July 18, 2012 at 16:15 PM EDT
Carolina Trust Bank Reports Second Quarter 2012 Profit
Bank Earns Profit in Three of Past Four Quarters; Loan Growth Strong Despite Soft Economy

LINCOLNTON, N.C., July 18, 2012 (GLOBE NEWSWIRE) -- Carolina Trust Bank (Nasdaq:CART) reported today net income of $301,000, or $0.07 per diluted common share, available to common shareholders for the second quarter of 2012. Results compare to a net loss of $793,000, or loss of $0.17 per diluted common share, for the second quarter of 2011.

Excluding payment of dividends on preferred shares, Carolina Trust Bank earned $374,000 for the second quarter of 2012, compared to a net loss of $722,000 for the same year-ago quarter. Net income available to common shareholders in the second quarter of 2012 declined $261,000, compared to earnings of $562,000 in the first quarter of 2012, or $0.12 per diluted common share.

Despite ongoing concerns over real estate values and a stagnant economy, the second quarter showed signs of stabilizing. Carolina Trust Bank reported its third profit in four quarters, with gains in total revenues, net interest income, non-interest income and loan production.

"Even in this soft economy, we continue to experience good loan growth, particularly in the commercial and industrial sector," said President and CEO J. Michael Cline. "Our bank is doing well in serving the financial needs of our small business and retail customers; we feel good about the direction the bank is headed. Our balance sheet and fundamentals remain strong."

Second Quarter 2012 Financial Highlights

  • Total revenues net of interest expense were $2.94 million for the second quarter of 2012, an increase of $172,000 from the first quarter of 2012, and up $532,000 from the same period a year ago.
  • Total deposits grew to $239.88 million in the current quarter, up $7.96 million from March 31, 2012.
  • Total shareholders' equity improved to $27.00 million in the second quarter of 2012, compared to $26.57 million at March 31, 2012, and $26.78 million at June 30, 2011.
  • Net interest income was $2.60 million in the second quarter of 2012, an increase of $89,000 from the first quarter of 2012, and up $415,000 from the quarter ended June 30, 2011.
  • Net interest margin remained unchanged at 3.99% for the second quarter of 2012 on a link-quarter basis, but improved from 3.38% for the quarter ended June 30, 2011.
  • Continued re-pricing of interest-bearing liabilities resulted in a decrease of $49,000 in interest expense from the first quarter of 2012, and $329,000 from the second quarter a year ago.
  • Noninterest income was $342,000 in the second quarter of 2012, an increase of $83,000 from the first quarter of 2012, and up $117,000 from the same period in 2011.
  • Noninterest expense of $2.09 million for the second quarter was slightly higher than the $1.96 million at March 31, 2012, primarily due to an increase in write-downs on real estate owned.
  • Provision for loan loss in the second quarter of 2012 was $471,000, compared to $224,000 for the quarter ended March 31, 2012, and $1.23 million for the quarter ended June 30, 2011.
  • Total nonperforming assets were $11.62 million at June 30, 2012, compared to $10.75 million at March 31, 2012, and $12.39 million at June 30, 2011.
  • Net loan charge-offs totaled $355,000 for the quarter ended June 30, 2012, compared to $172,000 for the quarter ended March 31, 2012, and $1.02 million for the quarter ended June 30, 2011.

Balance Sheet

Spurred by growth in small business loans, total loans increased to $223.36 million at June 30, 2012, an increase of $5.48 million from March 31, 2012 and up $17.12 million from June 30, 2011. Despite a soft economy, loans to small business owners and consumers helped the bank post its third consecutive quarterly increase in loan production. Total deposits increased to $239.88 million in the second quarter of 2012, compared to $231.92 million at March 31, 2012, and $233.23 million at June 30, 2011.

Total assets grew to $283.83 million at June 30, 2012, up $7.46 million compared to $276.37 million reported at March 31, 2012. Reserve for loan loss was $4.53 million at June 30, 2012, compared to $4.42 million at March 31, 2012 and $3.96 million at June 30, 2011. Total shareholders' equity increased to $27.00 million in the second quarter of 2012, compared to $26.57 million at March 31, 2012, and $26.78 million at June 30, 2011.

Carolina Trust Bank continued to maintain strong capital levels, reporting a Tier 1 leverage ratio of 9.33% at June 30, 2012, compared to 9.49% at March 31, 2012, and 9.40% at June 30, 2011. The bank's Tier 1 risk-based ratio was 11.20% at June 30, 2012, compared to 11.35% at March 31, 2012. The bank met all regulatory requirements for being "well-capitalized," the highest recognized category based on federal capital guidelines.

Interest Income, Net Interest Income and Expense

Interest income was $3.34 million in the second quarter of 2012, an increase of $40,000 from the first quarter of 2012, and up $86,000 from the second quarter of 2011. Net interest income, driven by loan growth and lower funding costs, was $2.60 million for the second quarter of 2012, an increase of $89,000 compared to the previous quarter, and up $415,000 compared to the second quarter of 2011.

Net interest margin was 3.99% for the second quarter of 2012 as Carolina Trust maintained its disciplined approach to deposit pricing. As a result, interest expense continued to trend favorably, with funding costs in the second quarter of 2012 declining to $742,000, compared to $791,000 in the first quarter of 2012, and $1.07 million for the quarter ended June 30, 2011.

Asset Quality

Net loan charge-offs were $355,000 for the quarter ended June 30, 2012, compared to $172,000 for the quarter ended March 31, 2012, and $1.02 million for the quarter ended June 30, 2011. Net loan charge-offs to average loans were 0.16% for the quarter ended June 30, 2012, compared to 0.08% for the quarter ended March 31, 2012, and 0.82% for the quarter ended June 30, 2011. Non-accrual loans were $6.74 million at June 30, 2012, compared to $6.29 million at March 31, 2012, and $6.43 million at June 30, 2011.

Total nonperforming assets, which include foreclosed property and non-accrual loans, were $11.62 million at June 30, 2012, compared to $10.75 million at March 31, 2012, and $12.39 million at June 30, 2011. The ratio of nonperforming assets to total assets was 4.09% at June 30, 2012, slightly higher than 3.89% at March 31, 2012, but lower than 4.46% reported at June 30, 2011.

Reserve for loan loss was $4.53 million at June 30, 2012, compared to $4.42 million at March 31, 2012, and $3.96 million at June 30, 2011. The ratio of allowance for loan losses to total loans was 2.03% for both quarters ended June 30, 2012, and March 31, 2012.

Carolina Trust Bank, with $283.83 million in assets, is a full service state chartered bank headquartered in Lincolnton, N.C., operating six full service branches in Lincoln, Catawba and Gaston Counties and loan production offices in Catawba and Rutherford Counties.

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)
June 30 March 31December 31September 30June 30
20122012201120112011
Balance Sheet Data:
Total Assets  283,829  276,365  266,162  270,089  277,392
Total Deposits  239,883  231,924  224,206  226,860  233,229
Total Loans  223,357  217,875  209,900  204,471  206,240
Reserve for Loan Loss  4,534  4,417  4,366  3,909  3,962
Total Shareholders Equity  27,004  26,566  26,045  27,364  26,781
 (Dollars in thousands, except per share data)
 For the three months ended
June 30 March 31December 31September 30June 30
20122012201120112011
Income and Per Share Data:
Interest Income  3,339  3,299  3,238  3,296  3,253
Interest Expense  742  791  855  1,020  1,071
Net Interest Income  2,597  2,508  2,383  2,276  2,182
Provision for Loan Loss  471  224  835  116  1,227
Net Interest Income After Provision  2,126  2,284  1,548  2,160  955
Non-interest Income  342  259  295  316  225
Non-interest Expense  2,094  1,959  3,220  2,096  1,902
Income (loss) Before Taxes  374  584  (1,377)  380  (722)
Income Tax Expense (benefit)  --  --  --  --  --
Net Income (loss)  374  584  (1,377)  380  (722)
Preferred Stock Dividend  73  22  22  21  71
Income available (loss) attributable to common shareholders  301  562  (1,399)  359  (793)
Net Income (loss) Per Common Share:
Basic  0.07  0.12  (0.30)  0.08  (0.17)
Diluted  0.07  0.12  (0.30)  0.08  (0.17)
Average Common Shares Outstanding:
Basic  4,634,286  4,634,262  4,634,262  4,634,262  4,634,262
Diluted  4,634,286  4,634,262  4,634,262  4,634,262  4,634,262
June 30 March 31December 31September 30June 30
20122012201120112011
Capital Ratios:
Tier 1 Leverage Ratio 9.33% 9.49% 9.32% 9.57% 9.40%
Tier 1 Risk-based Capital Ratio 11.20% 11.35% 11.49% 12.21% 11.95%
Total Risk-based Capital Ratio 12.46% 12.61% 12.75% 13.47% 13.21%
Tangible Common Equity  22,285  21,509  20,922  22,631  22,040
Common Shares Outstanding  4,634,482  4,634,262  4,634,262  4,634,262  4,634,262
Book Value Per Common Share  4.81  4.64  4.51  4.88  4.76
Performance Ratios:
Return on Average Assets (%) 0.54 0.87% -2.02% 0.55% -0.82%
Return on Average Equity (%) 5.57 8.91% -19.88% 5.55% -8.26%
Net Interest Margin (%) 3.99 3.99% 3.79% 3.52% 3.38%
Asset Quality:
Delinquent Loans ( 30-89 days )  4,599  4,102  3,571  2,995  5,213
Delinquent Loans ( 90 days or more )  --  1  2  236  134
Non-accrual Loans  6,739  6,290  6,297  5,987  6,432
OREO and repossessed property  4,876  4,459  4,272  5,836  5,819
Total Nonperforming Assets  11,615  10,750  10,571  12,059  12,385
Restructured Loans  3,229  4,106  2,487  2,293  1,359
Nonperforming Assets to Total Assets 4.09% 3.89% 3.97% 4.46% 4.46%
Nonperforming Assets to Equity Capital & ALLL 36.83% 34.70% 34.76% 38.56% 40.29%
Allowance for Loan Losses to Non-performing Assets 39.04% 41.09% 41.30% 32.42% 31.99%
Allowance for Loan Losses to Total Loans 2.03% 2.03% 2.08% 1.91% 1.92%
Net Loan Charge-Offs  355  172  469  170  1,020
Net Loan Charge-Offs to Average Loans (%) 0.16% 0.08% 0.23% 0.08% 0.82%
CONTACT: J. Michael Cline
         President and CEO
         Carolina Trust Bank
         (704) 735-1104
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