Carter Bankshares Inc (CARE, Financial) released its 8-K filing on October 24, 2024, reporting a net income of $5.6 million, or $0.24 diluted earnings per share (EPS), for the third quarter of 2024. This performance exceeded the analyst estimate of $0.22 EPS. The company's revenue for the quarter was not explicitly stated in the filing, but the net interest income was reported at $28.8 million, reflecting a 2.5% increase from the previous quarter.
Company Overview
Carter Bankshares Inc is a bank holding company operating through Carter Bank & Trust. The bank generates revenue from interest on loans and securities, alongside fees for financial services. It offers a comprehensive range of deposit services and loans, including commercial, consumer, and mortgage loans, as well as home equity lines of credit.
Performance and Challenges
The third quarter results showed improvement over the previous quarter and the same period last year, with net income rising from $4.8 million in Q2 2024 and $3.6 million in Q3 2023. However, the company continues to face challenges, particularly with its largest lending relationship, which remains on nonaccrual status. This has significantly impacted interest income, reducing it by $8.8 million in the third quarter alone.
Financial Achievements
Despite these challenges, Carter Bankshares Inc achieved notable financial milestones. The bank's total portfolio loans increased by $46.3 million, or 5.2% on an annualized basis, reaching $3.6 billion. Total deposits also saw a significant rise, increasing by $203.8 million, or 20.9% on an annualized basis, to $4.1 billion. These achievements are crucial for maintaining liquidity and supporting loan growth, which are vital for banks.
Key Financial Metrics
Net interest margin, on a fully taxable equivalent basis, increased to 2.59% from 2.56% in the previous quarter. The efficiency ratio improved to 80.17% from 81.62% in Q2 2024, indicating better cost management. Nonperforming loans decreased by $12.5 million to $287.7 million, primarily due to curtailment payments from the bank's largest nonperforming lending relationship.
“Although the large nonperforming lending relationship continues to have a negative impact on our financial and credit metrics, aside from this impact, our financial performance and asset quality metrics remain solid,” stated Litz H. Van Dyke, Chief Executive Officer.
Analysis and Outlook
Carter Bankshares Inc's performance in the third quarter of 2024 demonstrates resilience amidst ongoing challenges. The voluntary dismissal of the GLAS Trust Lawsuit and the continued curtailment of debt by the Justice Entities are positive developments. However, the impact of nonaccrual loans on interest income remains a concern. The bank's strategic focus on deposit growth and loan production, coupled with a favorable interest rate environment, positions it well for future improvements in net interest margin and overall financial health.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income ($ million) | 5.6 | 4.8 | 3.6 |
| Diluted EPS ($) | 0.24 | 0.21 | 0.16 |
| Net Interest Income ($ million) | 28.8 | 28.1 | 27.4 |
| Net Interest Margin (%) | 2.59 | 2.56 | 2.54 |
| Efficiency Ratio (%) | 80.17 | 81.62 | 83.52 |
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Carter Bankshares Inc for further details.
