Carter Bank & Trust, Martinsville, VA (CARE)

A Case of Gray Hairs Proving Their Worth in 123 Bank Branches

I wonder how this little gem of a bank has gone so long undiscovered by investors? Only two institutions own shares in Carter Bank & Trust (and less than 1/2 of 1% at that). And no brokerage firm appears to have written anything about it, despite six fine years of earnings when the rest of the industry was mired in the Great Recession. Trading at only 62% of book value and 6.8 times earnings, CARE clearly offers investors a Worthy opportunity.

Disclosure: As of this posting, I own significant shares of CARE and may subsequently either dispose of them or purchase more.

Prospective Buyers
CARE would present an easy in-market transaction for any of the following acquisition-hungry banks:

BB&T Corporation, Winston-Salem, NC (BBT)
First Citizens BancShares, Raleigh, NC (FCNCA)
SunTrust Banks, Atlanta, GA (STI)
Financial Snapshot
(as of 3/31/2012)

Total assets:
Tangible book value per share:
NPAs to assets:
Price to book:
Market cap:
Dividend yield:
Trailing 12-month return on assets:
Trailing 12-month return on equity:
Worth Harris Carter, Jr., Founder, Chairman, and President
Jane Davis, Senior VP and CFO
Gold Stars
Combined with Carter Bank & Trust's low price to book value and low price to earnings, five Key Performance Indicators (KPIs) give me tremendous confidence in the bank's ability to deliver outsized returns for investors:
  1. No annual losses during the Great Recession
  2. Strong return on assets of .8%, just shy of the Industry Gold Standard target of 1% before the Great Recession, in a current economic environment where negative returns have not been uncommon
  3. Stellar return on tangible common equity of 14.8%, versus industry trends closer to 7%
  4. Consistent growth in both deposits and core deposits
  5. Healthy and growing insider ownership, currently over 28% of the stock, a whopping 7.5M shares (Since January 1st, there have already been 14 open market purchases of stock by directors at prices ranging from $8.00 to $8.80 per share)
Kudos to an experienced team for showing the banking industry how it's done. Mr. Carter, at 74, has built a bank worthy of his name, and shows no signs of slowing down. His board doesn't have a single director under the age of 70. Clearly many of nation's bankers could learn a thing or two from these graybeards.


    1. Try calling the cfo and see how far you get. And an acquirer would to invest a lot in systems. But the yield in particular is satisfying.

    2. Thanks for the thought Sam. The CFO is almost as shareholder unfriendly as Worth himself. But it helps me justify in my own mind at least why the stock is so cheap and no one covers it. And I agree, their systems are very antiquated and I'm sure would be replaced. An ATM or two might be needed as well. :)

    3. Their executives must live in the dark ages, virtually none of them have any LinkedIn profiles, I can't find the bank on any social media.