Carter Bankshares (CARE) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $4.8M ($0.21 EPS), down from $5.7M in Q2 2023, mainly due to a large nonperforming loan (NPL) placed on nonaccrual in Q2 2023.

• Total assets reached $4.5B at June 30, 2024, with 65 branches and loan growth led by commercial real estate.

• The company remains well-capitalized, with a Tier 1 capital ratio of 10.95% and a leverage ratio of 9.43%.

• Legal settlement with the Justice Entities resulted in curtailment payments and a structured payoff plan for the large NPL, reducing nonperforming loans by $7.8M in Q2 2024.

• Focus on operational efficiency, technology investment, and deepening customer relationships.

Financial highlights

• Net interest income for Q2 2024 was $28.1M, up 5.2% year-over-year; noninterest income rose 10% to $5.5M.

• Noninterest expense increased 7.5% to $27.4M, driven by FDIC insurance and salaries.

• Loans grew 6.6% year-over-year to $3.55B; deposits up 8.4% year-over-year to $3.88B.

• Provision for credit losses was $0.5M for Q2 2024, up $0.4M year-over-year, reflecting loan growth and new individually evaluated loans.

• Diluted EPS for Q2 2024 was $0.21, down 16.0% sequentially and 12.5% year-over-year.

Outlook and guidance

• Management expects moderate loan growth and stabilization in funding costs and net interest margin in coming quarters.

• Strategic focus on organic growth, operational leverage through technology, and opportunistic acquisitions.

• Deposit growth is expected to remain modest, with funding cost pressures stabilizing.