Please ensure Javascript is enabled for purposes of website accessibility

Carter Bank & Trust Fails to File Annual Report With the FDIC

By Bram Berkowitz - Updated Mar 17, 2020 at 12:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Virginia bank cites a pending appraisal for impaired loan relationship.

Carter Bank & Trust (CARE -1.04%) has failed to file its annual report with the Federal Insurance Deposit Corporation, according to a regulatory filing yesterday.

The bank, based in Martinsville, Virginia, said in the filing that, along with its auditor, it is still evaluating the collateral behind an impaired loan relationship.

Analyzing the books.

Image source: Getty Images

"The results of a pending independent appraisal regarding the collateral supporting this impaired loan relationship could potentially impact the financial statements to be included in such Form 10-K if it results in a reserve being necessary for this loan relationship," Carter Bank & Trust's CFO, Wendy Ball, said in the filing. "In addition, there is a potential deficiency in internal controls primarily relating to the valuation of impaired loans within the Allowance for Loan Losses, which could affect prior periods."

Banks set aside allowance for loan losses each quarter so they have sufficient funding to cover faulty loans. The number directly impacts earnings. Carter Bank & Trust, in its filing, said it does not expect the impaired loan to result in any changes to the provision for loan losses.

Overall, allowance for loan losses at the bank improved in the fourth quarter of 2019, according to the bank's fourth-quarter earnings release. The bank also did not have any loans modified as troubled debt restructurings through the first three quarters of 2019, according to its third-quarter earnings report. Net charge-offs, which are debts unlikely to be collected, were greatly reduced for the year after the bank charged off a $10.1 million legacy commercial real estate loan in 2018.

Still, the fact that the bank is having trouble with an impaired loan relationship months later could suggest a more significant problem, especially for a small bank.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Carter Bank & Trust Stock Quote
Carter Bank & Trust
CARE
$13.26 (-1.04%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.