Carter Bankshares (CARE) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $9.0 million ($0.39 per diluted share), up from $5.8 million in Q1 2024, driven by higher net interest income and a recovery in credit losses.

• Pre-tax pre-provision income rose to $9.0 million, up from $7.2 million in Q1 2024.

• Financial results remain significantly impacted by nonaccrual loans to the Justice Entities, with principal balance at $245.1 million as of March 31, 2025.

• $6.9 million in curtailment payments received in Q1 2025, reducing nonperforming loan balance from $301.9 million (Q1 2024) to $245.1 million (Q1 2025).

• The company remains well-capitalized, with a Tier 1 capital ratio of 11.01% and leverage ratio of 9.67% at quarter-end.

Financial highlights

• Net interest income increased 6.0% year-over-year to $30.1 million, aided by higher loan yields and lower funding costs.

• Total portfolio loans increased $62.7 million (7.0% annualized) to $3.7 billion from Q4 2024; up $178.4 million (5.1%) year-over-year.

• Total deposits grew $47.5 million (4.6% annualized) from Q4 2024 and $370.4 million (9.7%) year-over-year, reaching $4.2 billion.

• Noninterest income rose 36.8% to $6.9 million, mainly due to a $1.9 million gain on a BOLI death benefit.

• Noninterest expense grew 6.8% year-over-year to $28.0 million, with increases in occupancy, advertising, and data processing costs.

Outlook and guidance

• Management expects continued positive impact on net interest margin from further short-term rate cuts and resolution of the large nonperforming lending relationship.

• Loan pipeline remains healthy, with anticipated tailwinds from construction lending over the next 12–18 months.

• Branch acquisition expected to close in Q2 2025, adding ~$60 million in deposits.

• The company continues to focus on prudent organic growth, fee income expansion, and expense management.

• Ongoing resolution of a large nonperforming credit relationship remains a key focus, with further curtailments anticipated.