Carter Bankshares : Second Quarter 2025 Press Release

About this update from Carter Bankshares, Inc.

NEWS RELEASE Carter Bankshares, Inc. Announces Second Quarter 2025 Financial Results 2025-07-24 MARTINSVILLE, VA / ACCESS Newswire / July 24, 2025 / Carter Bankshares, Inc. (the "Company") (NASDAQ:CARE), the holding company of Carter Bank (the "Bank") today announced quarterly net income of $8.5 million, or $0.37 diluted earnings per share ("EPS"), for the second quarter of 2025 compared to net income of $9.0 million, or $0.39 diluted EPS, for the rst quarter of 2025 and net income of $4.8 million, or $0.21 diluted EPS, for the second quarter of 2024. Net interest income was $32.4 million for the second quarter of 2025, $30.1 million for the rst quarter of 2025, and $28.1 million for the second quarter of 2024. Pre-tax pre-provision income 1 was $8.0 million for the second quarter of 2025, $9.0 million for the rst quarter of 2025 and $6.2 million for the second quarter of 2024. For the six months ended June 30, 2025, net income was $17.5 million, or $0.76 diluted EPS, compared to net income of $10.6 million, or $0.46 diluted EPS for the same period in 2024. Net interest income was $62.5 million for the six months ended June 30, 2025, and $56.5 million for the six months ended June 30, 2024. Pre-tax pre-provision income 1 was $17.0 million and $13.4 million for the six months ended June 30, 2025 and 2024, respectively. At the close of business on May 23, 2025, the Company completed the acquisition of two leased branch facilities and the deposits associated therewith, located in Mooresville, North Carolina and Winston-Salem, North Carolina, from First Reliance Bank (the "Branch Purchase"). In the Branch Purchase the Bank acquired $55.9 million of deposits, as well as cash, personal property and other xed assets related to the branch locations purchased, and welcomed 10 new associates to its team. The Branch Purchase did not include any loans. On May 20, 2025, the Company announced a stock repurchase program to purchase up to $20.0 million of the Company's common stock through May 14, 2026. The repurchase program does not obligate the Company to purchase any particular number of shares and may be modi ed or terminated by the Company's Board of Directors at any time. As of June 30, 2025, under the repurchase program we have repurchased 547,332 shares of the Company's common stock at a total cost of $9.1 million and a weighted average cost per share of $16.70. The Company's nancial results continue to be signi cantly impacted by loans in the Bank's Other segment of the Company's loan portfolio, the signi cant majority of which have been on nonaccrual status since the second quarter of 2023. The Bank's loans, now reduced to judgments, relate to various entities in which James C. Justice, II has an interest (collectively, the "Justice Entities"), remain the Bank's largest credit relationship and comprise the signi cant majority of the Other segment with an aggregate principal balance of $235.5 million as of June 30, 2025. Interest income was negatively impacted by $6.7 million during the second quarter of 2025, $6.8 million during the rst quarter of 2025, and $9.1 million during the second quarter of 2024, due to these credits being on nonaccrual status. Interest income has been negatively impacted by $78.6 million in the aggregate since placement of these credits on nonaccrual status during the second quarter of 2023. During the second quarter of 2025, the Company received $9.5 million of curtailment payments. As of June 30, 2025, $66.4 million of aggregate curtailment payments made by the Justice Entities to the Bank have decreased the aggregate nonperforming loan ("NPL") balance from $301.9 million as of June 30, 2023 to $235.5 million as of June 30, 2025. For additional information regarding the Bank's credit relationship with the Justice Entities, see "Credit Quality." Financial Highlights for the Three and Six Months Ended June 30, 2025 Total portfolio loans increased $59.6 million, or 6.5%, on an annualized basis, to $3.7 billion at June 30, 2025 from March 31, 2025 and increased $197.6 million, or 5.6% from June 30, 2024; The allowance for credit losses to total portfolio loans was 1.90%, 1.99% and 2.72% at June 30, 2025, March 31, 2025 and June 30, 2024, respectively; Total deposits increased $21.3 million, or 2.0% on an annualized basis, compared to March 31, 2025 and increased $340.9 million, or 8.8%, compared to June 30, 2024; Net interest income totaled $32.4 million, an increase of $2.2 million, or 7.4% compared to the prior quarter, and an increase of $4.3 million, or 15.2% compared to the year ago quarter. Net interest margin, on a fully taxable equivalent ("FTE") basis 3 , increased 12 basis points to 2.82% for the second quarter of 2025, compared to 2.70% for the prior quarter and increased 26 basis points from the year ago quarter. Net interest income and net interest margin continue to be signi cantly impacted by the Bank's largest lending relationship remaining on nonaccrual status since the second quarter of 2023; NPLs decreased by $10.9 million to $250.6 million at June 30, 2025 compared to March 31, 2025. NPLs to total portfolio loans were 6.69% at June 30, 2025, 7.09% at March 31, 2025 and 8.46% at June 30, 2024; and The e ciency ratio was 78.63%, 75.71% and 81.62%, and the adjusted e ciency ratio (non-GAAP) 4 was 75.55%, 78.67%, and 81.33% for the quarters ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. The e ciency ratio was impacted by the Bank's largest lending relationship that was placed in nonaccrual status during the second quarter of 2023 and a one-time gain on death bene t and expenses related to the Company's surrender of bank owned life insurance ("BOLI") in the rst and second quarters of 2025. "We are pleased to report another quarter with strong fundamentals and positive trends in the second quarter of 2025. During the quarter, we continued to see margin expansion and solid loan growth throughout our footprint. Our annualized loan growth of 6.5% re ects good momentum in our commercial lending platform. Our loan pipeline remains healthy and we continue to expect a tailwind from prior construction lending that will come online over the coming 12 to 18 months as projects progress. The Bank continues to add seasoned commercial lenders in key strategic growth markets. On the deposit side, balances are showing modest growth and cost of deposits continues to decline, albeit at a slower pace. If the Federal Reserve reduces short-term interest rates in the near term, we are well positioned to bene t given the short-term nature of our certi cates of deposit ("CD") portfolio," stated Litz H. Van Dyke, Chief Executive O cer. Van Dyke continued, "Additionally, in the second quarter we completed the purchase of two leased branch facilities in Mooresville and Winston-Salem, North Carolina and the associated deposits from First Reliance Bank. The Bank acquired $55.9 million of deposits at the two branch locations. We are thrilled to welcome First Reliance's associates and customers to the Carter family." Van Dyke continued, "On May 20, 2025, we announced a stock repurchase program to purchase up to $20.0 million of the Company's common stock through May 14, 2026. Given our strong capital position, we believe that this program currently is the most prudent way to deliver shareholder value. As of June 30, 2025, we have utilized approximately 46% of the stock repurchase program." Van Dyke concluded, "Although our large nonperforming credit relationship continues to have a negative impact on our nancial and credit metrics, aside from this impact, our fundamentals, nancial performance, and asset quality metrics all remain solid. We are committed to resolving this lending relationship in a manner that best protects our Company and our shareholders in the long-term. We continue to believe we are well positioned for a strong remainder of 2025." Operating Highlights Credit Quality NPLs as a percentage of total portfolio loans were 6.69%, 7.09% and 8.46% at June 30, 2025, March 31, 2025 and June 30, 2024, respectively. At June 30, 2025, NPLs decreased $10.9 million to $250.6 million compared to March 31, 2025. The decrease during the quarter was primarily due to $9.5 million of curtailment payments made by the Bank's largest NPL credit relationship, as well as a decline of $1.2 million in nonaccrual residential mortgages. Since the Bank's largest lending relationship was transferred to nonaccrual status, in the second quarter of 2023 due to loan maturities and failure to pay in full, this relationship's NPL balance has decreased from $301.9 million at June 30, 2023 to $235.5 million at June 30, 2025. This NPL relationship represents 94.0% of total NPLs and 6.3% of total portfolio loans at June 30, 2025. The Company continues to believe it is well secured based on the net carrying value of the credit relationship and is appropriately reserved for potential credit losses with respect to all such loans based on information currently available. However, the Company cannot give any assurance as to the timing or amount of future payments or collections on such loans or that the Company will ultimately collect all amounts contractually due under the terms of such loans. The speci c reserves with respect to the Bank's largest NPL credit relationship were $24.0 million at June 30, 2025 compared to $27.1 million at March 31, 2025. The decline during the second quarter of 2025 was driven by the aforementioned curtailment payments and updated analysis of the credit relationship. The Company uses the discounted cash ow model with updated assumptions and inputs regarding the credit relationship, legal risk and related risks. The updated analysis and the impact on the speci c reserves signi cantly contributed to the $(2.3) million (recovery) for credit losses during the second quarter of 2025 as compared to the prior quarter. During the second quarter of 2025, the (recovery) provision for credit losses was a recovery of $(2.3) million compared to a recovery of $(2.0) million during the rst quarter of 2025 and a provision for credit losses of $491 thousand during the second quarter of 2024. The change compared to the rst quarter of 2025 was primarily driven by a decline in the Other segment reserve rate from 11.05% to 10.18%, higher curtailment payments in the second quarter of 2025 compared to the rst quarter of 2025, partially o set by loan growth in the second quarter of 2025. During the second quarter of 2025, the recovery for unfunded commitments was a recovery of $(335) thousand compared to a recovery of $(114) thousand in the rst quarter of 2025 and a recovery of $(236) thousand in the second quarter of 2024. The increased recovery during the second quarter of 2025 compared to both the rst quarter of 2025 and the second quarter of 2024 was due to decreased unfunded commitments in construction loans. Net Interest Income Net interest income for the second quarter of 2025 increased $2.2 million, or 7.4%, to $32.4 million compared to the rst quarter of 2025 and increased $4.3 million, or 15.2% compared to the second quarter of 2024. The increase in net interest income for the second quarter of 2025 was primarily due to 14 basis point and 30 basis point declines in funding costs and one basis point and four basis point increases in the yield on average interest-earning assets compared to the rst quarter of 2025 and the second quarter of 2024, respectively. Net interest margin, on a FTE basis 3 , increased 12 basis points to 2.82% compared to the rst quarter of 2025, and increased 26 basis points compared to the second quarter of 2024. The increases during the second quarter of 2025 were driven by lower funding costs and higher yields on interest-earning assets. Total interest-bearing deposit costs decreased 16 basis points to 2.70% compared to 2.86% in the rst quarter of 2025, while the balance of average interest-bearing deposits increased $31.8 million compared to the rst quarter of 2025 primarily due to the Branch Purchase. The lower interest-bearing funding costs were positively impacted by the Federal Reserve's cut of short-term interest rates by 100 basis points beginning from September 2024 to December 2024. Total average borrowings increased $39.2 million to $119.5 million compared to the rst quarter of 2025 primarily due to additional Federal Home Loan Bank ("FHLB") borrowings to fund loan growth. Noninterest Income Noninterest Income was $4.9 million for the second quarter of 2025 a decrease of $2.0 million, or 28.9%, compared to the rst quarter of 2025 and a decrease of $0.6 million, or 11.3%, compared to the second quarter of 2024. The primary driver for the decrease compared to the previous quarter was the $1.9 million gain on a BOLI death bene t recorded in other noninterest income in the rst quarter of 2025. The most signi cant decreases compared to the year ago quarter were $0.3 million in other noninterest income and $0.2 million in insurance commissions due to lower activity in the second quarter of 2025. Noninterest Expense Noninterest expense was $29.3 million for the second quarter of 2025 an increase of $1.3 million, or 4.5% compared to the rst quarter of 2025 and an increase of $1.9 million compared to the second quarter of 2024. The primary drivers compared to the rst quarter of 2025 were increases in other noninterest expenses, professional and legal fees, and salaries and employee bene ts. Other noninterest expenses increased due to a $0.3 million 1035 exchange fee as a direct result of the early surrender of one of the Company's BOLI policies recorded in the second quarter of 2025. Professional and legal fees increased $0.4 million due to costs expensed in the second quarter of 2025. Salaries and employee bene ts increased $0.4 million primarily due to higher medical expenses and one extra day in the second quarter of 2025, as well as ten full-time associates retained from the Branch Purchase. Other noninterest expenses and professional and legal fees similarly increased compared to the second quarter of 2024 driven by the matters discussed above. However, occupancy expense, net increased $0.4 million primarily due to additional software and maintenance expenses and higher depreciation expense as a result of the Branch Purchase. Financial Condition Total assets increased $83.8 million, to $4.8 billion at June 30, 2025 compared to March 31, 2025. Cash and due from banks increased $10.9 million to $99.9 million at June 30, 2025 compared to $89.0 million at March 31, 2025. The available-for-sale securities portfolio increased $9.8 million compared to March 31, 2025 and is currently 15.8% of total assets at June 30, 2025 compared to 15.9% of total assets at March 31, 2025. The increase is due to new security purchases, partially o set by normal paydowns and maturities. Total portfolio loans increased $59.6 million, or 6.5%, on an annualized basis, to $3.7 billion at June 30, 2025 compared to March 31, 2025. The increase in portfolio loans compared to March 31, 2025 related to growth of $84.9 million in commercial real estate loans ("CRE") and an increase of $12.9 million in residential mortgages, partially o set by the following decreases: $15.7 million in construction, $12.1 million in commercial and industrial ("C&I"), $9.5 million in other and $0.8 million in other consumer. Total deposits increased $21.3 million to $4.2 billion at June 30, 2025 compared to March 31, 2025. Total deposits included $55.9 million related to the Branch Purchase completed during the second quarter of 2025; however, excluding these assumed deposits, total deposits decreased $34.6 million compared to March 31, 2025 primarily due to a few large commercial depositors repositioning funds for working capital needs during the second quarter. FHLB borrowings increased $58.5 million to $113.5 million at June 30, 2025 compared to March 31, 2025 due to additional FHLB borrowings to fund loan growth. At June 30, 2025 and March 31, 2025, approximately 81.5% of our total deposits of $4.2 billion were insured under standard Federal Deposit Insurance Corporation ("FDIC") insurance coverage limits, and approximately 18.5% of our total deposits were uninsured deposits over the standard FDIC insurance coverage limit, respectively. Capitalization and Liquidity The Company remained well capitalized at June 30, 2025. The Company's Tier 1 Capital ratio was 10.87% at June 30, 2025 as compared to 11.01% at March 31, 2025. The Company's leverage ratio was 9.46% at June 30, 2025 as compared to 9.67% at March 31, 2025. The Company's Total Risk-Based Capital ratio was 12.12% at June 30, 2025 as compared to 12.27% at March 31, 2025. At June 30, 2025, funding sources accessible to the Company include borrowing availability at the FHLB, equal to 25.0% of the Company's assets or approximately $1.2 billion, subject to the amount of eligible collateral pledged, of which the Company is eligible to borrow up to an additional $732.0 million. The Company has unsecured facilities with three other correspondent nancial institutions totaling $30.0 million, a fully secured facility with one other correspondent nancial institution totaling $45.0 million, and access to the institutional CD market. The Company did not have outstanding borrowings on these federal funds lines as of June 30, 2025. In addition to the above funding resources, the Company also has $438.8 million unpledged available-for-sale investment securities, at fair value, as an additional source of liquidity. About Carter Bankshares, Inc. Headquartered in Martinsville, VA, Carter Bankshares, Inc. (NASDAQ:CARE) provides a full range of commercial banking, consumer banking, mortgage and services through its subsidiary Carter Bank. The Company has $4.8 billion in assets and 64 branches in Virginia and North Carolina. For more information or to open an account visit https://www.carterbank.com . Important Note Regarding Non-GAAP Financial Measures In addition to the results of operations presented in accordance with generally accepted accounting principles in the United States ("GAAP"), our management uses, and this press release contains or references, certain non-GAAP nancial measures and should be read along with the accompanying tables in our de nitions and reconciliations of GAAP to non-GAAP nancial measures. This press release and the accompanying tables discuss nancial measures that we believe are useful because they enhance the ability of investors and management to evaluate and compare the Company's operating results from period to period in a meaningful manner. Management also believes these measures provide information useful to investors in understanding our underlying business, operational performance and performance trends as these measures facilitate comparisons with the performance of other companies in the nancial services industry. Non-GAAP measures should not be considered as an alternative to GAAP or considered to be more relevant than nancial results determined in accordance with GAAP, nor are they necessarily comparable with similar non-GAAP measures that may be presented by other companies. Investors should consider the Company's performance and nancial condition as reported under GAAP and all other relevant information when assessing the performance or nancial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or nancial condition as reported under GAAP. Important Note Regarding Forward-Looking Statements This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made in Mr. Van Dyke's quotations and may include statements relating to our nancial condition, market conditions, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality and nonaccrual and nonperforming loans. Forward looking statements are typically identi ed by words or phrases such as "will likely result," "expect," "anticipate," "estimate," "forecast," "project," "intend," " believe," "assume," "strategy," "trend," "plan," "outlook," "outcome," "continue," "remain," "potential," "opportunity," "comfortable," "current," "position," "maintain," "sustain," "seek," "achieve" and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are di cult to predict and often are beyond the Company's control. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to di er materially from those made, projected, or implied in or by the forward-looking statements including, but not limited to the e ects of: market interest rates and the impacts of market interest rates on economic conditions, customer behavior, and the Company's net interest margin, net interest income and its deposit, loan and securities portfolios; in ation, market and monetary uctuations; changes in trade, tari s, monetary and scal policies and laws of the U.S. government and the related impacts on economic conditions and nancial markets, and changes in policies of the Federal Reserve, FDIC and U.S. Department of the Treasury; changes in accounting policies, practices, or guidance, for example, our adoption of Current Expected Credit Losses ("CECL") methodology, including potential volatility in the Company's operating results due to application of the CECL methodology; cyber-security threats, attacks or events; rapid technological developments and changes; our ability to resolve our nonperforming assets and our ability to secure collateral on loans that have entered nonaccrual status due to loan maturities and failure to pay in full; changes in the Company's liquidity and capital positions; concentrations of loans secured by real estate, particularly CRE loans, and the potential impacts of changes in market conditions on the value of real estate collateral; increased delinquency and foreclosure rates on CRE loans; an insu cient allowance for credit losses; the potential adverse e ects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, war and other geopolitical con icts or public health events, and of any governmental and societal responses thereto; these potential adverse e ects may include, without limitation, adverse e ects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company's liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on nancial markets and economic growth; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight, including our relationship with regulators and any actions that may be initiated by our regulators; legislation a ecting the nancial services industry as a whole, and the Company and the Bank, in particular; the outcome of pending and future litigation and/or governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-e ective basis; managing our internal growth and acquisitions; the possibility that the anticipated bene ts from acquisitions cannot be fully realized in a timely manner or at all, or that integrating acquired operations will be more di cult, disruptive or more costly than anticipated; the soundness of other nancial institutions and any indirect exposure related to large bank failures and their impact on the broader market through other customers, suppliers and partners or that the conditions which resulted in the liquidity concerns with those failed banks may also adversely impact, directly or indirectly, other nancial institutions and market participants with which the Company has commercial or deposit relationships with; material increases in costs and expenses; reliance on signi cant customer relationships; general economic or business conditions, including unemployment levels, supply chain disruptions and slowdowns in economic growth; signi cant weakening of the local economies in which we operate; changes in customer behaviors, including consumer spending, borrowing and saving habits; changes in deposit ows and loan demand; our failure to attract or retain key associates; expansions or consolidations in the Company's branch network, including that the anticipated bene ts of the Company's branch acquisitions or the Company's branch network optimization project are not fully realized in a timely manner or at all; deterioration of the housing market and reduced demand for mortgages; and re-emergence of turbulence in signi cant portions of the global nancial and real estate markets that could impact our performance, both directly, by a ecting our revenues and the value of our assets and liabilities, and indirectly, by a ecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our lings with the Securities and Exchange Commission, including in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. All risk factors and uncertainties described herein and therein should be considered in evaluating the Company's forward-looking statements. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events are expressed in or implied by a forward-looking statement may, and often do, di er materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update, revise or clarify any forward-looking statement to re ect developments occurring after the statement is made, except as required by law. Carter Bankshares, Inc. [email protected] CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA BALANCE SHEETS June 30, 2025 March 31, 2025 June 30, 2024 (unaudited) (unaudited) (unaudited) (Dollars in Thousands, except per share data) ASSETS $ 99,905 $ 88,999 $ 61,746 Cash and Due From Banks, including Interest-Bearing Deposits of $51,890 at June 30, 2025 , $46,490 at March 31, 2025 and $21,364 at June 30, 2024 755,212 745,390 746,325 Securities Available-for-Sale, at Fair Value 10,200 10,178 5,063 Equity Securities 246 - - Loans Held-for-Sale 3,747,121 3,687,495 3,549,521 Portfolio Loans (71,023 Allowance for Credit Losses ) (73,518 ) (96,686) 3,676,098 Portfolio Loans, net 3,613,977 3,452,835 72,105 73,944 73,347 Bank Premises and Equipment, net 1,193 - - Goodwill 1,073 - - Core Deposit Intangible 1,657 577 2,501 Other Real Estate Owned, net 8,653 5,875 14,467 Federal Home Loan Bank Stock, at Cost Bank Owned Life Insurance Other Assets Total Assets 48,365 48,224 58,828 109,384 113,123 117,397 $ 4,784,091 $ 4,700,287 $ 4,532,509 LIABILITIES $ 635,192 $ 631,714 $ 653,296 805,013 794,059 565,465 544,764 528,381 500,475 343,659 353,394 399,833 1,893,611 1,893,379 1,762,232 4,222,239 4,200,927 3,881,301 113,500 55,000 238,000 2,737 3,072 2,914 39,980 39,522 45,883 4,378,456 4,298,521 4,168,098 Deposits: Noninterest-Bearing Demand Interest-Bearing Demand Money Market Savings Certi cates of Deposit Total Deposits Federal Home Loan Bank Borrowings Reserve for Unfunded Loan Commitments Other Liabilities Total Liabilities SHAREHOLDERS' EQUITY 22,670 23,162 23,073 84,146 92,418 91,274 351,069 342,559 319,697 (52,250) (56,373) (69,633) 405,635 401,766 364,411 $ 4,784,091 $ 4,700,287 $ 4,532,509 Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares; Outstanding- 22,669,834 shares at June 30, 2025 , 23,161,993 shares at March 31, 2025 and 23,072,750 shares at June 30, 2024 Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity Total Liabilities and Shareholders' Equity PERFORMANCE RATIOS Return on Average Assets (QTD Annualized) Return on Average Assets (YTD Annualized) Return on Average Shareholders' Equity (QTD Annualized) Return on Average Shareholders' Equity (YTD Annualized) 0.72% 0.78% 0.43% 0.75% 0.78% 0.47% 8.45% 9.27% 5.40% 8.85% 9.27% 5.99% Portfolio Loans to Deposit Ratio Allowance for Credit Losses to Total Portfolio Loans 88.75% 87.78% 91.45% 1.90% 1.99% 2.72% CAPITALIZATION RATIOS Shareholders' Equity to Assets Tier 1 Leverage Ratio Risk-Based Capital - Tier 1 Risk-Based Capital - Total 8.48% 8.55% 8.04% 9.46% 9.67% 9.43% 10.87% 11.01% 10.95% 12.12% 12.27% 12.22% CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA INCOME STATEMENTS Quarter-to-Date Year-to-Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (Dollars in Thousands, except per share data) $ 57,747 $ 56,007 $ 54,583 $ 113,754 $ 108,632 Interest Income 25,388 25,869 26,491 51,257 52,121 Interest Expense 32,359 30,138 28,092 62,497 56,511 NET INTEREST INCOME (2,330) (2,025) 491 (4,355) 507 (Recovery) Provision for Credit Losses (335) (114) (236) (449) (279) Recovery for Unfunded Commitments NET INTEREST INCOME AFTER (RECOVERY) PROVISION FOR 35,024 32,277 27,837 67,301 56,283 CREDIT LOSSES NONINTEREST INCOME - - 36 - 36 Gains on Sales of Securities, net 1,765 1,874 1,852 3,639 3,727 Service Charges, Commissions and Fees 1,942 2,104 1,933 4,046 4,019 Debit Card Interchange Fees 714 344 934 1,058 1,548 Insurance Commissions 357 341 365 698 713 Bank Owned Life Insurance Income 130 2,238 413 2,368 535 Other 4,908 6,901 5,533 11,809 10,578 Total Noninterest Income NONINTEREST EXPENSE 14,082 13,657 14,216 27,739 28,416 Salaries and Employee Bene ts 4,230 4,472 3,793 8,702 7,541 Occupancy Expense, net 1,436 1,430 1,566 2,866 3,253 FDIC Insurance Expense 922 947 894 1,869 1,802 Other Taxes 708 911 528 1,619 885 Advertising Expense 307 304 342 611 759 Telephone Expense 1,921 1,230 1,542 3,151 3,055 Professional and Legal Fees 1,395 1,444 1,234 2,839 2,125 Data Processing 991 992 808 1,983 1,564 Debit Card Expense 3,312 2,655 2,523 5,967 4,303 Other 29,304 28,042 27,446 57,346 53,703 Total Noninterest Expense 10,628 11,136 5,924 21,764 13,158 Income Before Income Taxes 2,118 2,183 1,121 4,301 2,544 Income Tax Provision $ 8,510 $ 8,953 $ 4,803 $ 17,463 $ 10,614 Net Income 22,669,834 23,161,993 23,072,750 22,669,834 23,072,750 Shares Outstanding, at End of Period 22,805,881 22,873,800 22,826,510 22,839,412 22,798,476 Average Shares Outstanding-Basic & Diluted PER SHARE DATA $ 0.37 $ 0.39 $ 0.21 $ 0.76 $ 0.46 Basic Earnings Per Common Share* $ 0.37 $ 0.39 $ 0.21 $ 0.76 $ 0.46 Diluted Earnings Per Common Share* $ 17.89 $ 17.35 $ 15.79 $ 17.89 $ 15.79 Book Value $ 17.34 $ 16.18 $ 15.12 $ 17.34 $ 15.12 Market Value PROFITABILITY RATIOS (GAAP) Net Interest Margin E ciency Ratio PROFITABILITY RATIOS (Non-GAAP) Net Interest Margin (FTE) 3 Adjusted E ciency Ratio (Non-GAAP) 4 2.80% 2.68% 2.55% 2.74% 2.56% 78.63% 75.71% 81.62% 77.18% 80.05% 2.82% 2.70% 2.56% 2.76% 2.58% 75.55% 78.67% 81.33% 77.06% 80.17% *All outstanding unvested restricted stock awards are considered participating securities for the earnings per share calculation. As such, these shares have been allocated to a portion of net income and are excluded from the diluted earnings per share calculation. CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA NET INTEREST MARGIN (FTE) (QTD AVERAGES) (Unaudited) June 30, 2025 March 31, 2025 June 30, 2024 Average Income/ Rate Average Income/ Rate Average Income/ Rate (Dollars in Thousands) Balance Expense Balance Expense Balance Expense ASSETS Interest-Bearing Deposits with Banks Tax-Free Investment Securities 3 Taxable Investment $ 58,006 $ 643 4.45% $ 67,387 $ 748 4.50% $ 31,083 $ 420 5.43% 11,622 85 2.93% 11,662 84 2.92% 11,779 86 2.94% 818,588 6,796 3.33% 807,891 6,655 3.34% 841,787 7,721 3.69% 830,210 6,881 3.32% 819,553 6,739 3.33% 853,566 7,807 3.68% 89,362 732 3.29% 93,480 761 3.30% 105,487 854 3.26% 3,648,629 49,522 5.44% 3,567,184 47,825 5.44% 3,430,330 45,395 5.32% Securities Total Securities Tax-Free Loans 3 Taxable Loans 3,737,991 50,254 5.39% 3,660,664 48,586 5.38% 3,535,817 46,249 5.26% Total Loans Federal Home Loan Bank 8,428 140 6.66% 6,499 112 6.99% 16,611 304 7.36% 4,634,635 57,918 5.01% 4,554,103 56,185 5.00% 4,437,077 54,780 4.97% 126,303 121,766 91,648 $ 4,760,938 $ 4,675,869 $ 4,528,725 Stock Total Interest-Earning Assets Noninterest Earning Assets LIABILITIES AND SHAREHOLDERS' EQUITY $ 805,749 $ 3,661 1.82% $ 744,895 $ 3,386 1.84% $ 532,700 $ 1,689 1.28% Interest-Bearing Demand 536,366 3,510 2.62% 525,463 3,319 2.56% 510,828 3,926 3.09% Money Market 347,863 129 0.15% 355,123 113 0.13% 411,457 145 0.14% Savings 1,885,486 16,759 3.57% 1,918,195 18,205 3.85% 1,731,358 16,963 3.94% Certi cates of Deposit Total Interest- 3,575,464 Bearing 24,059 2.70% 3,543,676 25,023 2.86% 3,186,343 22,723 2.87% Deposits 108,753 Federal Home Loan Bank 1,186 4.37% 69,833 702 4.08% 283,154 3,675 5.22% Borrowings 10,713 143 5.35% 10,417 144 5.61% 8,460 93 4.42% Other Borrowings 119,466 1,329 4.46% 80,250 846 4.28% 291,614 3,768 5.20% Total Borrowings Total Interest- 3,694,930 Bearing 25,388 2.76% 3,623,926 25,869 2.90% 3,477,957 26,491 3.06% Liabilities 662,168 Noninterest-Bearing 660,437 693,336 Liabilities 403,840 391,506 357,432 Shareholders' Equity and $ 4,760,938 $ 4,675,869 $ 4,528,725 Shareholders' Equity Total Assets Total Liabilities Net Interest Income 3 Net Interest Margin 3 $ 32,530 $ 30,316 $ 28,289 2.82% 2.70% 2.56% CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA NET INTEREST MARGIN (FTE) (YTD AVERAGES) (Unaudited) Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 (Dollars in Thousands) Average Balance Income/ Expense Rate Average Balance Income/ Expense Rate ASSETS $ 62,670 $ 1,391 4.48% $ 27,606 $ 755 5.50% Interest-Bearing Deposits with Banks 11,642 169 2.93% 11,799 171 2.91% Tax-Free Investment Securities 3 813,269 13,451 3.34% 847,664 15,464 3.67% Taxable Investment Securities 824,911 13,620 3.33% 859,463 15,635 3.66% 91,410 1,493 3.29% 108,479 1,751 3.25% 3,608,131 97,347 5.44% 3,418,994 90,212 5.31% Total Securities Tax-Free Loans 3 Taxable Loans 3,699,541 98,840 5.39% 3,527,473 91,963 5.24% Total Loans 7,469 252 6.80% 18,507 682 7.41% Federal Home Loan Bank Stock 4,594,591 114,103 5.01% 4,433,049 109,035 4.95% Total Interest-Earning Assets 124,048 91,409 Noninterest Earning Assets $ 4,718,639 $ 4,524,458 Total Assets LIABILITIES AND SHAREHOLDERS' EQUITY $ 775,490 $ 7,047 1.83% $ 514,376 $ 2,801 1.10% Interest-Bearing Demand 530,944 6,829 2.59% 517,862 7,922 3.08% Money Market 351,473 242 0.14% 425,616 282 0.13% Savings 1,901,751 34,964 3.71% 1,683,589 32,435 3.87% Certi cates of Deposit 3,559,658 49,082 2.78% 3,141,443 43,440 2.78% Total Interest-Bearing Deposits 89,400 1,888 4.26% 324,968 8,494 5.26% Federal Home Loan Bank Borrowings 10,566 287 5.48% 8,081 187 4.65% Other Borrowings 99,966 2,175 4.39% 333,049 8,681 5.24% Total Borrowings 3,659,624 51,257 2.82% 3,474,492 52,121 3.02% Total Interest-Bearing Liabilities 661,308 693,814 Noninterest-Bearing Liabilities 397,707 356,152 Shareholders' Equity $ 4,718,639 $ 4,524,458 Total Liabilities and Shareholders' Equity Net Interest Income 3 Net Interest Margin 3 $ 62,846 $ 56,914 2.76% 2.58% CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA LOANS AND LOANS HELD-FOR-SALE (Unaudited) (Dollars in Thousands) June 30, 2025 March 31, 2025 June 30, 2024 Commercial Commercial Real Estate Commercial and Industrial Total Commercial Loans Consumer Residential Mortgages Other Consumer Total Consumer Loans Construction Other Total Portfolio Loans Loans Held-for-Sale Total Loans $ 2,000,766 $ 1,915,863 $ 1,801,397 221,880 234,024 240,611 2,222,646 2,149,887 2,042,008 814,188 801,253 783,903 27,991 28,804 31,284 842,179 830,057 815,187 443,573 459,285 394,926 238,723 248,266 297,400 3,747,121 3,687,495 3,549,521 246 - - $ 3,747,367 $ 3,687,495 $ 3,549,521 CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA ASSET QUALITY DATA (Unaudited) For the Periods Ended (Dollars in Thousands) June 30, 2025 March 31, 2025 June 30, 2024 Nonaccrual Loans Commercial Real Estate $ 9,613 $ 9,733 $ 611 1,048 1,070 1,084 Commercial and Industrial 4,142 5,326 1,951 Residential Mortgages 29 38 30 Other Consumer 207 213 2,426 Construction 235,542 245,064 294,140 Other 250,581 261,444 300,242 Total Nonperforming Loans 1,657 577 2,501 Other Real Estate Owned $ 252,238 $ 262,021 $ 302,743 Total Nonperforming Assets 6.69% 7.09% 8.46% Nonperforming Loans to Total Portfolio Loans 6.73% 7.10% 8.52% Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned 1.90% 1.99% 2.72% Allowance for Credit Losses to Total Portfolio Loans 28.34% 28.12% 32.20% Allowance for Credit Losses to Nonperforming Loans $ 165 $ 57 $ 341 Net Loan Charge-o s QTD $ 222 $ 57 $ 873 Net Loan Charge-o s YTD 0.02% 0.01% 0.04% Net Loan Charge-o s (Annualized) to Average Portfolio Loans QTD 0.01% 0.01% 0.05% Net Loan Charge-o s (Annualized) to Average Portfolio Loans YTD CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA ALLOWANCE FOR CREDIT LOSSES (Unaudited) Quarter-to-Date Year-to-Date June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (Dollars in Thousands) $ 73,518 $ 75,600 $ 96,536 $ 75,600 $ 97,052 Balance Beginning of Period (2,330 (Recovery) Provision for Credit Losses ) (2,025 ) 491 (4,355 ) 507 Charge-o s: - - - - - Commercial Real Estate - 7 1 7 19 Commercial and Industrial - - 4 - 27 Residential Mortgages 288 171 488 459 968 Other Consumer - 1 - 1 156 Construction - Other - - - - 288 179 493 467 1,170 Total Charge-o s Recoveries: - - - - - Commercial Real Estate 2 3 1 5 2 Commercial and Industrial 2 8 22 10 24 Residential Mortgages 119 110 129 229 271 Other Consumer - 1 - 1 - Construction - - - - - Other 123 122 152 245 297 Total Recoveries 165 Total Net Charge-o s 57 341 222 873 $ 71,023 $ 73,518 $ 96,686 $ 71,023 $ 96,686 Balance End of Period CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA DEFINITIONS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES: (Unaudited) Quarter-to-Date Year-to-Date 1 Pre-tax Pre-provision Income (Non-GAAP) June 30, March 31, June 30, June 30, June 30, 2025 2025 2024 2025 2024 (Dollars in Thousands) $ 32,359 $ 30,138 $ 28,092 $ 62,497 $ 56,511 Net Interest Income 4,908 6,901 5,533 11,809 10,578 Noninterest Income 29,304 28,042 27,446 57,346 53,703 Noninterest Expense $ 7,963 $ 8,997 $ 6,179 $ 16,960 $ 13,386 Pre-tax Pre-provision Income (Non-GAAP) Quarter-to-Date Year-to-Date 2 Adjusted Net Income (Non-GAAP) June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (Dollars in Thousands, except per share data) $ 8,510 $ 8,953 $ 4,803 $ 17,463 $ 10,614 Net Income - - (36) - (36) Gains on Sales of Securities, net (22) (137) (63) (159) (63) Equity Security Unrealized Fair Value Gain 60 (3) 44 57 45 Losses (Gains) on Sales and Write-downs of Bank Premises, net 262 81 (8) 343 (350) Losses (Gains) on Sales and Write-downs of OREO, net 252 275 - 527 - 1035 Exchange fee on BOLI 386 - - 386 - Acquisition Costs - (1,882) - (1,882) - Gain on BOLI death bene t 5 - - (20) - (28) OREO Income 40 - - 40 - Severance Pay 38 - - 38 - Contingent Liability (214) (45) 18 (259) 91 Total Tax E ect $ 9,312 $ 7,242 $ 4,738 $ 16,554 $ 10,273 Adjusted Net Income (Non-GAAP) 22,805,881 22,873,800 22,826,510 22,839,412 22,798,476 Average Shares Outstanding - diluted $ 0.41 $ 0.32 $ 0.21 $ 0.72 $ 0.45 Adjusted Earnings Per Common Share (diluted) (Non-GAAP) 3 Net interest income has been computed on a fully taxable equivalent basis ("FTE") using 21% federal income tax rate for the 2025 and 2024 periods. Quarter-to-Date Year-to-Date Net Interest Income (FTE) (Non-GAAP) June 30, March 31, June 30, June 30, June 30, 2025 2025 2024 2025 2024 (Dollars in Thousands) $ 57,747 $ 56,007 $ 54,583 $ 113,754 $ 108,632 Interest and Dividend Income (GAAP) 171 178 197 349 403 Tax Equivalent Adjustment 3 57,918 56,185 54,780 114,103 109,035 Interest and Dividend Income (FTE) (Non-GAAP) 4,634,635 4,554,103 4,437,077 4,594,591 4,433,049 Average Earning Assets 5.00% 4.99% 4.95% 4.99% 4.93% Yield on Interest-earning Assets (GAAP) 5.01% 5.00% 4.97% 5.01% 4.95% Yield on Interest-earning Assets (FTE) (Non-GAAP) 32,359 30,138 28,092 62,497 56,511 Net Interest Income (GAAP) 171 178 197 349 403 Tax Equivalent Adjustment 3 $ 32,530 $ 30,316 $ 28,289 $ 62,846 $ 56,914 Net Interest Income (FTE) (Non-GAAP) $ 4,634,635 $ 4,554,103 $ 4,437,077 $ 4,594,591 $ 4,433,049 Average Earning Assets 2.80% 2.68% 2.55% 2.74% 2.56% Net Interest Margin (GAAP) 2.82% 2.70% 2.56% 2.76% 2.58% Net Interest Margin (FTE) (Non-GAAP) CARTER BANKSHARES, INC. CONSOLIDATED SELECTED FINANCIAL DATA Quarter-to-Date Year-to-Date 4 Adjusted E ciency Ratio (Non-GAAP) June 30, March 31, June 30, 2025 2025 2024 June 30, June 30, 2025 2024 (Dollars in Thousands) $ 29,304 $ 28,042 $ 27,446 $ 57,346 $ 53,703 Noninterest Expense (60) 3 (44) (57) (45) Less:(Losses) Gains on sales and write-downs of Branch Premises, net (262) (81) 8 (343) 350 Less: (Losses) Gains on Sales and write-downs of OREO, net (252) (275) - (527) - 1035 Exchange fee on BOLI (386) - - (386) - Less: Acquisition Costs (40) - - (40) - Less: Severance Pay (38) - - (38) - Less: Contingent Liability $ 28,266 $ 27,689 $ 27,410 $ 55,955 $ 54,008 Adjusted Noninterest Expense (Non-GAAP) $ 32,359 $ 30,138 $ 28,092 $ 62,497 $ 56,511 Net Interest Income 171 178 197 349 403 Plus: Taxable Equivalent Adjustment 3 $ 32,530 $ 30,316 $ 28,289 $ 62,846 $ 56,914 Net Interest Income (FTE) (Non-GAAP) - - (36) - (36) Less: Gains on Sales of Securities, net (22) (137) (63) (159) (63) Less: Equity Security Unrealized Fair Value Gain - (1,882) - (1,882) - Gain on BOLI death bene t 5 - - (20) - (28) Less: OREO Income 4,908 6,901 5,533 11,809 10,578 Noninterest Income Net Interest Income (FTE) (Non-GAAP) plus Adjusted $ 37,416 $ 35,198 $ 33,703 $ 72,614 $ 67,365 Noninterest Income 78.63% 75.71% 81.62% 77.18% 80.05% E ciency Ratio (GAAP) 75.55% 78.67% 81.33% 77.06% 80.17% Adjusted E ciency Ratio (Non-GAAP) 5 The Gain on BOLI death bene t is tax-exempt. SOURCE: Carter Bankshares, Inc. View the original press release on ACCESS Newswire

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