Carter Bankshares(US:CARE)2025-08-04 20:03Financial Performance - Net income for the three months ended June 30, 2025, was $8.5 million, or $0.37 diluted earnings per share, compared to $4.8 million, or $0.21 diluted earnings per share, for the same period in 2024[163]. - Return on average assets increased to 0.72% for the three months ended June 30, 2025, compared to 0.43% for the same period in 2024[164]. - Return on average shareholders' equity increased to 8.45% for the three months ended June 30, 2025, compared to 5.40% for the same period in 2024[164]. - Net interest income increased by $4.3 million, or 15.2%, to $32.4 million for the three months ended June 30, 2025, compared to $28.1 million for the same period in 2024[161]. - Total noninterest income decreased by $0.6 million to $4.9 million for the three months ended June 30, 2025, compared to the same period in 2024[161]. - Total noninterest expense increased by $1.9 million, or 6.8%, for the three months ended June 30, 2025, and by $3.6 million, or 6.8%, for the six months ended June 30, 2025 compared to the same periods in 2024[182]. Asset and Loan Growth - As of June 30, 2025, Carter Bankshares, Inc. has total assets of $4.8 billion[150]. - Total assets increased by $124.9 million to $4.8 billion at June 30, 2025, compared to December 31, 2024[185]. - Total portfolio loans increased by $122.3 million, or 6.8%, on an annualized basis, reaching $3.747 billion at June 30, 2025, compared to $3.625 billion at December 31, 2024[198]. - Average loans grew by $202.2 million and $172.1 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024[171]. - The commercial real estate (CRE) loans represented 53.4% of total portfolio loans at June 30, 2025, up from 51.6% at December 31, 2024[199]. Credit Quality and Losses - The significant credit relationship placed on nonaccrual status has an aggregate principal balance of $235.5 million as of June 30, 2025[156]. - The company is dedicated to resolving nonaccrual loans, primarily related to a single large credit relationship[155]. - The company reported a total negative impact of $78.6 million on interest income due to the nonaccrual loans since their placement[157]. - Nonperforming loans decreased by $8.8 million to $250.6 million compared to December 31, 2024, with nonperforming loans as a percentage of total portfolio loans at 6.69% compared to 7.15%[161]. - The allowance for credit losses to total portfolio loans ratio was 1.90% compared to 2.09%[161]. - The recovery provision for credit losses was $2.3 million and $4.4 million for the three and six months ended June 30, 2025, respectively, compared to provisions of $491 thousand and $507 thousand for the same periods in 2024[178]. Deposits and Funding - Total deposits increased by $68.8 million, or 3.3%, on an annualized basis, to $4.2 billion at June 30, 2025, compared to December 31, 2024[167]. - The composition of deposits showed a 10.74% increase in interest-bearing demand deposits, rising to $805.0 million as of June 30, 2025[232]. - Approximately 18.5% of total deposits were uninsured deposits exceeding the standard FDIC insurance coverage limit[240]. - Noninterest-bearing deposits represented 15.0% of total deposits, while certificates of deposits (CDs) accounted for 44.8%[234]. - FHLB borrowings increased by $43.5 million to $113.5 million from $70.0 million at December 31, 2024, primarily to fund loan growth[237]. Interest Income and Expense - Interest income has been negatively impacted by $6.7 million and $9.1 million during the three months ended June 30, 2025 and 2024, respectively[157]. - Interest expense decreased by $1.1 million and $0.9 million for the three and six months ended June 30, 2025, respectively[173]. - The net interest margin (GAAP) improved by 25 basis points for the three months and 18 basis points for the six months ended June 30, 2025, compared to the same periods in 2024[172]. Capital and Liquidity - Total capital increased by $21.3 million to $405.6 million, driven by net income of $17.5 million and an increase in other comprehensive income[247]. - The leverage ratio for Carter Bankshares, Inc. was 9.46% at June 30, 2025, compared to 9.56% at December 31, 2024[247]. - Total liquidity sources reached $1.41 billion as of June 30, 2025, compared to $1.39 billion at December 31, 2024[246]. - The ratio of highly liquid assets to total assets was 10.3% at June 30, 2025, down from 10.9% at December 31, 2024[246]. Strategic Initiatives - The company aims to shift from restructuring the balance sheet to pursuing a prudent growth strategy, focusing on organic growth and opportunistic acquisitions[154]. - The company introduced new guiding principles in June 2023 to align operations with its brand strategy, emphasizing relationship building and trust[153]. - The Company has established transaction, relationship, and specific loan segment limits in its loan policy to manage credit risk[202]. Market and Economic Conditions - The company expects market values of its intermediate and long-term maturity holdings to continue fluctuating due to changes in treasury yields[193]. - The economic value of equity modeling shows a projected decrease of 8.0% in economic value of equity with a 200 basis points increase in interest rates as of June 30, 2025[267]. - The earnings simulation results indicate a liability-sensitive position, with a projected decrease in net interest income of 0.5% in a 200 basis points increase in interest rates as of June 30, 2025[263].