Carter Bank & Trust Responds to COVID-19 Pandemic with Responsible Operations and Financial Relief Programs

The Virginia Based Financial Institution Will Provide a Variety of Loan Relief Options

MARTINSVILLE, VA / ACCESSWIRE / April 30, 2020 / Carter Bank & Trust (the "Bank") (NASDAQ:CARE) today announced net income of $4.4 million, or $0.17 diluted earnings per share, for the first quarter of 2020, as compared to net income of $3.6 million, or $0.14 diluted earnings per share, in the fourth quarter of 2019 and net income of $7.5 million, or $0.29 diluted earnings per share, for the first quarter of 2019. Pre-tax pre-provision earnings1 were $9.5 million, $2.4 million and $9.6 million for the quarters ended March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

First Quarter 2020 Financial Highlights

• First quarter net income of $4.4 million, or $0.17 diluted earnings per share, as compared to net income of $3.6 million, or $0.14 diluted earnings per share, in the fourth quarter of 2019 and net income of $7.5 million, or $0.29 diluted earnings per share, over the same quarter of 2019;

• Net interest income declined $1.2 million, or 4.1%, to $27.3 million as compared to the linked quarter primarily due to balance sheet repricing driven by the impact of the lower interest rate environment and one less day in the first quarter, offset by an seven basis point decrease in funding costs compared to the fourth quarter of 2019, and decreased $0.6 million, or 2.3%, over the same quarter in 2019;

• Net interest margin, on a fully taxable equivalent basis, declined nine basis points to 2.97% over the linked quarter and decreased 12 basis points over the same quarter last year;

• Solid portfolio loan growth of $55.1 million, or 7.6% on an annualized basis, as compared to the linked quarter, and growth of $94.3 million, or 3.3%, as compared to March 31, 2019;

• Total deposits decreased $31.3 million to $3.5 billion as of March 31, 2020 as compared to December 31, 2019 due to the intentional runoff of $72.7 million of higher cost certificates of deposits. Noninterest-bearing and interest bearing demand deposits, money market accounts and savings, increased by $41.4 million, or 2.7%, as compared to linked quarter;

• The provision for loan losses totaled $4.8 million for the period ended March 31, 2020 and $1.6 million for the same period of 2019. Included is the impact of a reserve build of $2.6 million, or $(0.08) per share, driven by economic and market conditions as a result of COVID-19;

• The Bank has elected to take advantage of Section 4014 of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act provision to temporarily delay adoption of the Current Expected Credit Losses ("CECL") methodology. This delay expires at the earlier of December 31, 2020 or the date on which the national emergency declaration related to COVID-19 is terminated;

• Nonperforming loans declined $1.6 million, or 4.0% as compared to December 31, 2019 and decreased $9.1 million, or 18.4%, from March 31, 2019. Nonperforming loans as a percentage of total portfolio loans were 1.38%, 1.46% and 1.74% as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

Important Note Regarding Financial Results

The financial results reported in this release are subject to amendment due to a pending appraisal regarding collateral for one impaired loan relationship and the impact that the results of that appraisal may have on the Bank's financial results as of and for the periods ended December 31, 2019 and March 31, 2020. Due to the effects of the COVID-19 pandemic, the process of obtaining the independent appraisal and evaluating the collateral has been slowed. Please reference the Bank's Form 12b-25 filed with the Federal Deposit Insurance Corporation ("FDIC") on March 16, 2020.

Litz H. Van Dyke, Chief Executive Officer, stated, "We recognize that the emergence of COVID-19 and the dramatic steps we all must take to curtail its spread, will create financial and other challenges for our customers and communities in these unprecedented times. We are committed to providing financial flexibility to our individual and business customers to help them deal with the challenges from this crisis. For our customers, we have offered payment deferrals, participation in the small business Paycheck Protection Program (PPP), fee waivers, as well as other relief actions. For our employees, we've enabled approximately 20% of our workforce to work remotely. For those whose jobs are not conducive to them working remotely, we have taken significant steps to ensure their safety."

Van Dyke added, "I'm incredibly proud of the efforts our employees are making to support our customers and each other. Our priority is to be there to serve our customers while maintaining a safe environment for our employees."

Operating Highlights

Net interest income decreased $0.6 million, or 2.3%, to $27.3 million during the first quarter of 2020 as compared to the same period of 2019. The net interest margin, on a fully taxable equivalent basis, decreased 12 basis points to 2.97% over the past twelve months. The decreases in short-term interest rates had a negative impact on both net interest income and net interest margin, but are offset by a lower cost of funds. The yield on interest-earning assets decreased 18 basis points, offset by a five basis point decline in funding costs as compared to the same period of 2019.

The provision for loan losses totaled $4.8 million for the period ended March 31, 2020 and $1.6 million for the same period of 2019. The Bank was subject to the adoption of the CECL accounting method under Financial Accounting Standards Board ("FASB") Accounting Standards Update 2016-03 and related amendments, Financial Instruments - Credit Losses (Topic 326). However, the Bank elected under the CARES Act to defer the implementation of CECL until the earlier of when the national emergency related to the outbreak of COVID-19 ends or December 31, 2020. Included in the provision expense for the period ended March 31, 2020 is the impact of a reserve build of $2.6 million, or $(0.08) per share, driven by economic and market conditions as a result of COVID-19. This represents a 195% increase in the provision expense as compared to the same period of 2019. The Bank adjusted qualitative risk factors under its incurred loss model for economic conditions, changes in payment deferral procedures, expected changes in collateral values due to reduced cash flows and external factors such as government actions. Management believes the uncertainty regarding customers' ability to repay loans could be adversely impacted by the COVID-19 pandemic given higher unemployment rates, requests for payment deferrals, temporary business shutdowns and reduced consumer and business spending.

At March 31, 2020, nonperforming loans were $40.5 million, a decrease of $1.6 million, or 4.0% as compared to December 31, 2019. Net charge-offs were $0.6 million in the first quarter of 2020 as compared to $1.3 million in the same period of 2019. As a percentage of total portfolio loans, on an annualized basis, net charge-offs were 0.08% and 0.18% for the quarters ending March 31, 2020 and 2019, respectively. Nonperforming loans as a percentage of total portfolio loans were 1.38%, 1.46% and 1.74% as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

Noninterest income at March 31, 2020, excluding net securities gains, increased $2.0 million, or 52.1%, as compared to the same period of 2019. The increase was primarily due to $1.0 million of higher insurance commissions, related to the adoption of ASU 2014-09, Topic 606 by our provider, $0.4 million of commercial loan interest rate swap fees, included in other income, $0.5 million of higher service charges and debit card interchange fees, which were offset by lower Other Real Estate Owned ("OREO") income of $0.2 million due to the sale of several large commercial properties over the last 12 months that generated income. Securities gains of $1.2 million and $31 thousand were realized during the first quarter of 2020 and 2019, respectively, to take advantage of market opportunities and reposition and diversify holdings in the securities portfolio.

Total noninterest expense increased $2.6 million, or 11.9%, to $24.7 million as compared to $22.1 million in the same period of 2019. The increase was primarily driven by salaries and employee benefits and occupancy expenses. The increase of $1.5 million in salaries and benefits were primarily attributable to a $0.7 million increase of normal merit increases and a $0.7 million decrease in salary deferrals on new loan originations in the first quarter of 2020. There have not been any permanent or temporary reductions in employees as a result of COVID-19. The $0.4 million increase in occupancy expense is a result of higher depreciation for software and equipment for ancillary products and services. The $0.4 million increase in advertising is related to our deposit acquisition strategy. The $0.9 million increase in the unfunded loan commitment reserve was due to several new commitments approved during the first quarter of 2020 and increased commitments on existing lines of credit. Offsetting these increases were decreases of $0.6 million in FDIC insurance expense, legal and professional fees and data processing.

Financial Condition

Total assets were $4.0 billion at March 31, 2020 and December 31, 2019. Total portfolio loans increased $55.1 million, or 7.6% on an annualized basis, to $2.9 billion as of March 31, 2020 as compared to December 31, 2019. Nonperforming loans decreased $1.6 million to $40.5 million, or 4.0% as of March 31, 2020 as compared to $42.1 million at December 31, 2019. OREO decreased $0.2 million at March 31, 2020 as compared to December 31, 2019. Closed retail bank offices carrying values declined $0.5 million from December 31, 2019 and have a remaining book value of $2.5 million at March 31, 2020.

Federal Reserve Bank excess reserves decreased $28.2 million at March 31, 2020 as compared to December 31, 2019 due to active balance sheet management. This excess cash was deployed into higher yielding and diversified securities, funded loan growth, and also funded the planned decrease in higher cost certificates of deposits.

The securities portfolio decreased $12.6 million and is currently 18.2% of total assets at March 31, 2020 as compared to 18.5% of total assets at December 31, 2019. The decrease is a result of loan growth and active balance sheet management. We have further diversified the securities portfolio as to bond types, maturities and interest rate structures.

Total deposits decreased $31.3 million to $3.5 billion as of March 31, 2020 as compared to December 31, 2019 due to the intentional runoff of $72.7 million of higher cost certificates of deposits. Core deposits, including noninterest-bearing and interest-bearing demand deposits, money market accounts and savings, increased by $41.4 million, or 2.7%, as compared to December 31, 2019. Noninterest-bearing deposits comprised 16.1% and 15.8% of total deposits at March 31, 2020 and December 31, 2019, respectively

The allowance for loan losses was 1.46% of total portfolio loans as of March 31, 2020 as compared to 1.34% as of December 31, 2019. General reserves as a percentage of total loans were 1.22% at March 31, 2020 as compared to 1.13% as of December 31, 2019. Included in the allowance is a reserve build of $2.6 million driven by economic and market conditions as a result of COVID-19. The allowance for loan losses was 106.1% of nonperforming loans as of March 31, 2020 as compared to 92.0% of nonperforming loans as of December 31, 2019. In the view of management, the allowance for loan losses is adequate to absorb probable losses inherent in the loan portfolio. For further information regarding the Bank's decision to defer CECL under Section 4014 of the CARES Act, as well as further detail on the increase in provision during the first quarter of 2020, please see the discussion above under Provision for Loan Losses.

The Bank is providing deferrals to customers under Section 4013 of the CARES Act and regulatory interagency statements on loan modifications. These deferrals typically provide deferrals of both principal and interest for up to 180 days. At the end of the deferral period, for term loans, payments will be applied to accrued interest first and will resume principal payments once accrued interest is current. Deferred principal will be due at maturity. For interest only loans, such as lines of credit, deferred interest will be due at maturity. As of April 28, 2020, we have had 380 commercial customers opt for deferrals with an aggregate principal balance of $1.1 billion. Approximately $454.8 million of these modifications were in the hospitality industry comprised of deferrals on 81 loans. The average deferment period for these customers has been 4.4 months.

The Bank remains well capitalized. The Bank's Tier 1 Capital ratio decreased to 13.03% as of March 31, 2020 as compared to 13.46% as of December 31, 2019. The Bank's leverage ratio was 10.47% at March 31, 2020 as compared to 10.33% as of December 31, 2019. The Bank's Total Risk-Based Capital ratio was 14.29% at March 31, 2020 as compared to 14.71% at December 31, 2019.

Total capital of $474.8 million at March 31, 2020, reflects an increase of $1.7 million as compared to December 31, 2019. The increase in equity during the first quarter of 2020 is due to net income of $4.4 million and a $0.6 million increase in other comprehensive income due to changes in fair value of investment securities. These increases were offset by $3.7 million special dividend paid in March of 2020. The remaining difference of $0.4 million is related to restricted stock activity during the quarter.

At March 31, 2020, funding sources accessible to the Bank include borrowing availability at the FHLB, equal to 25% of the Bank's assets approximating $1.0 billion, subject to the amount of eligible collateral pledged, federal funds unsecured lines with six other correspondent financial institutions in the amount of $115.0 million and access to the institutional CD market through brokered CDs and QwickRate. In addition to the above resources, the Bank also has $605.4 million of unpledged available-for-sale investment securities as an additional source of liquidity.

About Carter Bank & Trust

Headquartered in Martinsville, VA, Carter Bank & Trust is a state-chartered community bank in Virginia and trades on the Nasdaq Global Select Market under the symbol CARE. The Bank has $4.0 billion in assets and 99 branches in Virginia and North Carolina. For more information visit www.CBTCares.com.

Important Note Regarding Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in our definitions and reconciliations of GAAP to non-GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as adjusted noninterest expense, adjusted efficiency ratio, and net interest income on a fully taxable equivalent basis, which are all non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Bank's operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors should consider the Bank's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Bank. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Bank's results or financial condition as reported under GAAP.

Important Note Regarding Forward-Looking Statements

This information contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting Carter Bank & Trust and its future business and operations, and specifically including information related to the pending appraisal of collateral for one impaired loan relationship and potential impacts on the Bank's financial results. Forward looking statements are typically identified by words or phrases such as "will likely result," "expect," "anticipate," "estimate," "forecast," "project," "intend," " believe," "assume," "strategy," "trend," "plan," "outlook," "outcome," "continue," "remain," "potential," "opportunity," "believe," "comfortable," "current," "position," "maintain," "sustain," "seek," "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses; cyber-security concerns; rapid technological developments and changes; the Bank's liquidity and capital positions; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as the current COVID-19 pandemic), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Bank's borrowers to satisfy their obligations to the Bank, on the value of collateral securing loans, on the demand for the Bank's loans or its other products and services, on incidents of cyberattack and fraud, on the Bank's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Bank's business operations and on financial markets and economic growth; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight; legislation affecting the financial services industry as a whole, and Carter Bank & Trust, in particular; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or more costly than anticipated; containing costs and expenses; reliance on significant customer relationships; general economic or business conditions; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge to net income; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our filings with the FDIC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Carter Bank & Trust
Wendy Bell, 276-656-1776
Senior Executive Vice President & Chief Financial Officer
wendy.bell@CBTCares.com

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
BALANCE SHEETS
(Unaudited)

(Dollars in Thousands, except per share data)		March 31,				December 31,				March 31,
		2020				2019				2019
ASSETS
Cash and Due From Banks		$	48,706			$	41,386			$	42,493
Interest-Bearing Deposits in Other Financial Institutions			3,667				45,156				60,430
Federal Reserve Bank Excess Reserves			11,028				39,270				84,644
Total Cash and Cash Equivalents			63,401				125,812				187,567
Securities, Available-for-Sale, at Fair Value			729,973				742,617				798,669
Loans Held-for-Sale			29,689				19,714				6,285
Portfolio Loans			2,939,899				2,884,766				2,845,606
Allowance for Loan Losses			(42,942	)			(38,762	)			(39,572	)
Portfolio Loans, net			2,896,957				2,846,004				2,806,034
Bank Premises and Equipment, net			88,986				85,942				86,751
Other Real Estate Owned, net			18,117				18,324				30,592
Goodwill			62,192				62,192				62,192
Federal Home Loan Bank Stock, at Cost			5,093				4,113				-
Bank Owned Life Insurance			52,950				52,597				51,522
Other Assets			54,505				48,793				53,051
TOTAL ASSETS		$	4,001,863			$	4,006,108			$	4,082,663
LIABILITIES
Deposits:
Noninterest-Bearing Demand		$	557,511			$	554,875			$	559,924
Interest-Bearing Demand			305,214				286,561				260,922
Money Market			156,140				140,589				112,526
Savings			566,414				561,814				600,450
Certificates of Deposits			1,887,716				1,960,406				2,084,444
Total Deposits			3,472,995				3,504,245				3,618,266
FHLB Borrowings			35,000				10,000				-
Other Liabilities			19,047				18,752				14,628
TOTAL LIABILITIES			3,527,042				3,532,997				3,632,894
SHAREHOLDERS' EQUITY
Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;
26,385,754 outstanding at March 31, 2020,
26,334,229 outstanding at December 31, 2019 and 26,308,087 at March 31, 2019			26,386				26,334				26,308
Additional Paid-in-Capital			142,792				142,492				142,183
Retained Earnings			304,892				304,158				285,124
Accumulated Other Comprehensive Income (Loss)			751				127				(3,846	)
TOTAL SHAREHOLDERS' EQUITY			474,821				473,111				449,769
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	4,001,863			$	4,006,108			$	4,082,663

PROFITABILITY RATIOS (ANNUALIZED)
Return on Average Assets			0.44	%			0.65	%			0.75	%
Return on Average Shareholders' Equity			3.70	%			5.76	%			6.89	%
Portfolio Loan to Deposit Ratio			84.65	%			82.32	%			78.65	%
Allowance to Total Portfolio Loans			1.46	%			1.34	%			1.39	%
CAPITALIZATION RATIOS
Shareholders' Equity to Assets			11.86	%			11.81	%			11.02	%
Tier 1 Leverage Ratio			10.47	%			10.33	%			9.77	%
Risk-Based Capital - Tier 1			13.03	%			13.46	%			13.51	%
Risk-Based Capital - Total			14.29	%			14.71	%			14.76	%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
INCOME STATEMENTS
(Unaudited)

(Dollars in Thousands, except per share data)		Quarter-to-Date
		March 31,				December 31,				March 31,
		2020				2019				2019
Interest Income		$	37,836			$	39,759			$	39,139
Interest Expense			10,572				11,333				11,243
NET INTEREST INCOME			27,264				28,426				27,896
Provision for Loan Losses			4,798				(982	)			1,627
NET INTEREST INCOME AFTER			22,466				29,408				26,269
PROVISION FOR LOAN LOSSES
NONINTEREST INCOME
Gains on Sales of Securities, net			1,214				606				31
Service Charges, Commissions and Fees			1,650				1,733				1,226
Debit Card Interchange Fees			1,243				1,326				1,174
Insurance			1,309				128				274
Bank Owned Life Insurance Income			353				357				361
Other Real Estate Owned Income			139				72				290
Other			1,044				287				448
TOTAL NONINTEREST INCOME			6,952				4,509				3,804
NONINTEREST EXPENSE
Salaries and Employee Benefits			13,581				15,083				12,035
Occupancy Expense, net			3,249				3,082				2,827
FDIC Insurance Expense			544				549				714
Other Taxes			746				746				643
Advertising Expense			606				738				171
Telephone Expense			574				578				505
Professional and Legal Fees			437				1,560				649
Data Processing			486				493				750
Losses on Sales and Write-downs of Other Real Estate Owned, net			189				4,163				188
Losses on Sales and Write-downs of Bank Premises, net			12				165				170
Debit Card Expense			554				593				710
Tax Credit Amortization			272				576				563
Unfunded Loan Commitment Expense			982				(255	)			45
Other Real Estate Owned Expense			140				265				97
Other			2,376				2,150				2,043
TOTAL NONINTEREST EXPENSE			24,748				30,486				22,110
INCOME BEFORE INCOME TAXES			4,670				3,431				7,963
Income Tax Provision (Benefit)			247				(175	)			422
NET INCOME		$	4,423			$	3,606			$	7,541
Shares Outstanding, at End of Period			26,385,754				26,334,229				26,308,087
Average Shares Outstanding-Basic			26,362,906				26,334,069				26,293,108
Average Shares Outstanding-Diluted			26,368,622				26,362,129				26,295,226
PER SHARE DATA
Basic Earnings Per Common Share		$	0.17			$	0.14			$	0.29
Diluted Earnings Per Common Share		$	0.17			$	0.14			$	0.29
Book Value		$	18.00			$	17.97			$	17.10
Tangible Book Value2		$	15.64			$	15.60			$	14.73
Market Value		$	9.18			$	23.72			$	19.19

PROFITABILITY RATIOS (non-GAAP)
Net Interest Margin (FTE)3			2.97	%			3.06	%			3.09	%
Core Efficiency Ratio4			74.00	%			76.13	%			67.01	%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
NET INTEREST MARGIN (FTE) (QTD AVERAGES)
(Unaudited)

(Dollars in Thousands)		March 31, 2020												December 31, 2019												March 31, 2019
ASSETS		Average Balance				Income/ Expense				Rate				Average Balance				Income/ Expense				Rate				Average Balance				Income/ Expense				Rate
Interest-Bearing Deposits with Banks		$	62,960			$	210				1.32	%		$	97,512			$	410				1.67	%		$	172,155			$	1,021				2.41	%
Tax-Free Investment Securities			21,452				204				3.80	%			20,337				207				4.04	%			110,955				1,018				3.72	%
Taxable Investment Securities			712,104				4,503				2.52	%			730,444				4,723				2.57	%			701,390				4,122				2.38	%
Tax-Free Loans			337,857				2,660				3.15	%			355,639				2,830				3.16	%			401,066				3,314				3.35	%
Taxable Loans			2,584,917				30,797				4.74	%			2,558,192				32,167				4.99	%			2,396,152				30,574				5.17	%
Federal Home Loan Bank Stock			4,418				64				5.85	%			4,081				60				5.83	%			-				-				-	%
Total Interest-Earning Assets		$	3,723,708			$	38,438				4.11	%		$	3,766,205			$	40,397				4.26	%		$	3,781,718			$	40,049				4.29	%
LIABILITIES
Deposits:
Interest-Bearing Demand		$	297,395			$	446				0.60	%		$	245,887			$	364				0.59	%		$	271,214			$	641				0.96	%
Money Market			154,564				271				0.71	%			154,381				358				0.92	%			90,601				243				1.09	%
Savings			562,712				145				0.10	%			563,401				148				0.10	%			606,317				486				0.33	%
Certificates of Deposit			1,918,841				9,633				2.02	%			1,994,916				10,403				2.07	%			2,098,658				9,854				1.90	%
Total Interest-Bearing Deposits		$	2,933,512			$	10,495				1.44	%		$	2,958,585			$	11,273				1.51	%		$	3,066,790			$	11,224				1.48	%
Borrowings:
FED Funds Purchased			220				1				1.59	%
FHLB Borrowings			17,418				59				1.33	%			9,239				39				1.67	%			-				-				-	%
Other Borrowings			1,481				18				4.81	%			1,547				21				5.39	%			954				20				8.50	%
Total Borrowings			19,119				78				1.64	%			10,786				60				2.21	%			954				20				8.50	%
Total Interest-Bearing Liabilities		$	2,952,631			$	10,573				1.44	%		$	2,969,371			$	11,333				1.51	%		$	3,067,744			$	11,244				1.49	%
Net Interest Income						$	27,865											$	29,064											$	28,805
Net Interest Margin											2.97	%											3.06	%											3.09	%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
LOANS AND LOANS HELD-FOR-SALE
(Unaudited)

		March 31,				December 31,				March 31,
(Dollars in Thousands)		2020				2019				2019
Commercial
Commercial Real Estate		$	1,372,819			$	1,385,696			$	1,444,692
Commercial and Industrial			263,268				255,551				249,381
Obligations of State and Political Subdivisions			355,585				364,869				421,120
Commercial Construction			348,596				326,654				247,968
Total Commercial Loans			2,340,268				2,332,770				2,363,161
Consumer
Residential Mortgages			513,013				461,572				392,712
Other Consumer			73,242				73,688				71,622
Consumer Construction			13,376				16,736				18,111
Total Consumer Loans			599,631				551,996				482,445
Total Portfolio Loans			2,939,899				2,884,766				2,845,606
Loans Held-for-Sale			29,689				19,714				6,285
Total Loans		$	2,969,588			$	2,904,480			$	2,851,891

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
ASSET QUALITY DATA
(Unaudited)

(Dollars in Thousands)		March 31,				December 31,				March 31,
Nonperforming Loans		2020				2019				2019
Commercial Real Estate		$	299			$	1,017			$	545
Commercial and Industrial			115				77				1,359
Obligations of State and Political Subdivisions			-				-				-
Commercial Construction			3,080				3,210				2,301
Residential Mortgages			3,163				2,857				1,511
Other Consumer			236				267				76
Consumer Construction			-				-				-
Total Nonperforming Loans			6,893				7,428				5,792
Nonperforming Troubled Debt Restructurings
Commercial Real Estate			29,064				30,073				36,069
Commercial and Industrial			290				390				-
Obligations of State and Political Subdivisions			-				-				-
Commercial Construction			4,210				4,242				7,437
Residential Mortgages			-				-				272
Other Consumer			-				-				-
Consumer Construction			-				-				-
Total Nonperforming Troubled Debt Restructurings			33,564				34,705				43,778
Total Nonperforming Loans and Troubled Debt Restructurings			40,457				42,133				49,570
Other Real Estate Owned			18,117				18,324				30,592
Total Nonperforming Assets		$	58,574			$	60,457			$	80,162

		March 31,				December 31,				March 31,
		2020				2019				2019
Nonperforming Loans		$	40,457			$	42,133			$	49,570
Other Real Estate Owned			18,117				18,324				30,592
Nonperforming Assets			58,574				60,457				80,162
Troubled Debt Restructurings (Nonaccruing)			33,564				34,705				43,778
Troubled Debt Restructurings (Accruing)			107,694				109,265				114,259
Total Troubled Debt Restructurings		$	141,258			$	143,970			$	158,037
Nonperforming Loans to Total Portfolio Loans			1.38	%			1.46	%			1.74	%
Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned			1.98	%			2.08	%			2.79	%
Allowance for Loan Losses to Total Portfolio Loans			1.46	%			1.34	%			1.39	%
Allowance for Loan Losses to Nonperforming Loans			106.14	%			92.00	%			79.83	%
Net Loan Charge-offs (Recoveries)		$	618			$	3,841			$	1,254
Net Loan Charge-offs (Recoveries) (Annualized) to Average Loans			0.09	%			0.13	%			0.18	%

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
ALLOWANCE FOR LOAN LOSSES
(Unaudited)

		Year-to-Date
		March 31,				December 31,				March 31,
(Dollars in Thousands)		2020				2019				2019
Balance Beginning of Year		$	38,762			$	39,199			$	39,199
Provision for Loan Losses			4,798				3,404				1,627
Charge-offs:
Real Estate Loans			5				659				448
Consumer Loans			1,527				4,401				928
Commercial Loans			38				22				-
Total Charge-offs			1,570				5,082				1,376
Recoveries:
Real Estate Loans			707				639				-
Consumer Loans			244				602				122
Commercial Loans			1				-				-
Total Recoveries			952				1,241				122
Total Net Charge-offs			618				3,841				1,254
Balance End of Year		$	42,942			$	38,762			$	39,572

CARTER BANK & TRUST
CONSOLIDATED SELECTED FINANCIAL DATA
(Unaudited)
(Dollars in Thousands, except per share data)

DEFINITIONS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

1Pre-tax pre-provision earnings are computed as net interest income plus noninterest income minus noninterest expense before the provision for loan losses and income tax provision.

2Tangible Equity

		Quarter-to-Date
		March 31,				December 31,				March 31,
		2020				2019				2019
Total Shareholders' Equity		$	474,821			$	473,111			$	449,769
Less: Goodwill			62,192				62,192				62,192
Tangible Equity			412,629				410,919				387,577
Shares Outstanding at End of Period			26,385,754				26,334,229				26,308,087
Tangible Book Value Per Common Share		$	15.64			$	15.60			$	14.73

3Net interest income has been computed on a fully taxable equivalent basis ("FTE") using a 21% federal income tax rate for the 2020 and 2019 periods.

Net Interest Income (FTE) (Non-GAAP)		Quarter-to-Date
		March 31,				December 31,				March 31,
		2020				2019				2019
Interest Income		$	37,836			$	39,759			$	39,139
Interest Expense			(10,572	)			(11,333	)			(11,243	)
Net Interest Income			27,264				28,426				27,896
Tax Equivalent Adjustment3			601				638				909
NET INTEREST INCOME (FTE) (Non-GAAP)		$	27,865			$	29,064			$	28,805
Net Interest Income (Annualized)			110,537				115,308				116,820
Average Earning Assets			3,723,708				3,766,205				3,781,718
NET INTEREST MARGIN (FTE) (Non-GAAP)			2.97	%			3.06	%			3.09	%

4Core Efficiency Ratio (Non-GAAP)

		Quarter-to-Date
		March 31,				December 31,				March 31,
		2020				2019				2019
NONINTEREST EXPENSE		$	24,748			$	30,486			$	22,110
Less: Losses on Sales and Write-downs of Other Real Estate Owned, net			(189	)			(4,163	)			(188	)
Less: Losses on Sales and Write-downs of Bank Premises, net			(12	)			(165	)			(170	)
Less: Tax Credit Amortization			(272	)			(576	)			(563	)
Less: Conversion Expense			-				-				(2	)
Plus: FDIC Assessment Credits			-				-				-
Plus: Conversion Vacation Accrual			288				(539	)			269
CORE NONINTEREST EXPENSE (Non-GAAP)		$	24,563			$	25,043			$	21,456
NET INTEREST INCOME		$	27,264			$	28,426			$	27,896
Plus: Taxable Equivalent Adjustment3			601				638				909
NET INTEREST INCOME (FTE) (Non-GAAP)		$	27,865			$	29,064			$	28,805
Less: Gains on Sales of Securities, net			(1,214	)			(606	)			(31	)
Less: Other Real Estate Owned Income			(139	)			(72	)			(290	)
Less: Other Gains			(269	)			-				(271	)
Noninterest Income			6,952				4,509				3,804
CORE NET INTEREST INCOME (FTE) (Non-GAAP) plus NONINTEREST INCOME		$	33,195			$	32,895			$	32,017
CORE EFFICIENCY RATIO (Non-GAAP)			74.00	%			76.13	%			67.01	%

SOURCE: Carter Bank & Trust

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