CARE · Carter Bankshares, Inc.

Carter Bankshares, Inc. reported exceptional first quarter 2026 financial results, with net income reaching $85.8 million, or $3.88 diluted EPS, a substantial increase from $0.39 diluted EPS in the prior year quarter. The results were primarily driven by a strategic transaction involving the sale of nonperforming loans related to entities associated with James C. Justice, II. The Bank completed the sale on March 26, 2026, receiving $289.5 million in cash and recognizing an $80.0 million net gain, comprised of a $65.0 million gain on the transaction and a $15.0 million net recovery. This transaction was highly accretive, contributing $3.50 to diluted EPS and increasing tangible book value per share by $3.49.

The transaction dramatically improved the Company's credit quality profile. Nonperforming loans decreased by $220.0 million to $24.0 million, reducing the NPL ratio to 0.64% from 6.29% at December 31, 2025. The allowance for credit losses to total portfolio loans improved to 1.41%, reflecting the release of $18.0 million in specific reserves. Excluding the transaction, underlying credit quality trends remained relatively stable.

Core operating performance also showed strength. Net interest income increased 19.2% year-over-year to $35.9 million, supported by a 41 basis point decline in funding costs and higher average loan balances. Net interest margin expanded 39 basis points year-over-year to 3.07%. The Company noted its balance sheet remains slightly liability sensitive, positioning it to benefit from potential future Federal Reserve interest rate reductions. Management highlighted continued momentum in commercial and small business lending platforms, with net loan growth of 6.1% annualized excluding the transaction impact.