Carter Bankshares reports Q2 EPS 21c vs. 24c last year

Net interest margin, on a fully taxable equivalent basis, decreased four basis points to 2.56% compared to the first quarter of 2024 and increased two basis points compared to the second quarter of 2023. For the six months ended June 30, 2024 net interest margin, on a FTE basis, decreased 67 basis points to 2.58% compared to the same period in 2023. Net interest income and net interest margin continue to be significantly impacted by the Bank’s largest lending relationship remaining on nonaccrual status since the second quarter of 2023; The efficiency ratio was 81.62%, 78.46% and 80.46% for the quarters ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The efficiency ratio was impacted primarily by the Bank’s largest lending relationship that was placed in nonaccrual status during the second quarter of 2023. “As previously noted, the 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. This was a favorable outcome for our Company and we remain committed to resolving this lending relationship in a manner that best protects the Company, the Bank and shareholders, stated Litz H. Van Dyke, Chief Executive Officer. “Obviously, the large nonperforming lending relationship continues to have a negative impact on our financial results, but aside from this issue, we believe our financial performance for the second quarter was solid and our asset quality remains strong across all credit metrics. We continue to feel positive about the fundamentals of the Company and the structure of our balance sheet. Capital and liquidity levels continue to be strong. Loan production was modest in the second quarter, largely due to more construction lending that we expect to fund gradually over time. Our loan production pipeline also remains solid, however, we are still expecting moderate loan growth this year. We believe our bond portfolio is well positioned to outperform many of our peers in what appears to be a protracted period of higher interest rates. Modest deposit growth is occurring in most categories. While 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. We expect that our net interest margin will return to a more normalized level once the large nonperforming lending relationship is fully resolved. Additionally, if the Fed begins to cut short-term interest rates, we believe our balance sheet is positioned so that it will positively impact our margins.”