Carter Bankshares Reports Mixed Q1 2025 Results with Higher Income But Rising Expenses and Loans

Carter Bankshares, Inc. (NASDAQ: CARE) has reported its financial results for the quarter ended March 31, 2025, showing a mixed performance in various aspects of its income statement.

Positive Aspects:

• Net Income: Increased to $8.95 million, up from $5.81 million in the same quarter of 2024.
• Earnings per Share: Basic and diluted earnings per share rose to $0.39 from $0.25 year-over-year.
• Net Interest Income: Increased by 6% to $30.14 million compared to $28.42 million for Q1 2024.
• Total Noninterest Income: Grew by 36.8% to $6.90 million, mainly due to a $1.9 million gain on bank-owned life insurance (BOLI).
• Allowance for Credit Losses: Improved as a recovery of $2.025 million was recorded, contrasting with an increase in 2024.

Negative Aspects:

• Total Noninterest Expense: Increased to $28.04 million, up from $26.26 million.
• Nonperforming Loans: Increased to $261.44 million from $259.35 million, with nonperforming loans as a percentage of total loans at 7.09% compared to 7.15%. Changes were primarily attributed to a particular commercial real estate relationship.
• Deposits Composition: Overdrafts reclassified to loans stood at $0.3 million, unchanged from the prior period. Additionally, there were declines in CD deposits, indicating a shift to higher-yielding deposit products.
• Federal Home Loan Bank Borrowings: Decreased by $15 million to $55 million, which could indicate tightening liquidity conditions.

Key Points and Statistics:

• Total Assets: Increased to $4.70 billion from $4.66 billion at the end of 2024.
• Total Loans: Increased by 7% annualized to $3.69 billion.
• Portfolio Loan to Deposit Ratio: Slightly up to 87.78% from 87.31%.
• ACL to Total Loans: Ratio stood at 1.99%, down from 2.09%.
• Nonperforming Loans: Representing 7.09% of total loans, evidenced an increase from the previous percentage of 7.15%.
• Liquidity Sources: Total liquidity sources at $1.41 billion, highlighting a stable funding base.

Overall, while Carter Bankshares (NASDAQ: CARE) saw some improvement in net income and interest earnings, it also faced rising expenses and nonperforming loans. The shift in its deposit structure may require monitoring to ensure stable funding as it navigates a changing economic landscape.