8-K: Carter Bankshares Reports Strong First Quarter 2025 Results, Driven by Loan and Deposit Growth

Carter Bankshares, Inc. announces positive financial results for Q1 2025, highlighting growth in loans and deposits, alongside a strong liquidity and capital position.

Summary

• Carter Bankshares, Inc. reported its Q1 2025 financial results, showcasing growth in key areas.
• Total assets reached $4.7 billion, an increase of $145.3 million year-over-year.
• Loans grew to $3.7 billion, up by $178.4 million compared to Q1 2024.
• Deposits also saw significant growth, reaching $4.2 billion, a $370.4 million increase year-over-year.
• Net income for the quarter was $8.953 million, compared to $5.811 million in Q1 2024.
• The company's Common Equity Tier 1 (CET1) ratio stands at 11.01%.
• Available liquidity is reported at $1.4 billion.
• The company is acquiring two North Carolina branches from First Reliance Bank, expected to close in Q2 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial performance and strategic growth initiatives. While risks are acknowledged, the overall tone is optimistic and confident.

Positives

• The company experienced growth in both loans and deposits.
• Net income increased year-over-year.
• Carter Bankshares maintains a strong liquidity position with $1.4 billion available.
• The CET1 ratio of 11.01% indicates a solid capital base.
• The acquisition of First Reliance Bank branches will expand the company's presence in North Carolina.
• Diluted earnings per share increased from $0.25 to $0.39 year over year.
• Return on average assets increased from 0.52% to 0.78% year over year.
• Return on average shareholders' equity increased from 6.59% to 9.27% year over year.
• Net interest margin increased from 2.60% to 2.70% year over year.

Negatives

• The document highlights a large non-performing loan relationship impacting overall asset quality metrics.
• Non-performing loans represent 7.09% of the portfolio, although this figure drops to 0.44% when excluding the largest non-performing relationship.
• The adjusted efficiency ratio is 78.67%, indicating room for improvement in operational efficiency.

Risks

• The company acknowledges risks related to market interest rates, economic conditions, and regulatory changes.
• Cybersecurity threats and technological changes pose ongoing risks.
• Concentrations of loans secured by real estate, particularly CRE, could be impacted by market conditions.
• The company faces risks associated with reliance on third-party service providers.
• The document mentions the potential adverse effects of unusual events such as weather-related disasters, terrorist acts, war, and public health events.
• The company acknowledges the risk of large bank failures and their impact on the broader market.

Future Outlook

The company aims to grow responsibly, provide exceptional customer experiences, and gain operational efficiency through investments in human capital, technology, and brand strategy. They also plan to expand through organic growth and opportunistic acquisitions.

Management Comments

• Litz Van Dyke, CEO, stated that the acquisition of First Reliance Bank branches will enhance Carter Bank's overall growth and strengthen its presence in North Carolina.
• Litz Van Dyke, CEO, believes that the transaction will improve profitability and deliver exceptional returns to shareholders.

Industry Context

The announcement reflects a trend of community banks focusing on strategic growth through acquisitions and investments in technology and customer experience to remain competitive in a changing financial landscape.

Comparison to Industry Standards

• The document compares Carter Bankshares' NPL and delinquency ratios to a peer group including BHB, AROW, CCBG, CCNE, CFFI, CHCO, CTBI, FBMS, FCBC, FRST, GSBC, HTBI, MPB, MVBF, ORRF, PFIS, RBCA.A, SHBI, SMBK, SYBT, UVSP WASH.
• Excluding the largest lending relationship, Carter Bankshares' Q1 2025 NPL and delinquency ratios are significantly better than peers (0.44% vs 0.65%) and (0.06% vs 0.46%), respectively.

Stakeholder Impact

• Shareholders can expect improved profitability and returns.
• Customers will benefit from enhanced services and experiences.
• Associates will benefit from investments in human capital strategies.
• Communities will benefit from the bank's corporate and social responsibility initiatives.

Next Steps

• The company expects to close the acquisition of two North Carolina branches from First Reliance Bank in Q2 2025.
• Carter Bankshares will continue to focus on growing responsibly, providing exceptional customer experiences, and gaining operational efficiency.
• The company will continue to invest in human capital, technology, and brand strategy.
• The company will focus on increasing market share in target growth markets.
• The company will focus on expanding through organic growth and opportunistic acquisition.

Key Dates

Keywords

financial results, bank, loans, deposits, liquidity, capital, acquisition, Carter Bankshares, CARE