Carter Bankshares (CARE) investor relations material

Executive summary

• Net income for Q1 2026 was $85.8 million ($3.88 diluted EPS), up from $8.5 million in Q4 2025 and $9.0 million in Q1 2025, driven by a significant one-time transaction gain from the sale of nonperforming loans, which also resulted in substantial credit loss recoveries and improved asset quality.

• The sale of nonperforming loans generated $289.5 million in cash, a $65.0 million gain, a $15.0 million net recovery, and released $18.0 million in specific reserves, reducing nonperforming loans from $244.0 million to $24.0 million.

• Reinstated quarterly cash dividend and authorized a $10 million share repurchase program, reflecting enhanced capital and liquidity positions, though no shares were repurchased in Q1 2026.

• Continued focus on operational efficiency, technology investment, and market expansion in Virginia and North Carolina, with a strategic emphasis on organic growth and prudent expansion.

• Announced sale of insurance subsidiary in Q2 2026, expecting a $35.8 million pre-tax gain.

Financial highlights

• Net interest income for Q1 2026 was $35.9 million, up 3.8% sequentially and 19.2% year-over-year, with net interest margin rising to 3.08%.

• Total noninterest income surged to $71.0 million, mainly due to the $65.0 million transaction gain.

• Noninterest expense was $31.0 million, up 10.6% year-over-year, driven by higher salaries, data processing, and professional fees.

• Adjusted net income (excluding the transaction) was $8.6 million.

• Total assets at $4.8 billion, loans at $3.7 billion, and deposits at $4.2 billion as of March 31, 2026.

Outlook and guidance

• Management expects continued loan growth, supported by a healthy pipeline and funding from approximately $450 million in construction commitments over the next 12–18 months.

• Strategic focus remains on organic growth, operational efficiency, and market share expansion in target growth markets.

• The balance sheet remains slightly liability sensitive, positioning for potential Fed rate cuts to further support margin expansion.