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Jun 30, 2024
Carter Bankshares Q2 2024 Earnings Report
Carter Bankshares' financial performance was impacted by nonperforming loans, but the lawsuit filed by West Virginia Governor James Justice and related entities was dismissed.
Key Takeaways
Carter Bankshares, Inc. reported a net income of $4.8 million, or $0.21 diluted earnings per share, for the second quarter of 2024. The company's financial results continue to be significantly impacted by nonperforming loans, particularly those related to the Bank's Other segment. However, a lawsuit filed against the Company and the Bank by West Virginia Governor James C. Justice II, his wife Cathy L. Justice, his son James C. Justice, III, and related entities that he and/or they own (collectively, the “Justice Entities”) was dismissed with prejudice.
Net income for Q2 2024 was $4.8 million, or $0.21 diluted EPS, compared to $5.7 million, or $0.24 diluted EPS, for Q2 2023.
Nonperforming loans decreased by $7.1 million to $300.2 million compared to March 31, 2024, primarily due to curtailment payments.
Total portfolio loans increased by $40.5 million, or 4.6% on an annualized basis, to $3.5 billion at June 30, 2024, compared to March 31, 2024.
Total deposits increased by $50.8 million, or 5.3% on an annualized basis, compared to March 31, 2024.
Carter Bankshares
Carter Bankshares
Forward Guidance
The Company remains committed to resolving the lending relationship with Justice Entities in a manner that best protects the Company, the Bank and shareholders. The large nonperforming lending relationship continues to have a negative impact on the financial results. The loan production pipeline also remains solid, however, the company is still expecting moderate loan growth this year. The current rate environment will continue to affect the margin in the coming quarters.
Positive Outlook
- Lawsuit filed by West Virginia Governor James Justice and related entities was dismissed with prejudice during the second quarter of 2024, and the Justice Entities have begun curtailing their debt owed to the Bank.
- Financial performance for the second quarter was solid and the asset quality remains strong across all credit metrics.
- Capital and liquidity levels continue to be strong.
- Bond portfolio is well positioned to outperform many of our peers in what appears to be a protracted period of higher interest rates.
- Balance sheet is positioned so that it will positively impact margins if the Fed begins to cut short-term interest rates.
Challenges Ahead
- Large nonperforming lending relationship continues to have a negative impact on the financial results.
- Loan production was modest in the second quarter, largely due to more construction lending that we expect to fund gradually over time.
- Expecting moderate loan growth this year.
- There continues to be pressure on the cost of funds, rates have been leveling off. However, the current rate environment will continue to affect our margin in the coming quarters.
- Net interest margin will return to a more normalized level once the large nonperforming lending relationship is fully resolved.