarters, boosted net interest margin by 0.13% to 4.27% in the fourth quarter of 2012, and 0.48% from the 3.79% reported at Dec. 31, 2011.
Net interest income was $2.68 million in the fourth quarter of 2012, essentially flat compared to the previous quarter, but up $293,000 from the quarter ended Dec. 31, 2011. Non-interest income of $348,000 for the fourth quarter of 2012 realized a modest increase of $16,000 from the previous quarter, and an increase of $53,000 from the quarter ended Dec. 31, 2011.
Non-interest expense was $2.59 million in the fourth quarter of 2012, representing an increase of $82,000 from the quarter ended Sept. 30, 2012, and a decrease of $627,000 from the quarter ended Dec. 31, 2011. Provision for loan loss was $1.10 million for the quarter ended Dec. 31, 2012, an increase of $528,000 from the quarter ended Sept. 30, 2012.
Review of Credit Quality
Total nonperforming assets, which include foreclosed property and non-accrual loans, were $12.66 million at Dec. 31, 2012, an increase of $2.58 million from Sept. 30, 2012, reflecting a rise in non-accrual commercial loans, primarily related to one loan that was classified doubtful at the end of December. Allowance for loan losses to nonperforming assets declined to 37.69% at Dec. 31, 2012, compared to 43.46% at Sept. 30, 2012, and 41.30% at Dec. 31, 2011.
Loans 30 to 89 days past due were $3.64 million at Dec. 31, 2012, compared to $2.75 million at Sept. 30, 2012, and $3.57 million at Dec. 31, 2011. Non-accrual loans were $8.49 million at Dec. 31, 2012, an increase of $2.54 million from Sept. 30, 2012. Net loan charge-offs were $773,000 for the quarter ended Dec. 31, 2012, a marginal increase of $12,000 from the quarter ended Sept. 30, 2012. Net loan charge-offs to average loans remained relatively unchanged at 0.35% for the quarter ended Dec. 31, 2012, and 0.34% for the quarter ended Sept. 30, 2012.
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 in western North Carolina and loan production offices in Forest City, N.C. and Hickory, N.C.
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|
|Balance Sheet Data:|
|Reserve for Loan Loss||4,773||4,383||4,534||4,417||4,366|
|Total Shareholders Equity||24,935||26,977||27,004||26,566||26,045|
|(Dollars in thousands, except per share data)|
|For the three months ended|
|December 31||September 30||June 30||March 31||December 31|
|Income and Per Share Data:|
|Net Interest Income||2,676||2,679||2,597||2,508||2,383|
|Provision for Loan Loss||1,100||572||471||224||835|
|Net Interest Income After Provision||1,576||2,107||2,126||2,284||1,548|
|Income (loss) Before Taxes||(669)||(72)||374||584||(1,377)|
|Income Tax Expense (benefit)||--||--||--||--||--|
|Net Income (loss)||(669)||(72)||374||584||(1,377)|
|Preferred Stock Dividend||109||73||73||22||22|
|Income available (loss) attributable to common shareholders||(778)||(145)||301||562||(1,399)|
|Net Income (loss) Per Common Share:|
|Average Common Shares Outstanding:|
|December 31||September 30||June 30||March 31||December 31|
|Tier 1 Leverage Ratio||8.61%||9.14%||9.33%||9.49%||9.32%|
|Tier 1 Risk-based Capital Ratio||10.60%||11.16%||11.20%||11.35%||11.49%|
|Total Risk-based Capital Ratio||11.86%||12.41%||12.46%||12.61%||12.75%|
|Tangible Common Equity||21,581||22,262||22,285||21,509||20,922|
|Common Shares Outstanding||4,634,482||4,634,482||4,634,482||4,634,262||4,634,262|
|Book Value Per Common Share||4.66||4.80||4.81||4.64||4.51|
|Return on Average Assets (%)||-0.95%||-0.10%||5.40%||0.87%||-2.02%|
|Return on Average Equity (%)||-9.93%||-1.04%||5.57%||8.91%||-19.88%|
|Net Interest Margin (%)||4.27%||4.14%||3.99%||3.99%||3.79%|
|Delinquent Loans ( 30-89 days )||3,639||2,751||4,599||4,102||3,571|
|Delinquent Loans ( 90 days or more )||--||--||--||1||2|
|OREO and repossessed property||4,169||4,127||4,876||4,459||4,272|
|Total Nonperforming Assets||12,663||10,084||11,615||10,750||10,571|
|Nonperforming Assets to Total Assets||4.67%||3.56%||4.09%||3.89%||3.97%|
|Nonperforming Assets to Equity Capital & ALLL||42.62%||32.16%||36.83%||34.70%||34.76%|
|Allowance for Loan Losses to Non-performing Assets||37.69%||43.46%||39.04%||41.09%||41.30%|
|Allowance for Loan Losses to Total Loans||2.16%||1.96%||2.03%||2.03%||2.08%|
|Net Loan Charge-Offs||773||761||355||172||469|
|Net Loan Charge-Offs to Average Loans (%)||0.35%||0.34%||0.16%||0.08%||0.23%|
|Note: Financial information is unaudited.|
CONTACT: J. Michael Cline President and CEO Carolina Trust Bank (704) 735-1104