Carter Bankshares, Inc.
Carter Bankshares, Inc. (CARE)
Overview
Carter Bankshares, Inc. is a Virginia-based bank holding company headquartered in Martinsville, Virginia, operating through its wholly owned subsidiary, Carter Bank & Trust. The company runs a network of 65 branches across Virginia and North Carolina and reported total assets of approximately $4.7 billion as of December 31, 2024. Carter Bankshares employed roughly 680 full-time associates as of that date and had about 23.1 million shares outstanding as of February 2025. The bank has been working through a legacy portfolio with elevated commercial real estate and hospitality concentrations and meaningfully above-peer nonperforming loans, which has kept the stock trading at a discount to book value even as management has pushed to diversify the loan book and improve credit quality.
What They Do & How They Make Money
Carter Bank & Trust is a traditional community bank that takes in retail and commercial deposits (checking, savings, money market accounts, and certificates of deposit) and lends them out at a spread, primarily through commercial real estate, construction, commercial and industrial, and consumer/residential loans. Additional revenue comes from fee income tied to deposit accounts, treasury and cash management services, and insurance products sold through the bank's branch network. Profitability is driven by net interest margin (the spread between what the bank earns on loans/securities and pays on deposits/borrowings), loan growth, and credit quality — the last of which has been a particular focus given the bank's loan mix, which as of year-end 2024 was concentrated in commercial real estate (about 54.5% of the portfolio, or roughly $2.0 billion), construction loans (about 13.9%, or $505.2 million), and notable hospitality-sector exposure (about 9.8%, or $354.7 million). Nonperforming loans stood at roughly 7.15% of the total portfolio ($259.3 million) at year-end 2024, a level well above typical community-bank peers, underscoring credit-quality remediation as a central management priority.
Competitors
- National and large regional banks operating in Virginia and North Carolina, which offer broader product sets, digital banking capabilities, and lower funding costs from larger deposit bases.
- Community banks and thrifts across the bank's Virginia/North Carolina footprint competing directly for local deposits and small-business/commercial real estate lending relationships.
- Credit unions, which compete for consumer deposits and lending with member-owned, often lower-cost structures.
- Non-bank lenders and mortgage companies that compete on specific loan products, particularly residential and commercial mortgages.
Competitive Position
Carter Bankshares' position rests on a long-standing, geographically concentrated branch franchise across Virginia and North Carolina, which gives it local relationships and deposit stability in markets where it has operated for decades. That said, community banking is a fundamentally commoditized business: deposit products and standard loan structures are broadly interchangeable across competitors, and larger regional and national banks can often out-price or out-invest smaller players in technology and product breadth. Carter's more pressing challenge is credit quality — its heavy commercial real estate and hospitality concentration, combined with nonperforming loans running well above typical peer levels (7.15% of loans), signals real underwriting and workout risk from its legacy loan book rather than a structural competitive advantage. Management's task going forward is to continue de-risking and diversifying the loan portfolio, hold net interest margin steady as rates evolve, and rebuild credit metrics closer to peer norms, all of which will determine whether the bank can close its valuation discount rather than any inherent moat in the underlying business.