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Carolina Financial Corp (CARO)
Q3Â 2019 Earnings Call
Oct 25, 2019, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Carolina Financial Corporation 2019 Third Quarter Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. William Gehman, Chief Financial Officer. Please go ahead, sir.
William A. Gehman -- Executive Vice President & Chief Financial Officer
Thank you, operator. And again, welcome to the Carolina Financial Corporation's third Quarter 2019 investor call. Please refer to Slide 2 regarding forward-looking statements and non-GAAP measures. And now I'd like to turn the call over to Jerry Rexroad, CEO of Carolina Financial Corporation.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Thanks, Bill and I do thank all of you for attending our third quarter earnings release call for Carolina Financial. If you turn to Page 3, overall, I thought we had a very good third quarter. Really pleased with the overall results. Net income for the third quarter of 2019 increased 9.3% to $16.6 million or $0.74 per diluted share compared to $15.2 million or $0.66 per diluted share in the third quarter of 2018. On an operating basis, earnings increased 20.8% to $18.6 million or $0.83 per diluted share, up from $15.4 million or $0.67 per diluted share for the third quarter of 2018. Loans receivable grew $71 million for the quarter, and on an annualized rate that's 10.7% and for the year, have grown almost $198 million for an annualized rate of 10.5%. Really pleased with our loan growth and really want to thank our team members for an excellent job, particularly when you consider that this year we've had a nice decrease in our PCI loans of about $12 million. We've chosen to get out of a couple of lines of business that we have picked up through merger, primarily the Ag business and the leasing division business that we have picked up. And both of those areas were down fairly significantly.
And then quite frankly in the third quarter, we had a fair amount of repayment of mortgage loans. So overall, loan growth was excellent, and very pleased with our overall loan growth. And I do apologize that was my phone. If you look forward on Page 3, provision for loan loss for the quarter was $620,000 in the third quarter 2019, that compares to $750,000 in the third quarter of 2018. Deposit increased for the year $125 million, for the quarter, above $37 million [Phonetic]. I'm really pleased to say that we've announced the execution of our agreement this quarter to acquire and merge with Carolina Trust BancShares, combined, our company will have over $4.7 billion in total assets. And all the regulatory approvals for that transaction were received in September and October of 2019 and the shareholder vote is scheduled for December '18.
We did have some impact in our markets from Hurricane Dorian, primarily impacted particularly the tourism business along the coast for probably a couple of weeks certainly had some impact on our deposits being a little lower early on in the quarter. In addition, it did impact our mortgage business quite a bit in September, particularly in our banking segment. But overall, really the damage was minimal. I don't expect any customer impacts to be material and overall really limited impact this year from storms unlike what we had last year. Book value per common share of $28.08 at the end of the third quarter, that compares to $25.83 at the end of the year. Tangible book value per share was $21.68 at September 30, 2019, and that compares to $19.36 at the beginning of the year. We've previously announced a stock repurchase plan. That stock repurchase plan is somewhat limited because, we're in a transaction with Carolina Trust, but we did repurchase approximately 47,000 shares in the quarter at an average price of $34.23. I'm pleased to announce that our Board of Directors on October 23 did increase our dividend and we declared a dividend of $0.10 per common share payable on January 3, 2020. And that's to shareholders of record on December 13th. This represents an 11% increase in the dividend. And over the last four quarters, the Company has increased this quarterly dividend from $0.07 a share to $0.10 a share or almost 43% as a result of improving earnings.
Let's talk about our Community Banking segment results on Page 5. Overall, really good quarter. Community banking segment $16.9 million in the third quarter of '19 or $0.76 a share, compared to $15.3 million in the third quarter of '18 or $0.67 a share. On an operating basis, third quarter 2019 $17.5 million or $0.78 per diluted share compared to $15.4 million in the prior year third quarter or $0.67 a share. Segment return on average assets was 1.73% for the third quarter '19. On an operating basis, Community Banking segment was 1.8% for the third quarter of 2019.
I'm sure most of you want to know what happened with margin and that's on Page 6, we give a lot of information here. We've tried to give you all the different pieces and there are a lot of moving pieces this quarter. During the quarter, we did have recognition of interest income of approximately $1.2 million related to the payoff of previously purchased credit impaired loan. And that had an impact on loan yield of almost 18 basis points. Our accretion income for the quarter was $1.7 million that compares to $1.5 million in the second quarter of 2019. Also, we had early payoff fees related to loan repayments and interest income of $276,000 in the third quarter of 2019. That compares to $46,000 in the second quarter of '19. I will point out that we make that available for everybody to see what it is, simply because it really is a part of our normal ongoing business. We do generally require prepayment penalties on term commercial loans. They're choppy in the recognition and they can kind of move up and down. So we do break it out separately. When you exclude the accretion income, our net interest margin was 3.77% for the quarter compared to 3.82% in the second quarter of 2019. Cost of funds decreased 4 basis points and overall felt like the margin, really held up pretty nicely considering the decreases in prime rate that we've experienced recently.
Operating efficiency in the bank remains very strong. We've had four quarters in a row where our non-interest expense divided by average assets is less than 2%. It's really been a goal for a long time, and we had started achieving that late last year and frankly have continued to be able to achieve that level of efficiency throughout this year and very proud of our team in the hard work they do to make sure that happened.
Talked about our balance sheet growth on Page 8, I won't spend much time on that. But we'll go to Page 9. I mentioned that we did had one NPA. There was a material that occurred this quarter, NPAs are still I think very favorable 0.52% of assets. The increase in the NPA ratio was primarily due to one fully collateralized lending relationship that had not hit 90-days delinquent, where we'd chose to go ahead and put it on non-accrual and we do believe that it is fully collateralized based on the information we have at this time.
Provision for loan loss for the quarter was $620,000. And I think you can continue to see that our loan mix continues to be fairly conservative. I think 26% of our portfolio is one-to-four family with a very small emphasis on consumer being less than 4% of our total loans.
I'm going to go forward to talk about Crescent Mortgage on Page 12. Crescent Mortgage had a really good quarter. I'm really pleased with the margin increase. You can see that the margin increased 31 basis points from last quarter and 54 basis points from the third quarter of 2018. Also our origination volume $233 million in the third quarter compared to $189 million in the second quarter of 2019 and $190 million in the third quarter of 2018. That's a 23% increase. The Mortgage company -- Crescent Mortgage company made $325,000 or $0.01 a share. That compares to $555,000 on a GAAP basis or $0.02 a share a year ago. However, this year included in net income for the third quarter was a $1.8 million temporary impairment of mortgage servicing rights.
And so, if you exclude that, which we believe is a non-operating item, our actual earnings in our wholesale mortgage segment were $1.7 million or $0.08 a share. There was some impact this year, I've mentioned from Dorian, but of course last year we did have some fairly significant impact from Hurricane Florence. I do want to look down at the right side of Page 12 at the bottom there. We've added some information that I think is very valuable. Our servicing portfolio began the year at about $4 billion [Phonetic]. We haven't added a whole lot to it this year, little less than $100 million. And you can see that repayments for the year of $413 million, that's 10%. Now, when I say repayments, that includes amortization and early payoff. So, a pretty benign number when you really look at interest rates of what they've done. If you look to the right of that, you can see that we've actually amortized through normal amortization 12% of the asset. But in addition, due to the fair value requirements under generally accepted accounting principles that are based upon really market metrics, you can see that we've written down the asset an additional 10% for fair value adjustment. So we've actually decreased the asset 22%, whereas the servicing portfolio has only decreased 10%. And I will say, it will take time for us to figure out what happens as we go forward, but I am generally very pleased that our servicing portfolio has repaid fairly slowly. It certainly paying slower than peer and obviously the third-party valuations are based on market metrics and the expectation of future repayments.
I will mention that the end of the third quarter is the time that this servicing portfolio is valued. At that date, the 10-year treasury was 1.68%. Today it's about 1.77%. So, as we look forward, I can't really make projections, but what I can say is that if rates continue to be moderate as far as compared to that 1.68% on the 10-year, we would expect that there is a potential for a possible recovery -- some of that temporary impairment and we would also expect that it would be possible as time goes on that we will slow our amortization. So overall, although we did have the impairment, I must say that I still feel very good about the assets that we purchased and believe this strategically it represents an opportunity in the mortgage company to continue to be profitable for us as we move forward.
Looking at Page 13, a couple of key shareholder metrics. For the quarter, return on our average assets 1.71%. Operating return on a consolidated basis 1.91%. I mentioned earlier, tangible book value per share. But if you look from a year ago, we were $18.69 a year ago or $21.68 at the end of this quarter, almost $3 improvement, 16% when comparing a year ago to now. On a operating earnings basis and this is shown on the slide on the bottom of Page 13. A year ago, we made $0.67 on an operating basis in the third quarter. This year $0.83 on the third quarter of 2019, a 24% increase in operating earnings. So really pleased with the third quarter and really pleased with our overall result.
Quick summary. As of the quarter, really good organic loan growth, almost $71 million margin we mentioned earlier, I felt very good at about -- really good mortgage operations both really in bank and in the company. Overall, good expense control and again, I would say, both in the bank and in the mortgage company. Very pleased to say that we received our regulatory approvals to complete the merger with Carolina Trust, tangible book value per share increasing 16% from a year ago and of course, I mentioned that our operating return on tangible assets was 1.98% for the quarter ending September 30, 2019.
So I want to really thank our team members. It's been a really good quarter, obviously challenged by Hurricane Dorian for a couple of weeks there, but I feel like the team has really done a great job, really want to say thank you to our people, Crescent Mortgage has been busy. I think they've done a great job delivering great service as well as being able to really make an impact on our quarter. So with that, I'll go ahead and open it up for questions.
Questions and Answers:
Operator
[Operator Instructions] And our first question comes from Kevin Fitzsimmons with D.A. Davidson. Please proceed with your question.
Kevin Fitzsimmons -- D.A. Davidson -- Analyst
Hey, good morning guys.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Good morning.
Kevin Fitzsimmons -- D.A. Davidson -- Analyst
Just a couple of questions. First on the margin, if you -- excluding all the accretion and the recoveries, so just looking at the core, how would you think about it reacting to just the current environment we have as well as further rate cuts in fourth quarter and in first quarter? Thanks.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Kevin, its is a really hard question for us to answer, particularly given our seasonality and our deposit portfolio. So we -- and I think that seasonality actually happen quicker, this year, I think we had a really good summer, particularly up and down the coast [Phonetic]. And so, I think people have to pay quite a bit in income taxes September 15th and then of course that came write-off of really not having a good first two weeks since September, which -- September has actually become a very good part of the season along the coast. So, having said that, you know, deposits are always hard for us to project as we go into the fourth quarter, and particularly the non-interest bearing deposits tend to shrink a little bit. But, we also have quite a bit of CDs that are repricing in the fourth quarter, an unusually large amount in the fourth quarter and it really just depends on when we get that next rate cut. Those rate cuts are immediate as far as impact yield on loans and of course the impact on deposits tends to be a little slower in reacting. So I would expect some further help if, let's say, we don't get until December. I think we could do fairly well on margin. The other thing I mentioned Kevin, and I mentioned this in my call, is -- when you have an extremely good loan growth month like we've did in September and really August. August and September were really strong loan growth months for us. And those loan rates that we're putting on now, although I think their market for sure and we're not giving away our loans like I do see some of our competitors still in the marketplace, but frankly their rates that are lower than our average rate. And so they really do pull down. They pull down our yield on loans a little bit. I'm guessing a little bit -- when I say this, but I think it's a pretty good guess, and that is, I think they probably hit us two to three basis points in this quarter on loan rates. So overall, that's probably going to continue if we continue to have extremely good loan growth, but if loan growth moderates to be more like what we thought it had a lesser impact. So I kind of look at net interest income and felt really good about the quarter as a whole, because I think that's what you got to look about is growing revenue. But yeah, if rates drop, I mean we've made it very clear that we're going to lose a little bit of margin on a year-over-year basis. But so far, it seems to be pretty controlled.
Kevin Fitzsimmons -- D.A. Davidson -- Analyst
Okay. Great, very helpful. Can you remind us as far as -- it was a very strong quarter for mortgage, but now as we go into fourth quarter, is there -- on one hand, is there a typical fourth quarter seasonality, but -- there are also some kind of pent-up strength that -- not strength but the effect of the hurricanes, it seemed like you got pushed a little later. So is there any activity that gets pushed in the fourth quarter that might not normally?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
So I will say, I'll answer the hurricane question first, and then I'll try to answer the second part. It's a good question. The problem with hurricanes is to keep people from coming into the coast. And those people are typically coming to buy and it's amazing how much activity there is in our coastal markets -- people looking for opportunity. So yeah, it may push some of those people back -- coming -- in the fourth quarter. And I just can't predict that. What I do know is that really the first two weeks of September we're really, really negatively impacted by Hurricane Dorian. And in all honesty of that is, that is typically a good period for our mortgage team on purchases. So, we just have to wait and see what the fourth quarter looks like. I will say that I'm pretty pleased with fourth quarter volume so far. And on the mortgage side, talked about our wholesale mortgage company, that has been very sensitive to interest rates. So, when we see the 10-year drop down like 160 [Phonetic], our volumes increased significantly.
When they go -- when rates go up toward say 180, 190 on the 10-year [Phonetic], things slow down and then they kind of level off. So, there is some real sensitivity to rates there. So far, again in the fourth quarter -- been good. But I can't tell you how much of that pin-up is related to people to finally just go ahead and refinancing or purchasing versus other things. Overall, you look at the fourth quarter of last year in our wholesale mortgage company, we typically do drop -- say 15% in the fourth quarter and probably another 15% in the first quarter. So definitely the second and third quarters are definitely our better quarters. But, as long as rates stay in this sub-2% on the 10-year, I feel pretty confident that mortgage will continue to be a good driver for it. If the Fed decreases in the future and long-term rates go down, then obviously mortgage gets benefited significantly by that. So hopefully I got -- hopefully I can't cover debt -- long explanation there.
Kevin Fitzsimmons -- D.A. Davidson -- Analyst
No, that was great Jerry. Thanks very much.
Operator
Thank you. And our next question comes from William Wallace with Raymond James. Please proceed with your question.
William Wallace -- Raymond James -- Analyst
Thanks, good morning guys. I wanted to follow up on Kevin's margin question if I could. Jerry, you said a lot. So, maybe if I could just ask a very direct question. If the Fed does not cut next week, am I hearing you correctly, where you think you could hold net interest margin in the fourth quarter?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
It totally depends on the seasonality of our deposit mix. And why I always try to dance around that because it just is very, very unpredictable. And so, the Fed not decreasing next week, it would be very good. I will mention, and I think I've said this on previous calls, we have opened an office in Charlotte. We are being very aggressive on acquiring deposits there. We also have had some closures of competitors in a number of our markets and we are being very aggressive in our -- attempt to the acquisition of deposits in those markets. And there's about five markets. So, that's the case. And that could have some impact. It just depends on how successful we are. So, I always struggled to try to give guidance on where interest rates are going. But overall, Wally no decrease by the Fed. I wouldn't be surprised just because in the fourth quarter we're still going to have a little compression. But quite frankly we'll get most of that back probably in latter part of the first quarter it starts in March, and then by the time April comes, we see pretty large increases in deposits starting to come back in.
So when I look at it more over a year period of time, this is what we try to do. So far we're pretty pleased with what margins done considering seasonality.
William Wallace -- Raymond James -- Analyst
Okay, all right, thank you. And then, have you started to take down the rates you're paying on deposits [Indecipherable].
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Yes, we have.
William Wallace -- Raymond James -- Analyst
Okay. And if we do get another cut next week, will we expect that you would be aggressive on hitting those costs again?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Yes, we would. Now, we can have -- like I said, three or four markets that we probably remain aggressive there. But we're even bringing our rates down in those markets. But, yeah, we'll definitely bring in our rates down.
William Wallace -- Raymond James -- Analyst
Okay. So it's fair to assume that the advisory costs likely peaked in the third quarter understanding that a shift in the mix could change that equation?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
I would think so. I mean, we were down 4 basis points in the third quarter. And I -- even though there is -- no doubt there will be some deposit mix shift in the fourth quarter. I definitely think your hypothesis there is correct.
William Wallace -- Raymond James -- Analyst
Okay, thank you. And then, I was wondering if you could get a little bit more specific color on the one credit that you said drove the NPA increase. Can you tell us, one, the balance of the loan, the nature of the loan and what drove the deterioration?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
No, I can't give you that kind of detail. It was approximately $5.5 million in size. It's one relationship. It is a relationship that's collateralized by real estate and we feel based upon the information that we have is fully collateralized. But you know as to why it happened in that kind of stuff, I can't really go there. But, it's a customer that has been with us for a while and quite frankly just experienced some difficulties. But it is a CRE loan.
William Wallace -- Raymond James -- Analyst
Okay. Can you please say what industry it was in.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
I don't know that.
William Wallace -- Raymond James -- Analyst
It's OK, and you won't?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
I did not.
William Wallace -- Raymond James -- Analyst
Okay, all right, fair enough. The -- as far as the loan pipeline goes, I'm curious if you guys are changing any kind of underwriting metrics just given that we're late in the cycle, we're hearing some commentary from other bank management teams that they're seeing, what would be consistent with late cycle behavior. I'm just curious if you guys are seeing any questionable behavior, and if you're changing some of your decision matrices [Phonetic] as a result.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
So Wally, it's a really good question and it's frustrating to me because I tend to what we see in the marketplace or what you hear some of these banks say don't seem to be consistent because we are definitely seeing much more aggressive terms and it's -- one of the things it make much harder for me to project what our loan growth is going to be because we're losing more loans that are in our pipeline then we traditionally have lost. And it's for two reasons. One, quite a bit more aggressive underwriting that we're willing to go. And two, I'll actually add one. Borrowers who think they can get away with more aggressive underwriting, who consequently are asking for things that you have to say no. And sometimes you lose a deal, and sometimes you keep a bit of delays at closing by good while.
And then three, rates that we just won't play out. And that may be something we just have to watch over time. But we're seeing some really aggressive long-term CRE rates that when you compare them to the swap curve or under 200 basis points. So very, very aggressive pricing in our opinion for properties that just don't deserve it. So having said that, one of the things is making hard on -- Bill and I are trying to project future growth numbers because we used to feel like -- if it was in the pipeline that we had approved it, we had a pretty doggone good chance to get into close [Phonetic] and today that's just not as higher percentage. On our side, we have tightened in probably four or five different areas. And so, we are requiring more equity on certain kinds of loans and we are in some cases requiring -- like on start-up projects, we're requiring more upfront money from loan to cost standpoints. So yes, we have tightened a little bit. I wouldn't say it's overly material. But what we're seeing is -- incidents in some cases on credit metrics of loans not only rates that we're seeing some pretty aggressive advanced rates on construction that we probably have tightened the hair and others seem to have loosened their hair. That's just an outside observation I can say I'm right or wrong.
William Wallace -- Raymond James -- Analyst
Okay, fair enough. Well, yeah, you seem to have demonstrated some pretty strong loan growth this year despite that fact, is that the function of hires or like, what do you think is driving?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Quite a few things. One, hires, we have added a number of people and I think a number of good people and they've been pretty successful. Two, I would suggest to you that we have less competition in our size bank. If you go back two or three years, there is a number of banks that we're -- $3 billion to $10 billion that we're competing in our markets. And honestly, they're not there and I think a lot of those customers have come to us because either we have -- we might have the person they used to deal with or they're looking for a community bank, who is responsive and they can know the senior people in addition to just the loan officer. And I think that's probably been our -- if I had to say what's the biggest thing this impact us, it will be that.
And then the third thing is, we're in fabulous markets. I think as you know, we're in eight of the very best markets in the Southeast, five of the fastest top 25 markets in the United States as far as growth and it just is a tremendous help to be in those markets and know the players in those markets. We are seeing some competition from outside forces in a couple of those markets. And so, how long do we get the benefit? I don't know. But I do think that a lot of people want to do business was a community bank and the beautiful thing is, we are the community bank of size in a lot of these markets that I think people want do business with. Certain markets have really lost a number of competitors.
So, I think we're in the right place. We're in the right markets. I think we've done a really good job of picking up people to help us grow. But needless to say, from a credit and from a rate standpoint, it remains very competitive.
William Wallace -- Raymond James -- Analyst
Thank you very much for all that color. Jerry. I appreciate it.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Thanks Wally.
Operator
Thank you. And our next question comes from Stuart Lotz with KBW. Please proceed with your question.
Stuart Lotz -- KBW -- Analyst
Hi, guys. Good morning.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
[Speech Overlap]
Jerry, following up on your commentary there on this competition you're seeing on loans. On some of the deals you're losing, are you -- who is winning some of these credits now. Is it larger regional competitors or is it -- will they end up going to smaller community banks in your markets. Just curious who you're running up against the most right now?
I would say there are banks that are larger than us who are not super-regionals. But that's about all I give you [Phonetic].
Stuart Lotz -- KBW -- Analyst
Okay. So, nothing really from SunTrust to BB&T, again super defensive coming in the upcoming merger. [Speech Overlap]
Jerold L. Rexroad -- President, Chief Executive Officer & Director
I mean, they've always been great competitors. And -- but I haven't noticed anything increasingly from them, if that's what you're asking, but they've always been great competitors. They are good banks.
Stuart Lotz -- KBW -- Analyst
Got it. I appreciate the color there. And then in terms of I guess going back to the margin for a second. Where do the total interest-bearing deposit costs shake out this quarter. And I think, last quarter for 2Q you were running at $125 million [Phonetic] and total deposit costs were up 2 basis points linked-quarter. I'm just curious, was the increase for interest-bearing kind of in line with that 2 basis point increase?
You have to give us a second [Speech Overlap]. I might have to get back with you on that one, I'm not quite sure -- I'm following that the overall -- if you're comparing year-over-year and I'm doing this from memory, our core margin actually dropped from third quarter of last year about 3 basis points. The cost of funds was down about 4 basis points, obviously some of that does have to do with mix and part of that does have to do with -- , you will have a big broker portfolio, but it does fluctuate up and down 1% or 2% of the total liabilities that we have. But, overall, like I said, cost [Indecipherable] for the quarter were down 4 basis points.
And I guess, digging further into that, we've got the cut in July. We've got the cut in September. How quickly were you able to lower your various prices, was there a bit of a lag. And then with the September cut, that we really see much benefit in the third quarter, which we see more benefit going into the 4Q?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Well, you're definitely right. I guess its probably a week and a half. We typically don't drop our money market rates until it actually happens and then -- then we get together and meet even though we kind of follow up pretty systematic process we -- from an internal control standpoint, we always meet, we go through it [Technical Issues] communicate it and put it out systemwide. So there is a lag. So the third quarter of that increase would not have given much impact. They would given them immediate impact on prime and LIBOR. Those things, of course, are pretty darn fast. But on the liability side, there is a slower process. And then on the CDs, it's even slower than that, because obviously it takes about that same 10 days to change the rates. But then, in all honesty, there is -- our average CDs period of time between repricing is drag out over five or six months [Phonetic].
So, definitely a lag on the deposit side of liabilities. On the federal home loan bank advances, which we have some, that's more immediate but that probably represents 12% of our total liabilities.
Stuart Lotz -- KBW -- Analyst
Okay. And where are the new CDs coming on and if we do get a cut next week. How large is that balance that you said you have a unusually large amount of CDs maturing in the fourth quarter.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
You know, I don't think we've ever disclosed that. And honestly, we do put repricing in the 10-Q and that's where it will be. But as far as particular month-to-month, we've never disclosed that and I really don't want to give them a habit of trying to do that.
Stuart Lotz -- KBW -- Analyst
Alright. I understand the competitive dynamics for that. All right. Jerry. Last one from me. As it relates to the acquisitions of Carolina Trust and CECL. Just any preliminary guess on the impact from CECL day one, and then in terms of with this deal closing at year-end or early in 1Q, what the PCD marker they do provision [Phonetic] any guidance around there that you're willing to disclose at this point?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
No, we're not there yet. I will say that we do at this point in time and tend to close the Carolina Trust transaction on December 31st. But as far as specifics, obviously there is a lot that will happen between now and December 31st in that portfolio. So obviously you redo it right on the day that you acquired the portfolio and interest rates will have some impact on part of the valuation metrics that go in for liquidity mark and that kind of stuff. So, the answer is no. I think we're in very good shape. But we're going to, we would intend to disclose that really in Q4, is that right?
William A. Gehman -- Executive Vice President & Chief Financial Officer
Yes.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Yes, OK. So Bill has got I mean, pretty good muscles on...
Stuart Lotz -- KBW -- Analyst
So, is that going to be coming with the 10-K or could we expect some type of either press release at deal close, I mean just in terms of timing?
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Well, I don't think it would be a deal close to be honest with you, because in all honestly Stuart, there is a lot of work that has to be done because you actually have to -- you're supposed to relook at all the work you've done in your purchase accounting work and update it and of course adjust for anything that you see that happens in the intervening six -month period. So, now, it would be included in the 10-K.
Stuart Lotz -- KBW -- Analyst
Got it. Well, thanks for taking my questions, guys and congrats on a nice quarter.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Okay. My pleasure, thanks.
Operator
Thank you. And I'm not showing any further questions at this time, I would now like to turn it back to Jerry Rexroad, Chief Executive Officer for any further remarks.
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Well, thank you so much for joining the call today. And again, thank you team members for a great job and look forward to a good fourth quarter. Thank you, and goodbye.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
William A. Gehman -- Executive Vice President & Chief Financial Officer
Jerold L. Rexroad -- President, Chief Executive Officer & Director
Kevin Fitzsimmons -- D.A. Davidson -- Analyst
William Wallace -- Raymond James -- Analyst
Stuart Lotz -- KBW -- Analyst
