Reversal of Deferred Tax Asset valuation allowance results in tax benefit of $4.82 million for fourth quarter 2014
Bank reports 2014 net income of $7.14 million
LINCOLNTON, N.C., Jan. 20, 2015 (GLOBE NEWSWIRE) -- Carolina Trust Bank (Nasdaq:CART) today reported net income available to common shareholders of $5.12 million for the fourth quarter 2014 or $1.10 per diluted common share. For the year 2014, the company reported net income available to common shareholders of $6.91 million, or $1.48 per diluted common share.
Net income reflects recognition of a tax benefit of $4.82 million in the fourth quarter resulting from the Bank's reversal of its deferred tax asset valuation allowance. The reversal combined with net earnings resulted in tangible book value per common share of $5.88, an increase of $1.18 or 25.11% from September 30, 2014, and $1.70 or 40.67% from December 31, 2013. Total shareholders' equity of $30.09 million increased $5.44 million or 22.06% from September 30, 2014, and $7.83 million or 35.19% from December 31, 2013.
"The reversal of our valuation allowance was made possible by our return to profitability and earnings growth," said President and CEO Jerry L.Ocheltree. "2014 was a good year by any measure as we continue to have excellent loan and deposit growth. We have successfully added experienced lenders in key markets as we position our organization for 2015 and beyond. Talent retention and acquisition is a key component of our ongoing strategic plan."
Excluding the one-time tax benefit, net income was $360,000 for the quarter ended December 31, 2014, compared to $737,000 for the previous quarter and a net loss of $331,000 for the quarter ended December 31, 2013. For the full year 2014, the company reported pre-tax net income of $2.32 million compared to a net loss of $1.45 million for 2013.
Before payment of dividends on preferred shares, the bank earned $5.18 million in the fourth quarter 2014. Excluding recognition of the DTA valuation allowance, net income available to common shareholders was $360,000 for the fourth quarter.
Selected Financial Highlights
Year-Over-Year
2014-2013 Comparisons (Excluding tax benefit)
- 2014 pre-tax earnings of $2.32 million represent net increase of $3.77 million from 2013
- Total loans increased $20.76 million or 9.27%
- Total deposits increased $8.29 million or 3.62%
- Net interest margin was 4.33% compared to 4.22%
- Net interest income after provision for loan losses increased $2.78 million or 33.15%
- Total nonperforming assets decreased $1.50 million or 19.43%
Linked-Quarter
December 31, 2014 compared to September 30, 2014 (Excluding tax benefit)
Income Statement
-
Total revenues, less interest expense, increased $33,000 from September 30, 2014
-- Net interest income decreased $10,000 or 0.36%
-- Non-interest income increased $43,000 or 18.53%
-- Interest expense increased $11,000 or 2.26%
-- Non-interest expense increased $410,000 or 17.83%
Balance Sheet
- Total assets of $293.27 million increased $23.20 million or 8.59%
- Total deposits of $237.18 million increased $5.58 million or 2.41%
- Total loans of $244.65 million increased $16.71 million or 7.33%
- Reserve for loan loss of $4.00 million decreased $163,000 or 3.91%
- Total shareholders' equity of $30.09 million increased $5.44 million or 22.06%
Credit Quality
- Total nonperforming assets increased $870,000 or 16.28%
- Other Real Estate Owned decreased $213,000 or 9.42%
- Non-accrual loans increased $909,000 or 29.49%
- Net loan charge-offs to average loans were 0.07%
Carolina Trust Bank continued to exceed "well-capitalized" requirements for each of the three primary capital levels monitored by state and federal regulators. As of December 31, 2014, Tier 1 Leverage Ratio was 9.03%; Tier 1 Risk-based Capital Ratio was 9.77%; and Total Risk-based Capital Ratio was 11.02%.
Revenue
Total revenues, less interest expense, increased $33,000 from the previous quarter and $51,000 from the quarter ended December 31, 2013. Non-interest expense increased $410,000 in the fourth quarter due primarily to newly hired loan production staff and operational expenses associated with the Bank's new loan production office in Mooresville. The Bank expects robust loan growth – reflected in net new loans of $16.71 million in the fourth quarter of 2014 - combined with its strong net interest margin to provide the Bank with momentum throughout 2015 as credit issues are anticipated to become less problematic.
Balance Sheet
Total assets of $293.27 million at December 31, 2014 increased $23.20 million from September 30, 2014 and $26.83 million from December 31, 2013. Total deposits were $237.18 million at December 31, 2014, compared to $231.60 million at September 30, 2014 and $228.89 million at December 31, 2013. Total loans of $244.65 at December 31, 2014 increased $16.71 million from September 30, 2014, and $20.76 million from December 31, 2013. Reserve for loan loss was $4.00 million at December 31, 2014, compared to $4.17 million at September 30, 2014 and $4.07 million at December 31, 2013.
Asset Quality
Total nonperforming assets of $6.21 million at December 31, 2014, increased 16.28% from September 30, 2014, primarily the result of a single commercial loan that was moved to non-accrual status while the Bank works to restructure terms. As a result, non-accrual loans of $3.99 million at December 31, 2014, increased $909,000 from September 30, 2014. The Bank continues to receive monthly interest payments on the loan. Other Real Estate Owned decreased 9.42% from September 30, 2014 and 47.59% from December 31, 2013.
Nonperforming assets were 2.12% of total assets at December 31, 2014, compared to 1.98% at September 30, 2014 and 2.89% at December 31, 2013. Allowance for loan losses to total loans was 1.64% at December 31, 2014, compared to 1.83% at September 30, 2014, and 1.82% at December 31, 2013. Delinquent loans 30 to 89 days past due were $2.63 million at December 31, 2014, compared to $2.57 million at September 30, 2014, and $2.22 million at December 31, 2013.
Performance Ratios
Annualized return on average assets was 7.35% (0.51% excluding the tax benefit) for the quarter ended December 31, 2014, compared to 1.08% for the quarter ended September 30, 2014 and -0.49% for the quarter ended December 31, 2013. Annualized return on average equity was 78.68% (5.46% excluding the tax benefit) for the quarter ended December 31, 2014, compared to 11.94% for quarter ended September 30, 2014, and -5.78% for the quarter ended December 31, 2013.
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 loan production offices in Hickory and 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.
| Carolina Trust Bank | |||||||
| (Dollars in thousands) | |||||||
| December 31 | September 30 | June 30 | March 31 | December 31 | |||
| 2014 | 2014 | 2014 | 2014 | 2013 | |||
| Balance Sheet Data: | |||||||
| Total Assets | $ 293,267 | $ 270,072 | $ 267,618 | $ 266,549 | $ 266,435 | ||
| Total Deposits | $ 237,176 | $ 231,600 | $ 230,841 | $ 230,646 | $ 228,885 | ||
| Total Loans | $ 244,646 | $ 227,933 | $ 222,529 | $ 221,887 | $ 223,891 | ||
| Reserve for Loan Loss | $ 4,002 | $ 4,165 | $ 4,143 | $ 4,165 | $ 4,066 | ||
| Total Shareholders Equity | $ 30,088 | $ 24,650 | $ 23,969 | $ 23,068 | $ 22,256 | ||
| (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 | |
| 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | |
| Income and Per Share Data: | |||||||
| Interest Income | $ 3,293 | $ 3,292 | $ 3,269 | $ 3,187 | $ 3,270 | 13,042 | 12,815 |
| Interest Expense | 498 | 487 | 484 | 481 | 492 | 1,951 | 2,140 |
| Net Interest Income | 2,795 | 2,805 | 2,785 | 2,706 | 2,778 | 11,091 | 10,675 |
| Provision for Loan Loss | -- | -- | (125) | 45 | 637 | (80) | 2,285 |
| Net Interest Income After Provision | 2,795 | 2,805 | 2,910 | 2,661 | 2,141 | 11,171 | 8,390 |
| Non-interest Income | 275 | 232 | 247 | 242 | 241 | 996 | 1,019 |
| Non-interest Expense | 2,710 | 2,300 | 2,488 | 2,350 | 2,713 | 9,849 | 10,858 |
| Income (loss) Before Taxes | 360 | 737 | 669 | 553 | (331) | 2,318 | (1,449) |
| Income Tax Expense (benefit) | (4,820) | -- | -- | -- | -- | (4,820) | -- |
| Net Income (loss) | 5,180 | 737 | 669 | 553 | (331) | 7,138 | (1,449) |
| Preferred Stock Dividend | 59 | 59 | 59 | 51 | 49 | 227 | 190 |
| Income available (loss attributable) to common shareholders | $ 5,121 | $ 678 | $ 610 | $ 502 | $ (380) | 6,911 | (1,639) |
| Net Income (loss) Per Common Share: | |||||||
| Basic | $ 1.10 | $ 0.15 | $ 0.13 | $ 0.11 | $ (0.08) | $ 1.49 | $ (0.35) |
| Diluted | $ 1.10 | $ 0.15 | $ 0.13 | $ 0.11 | $ (0.08) | $ 1.48 | $ (0.35) |
| Average Common Shares Outstanding: | |||||||
| Basic | 4,635,215 | 4,635,172 | 4,635,097 | 4,634,894 | 4,634,702 | 4,635,096 | 4,634,565 |
| Diluted | 4,669,888 | 4,677,837 | 4,645,291 | 4,649,981 | 4,634,702 | 4,678,108 | 4,634,565 |
| (Dollars in thousands, except per share data) | |||||||
| December 31 | September 30 | June 30 | March 31 | December 31 | |||
| 2014 | 2014 | 2014 | 2014 | 2013 | |||
| Capital Ratios: | |||||||
| Tier 1 Leverage Ratio | 9.03% | 9.10% | 8.92% | 8.51% | 8.24% | ||
| Tier 1 Risk-based Capital Ratio | 9.77% | 10.53% | 10.51% | 10.01% | 9.54% | ||
| Total Risk-based Capital Ratio | 11.02% | 11.79% | 11.77% | 11.27% | 10.80% | ||
| Tangible Common Equity | $ 27,266 | $ 21,805 | $ 21,107 | $ 20,187 | $ 19,358 | ||
| Common Shares Outstanding | 4,635,422 | 4,635,172 | 4,635,172 | 4,634,952 | 4,634,702 | ||
| Book Value Per Common Share | $ 5.88 | $ 4.70 | $ 4.55 | $ 4.36 | $ 4.18 | ||
| Performance Ratios (annualized): | |||||||
| Return on Average Assets (%) | 7.35% | 1.08% | 1.00% | 0.84% | -0.49% | ||
| Return on Average Equity (%) | 78.68% | 11.94% | 11.42% | 9.83% | -5.78% | ||
| Net Interest Margin (%) | 4.20% | 4.36% | 4.42% | 4.35% | 4.37% | ||
| Asset Quality: | |||||||
| Delinquent Loans ( 30-89 days accruing interest) | $ 2,631 | $ 2,569 | $ 2,219 | $ 1,943 | $ 2,219 | ||
| Delinquent Loans ( 90 days or more ) | 174 | -- | -- | -- | 517 | ||
| Non-accrual Loans | $ 3,991 | $ 3,082 | $ 2,767 | $ 3,603 | $ 3,286 | ||
| OREO and repossessed property | 2,048 | 2,261 | 2,271 | 3,234 | 3,908 | ||
| Total Nonperforming Assets | $ 6,213 | $ 5,343 | $ 5,038 | $ 6,837 | $ 7,711 | ||
| Restructured Loans | $ 4,871 | $ 4,765 | $ 4,343 | $ 5,546 | $ 4,219 | ||
| Nonperforming Assets to Total Assets | 2.12% | 1.98% | 1.88% | 2.57% | 2.89% | ||
| Nonperforming Assets to Equity Capital & ALLL | 18.23% | 18.54% | 17.92% | 25.11% | 29.29% | ||
| Allowance for Loan Losses to Non-performing Assets | 64.41% | 77.95% | 82.24% | 60.92% | 52.73% | ||
| Allowance for Loan Losses to Total Loans | 1.64% | 1.83% | 1.86% | 1.88% | 1.82% | ||
| Net Loan Charge-Offs (recoveries) | $ 162 | $ (22) | $ (102) | $ (54) | $ 555 | ||
| Net Loan Charge-Offs to Average Loans (%) | 0.07% | -0.01% | -0.05% | -0.02% | 0.25% | ||
| Note: Financial information is unaudited. | |||||||