Carter Bankshares(CARE) - 2023 Q2 - Quarterly Report

Financial Performance - Net interest income for the three months ended June 30, 2023, was $26,711 thousand, a decrease of 18.5% from $32,459 thousand in the same period of 2022[186] - Net income for the six months ended June 30, 2023, was $21,645 thousand, an increase of 7.7% compared to $20,101 thousand for the same period in 2022[186] - The net income for the quarter ended June 30, 2023, was $5,704,000, compared to $20,101,000 for the same quarter in the previous year[190] - Basic earnings per common share for the three months ended June 30, 2023, was $0.24, unchanged from the same period in 2022[186] - The provision for credit losses decreased by $1.7 million to $0.1 million for the three months ended June 30, 2023, compared to the same period in 2022[262] - Total noninterest income decreased by $1.2 million to $9.8 million for the six months ended June 30, 2023, compared to the same period in 2022[263] - Total noninterest expense increased to $25,536 thousand for the three months ended June 30, 2023, compared to $23,410 thousand in the same period of 2022, marking an increase of 9.1%[186] Assets and Liabilities - Total assets increased to $4,383,990 thousand as of June 30, 2023, compared to $4,204,519 thousand at December 31, 2022, representing a growth of approximately 4.3%[185] - Total liabilities increased to $4,039,753 thousand as of June 30, 2023, from $3,875,892 thousand at December 31, 2022, reflecting a rise of approximately 4.2%[185] - As of June 30, 2023, total shareholders' equity was $344,237,000, a decrease from $354,986,000 as of March 31, 2023[189] - Total deposits decreased to $3,577,003 thousand as of June 30, 2023, from $3,630,333 thousand at December 31, 2022, a decline of about 1.5%[185] Share Repurchase and Equity - The company repurchased 583,824 shares of common stock during the quarter, resulting in a total repurchase cost of $8,153,000[189] - The Company has a common share repurchase program authorized to buy back up to 750,000 shares, effective August 1, 2022, subject to regulatory approval[248] - The Company repurchased 583,824 shares of common stock at a total cost of $8.2 million, averaging $13.96 per share, under the share repurchase program[268] Credit and Commitments - The balance of commitments to extend credit increased to $749,377,000 as of June 30, 2023, up from $630,619,000 as of December 31, 2022[225] - The Company has commitments to extend credit amounting to $749.4 million as of June 30, 2023, up from $630.6 million at December 31, 2022, with construction project lines of credit representing $395.6 million, or 52.8% of total commitments[239] - A provision for unfunded commitments of $0.4 million was recorded during the three months ended June 30, 2023, reflecting an increase compared to the same period in 2022[226] - The provision for unfunded commitments for the three months ended June 30, 2023, was $360,000, up from $269,000 in the same period of 2022[242] Market and Economic Conditions - Rising market interest rates have begun to increase the Company's funding costs, which are expected to continue negatively impacting net interest income and net interest margin in future periods[266] - The company has suspended +300 and +400 basis point rate shock analyses due to changes in the Federal Open Market Committee's rate increase projections[208] Litigation and Regulatory Changes - The Company is involved in litigation with the Justice Entities regarding approximately $301 million in promissory notes, with ongoing proceedings that may affect future financial outcomes[243] - The company has adopted new accounting standards effective June 30, 2023, which resulted in a transitional adjustment of $0.1 million to retained earnings[193] - The company is transitioning away from LIBOR and has selected one-month term SOFR as the replacement benchmark for LIBOR-based loans[195] Portfolio and Loan Performance - Total portfolio loans increased by $181.5 million, or 11.6%, on an annualized basis, primarily due to growth in commercial real estate and residential mortgage segments[264] - The company's largest lending relationship, with an aggregate principal amount of $301.9 million, was placed on nonaccrual status as of June 30, 2023[219] - The Company experienced a negative impact of $11.3 million on interest income due to placing commercial loans with an aggregate principal value of $301.9 million in nonaccrual status[264]