Carter Bankshares (CARE) Q4 2024 earnings summary

Executive summary

• Reported Q4 2024 net income of $8.3M ($0.36 EPS), up from $5.6M ($0.24 EPS) in Q3 2024 and a net loss of $1.9M in Q4 2023; full-year 2024 net income was $24.5M ($1.06 EPS), up from $23.4M ($1.00 EPS) in 2023.

• Pre-tax pre-provision income was $5.6M for Q4 2024, $6.8M for Q3 2024, and $1.6M for Q4 2023; full-year 2024 was $25.8M, down from $35.1M in 2023.

• Results remain significantly impacted by large nonaccrual loans to Justice Entities, with $7.9M and $9.4M negative impact on interest income in Q4 2024 and Q4 2023, respectively.

• Nonperforming loans declined by $28.4M to $259.3M at year-end, mainly due to curtailment payments from the largest nonperforming credit relationship.

• Launched a brand refresh, celebrated 50th anniversary, and announced acquisition of two North Carolina branches to expand market presence.

Financial highlights

• Net interest income for Q4 2024 was $29.1M, up 1.2% sequentially and 6.3% year-over-year; net interest margin (FTE) was 2.58%, down 1 bp sequentially, up 9 bps year-over-year.

• Full-year 2024 net interest income was $114.5M, down 6.4% from 2023; net interest margin (FTE) for the year was 2.58%, down 29 bps from 2023.

• Total portfolio loans grew $29.0M (3.2% annualized) from Q3 2024 and $118.9M (3.4%) year-over-year to $3.6B.

• Total deposits increased $68.4M (6.7% annualized) from Q3 2024 and $431.5M (11.6%) year-over-year to $4.2B.

• FHLB borrowings decreased $20.0M to $70.0M at year-end, reflecting deposit growth.

• Noninterest income for Q4 2024 was $5.4M, flat sequentially, up 65.4% year-over-year; full-year noninterest income was $21.4M, up 16.9%.

• Noninterest expense for Q4 2024 was $28.9M, up 5.2% sequentially, down $0.2M year-over-year; full-year noninterest expense was $110.0M, up 4.3%.

Outlook and guidance

• Management expects net interest margin to normalize once the large nonperforming lending relationship is resolved.

• Loan production pipeline remains strong, with construction lending expected to contribute as projects are funded.

• Deposit growth is expected to continue, especially in interest checking and CDs; balance sheet is positioned to benefit from further rate cuts.

• Company believes it is well positioned for a strong 2025, with solid fundamentals and asset quality aside from the large nonperforming credit.