On July 25, 2024, Carter Bankshares Inc (CARE, Financial) released its 8-K filing announcing its financial results for the second quarter of 2024. Carter Bankshares Inc is a bank holding company that conducts its business solely through the bank. The Bank earns revenue from interest on loans and securities and fees charged for financial services provided to customers. The Bank offers a full range of deposit services including Lifetime Free Checking, interest checking accounts, savings accounts, retirement accounts and other deposit accounts of various types, ranging from money market accounts to longer-term CDs. The Bank offers a full range of commercial and consumer loans. The Bank also originates and holds fixed and variable-rate mortgage loans and offers home equity lines of credit to its customers.
Performance and Challenges
For the second quarter of 2024, Carter Bankshares Inc reported a net income of $4.8 million, or $0.21 diluted earnings per share (EPS), aligning with the analyst estimate of $0.21 EPS. However, the company fell short of the revenue estimate, reporting $28.1 million in net interest income compared to the estimated $34.62 million. This represents a decrease from the $28.4 million reported in the first quarter of 2024.
The company's financial results continue to be significantly impacted by placing loans contained in the Bank's Other segment on nonaccrual status during the second quarter of 2023. This segment, representing loans to the Justice Entities, remains the Bank's largest lending relationship and has negatively impacted interest income by $9.1 million in Q2 2024.
Financial Achievements
Despite the challenges, Carter Bankshares Inc achieved several financial milestones:
- Nonperforming loans declined by $7.1 million to $300.2 million as of June 30, 2024, primarily due to $7.8 million of curtailment payments made by the Bank’s largest nonperforming lending relationship.
- Total portfolio loans increased by $40.5 million, or 4.6% on an annualized basis, to $3.5 billion compared to March 31, 2024.
- Total deposits increased by $50.8 million, or 5.3% on an annualized basis, to $3.9 billion compared to March 31, 2024.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income | $4.8 million | $5.8 million | $5.7 million |
| Diluted EPS | $0.21 | $0.25 | $0.24 |
| Net Interest Income | $28.1 million | $28.4 million | $26.7 million |
Balance Sheet and Cash Flow Highlights
As of June 30, 2024, total assets were $4.5 billion, a decrease of $22.4 million during the second quarter. Cash and due from banks decreased by $46.4 million to $61.7 million. The available-for-sale securities portfolio decreased by $22.5 million, reflecting a strategic shift to higher-yielding loan assets.
Commentary and Analysis
"Obviously, the large nonperforming lending relationship continues to have a negative impact on our financial results, but aside from this issue, we believe our financial performance for the second quarter was solid and our asset quality remains strong across all credit metrics," stated Litz H. Van Dyke, Chief Executive Officer.
Despite the ongoing challenges with nonperforming loans, Carter Bankshares Inc has shown resilience in its core operations. The company's strategic focus on loan growth and deposit acquisition has yielded positive results, although the impact of nonaccrual loans continues to weigh on overall financial performance.
For more detailed insights and the full financial report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Carter Bankshares Inc for further details.
