Carter Bankshares, Inc. (CARE): BCG Matrix [Dec-2025 Updated]

You're looking at the hard truth of Carter Bankshares, Inc.'s current engine room, mapped out using the BCG Matrix as of late 2025; it's a story of solid cash generation-like that $4.2$ billion deposit base fueling a 17.1% NII surge in Q3-clashing with necessary future bets, such as heavy tech spending on digital services. We see the Stars, like Commercial Real Estate growing at 9.4%, pulling the wagon, but you also need to see the drag from the Dogs, including $259.0$ million in nonperforming assets, and where the $416.1$ million in liquid securities might be best deployed next. Dive in to see exactly where management must invest, hold, or divest to make the next few years count.

Background of Carter Bankshares, Inc. (CARE)

You're looking at Carter Bankshares, Inc. (CARE), the holding company for Carter Bank, which is a Virginia state-chartered bank. As a seasoned analyst, I can tell you that this is a regional player headquartered in Martinsville, Virginia, focusing its operations across Virginia and North Carolina. As of the third quarter of 2025, Carter Bankshares reported total assets hitting $4.8 billion. That's a solid number, showing growth of $180.9 million since the end of 2024.

The core of the business, the loan portfolio, showed good momentum leading into the end of 2025. Total portfolio loans surged to $3.8 billion at September 30, 2025, which represents an annualized growth of 9.4% from the previous quarter and a 7.8% increase year-over-year. To fund this, total deposits stood at $4.2 billion at the end of Q3 2025, helped by a recent strategic acquisition in May 2025 of two branch facilities from First Reliance Bank in North Carolina.

When we look at profitability from operations, net interest income is definitely the engine here. For the third quarter of 2025, net interest income reached $33.7 million, marking a strong 17.1% increase compared to the same period in 2024. However, the bottom line for that quarter was a bit pressured; diluted earnings per share (EPS) came in at $0.24, down sequentially from $0.37 in Q2 2025, largely due to a swing in the provision for credit losses. Still, looking at the year-to-date performance for the nine months ending September 30, 2025, net income was $22.9 million, a significant improvement over the $16.2 million earned in the first nine months of 2024.

Operationally, you can see management is focused on efficiency; the GAAP efficiency ratio improved to 73.43% in Q3 2025 from 78.63% in Q2 2025. The company maintains a strong regional footprint with 64 branches across Virginia and North Carolina, and they are actively expanding their presence in the Carolinas. It's worth noting, though, that the company continues to manage the drag from a large nonaccrual relationship, which has negatively impacted aggregate interest income by $85.2 million since the second quarter of 2023.

Carter Bankshares, Inc. (CARE) - BCG Matrix: Stars

You're looking at the engine room of Carter Bankshares, Inc.'s current growth, the Stars quadrant. These are the areas where the bank has a strong foothold in a market that's still expanding rapidly. The key here is that while they bring in revenue, they also demand significant investment to maintain that high market share and growth trajectory. If Carter Bankshares, Inc. manages to sustain this success as the market matures, these Stars are what you expect to see transition into the Cash Cows later on.

The momentum in the loan portfolio, particularly in high-growth asset classes, clearly signals Star behavior. As of September 30, 2025, the total portfolio loans showed an annualized growth rate of 9.4% when comparing that quarter's balance to the prior quarter's balance, pushing the total portfolio to $3.8 billion.

The primary drivers for this high growth are Commercial Real Estate (CRE) and Construction lending. Here's a quick look at the quarter-over-quarter growth that defines this segment as a Star:

This aggressive asset generation is being funded smartly, too. For the year-to-date period ending Q3 2025, the loan production was funded at a yield of 6.77%. That's a solid return on the assets being originated right now, which is exactly what you want to see supporting a Star business unit.

To keep this high-growth engine running, Carter Bankshares, Inc. is making concrete moves to secure market share in attractive geographies. These strategic actions are designed to feed the Star segment with new deposits and talent:

• Strategic expansion in North Carolina, evidenced by the May 2025 branch acquisition that added $55.9 million in deposits.
• The bank now operates 64 branches across Virginia and North Carolina as of September 30, 2025.
• Total deposits as of September 30, 2025, stood at $4.2 billion.

Also, you can't grow a commercial book without the right people. Carter Bankshares, Inc. is actively supporting this commercial lending platform momentum by adding seasoned lenders in key growth markets like Charlotte and Raleigh. This investment in human capital is crucial because Stars need that support for promotion and placement to solidify their leadership position, so it's a necessary cash outflow right now.

Carter Bankshares, Inc. (CARE) - BCG Matrix: Cash Cows

You're looking at the core engine of Carter Bankshares, Inc. (CARE) here, the business units that are market leaders in mature segments and are relied upon to fund everything else. These Cash Cows are the bedrock; they generate more cash than they consume, which is exactly what you want in a stable financial institution.

The stability of this segment is clearly visible in the deposit structure. You see a highly granular core retail deposit base, which is the definition of sticky, low-cost funding. As of September 30, 2025, the total deposits stood at $4.2 billion. What really drives the 'low-cost' part of that equation is the composition: 78.2% of those deposits came directly from retail customers. That granular base means less reliance on volatile, high-cost wholesale funding sources.

This deposit franchise directly fuels the profitability that defines a Cash Cow. Look at the Net Interest Income (NII) for the third quarter of 2025. NII hit $33.7 million. That's a significant operating cash generator, representing a 17.1% increase year-over-year compared to Q3 2024. That kind of consistent, high-margin performance is why we categorize this as a Cash Cow-it's milking the mature market effectively.

The physical footprint supports this stable market share. The overall Virginia branch network, which includes operations across Virginia and North Carolina, totals 64 branches as of September 30, 2025. This physical presence maintains the foundational market share necessary to keep those deposits flowing in at a low cost. Honestly, these numbers show a business unit that requires minimal promotional spend because its market position is already established.

Here's a quick look at how these key metrics stack up for the Cash Cow segment as of the end of Q3 2025:

The strategy here isn't aggressive expansion, but efficiency and maintenance. You want to invest just enough to keep the infrastructure running smoothly and maximize the cash extraction. The focus shifts to supporting infrastructure investments that improve efficiency and further boost that cash flow, rather than heavy marketing to steal share in a slow-growth area. The key actions for this unit are:

• Maintain the granular retail deposit base.
• Invest in infrastructure to lower funding costs.
• 'Milk' the gains passively for corporate use.
• Ensure the 64 branch network remains efficient.

If onboarding takes 14+ days, churn risk rises, even for a Cash Cow. Finance: draft 13-week cash view by Friday.

Carter Bankshares, Inc. (CARE) - BCG Matrix: Dogs

Dogs are business units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture. Dogs are in low growth markets and have low market share, so you should avoid and minimize them. To be fair, expensive turn-around plans usually do not help.

For Carter Bankshares, Inc. (CARE), the assets and activities categorized as Dogs are those that consume management time and capital without generating sufficient returns, reflecting low market share in their respective segments or slow resolution. These areas require careful management to avoid becoming a persistent drain on resources. You're looking at areas where capital is tied up in underperforming assets, which is never ideal for maximizing shareholder value.

The most significant drag is tied to legacy credit issues. The largest non-accrual credit relationship, identified as the Justice Entities, still held a principal balance of approximately $245.1 million as of Q1 2025. This single relationship consumes substantial management focus. Furthermore, the overall Nonperforming Assets (NPAs) totaled $259.0 million as of September 30, 2025, which definitely consumes management time and capital that could be better deployed elsewhere.

The portfolio also includes legacy, lower-yielding Bank-Owned Life Insurance (BOLI) assets, signaling a move away from older, less efficient holdings. In a proactive step to improve yield, Carter Bankshares, Inc. surrendered $10.5 million of these BOLI assets in Q1 2025 to reinvest in higher-yielding assets. Also indicative of low-growth activity is the noninterest income from insurance commissions, which saw a decline in activity during the first nine months of 2025.

Here's the quick math on the key figures associated with these 'Dog' elements as of the reporting periods in 2025:

These items represent areas where the low market share (in the case of the non-accruals) or low yield (in the case of BOLI) keeps them firmly in the Dog quadrant. What this estimate hides is the ongoing cost of managing the legal and collection efforts for the non-accruals.

Consider the impact on noninterest income streams:

• Decline in insurance commissions activity for the first nine months of 2025.
• The decline in insurance commissions for the nine months ended September 30, 2025, was $0.5 million compared to the same period in 2024.
• The Q3 2025 noninterest income was $5.4 million, a slight decrease compared to Q3 2024.
• A $1.9 million gain on a BOLI death benefit in Q1 2025 temporarily boosted noninterest income, masking the underlying low-yield nature of the remaining BOLI portfolio.

Finance: draft 13-week cash view by Friday.

Carter Bankshares, Inc. (CARE) - BCG Matrix: Question Marks

You're looking at the Question Marks quadrant for Carter Bankshares, Inc. (CARE), which is where high-growth potential meets low current market penetration. These are the areas consuming cash now, hoping to become tomorrow's Stars. For Carter Bankshares, Inc., this involves significant outlays to capture new ground and build new capabilities.

The strategic imperative here is clear: invest heavily to gain share quickly or risk these units becoming Dogs. These activities are cash-intensive because they are either new to the market or require substantial technology upgrades to compete effectively.

• New digital banking products and services, a focus of the three-year strategic plan that requires heavy technology investment.
• Expansion into new, competitive metropolitan statistical areas (MSAs) where initial market share is low but growth potential is high.

The financial evidence of this investment and high-growth pursuit is visible in the recent expense reports and the balance sheet structure. For instance, the provision for credit losses reflects the necessary buffer to support the aggressive loan growth Carter Bankshares, Inc. is pursuing across its markets. In the third quarter of 2025, the provision for credit losses was an expense of $2.9 million, a significant swing from the recovery of $(0.4) million seen in the same period last year. This expense signals management is reserving capital to support the surging loan portfolio, which grew by $210.8 million, or 7.8%, as of September 30, 2025, compared to December 31, 2024.

To fund this growth and maintain liquidity for future strategic moves, Carter Bankshares, Inc. holds a substantial pool of liquid assets. As of September 30, 2025, the unpledged available-for-sale investment securities stood at $416.1 million. This represents a pool of assets ready to be deployed, either to fund further organic growth or to support strategic acquisitions in those high-growth MSAs, like the recent branch acquisitions in North Carolina or the announced entry into the South Carolina market.

Here's a look at how key balance sheet components reflect this positioning as of the end of Q3 2025:

The bank's total assets reached $4.8 billion as of September 30, 2025. The management's focus on expanding the footprint, including the acquisition of two branch facilities from First Reliance Bank in May 2025, demonstrates the action being taken to convert these Question Marks into Stars.

• Total assets: $4.8 billion as of September 30, 2025.
• Total deposits: $4.2 billion as of September 30, 2025.
• Loan growth (since Dec 31, 2024): $210.8 million.

The goal is to rapidly increase market share in these new digital and geographic areas, turning the current cash consumption from the provision for credit losses and technology investment into future returns.