Carter Bankshares (CARE) Net Margin Strength Challenges Bearish Credit Narratives In FY 2025 Results

Carter Bankshares (CARE) has wrapped up FY 2025 with fourth quarter revenue of US$42.1 million and basic EPS of US$0.39, supported by trailing twelve month revenue of US$157.1 million and EPS of about US$1.40. The company has seen revenue move from US$140.9 million and basic EPS of about US$1.06 on a trailing basis at the end of 2024 to the latest trailing figures. This gives investors a clearer sense of how earnings power has evolved through the year and what that might mean for margins going forward.

See our full analysis for Carter Bankshares.

With the numbers on the table, the next step is to see how this earnings story lines up with the widely followed market narratives around Carter Bankshares and where those views may need a reset.

Curious how numbers become stories that shape markets? Explore Community Narratives

20% net margin supports stronger EPS run rate

• On a trailing basis, CARE earned US$31.4 million of net income on US$157.1 million of revenue, which lines up with the 20% net margin figure and TTM EPS of about US$1.40.
• What stands out for the bullish view is that trailing earnings grew 29.2% year over year with a 5 year earnings CAGR of 24.9%. Quarterly EPS across FY 2025 stayed close to the US$0.37 to US$0.39 range, which supports the argument that profitability has become more consistent than it was a year earlier.
  • EPS in FY 2025 moved between roughly US$0.24 and US$0.39 per quarter, and TTM EPS reached about US$1.40 compared with US$1.06 a year earlier.
  • Net profit margin at 20%, up from 17.2% the prior year, sits alongside TTM revenue rising from US$140.9 million to US$157.1 million. This supports the view that CARE is converting more of its revenue into bottom line profit.

Loan quality: 6.7% non performing exposure

• Non performing loans sit at 6.7% of the book with only 29% allowance coverage, and quarterly data shows non performing balances around US$250 million to US$287.7 million through FY 2025. This is a key risk flag in the data set.
• Skeptics focus on this credit profile because elevated non performing loans and relatively low coverage can pressure future earnings, and the figures here give that bearish argument concrete footing.
  • Across the last six reported quarters, non performing loans ranged from US$250.6 million to US$287.7 million while the allowance covers 29% of those exposures, so a meaningful portion of problem loans is not reserved against yet.
  • This sits alongside a TTM net margin of 20%. The bearish case is therefore less about current profitability and more about whether additional provisions could affect that earnings level if credit costs rise from this base.

High headline profitability sitting next to a 6.7% non performing loan ratio is exactly the kind of tension skeptics point to when they question how durable these results will be. 🐻 Carter Bankshares Bear Case

P/E and DCF gap vs current US$20.48 price

• CARE trades on a 14.4x P/E, slightly below the 14.6x peer average but above the 11.7x US Banks industry average. The supplied DCF fair value of about US$33.21 sits well above the current US$20.48 share price.
• Supporters of the bullish narrative argue that strong TTM earnings growth of 29.2% and forecast earnings growth of about 15.45% a year help explain why the P/E is above the industry average. The roughly 38.3% gap between the DCF fair value of US$33.21 and the market price around US$20.48 keeps the valuation case in focus.
  • The stock trades below both the DCF fair value estimate and the single analyst price target of US$22.88. This supports the idea that the market is pricing in the credit risks more heavily than the recent earnings run rate.
  • At the same time, a 20% net margin and TTM revenue of US$157.1 million support the view that current profitability is consistent with a P/E near peer levels even as the broader US Banks group trades on a lower multiple.

If you are trying to compare a 14.4x P/E with a DCF fair value of US$33.21, these earnings and credit numbers are the key moving parts to keep in mind. 📊 Read the full Carter Bankshares Consensus Narrative.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Carter Bankshares's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Carter Bankshares combines strong margins with a relatively high 6.7% non performing loan ratio and 29% allowance coverage. This combination keeps credit quality squarely in focus.

If that level of problem loans feels like too much risk, shift your attention to solid balance sheet and fundamentals stocks screener (389 results) today and focus on companies with sturdier financial footing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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