Carter Bankshares(US:CARE)2023-03-09 16:00Capital Ratios and Equity - The Tier 1 capital ratio decreased to 12.61% at December 31, 2022, down from 14.21% at December 31, 2021, primarily due to a common stock repurchase of $42.9 million [9]. - The common equity tier 1 ratio was 12.61% for 2022, down from 14.21% in 2021, while the total risk-based capital ratio was 13.86%, down from 15.46% [40]. - The company reported a leverage ratio of 10.29% for 2022, compared to 10.62% in 2021, remaining above the regulatory guideline of 5.00% [41]. - The total shareholders' equity decreased to $328,627 thousand in 2022 from $407,596 thousand in 2021, a decline of approximately 19.4% [110]. Loan Performance and Credit Quality - Nonperforming loans (NPLs) decreased by $0.8 million to $6.6 million at December 31, 2022, representing 0.21% of total portfolio loans compared to 0.26% in 2021 [25]. - Portfolio loans past due 30 to 89 days increased by $3.2 million to $4.8 million at December 31, 2022, primarily in the construction segment [27]. - The allowance for credit losses to total portfolio loans was 2.98% at the end of 2022, compared to 3.41% at the end of 2021 [30]. - The balance of the allowance for credit losses at the end of 2022 was $93.852 million, down from $95.939 million at the end of 2021 [31]. - The company recognized a provision for credit losses of $2,928 thousand in 2022, compared to $2,081 thousand in 2021, indicating a rise in credit loss provisions [115]. - The company maintains an allowance for credit losses (ACL) deemed adequate to absorb expected credit losses across various loan segments [196]. Income and Expenses - The company experienced an increase in net interest income due to rising yields on loans and investment securities in 2022 [51]. - Net interest income increased by $28.7 million, or 25.9%, to $139.9 million for the full year 2022 compared to $111.2 million for 2021 [73]. - Total noninterest income decreased by $7.2 million to $21.7 million for the full year 2022 compared to $28.9 million for 2021 [73]. - Total noninterest expense decreased by $5.3 million to $97.0 million for the full year 2022 compared to $102.3 million for 2021 [73]. - The company reported a net income of $50.1 million for the year ended December 31, 2022, compared to $31.6 million for 2021 [79]. - Net income for the year ended December 31, 2022, was $50,118,000, compared to $31,590,000 for the year ended December 31, 2021, representing a 58.5% increase [80]. Securities and Investments - Total debt securities decreased by $86.1 million to $836.3 million in 2022 from $922.4 million in 2021 [10]. - The unrealized losses on debt securities are considered temporary, primarily due to market value reductions from rising interest rates [12]. - The total fair value of debt securities was $284,547,000, with unrealized losses amounting to $(32,266,000) [155]. - The company evaluates debt securities for impairment at least quarterly, considering factors such as fair value decline duration and issuer's financial condition [121]. - The company regularly reviews debt securities for expected credit loss using both qualitative and quantitative criteria [157]. Deposits and Borrowings - The total deposits without a stated maturity were $2.368 billion at year-end 2022 [44]. - The company had $180.6 million in FHLB borrowings at December 31, 2022, an increase of $173.6 million from $7.0 million at December 31, 2021 [38]. - Total deposits decreased to $3,630,333 thousand in 2022 from $3,698,476 thousand in 2021, a decline of approximately 1.8% [110]. Strategic Focus and Future Outlook - The Company plans to focus on organic growth and consider opportunistic acquisitions to align with its strategic vision [71]. - The Company aims to enhance its guiding principles and expects to roll out a new mission and vision in 2023 [70]. Risk Management - The company actively manages credit risk by diversifying its loan portfolio across segments, geography, collateral, and industry [188]. - The company has a concentration of credit risk, with the majority of loans granted to customers in its market area [131]. Financial Reporting and Compliance - The company’s financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), which requires management to make estimates and assumptions affecting reported amounts [84]. - The company recognizes tax positions in financial statements when it is more likely than not that the position will be sustained upon examination [134].