Financial Performance - Net interest income decreased by 114.5 million for the year ended December 31, 2024, due to higher funding costs [225]. - The company reported net income of 1.06 diluted earnings per share for the year ended December 31, 2024, compared to net income of 1.00 diluted earnings per share for the year ended December 31, 2023 [226]. - Total noninterest income increased by 21.4 million for the year ended December 31, 2024, compared to the same period in 2023 [225]. - Total noninterest expense for the year ended December 31, 2024, was 4.5 million, or 4.3%, from 2023 [253]. - The provision for credit losses decreased to a recovery of 5.5 million in 2023, reflecting improved credit quality assessments [317]. - The company reported a basic earnings per common share of 1.00 in 2023, reflecting a growth of 6% [362]. - Comprehensive income for 2024 was 37,561 thousand in 2023, reflecting a decrease of approximately 16.3% [363]. Loan Portfolio and Credit Quality - Total portfolio loans increased by 50.2 million to 75.6 million, or 2.09% of total portfolio loans, compared to 16.4 million for the year ended December 31, 2024, compared to 15.0 million impacting the Other segment [247]. - Nonperforming loans (NPLs) decreased by 259.3 million as of December 31, 2024, resulting in a NPL ratio of 7.15%, down from 8.83% in the previous year [319]. - The provision for income taxes increased by 6.3 million for the year ended December 31, 2024, with an effective tax rate of 20.6% compared to 18.6% in 2023 [285]. Deposits and Funding - Total deposits increased by 4.2 billion at December 31, 2024, compared to December 31, 2023 [229]. - The portfolio loans to deposit ratio was 87.3%, compared to 94.2% [225]. - Federal Home Loan Bank borrowings decreased by 70.0 million at December 31, 2024, compared to 100.7 million, or 20.8%, while average money market accounts increased by 60.6 million, now representing 15.4% of total assets compared to 17.3% [225]. - The securities portfolio comprised 43.5% variable rate securities, with 84.6% expected to reprice within the next 12 months, mitigating interest rate risk [237]. - The company purchased 0.1 million at December 31, 2024, offset by 0.7 million in gains and $92.3 million in losses at December 31, 2023 [272]. - The company may consider changes to its interest rate mix strategy if the Federal Reserve continues to reduce short-term interest rates [237]. Strategic Initiatives and Growth - The Company aims to shift from restructuring the balance sheet to pursuing a prudent growth strategy, focusing on organic growth and opportunistic acquisitions [217]. - The Company introduced new guiding principles in June 2023 to align processes and operations with its brand strategy, aiming to enhance brand awareness and support future growth [216]. - The Company has entered into a definitive purchase and assumption agreement to acquire two branch facilities in North Carolina, expected to close in the first half of 2025 [215]. - The Company has established limits on total commercial real estate balances, which should not exceed 300% of total risk-based capital, and construction loan balances should not exceed 100% of total risk-based capital [291]. Risk Management and Underwriting - The Company’s underwriting process includes multiple shock scenarios focused on cash flow and leverage to determine supportable loan amounts, enhancing risk management [290]. - Management continuously monitors delinquency trends to identify emerging patterns and potential problem loans [310]. - The economic value of equity simulation model uses rate shocks of +/- 100, 200, 300, and 400 basis points to assess the impact on the balance sheet [356]. - The CECL model estimates default probabilities driven by economic metrics, including unemployment and the Consumer Price Index, to determine expected losses [394].
Carter Bankshares(CARE) - 2024 Q4 - Annual Report