Carter Bankshares Q2 Net Income Dips to $10.2M Amidst AOCI Decline

TL;DR

**CARE's Q2 earnings are a red flag; the declining net income and growing AOCI loss suggest underlying asset valuation issues that could drag on future performance.**

AI Summary

Carter Bankshares, Inc. reported a net income of $10.2 million for the three months ended June 30, 2025, a decrease from $11.5 million in the prior-year quarter. For the six months ended June 30, 2025, net income was $20.1 million, down from $22.8 million in the same period of 2024. The bank's total assets stood at $4.7 billion as of June 30, 2025, a slight increase from $4.6 billion at December 31, 2024. Total deposits increased to $4.1 billion from $4.0 billion over the same period. The company's common stock remained stable at $1.00 par value per share, with 25,000,000 shares authorized and 23,000,000 shares issued and outstanding as of June 30, 2025. Retained earnings decreased to $200.5 million as of June 30, 2025, from $202.6 million at December 31, 2024, reflecting dividend payments and other comprehensive losses. Accumulated other comprehensive income (loss) worsened to a loss of $25.3 million as of June 30, 2025, compared to a loss of $23.1 million at December 31, 2024, primarily due to changes in the fair value of available-for-sale securities.

Why It Matters

This filing reveals a slight but notable dip in Carter Bankshares' profitability, with net income falling by 11.3% year-over-year in Q2 2025. For investors, this signals potential headwinds in earnings growth, despite a modest increase in total assets and deposits. The worsening accumulated other comprehensive loss, driven by securities valuation, could impact future capital levels and dividend capacity, making CARE less attractive compared to peers with stronger balance sheets in a competitive banking landscape. Employees might face pressure if profitability trends continue, while customers could see changes in lending rates or service offerings as the bank navigates its financial position. The broader market will watch how regional banks like CARE manage interest rate risks and asset valuations.

Risk Assessment

Risk Level: medium — The risk level is medium due to the 11.3% decrease in net income for the three months ended June 30, 2025, compared to the prior year, and a 11.8% decrease for the six months ended June 30, 2025. Additionally, the accumulated other comprehensive loss worsened from $23.1 million at December 31, 2024, to $25.3 million at June 30, 2025, indicating increased unrealized losses on securities.

Analyst Insight

Investors should closely monitor Carter Bankshares' upcoming earnings reports for signs of stabilization in net income and a reversal in the accumulated other comprehensive loss. Consider holding off on new investments until there's clear evidence of improved profitability and asset valuation, or re-evaluate existing positions if these trends persist.

Financial Highlights

total Assets

$4.7B

net Income

$10.2M

Key Numbers

• $10.2M — Net Income (Q2 2025) (Decreased from $11.5M in Q2 2024, an 11.3% decline.)
• $20.1M — Net Income (YTD Q2 2025) (Decreased from $22.8M in YTD Q2 2024, an 11.8% decline.)
• $4.7B — Total Assets (Increased from $4.6B at December 31, 2024.)
• $4.1B — Total Deposits (Increased from $4.0B at December 31, 2024.)
• -$25.3M — Accumulated Other Comprehensive Income (Loss) (Worsened from -$23.1M at December 31, 2024, indicating increased unrealized losses.)
• 23,000,000 — Shares Issued and Outstanding (Remained stable as of June 30, 2025.)
• $200.5M — Retained Earnings (Decreased from $202.6M at December 31, 2024.)

Key Players & Entities

• Carter Bankshares, Inc. (company) — filer of the 10-Q
• $10.2 million (dollar_amount) — net income for Q2 2025
• $11.5 million (dollar_amount) — net income for Q2 2024
• $20.1 million (dollar_amount) — net income for six months ended June 30, 2025
• $22.8 million (dollar_amount) — net income for six months ended June 30, 2024
• $4.7 billion (dollar_amount) — total assets as of June 30, 2025
• $4.6 billion (dollar_amount) — total assets as of December 31, 2024
• $4.1 billion (dollar_amount) — total deposits as of June 30, 2025
• $4.0 billion (dollar_amount) — total deposits as of December 31, 2024
• $25.3 million (dollar_amount) — accumulated other comprehensive loss as of June 30, 2025

FAQ

Risk Factors

• Deterioration in Accumulated Other Comprehensive Income [medium — financial]: Accumulated Other Comprehensive Income (AOCI) worsened to a loss of $25.3 million as of June 30, 2025, from a loss of $23.1 million at December 31, 2024. This deterioration is primarily attributed to changes in the fair value of available-for-sale securities, indicating unrealized losses are increasing.
• Declining Net Income [high — financial]: Net income for the three months ended June 30, 2025, was $10.2 million, a decrease from $11.5 million in the prior-year quarter (an 11.3% decline). For the six months ended June 30, 2025, net income was $20.1 million, down from $22.8 million in the same period of 2024 (an 11.8% decline). This trend suggests pressure on profitability.
• Decrease in Retained Earnings [medium — financial]: Retained earnings decreased to $200.5 million as of June 30, 2025, from $202.6 million at December 31, 2024. This reduction, while partly due to dividend payments, also reflects the impact of other comprehensive losses, further impacting the company's equity base.

Industry Context

The national commercial banking sector is navigating a complex environment characterized by evolving interest rate policies, increasing competition from fintechs, and ongoing regulatory scrutiny. Banks are focused on managing net interest margins, enhancing digital offerings, and maintaining strong capital adequacy ratios amidst economic uncertainties.

Regulatory Implications

As a national commercial bank, Carter Bankshares is subject to stringent regulations from bodies like the Federal Reserve and the FDIC. Compliance with capital requirements, liquidity standards, and consumer protection laws is paramount. Any breaches or significant changes in regulatory frameworks could impact operations and profitability.

What Investors Should Do

1. Monitor AOCI trends closely.
2. Analyze drivers of net income decline.
3. Evaluate the impact of dividend payments on retained earnings.

Key Dates

• 2025-06-30: Quarter End and Period End — Marks the end of the second quarter and the period for which financial statements are reported, showing total assets of $4.7 billion and total deposits of $4.1 billion.
• 2025-04-01: Start of Second Quarter — Beginning of the period for which Q2 financial results are reported, showing a net income of $10.2 million for the quarter.
• 2025-01-01: Start of Year-to-Date Period — Beginning of the six-month period for which financial results are reported, showing a year-to-date net income of $20.1 million.
• 2024-12-31: Prior Year End — Reference point for balance sheet changes, showing total assets of $4.6 billion and retained earnings of $202.6 million.
• 2024-06-30: Prior Year Quarter End — Comparison point for Q2 performance, showing prior year Q2 net income of $11.5 million.
• 2024-01-01: Prior Year Start of Year-to-Date Period — Comparison point for year-to-date performance, showing prior year YTD net income of $22.8 million.

Glossary

Accumulated Other Comprehensive Income (Loss)

Represents unrealized gains and losses on investments that have not yet been realized through sale. This includes items like unrealized gains/losses on available-for-sale securities. (A decline in this figure, as seen with Carter Bankshares' worsening loss to -$25.3 million, indicates increasing unrealized losses, primarily from fair value changes in securities.)

Retained Earnings

The cumulative amount of net income that a company has retained and reinvested in the business, after paying out dividends. (A decrease in retained earnings, such as Carter Bankshares' drop to $200.5 million, can signal that dividend payouts or other comprehensive losses are exceeding current profits.)

Available-for-Sale Securities

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities. Their fair value changes are typically reported in Other Comprehensive Income. (Changes in the fair value of these securities are directly impacting Carter Bankshares' Accumulated Other Comprehensive Income, leading to increased unrealized losses.)

Par Value

The nominal or face value of a share of stock, as stated in the corporate charter. It is often a very small amount and does not reflect the market value. (Carter Bankshares' common stock has a par value of $1.00 per share, with 25,000,000 shares authorized and 23,000,000 issued and outstanding, indicating a stable capital structure at this nominal level.)

Year-Over-Year Comparison

Carter Bankshares reported a decline in net income for both the second quarter and the year-to-date period compared to the prior year, with Q2 net income falling 11.3% to $10.2 million and YTD net income down 11.8% to $20.1 million. Total assets and deposits saw modest increases, reaching $4.7 billion and $4.1 billion respectively. However, the company's financial health is being impacted by a worsening Accumulated Other Comprehensive Income loss, which grew to -$25.3 million, primarily due to unrealized losses on securities.

Filing Details

This Form 10-Q (Form 10-Q) was filed with the SEC on August 4, 2025 regarding Carter Bankshares, Inc. (CARE).

View full filing on EDGAR

View Full Filing

View this 10-Q filing on SEC EDGAR