On January 25, 2024, Carter Bankshares Inc (CARE, Financial) released its 8-K filing, revealing a challenging fourth quarter and full year 2023. The bank holding company, which operates through Carter Bank & Trust, reported a net loss of $1.9 million for the fourth quarter, a significant downturn from the $15.6 million net income in the same period of the previous year. The full-year net income also decreased to $23.4 million from $50.1 million in 2022.
Carter Bankshares Inc's performance was heavily impacted by a large nonaccrual loan, which reduced interest income by approximately $30.0 million for the year. Despite this setback, the bank saw an 11.3% increase in total portfolio loans and a 2.5% rise in total deposits year-over-year.
The bank's net interest income remained stable at $27.4 million compared to the third quarter of 2023 but decreased by 34.0% compared to the fourth quarter of 2022. The net interest margin also saw a decline, dropping to 2.47% in Q4 2023 from 4.04% in Q4 2022.
Nonperforming loans (NPLs) as a percentage of total portfolio loans increased significantly to 8.83% at the end of 2023, up from 0.21% at the end of 2022. The provision for credit losses also rose to $2.9 million in Q4 2023, compared to just $52,000 in Q4 2022.
CEO Litz Van Dyke expressed disappointment over the largest lending relationship remaining in nonaccrual status, impacting the financial results. However, he noted solid loan growth and a strong balance sheet structure, with positive movements in deposits and capital levels.
"We remain confident in the condition and positioning of our Company. We are well prepared to navigate through any challenges that may emerge in our industry. We remain focused on resolving our large NPL and are committed to pursuing all remedies to resolve this matter in a manner that best protects the Company and its shareholders," stated Litz H. Van Dyke, Chief Executive Officer.
The efficiency ratio, a measure of the bank's overhead as a percentage of revenue, deteriorated to 94.8% in Q4 2023 from 58.7% in Q4 2022, indicating higher costs relative to income.
Despite the challenges faced in 2023, Carter Bankshares Inc is focused on resolving its nonperforming assets and maintaining its well-capitalized status, with a Tier 1 Capital ratio of 11.08% at the end of the year.
For more detailed financial information and the full earnings report, investors are encouraged to review the complete 8-K filing of Carter Bankshares Inc (CARE, Financial).
Explore the complete 8-K earnings release (here) from Carter Bankshares Inc for further details.
