Form 8-K

8-K — Carter Bankshares, Inc.

Accession: 0001829576-26-000070

Filed: 2026-07-23

Period: 2026-07-23

CIK: 0001829576

SIC: 6021 (NATIONAL COMMERCIAL BANKS)

Item: Results of Operations and Financial Condition

Item: Financial Statements and Exhibits

Documents

8-K — care-20260723.htm (Primary)

EX-99.1 (care-2q26_ex991xer.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K

8-K (Primary)

Filename: care-20260723.htm · Sequence: 1

care-20260723

0001829576false00018295762026-07-232026-07-23

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20429

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 23, 2026

CARTER BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

Virginia 001-39731 85-3365661

(State or other jurisdiction

of incorporation) (Commission

file number) (IRS Employer

Identification No.)

1300 Kings Mountain Road, Martinsville, Virginia 24112

(Address of Principal Executive Offices) (Zip Code)

(276) 656-1776

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which

registered

Common Stock, $1.00 par value CARE NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 23, 2026, Carter Bankshares, Inc. announced by press release its financial results for the three and six months ended June 30, 2026. A copy of the press release is attached hereto as Exhibit 99.1. The information contained in this Report on Form 8-K is furnished pursuant to Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit No.

Exhibit 99.1 Press Release announcing the Second Quarter 2026 Financial Results.

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 the financial consequences of the Portfolio Restructuring, our financial condition, market conditions, results of operations, plans, including our strategic plan, brand strategy, and guiding principles and the anticipated results of the foregoing, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, loan pipeline and nonaccrual and nonperforming loans. Forward looking statements are typically identified 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 difficult 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. Actual results may differ significantly from those expressed in or implied by these forward-looking statements. 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 differ materially from those made, projected, or implied in or by the forward-looking statements including, but not limited to the effects 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, funding costs and its deposit, loan and securities portfolios; inflation, market and monetary fluctuations; changes in trade policies, tariffs, monetary and fiscal policies and laws of the U.S. government and the related impacts on economic conditions and financial 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, including emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action or increase cybersecurity threats; 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 commercial real estate loans, and the potential impacts of changes in market conditions on the value of real estate collateral; increased delinquency and foreclosure rates on commercial real estate loans; an insufficient allowance for credit losses; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, war and other geopolitical conflicts or public health events (such as pandemics), and of any governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on macroeconomic conditions, 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 financial 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 affecting the financial services industry as a whole, and the Company and the Bank, in particular and changes impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies; 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-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating acquired operations will be more difficult, disruptive or more costly than anticipated; the soundness of other financial 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 financial institutions and market participants with which the Company has commercial or deposit relationships with; material increases in costs and expenses; reliance on significant customer relationships; general economic or business conditions, including unemployment levels, supply chain disruptions, slowdowns in economic growth, government shutdowns and geopolitical instability and tensions; significant weakening of the local economies in which we operate; changes in customer behaviors, including consumer spending, borrowing and saving habits; changes in deposit flows and loan demand; our failure to attract or retain key associates; expansions or consolidations in the Company’s branch network; deterioration of the housing market and reduced demand for mortgages; and turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting 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 filings 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, 2025. 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, differ 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 reflect developments occurring after the statement is made, except as required by law.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CARTER BANKSHARES, INC.

(Registrant)

Date: July 23, 2026

By: /s/ Wendy S. Bell

Name: Wendy S. Bell

Title: Chief Financial Officer

EX-99.1

Filename: care-2q26_ex991xer.htm · Sequence: 2

Document

Exhibit 99.1

FOR IMMEDIATE RELEASE – July 23, 2026

Carter Bankshares, Inc. Announces Second Quarter 2026 Financial Results

Martinsville, VA, July 23, 2026 – Carter Bankshares, Inc. (the “Company”) (NASDAQ:CARE), the holding company of Carter Bank (the “Bank”) today announced quarterly net income of $28.9 million, or $1.31 diluted earnings per share (“EPS”), for the second quarter of 2026 compared to net income of $85.8 million, or $3.88 diluted EPS, for the first quarter of 2026 and net income of $8.5 million, or $0.37 diluted EPS, for the second quarter of 2025. Net interest income was $40.0 million for the second quarter of 2026, $35.9 million for the first quarter of 2026, and $32.4 million for the second quarter of 2025. Adjusted net income1 was $11.6 million for the second quarter of 2026, $8.6 million for the first quarter of 2026 and $9.3 million for the second quarter of 2025.

For the six months ended June 30, 2026, net income was $114.7 million, or $5.18 diluted EPS, compared to net income of $17.5 million, or $0.76 diluted EPS for the same period in 2025. Net interest income was $75.9 million for the six months ended June 30, 2026, and $62.5 million for the six months ended June 30, 2025. Adjusted net income1 was $20.2 million and $16.6 million for the six months ended June 30, 2026 and 2025, respectively.

On May 1, 2026, the Company announced that it had completed the sale of its membership interest in Bearing Insurance Group, LLC (the “Insurance Transaction”) to an unaffiliated third party, effective May 1, 2026.

•Recognized a net gain (pre-tax) from the Insurance Transaction of $35.9 million;

•The Insurance Transaction was accretive to diluted earnings per share by $1.30 for the quarter; and

•The Insurance Transaction increased tangible book value per share by $1.28.

As a result of the successful completion of the Insurance Transaction and the sale of the large nonperforming credit relationship (“Loan Sale Transaction”) during the first quarter of 2026, the Company generated approximately $100.9 million of aggregate nonrecurring gains during the first six months of 2026. These gains afforded an opportunity to optimize the Company’s balance sheet, improve future earnings potential and enhance interest rate risk positioning. As part of this process, the Company completed a strategic repositioning of a portion of its available-for-sale securities portfolio (the “Portfolio Repositioning”) during the second quarter of 2026, resulting in a pre-tax loss of $12.5 million. The Portfolio Repositioning is expected to enhance future earnings performance through improved asset yields and balance sheet positioning.

In the Portfolio Repositioning, the Company sold $139.4 million in book value of securities available-for-sale with a weighted average yield of 2.28% and representing approximately 18.7% of the Company’s securities portfolio, and purchased approximately $88.5 million of securities available-for-sale with a weighted average yield of approximately 5.27%. All of the securities purchased were rated AAA or AA by a recognized credit rating agency. The Company expects to use the remaining proceeds from the Portfolio Repositioning to fund organic loan growth during the remainder of 2026.

Financial Highlights for the Three Months Ended June 30, 2026

•Total portfolio loans increased $6.1 million at June 30, 2026 from March 31, 2026, despite approximately $132.6 million in commercial real estate loan payoffs during the second quarter,

reflecting solid loan origination activity and continued demand, decreased 0.3% from June 30, 2025, and increased 6.45%7 excluding the Loan Sale Transaction from June 30, 2025;

•Net interest income totaled $40.0 million, an increase of $4.1 million, or 11.2% compared to the prior quarter, and an increase of $7.6 million, or 23.5% compared to the prior year quarter;

•Net interest margin increased 31 basis points to 3.38% for the second quarter of 2026, compared to 3.07% for the prior quarter and increased 58 basis points compared to 2.80% for the prior year quarter;

•Nonperforming loans (“NPLs”) increased by $13.6 million to $37.6 million at June 30, 2026 compared to March 31, 2026 and decreased by $213.0 million compared to June 30, 2025 due to the Loan Sale Transaction during the first quarter of 2026. NPLs to total portfolio loans were 1.01% at June 30, 2026, 0.64% at March 31, 2026 and 6.69% at June 30, 2025;

•The allowance for credit losses to total portfolio loans was 1.48% at June 30, 2026, compared to 1.41% at March 31, 2026 and 1.90% at June 30, 2025. The year-over-year decrease primarily reflects the release of specific reserves of $18.0 million related to the Loan Sale Transaction during the first quarter of 2026; and

•The efficiency ratio was 43.66% for the quarter ended June 30, 2026, compared to 29.01% for the quarter ended March 31, 2026, and 78.63% for the quarter ended June 30, 2025. The efficiency ratios for the first and second quarters of 2026 reflect the nonrecurring gains recognized during those periods as a result of the Insurance Transaction and the Loan Sale Transaction, both as discussed above. The adjusted efficiency ratio (non-GAAP)5 improved to 62.66% for the second quarter of 2026, compared to 72.66% for the first quarter of 2026 and 75.55% for the second quarter of 2025.

"We are very pleased with the successful completion of the sale of our membership interest in Bearing Insurance Group, LLC during the second quarter of 2026,” stated Litz H. Van Dyke, Chief Executive Officer. “This Transaction resulted in a significant capital gain, which increased tangible book value by $1.28 per share, and provided the flexibility to reposition a portion of our available-for-sale securities portfolio. We expect these strategic actions to enhance future earnings through increased asset yields and a stronger balance sheet.”

Van Dyke added, “Our core operating performance remained strong during the quarter, highlighted by continued net interest margin expansion and growth in our loan portfolio across our markets. Excluding the impact of the Loan Sale Transaction during the first quarter, loans increased approximately 6.45%7 from a year ago despite elevated payoff activity. We continue to see a healthy pipeline and growing momentum in small business and commercial and industrial lending, and we expect additional growth from prior construction lending commitments that are anticipated to fund over the next 12 to 18 months as projects progress.”

Van Dyke concluded, “We believe the strategic initiatives undertaken in the first half of 2026 have strengthened our capital and liquidity position, providing additional financial flexibility to support future organic growth, optimize our balance sheet and capitalize on new opportunities as market conditions evolve. We are excited about what the future holds for Carter Bank.”

Operating Highlights

Credit Quality

At June 30, 2026, nonperforming loans totaled $37.6 million, compared to $24.0 million at March 31, 2026 and $250.6 million at June 30, 2025. The linked quarter increase was primarily attributable to a commercial and industrial relationship consisting of three loans with an aggregate principal balance of $13.4 million that was downgraded to substandard and placed on nonperforming status during the quarter. Nonperforming assets totaled $40.9 million at June 30, 2026, compared to $27.4 million at March 31, 2026 and $250.6 million at June 30, 2025. The ratio of nonperforming assets to total portfolio loans plus other real estate owned (“OREO”) was 1.09% at June 30, 2026, compared to 0.73% at March 31, 2026 and 6.73% at June 30, 2025.

The allowance for credit losses on loans totaled $55.2 million, or 1.48% of total portfolio loans, at June 30, 2026, compared to $52.5 million, or 1.41% at March 31, 2026 and $71.0 million, or 1.90% at June 30, 2025. The allowance for credit losses to nonperforming loans decreased to 146.88% at June 30, 2026, compared to 219.03% at March 31, 2026 and increased compared to 28.34% at June 30, 2025. The linked quarter decrease in the coverage ratio primarily reflected the increase in nonperforming loans during the quarter.

The Company recognized net recoveries of $0.7 million for the quarter ended June 30, 2026, compared to net recoveries of $14.9 million for the quarter ended March 31, 2026 and net charge-offs of $0.2 million for the quarter ended June 30, 2025. Net recoveries (annualized) to average portfolio loans, were 0.07% for the second quarter of 2026, compared to net recoveries of 1.55% in the first quarter of 2026 and net charge-offs of 0.02% in the second quarter of 2025.

Management continues to closely monitor credit quality trends and believes the allowance for credit losses remains appropriate based on the composition of the loan portfolio, current economic conditions, and other qualitative factors.

Year-to-date credit quality metrics continue to reflect the impact of the first quarter 2026 Loan Sale Transaction. The transaction removed $209.5 million of nonperforming loans from the balance sheet and included the release of $18.0 million of specific reserves and the recognition of $15.0 million of loan recoveries. As a result, year-to-date comparisons to prior periods are influenced by this transaction and should be evaluated in that context.

Net Interest Income and Margin

Net interest income (GAAP) for the quarter ended June 30, 2026 totaled $40.0 million, representing an increase of $4.1 million, or 11.2%, from net interest income of $35.9 million in the prior quarter and an increase of $7.6 million, or 23.5%, from net interest income of $32.4 million in the prior year quarter. Net interest income, on an FTE basis4 (non-GAAP) totaled $40.2 million for the quarter ended June 30, 2026, representing an increase of $4.1 million, or 11.4%, compared to the quarter ended March 31, 2026, and an increase of $7.7 million, or 23.5% compared to the quarter ended June 30, 2025.

The linked-quarter increase in net interest income, on an FTE basis4 (non-GAAP) was primarily driven by a 10 basis point decline in funding costs and a 16 basis point increase in the yield on average interest-earning assets. The year-over-year increase was attributable to a 37 basis point decline in funding costs and a 22 basis point increase in average interest-earning assets yields.

During the second quarter of 2026, interest-bearing funding costs declined compared to both the prior quarter and year ago quarter, primarily reflecting a reduction in higher cost FHLB borrowings following the Loan Sale Transaction and Insurance Transaction, as well as stabilization in deposit pricing, partially reflecting the broader interest rate environment.

Net interest margin was 3.38% for the quarter ended June 30, 2026 compared to 3.07% for the prior quarter and 2.80% for the quarter ended June 30, 2025. On an FTE basis4 (non-GAAP) net interest margin was 3.40% compared to 3.08% and 2.82% for the prior quarter and prior year quarter, respectively.

Net interest margin continued to expand during the quarter ended June 30, 2026, reflecting the benefits of disciplined balance sheet management. The Portfolio Repositioning improved the yield on the investment portfolio, while lower funding costs, favorable loan repricing, and approximately $0.6 million in loan prepayment penalties recognized during the quarter further supported the increase in net interest income and net interest margin. The Company expects the Portfolio Repositioning to provide an ongoing benefit to future earnings through higher asset yields.

Noninterest Income

Noninterest income totaled $28.7 million for the second quarter of 2026, compared to $71.0 million for the first quarter of 2026 and $4.9 million for the second quarter of 2025.

Key drivers of noninterest income:

•$35.9 million net gain recognized from the Insurance Transaction during the second quarter of 2026.

•$12.5 million of losses on sales of securities recognized in connection with the Portfolio Repositioning during the second quarter of 2026.

•$65.0 million gain recognized from the Loan Sale Transaction during the first quarter of 2026.

These items are considered non-core in nature and not indicative of the Company’s ongoing operating performance.

Compared to the first quarter of 2026, noninterest income decreased $42.2 million, primarily due to the $65.0 million gain recognized from the Loan Sale Transaction during the first quarter of 2026 and $12.5 million of securities losses recognized in connection with the Portfolio Repositioning during the second quarter of 2026. These decreases were partially offset by the net gain recognized from the Insurance Transaction during the second quarter of 2026.

Other notable changes in noninterest income included a $0.5 million increase from the prior quarter in service charges on deposit accounts. Insurance commissions declined $0.8 million from the prior quarter, primarily due to the Insurance Transaction, which reduced ongoing insurance commission income, and a favorable prior year adjustment true-up recorded in the first quarter of 2026.

Compared to the second quarter of 2025, noninterest income increased $23.8 million, primarily due to the net gain recognized from the Insurance Transaction, partially offset by the $12.5 million securities losses recognized in connection with the Portfolio Repositioning during the second quarter of 2026.

For the six months ended June 30, 2026, noninterest income totaled $99.7 million, compared to $11.8 million for the same period in 2025. The increase was primarily attributable to the $65.0 million gain recognized from the Loan Sale Transaction during the first quarter of 2026, the $35.9 million net gain recognized from the Insurance Transaction during the second quarter of 2026 and higher service charges on deposit accounts. These increases were partially offset by $12.5 million of securities losses recognized in connection with the Portfolio Repositioning during the second quarter of 2026 and the $1.9 million bank owned life insurance (“BOLI”) death benefit recognized during the first quarter of 2025.

Noninterest Expense

Noninterest expense totaled $30.0 million for the second quarter of 2026, compared to $31.0 million for the first quarter of 2026 and $29.3 million for the second quarter of 2025.

The linked-quarter decrease was primarily attributable to lower FDIC insurance expense and salaries and employee benefits, partially offset by increases in other noninterest expense, professional and legal fees, and data processing expense.

FDIC insurance expense declined during the second quarter of 2026, primarily reflecting the favorable impact of the Loan Sale Transaction during the first quarter of 2026, which improved the Company’s FDIC assessments.

Salaries and employee benefits decreased $0.9 million, primarily due to lower incentive compensation compared to the first quarter of 2026, partially offset by annual merit increases, higher medical costs, and increased deferred compensation expense.

Other noninterest expense increased primarily due to a $0.8 million write-down of an OREO property based on an updated appraisal received during the second quarter of 2026, as well as a $0.5 million write-down on a closed corporate office building. Professional and legal fees increased as a result of costs associated with the litigation involving the Loan Sale Transaction and higher expenses related to the management of special assets. Data processing expense increased primarily due to new and existing service agreements implemented in early 2026.

Compared to the second quarter of 2025, noninterest expense increased $0.7 million, primarily reflecting increases of $1.1 million in other noninterest expense, $0.8 million in data processing expense, and $0.4 million in occupancy expense, partially offset by a $1.7 million decrease in FDIC insurance expense. The increases in other noninterest expense and data processing expense and the decrease in FDIC insurance expense were driven by the same factors discussed above. The increase in occupancy expense primarily reflected higher costs associated with new and existing service agreements, software licenses, maintenance contracts, and related infrastructure investments.

For the six months ended June 30, 2026, noninterest expense totaled $61.0 million, compared to $57.3 million for the same period in 2025, an increase of $3.7 million. The increase primarily reflected $1.6 million in higher other noninterest expense, $1.2 million in data processing expense, $1.2 million in salaries and employee benefits, $0.7 million in occupancy expense, and $0.4 million in professional and legal fees, partially offset by a $1.6 million decrease in FDIC insurance expense. These changes were attributable to the same factors discussed in the quarterly comparison above.

Financial Condition

Total assets increased $2.6 million to $4.8 billion at June 30, 2026, compared to March 31, 2026. The increase was primarily driven by a $6.1 million increase in portfolio loans, despite approximately $132.6 million in commercial real estate loan payoffs during the second quarter of 2026, reflecting continued loan origination activity and customer demand across the Company’s markets. Total cash and cash equivalents increased $48.2 million during the quarter, primarily reflecting higher interest-bearing deposits maintained with other financial institutions from excess liquidity generated by the Loan Sale Transaction during the first quarter of 2026 and the Insurance Transaction during the second quarter of 2026. The increase in interest-bearing deposits with other financial institutions reflected the redeployment of excess liquidity from Federal Reserve balances into higher-yielding deposit accounts during the quarter. The Company continued to strategically deploy excess liquidity during the quarter through loan growth and the previously announced Portfolio Repositioning.

The allowance for credit losses on loans totaled $55.2 million, or 1.48% of total portfolio loans at June 30, 2026, compared to $52.5 million, or 1.41%, at March 31, 2026.

Available-for-sale investment securities declined $21.8 million during the second quarter of 2026, primarily reflecting the previously announced Portfolio Repositioning, which is part of the Company’s broader balance sheet optimization strategy. These securities represented 13.3% of total assets at June 30, 2026, compared to 13.8% at March 31, 2026.

Total deposits decreased $37.7 million from March 31, 2026, primarily reflecting normal fluctuations in customer deposit balances. The Company had no Federal Home Loan Bank (“FHLB”) borrowings outstanding at June 30, 2026, as higher cost wholesale borrowings had been repaid with proceeds from the Company’s recent strategic transactions, contributing to lower funding costs and a more efficient balance sheet.

At June 30, 2026, approximately 82.3% of total deposits were insured under FDIC insurance coverage limits, while approximately 17.7% of total deposits were uninsured. At March 31, 2026, approximately 82.8% of total deposits were insured under Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limits, while approximately 17.2% of total deposits were uninsured.

Capitalization and Liquidity

The Company maintained a strong capital and liquidity position at June 30, 2026. Capital levels increased significantly and continued to exceed all applicable regulatory requirements, supported by earnings for the quarter and the impact of the recent strategic transactions. The Company remained well capitalized at June 30, 2026.

The Company’s Tier 1 capital ratio was 14.26% at June 30, 2026, compared to 13.52% at March 31, 2026. The Company’s leverage ratio was 11.65% at June 30, 2026, compared to 11.10% at March 31, 2026. The Company’s total risk-based capital ratio was 15.51% at June 30, 2026, compared to 14.78% at March 31, 2026.

During both the three and six months ended June 30, 2026, the Company repurchased 108,601 shares of its common stock at a total cost of $2.9 million and a weighted average cost per share of $26.50.

At June 30, 2026, funding sources accessible to the Company included borrowing availability at the FHLB equal to 30.0% of total assets, or $1.4 billion, subject to eligible collateral pledged, of which the Company had the capacity to borrow an additional $879.5 million. During the six months ended June 30, 2026, the Company’s previously disclosed $45.0 million secured line of credit with a correspondent financial institution was converted to an unsecured facility, with a borrowing capacity of $25.0 million. In addition, a $50.0 million unsecured line of credit with an unrelated correspondent financial institution was fully reinstated. Reflecting the Company’s improved earnings performance and enhanced credit risk profile following the Loan Sale Transaction during the first quarter of 2026, the Company now maintains unsecured borrowing lines of credit totaling $105.0 million with four correspondent financial institutions and continues to have access to the institutional CD market.

In addition to these funding sources, the Company had $500.6 million of unpledged available-for-sale investment securities at fair value at June 30, 2026, providing additional 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 other services through its subsidiary Carter Bank.

The Company has $4.8 billion in assets and 63 branches in Virginia and North Carolina as of June 30, 2026. For more information or to open an account visit www.carterbank.com.

Important Note Regarding Non-GAAP Financial Measures

In addition to results presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), management uses, and this press release contains or references, certain non-GAAP financial measures, including pre-tax pre-provision income, adjusted net income, adjusted earnings per common share (diluted), tangible book value, tangible shareholders’ equity, adjusted noninterest income, adjusted noninterest expense, adjusted loan growth, adjusted efficiency ratio, and interest and dividend income, yield on interest-earning assets, net interest income and net interest margin on a fully taxable equivalent (“FTE”) basis. These non-GAAP measures should be read along with the accompanying tables in our definitions and reconciliation of GAAP to non-GAAP financial measures.

Management believes these non-GAAP financial measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results across periods in a meaningful manner. These measures also assist in assessing the Company’s underlying operating performance and performance trends and facilitate comparisons with other financial services companies.

The Company believes that presenting interest and dividend income, yield on interest-earning assets, net interest income and net interest margin on an FTE basis improves comparability between income derived from taxable and tax-exempt sources and is consistent with industry practice.

While management believes these non-GAAP measures provide meaningful supplemental information, they should not be considered as an alternative to GAAP results, as more relevant than financial results prepared in accordance with GAAP, or as necessarily comparable to similarly titled non-GAAP measures used by other companies. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for an analysis of the Company’s financial condition or results of operations as reported under GAAP. Investors are encouraged to review the Company’s GAAP financial results and all other relevant information when evaluating its performance and financial condition.

Important Note Regarding Forward-Looking Statements

results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements including, but not limited to the effects 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, funding costs and its deposit, loan and securities portfolios;

•inflation, market and monetary fluctuations;

•changes in trade policies, tariffs, monetary and fiscal policies and laws of the U.S. government and the related impacts on economic conditions and financial 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, including emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action or increase cybersecurity threats;

•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 commercial real estate loans, and the potential impacts of changes in market conditions on the value of real estate collateral;

•increased delinquency and foreclosure rates on commercial real estate loans;

•an insufficient allowance for credit losses;

•the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, war and other geopolitical conflicts or public health events (such as pandemics), and of any governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on macroeconomic conditions, 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 financial 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 affecting the financial services industry as a whole, and the Company and the Bank, in particular and changes impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies;

•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-effective basis;

•managing our internal growth and acquisitions;

•the possibility that the anticipated benefits from acquisitions cannot be fully realized in a timely manner or at all, or that integrating acquired operations will be more difficult, disruptive or more costly than anticipated;

•the soundness of other financial 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 financial institutions and market participants with which the Company has commercial or deposit relationships with;

•material increases in costs and expenses;

•reliance on significant customer relationships;

•general economic or business conditions, including unemployment levels, supply chain disruptions, slowdowns in economic growth, government shutdowns and geopolitical instability and tensions;

•significant weakening of the local economies in which we operate;

•changes in customer behaviors, including consumer spending, borrowing and saving habits;

•changes in deposit flows and loan demand;

•our failure to attract or retain key associates;

•expansions or consolidations in the Company’s branch network, including that the anticipated benefits 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

•turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses.

Carter Bankshares, Inc.

investorrelations@carterbank.com

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

BALANCE SHEETS

(Dollars in Thousands, except share data) June 30,

2026 March 31,

2026 June 30,

2025

(unaudited) (unaudited) (unaudited)

ASSETS

Cash and Due From Banks $ 41,101 $ 36,961 $ 48,015

Interest-Bearing Deposits in Other Financial Institutions 167,427 12,294 8,045

Federal Reserve Bank Excess Reserves 68,007 179,063 43,845

Total Cash and Cash Equivalents 276,535 228,318 99,905

Securities Available-for-Sale, at Fair Value (amortized cost of $682,318 at June 30, 2026, $716,862 at March 31, 2026 and $821,906 at June 30, 2025)

640,302 662,127 755,212

Equity Securities 12,676 10,246 10,200

Loans Held-for-Sale 467 341 246

Portfolio Loans 3,734,594 3,728,461 3,747,121

Allowance for Credit Losses (55,170) (52,503) (71,023)

Portfolio Loans, net 3,679,424 3,675,958 3,676,098

Bank Premises and Equipment, net 69,820 70,968 72,105

Goodwill 1,193 1,193 1,193

Core Deposit Intangible 812 874 1,073

Other Real Estate Owned, net 3,356 3,443 1,657

Other Restricted Stock, at Cost 8,476 8,476 8,653

Bank Owned Life Insurance 45,704 45,247 48,365

Other Assets 63,118 92,079 109,384

Total Assets $ 4,801,883 $ 4,799,270 $ 4,784,091

LIABILITIES

Deposits:

Noninterest-Bearing Demand $ 655,482 $ 637,933 $ 635,192

Interest-Bearing Demand 866,759 871,398 805,013

Money Market 510,125 514,362 544,764

Savings 318,774 326,929 343,659

Certificates of Deposit 1,846,416 1,884,628 1,893,611

Total Deposits 4,197,556 4,235,250 4,222,239

Federal Home Loan Bank Borrowings — — 113,500

Reserve for Unfunded Loan Commitments 2,220 2,774 2,737

Other Liabilities 62,961 56,344 39,980

Total Liabilities 4,262,737 4,294,368 4,378,456

SHAREHOLDERS’ EQUITY

Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;

Outstanding- 22,162,213 shares at June 30, 2026, 22,159,980 shares at March 31, 2026 and 22,669,834 shares at June 30, 2025

22,162 22,160 22,670

Additional Paid-in Capital 72,505 74,987 84,146

Retained Earnings 477,417 450,725 351,069

Accumulated Other Comprehensive Loss (32,938) (42,970) (52,250)

Total Shareholders’ Equity 539,146 504,902 405,635

Total Liabilities and Shareholders’ Equity $ 4,801,883 $ 4,799,270 $ 4,784,091

PERFORMANCE RATIOS

Return on Average Assets (QTD Annualized) 2.39 % 7.13 % 0.72 %

Return on Average Assets (YTD Annualized) 4.75 % 7.13 % 0.75 %

Return on Average Shareholders' Equity (QTD Annualized) 22.01 % 80.05 % 8.45 %

Return on Average Shareholders’ Equity (YTD Annualized) 48.08 % 80.05 % 8.85 %

Portfolio Loans to Deposit Ratio 88.97 % 88.03 % 88.75 %

Allowance for Credit Losses to Total Portfolio Loans 1.48 % 1.41 % 1.90 %

CAPITALIZATION RATIOS

Shareholders' Equity to Assets 11.23 % 10.52 % 8.48 %

Tier 1 Leverage Ratio 11.65 % 11.10 % 9.46 %

Risk-Based Capital - Tier 1 14.26 % 13.52 % 10.87 %

Risk-Based Capital - Total 15.51 % 14.78 % 12.12 %

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

INCOME STATEMENTS

Quarter-to-Date Year-to-Date

(Dollars in Thousands, except per share data) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)

Interest Income $ 61,491 $ 59,185 $ 57,747 $ 120,676 $ 113,754

Interest Expense 21,541 23,251 25,388 44,792 51,257

NET INTEREST INCOME 39,950 35,934 32,359 75,884 62,497

Provision (Recovery) for Credit Losses 2,010 (33,917) (2,330) (31,907) (4,355)

Recovery for Unfunded Commitments (554) (218) (335) (772) (449)

NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR CREDIT LOSSES 38,494 70,069 35,024 108,563 67,301

NONINTEREST INCOME

Gain on the Insurance Transaction 35,949 — — 35,949 —

Gain on the Loan Sale Transaction — 65,000 — 65,000 —

(Losses) Gains on Sales of Securities, net (12,531) 80 — (12,451) —

Service Charges, Commissions and Fees 2,491 2,128 1,765 4,619 3,639

Debit Card Interchange Fees 2,063 2,148 1,942 4,211 4,046

Insurance Commissions 164 954 714 1,118 1,058

Bank Owned Life Insurance Income 457 436 357 893 698

Other 137 228 130 365 2,368

Total Noninterest Income 28,730 70,974 4,908 99,704 11,809

NONINTEREST EXPENSE

Salaries and Employee Benefits 14,051 14,915 14,082 28,966 27,739

Occupancy Expense, net 4,584 4,861 4,230 9,445 8,702

FDIC Insurance Expense (241) 1,510 1,436 1,269 2,866

Other Taxes 776 925 922 1,701 1,869

Advertising Expense 820 926 708 1,746 1,619

Telephone Expense 278 292 307 570 611

Professional and Legal Fees 2,053 1,546 1,921 3,599 3,151

Data Processing 2,177 1,853 1,395 4,030 2,839

Debit Card Expense 1,072 1,001 991 2,073 1,983

Other 4,416 3,183 3,312 7,599 5,967

Total Noninterest Expense 29,986 31,012 29,304 60,998 57,346

Income Before Income Taxes 37,238 110,031 10,628 147,269 21,764

Income Tax Provision 8,327 24,274 2,118 32,601 4,301

Net Income $ 28,911 $ 85,757 $ 8,510 $ 114,668 $ 17,463

Shares Outstanding, at End of Period 22,162,213 22,159,980 22,669,834 22,162,213 22,669,834

Average Shares Outstanding - Basic & Diluted 21,838,645 21,846,942 22,805,881 21,842,497 22,839,412

PER SHARE DATA

Basic Earnings Per Common Share* $ 1.31 $ 3.88 $ 0.37 $ 5.18 $ 0.76

Diluted Earnings Per Common Share* $ 1.31 $ 3.88 $ 0.37 $ 5.18 $ 0.76

Book Value $ 24.33 $ 22.78 $ 17.89 $ 24.33 $ 17.89

Tangible Book Value3

$ 24.24 $ 22.69 $ 17.79 $ 24.24 $ 17.79

Market Value $ 34.01 $ 23.32 $ 17.34 $ 34.01 $ 17.34

PROFITABILITY RATIOS (GAAP)

Net Interest Margin

3.38 % 3.07 % 2.80 % 3.23 % 2.74 %

Efficiency Ratio

43.66 % 29.01 % 78.63 % 34.74 % 77.18 %

PROFITABILITY RATIOS (Non-GAAP)

Net Interest Margin (FTE)4

3.40 % 3.08 % 2.82 % 3.24 % 2.76 %

Adjusted Efficiency Ratio (Non-GAAP)5

62.66 % 72.66 % 75.55 % 67.45 % 77.06 %

*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 ($402 thousand, $1,069 thousand and $97 thousand for the quarters ended June 30, 2026, March 31, 2026 and June 30, 2025, respectively and $1,514 thousand and $190 thousand for the six months ended June 30, 2026 and 2025, respectively) 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, 2026 March 31, 2026 June 30, 2025

(Dollars in Thousands) Average

Balance Income/

Expense Rate Average

Balance Income/

Expense Rate Average

Balance Income/

Expense Rate

ASSETS

Interest-Bearing Deposits with Banks $ 291,575 $ 2,712 3.73 % $ 75,984 $ 693 3.70 % $ 58,006 $ 643 4.45 %

Tax-Free Investment Securities4

37,890 488 5.17 % 11,503 83 2.93 % 11,622 85 2.93 %

Taxable Investment Securities 671,139 5,323 3.18 % 733,785 5,582 3.09 % 818,588 6,796 3.33 %

Total Securities 709,029 5,811 3.29 % 745,288 5,665 3.08 % 830,210 6,881 3.32 %

Commercial Real Estate 2,155,650 31,936 5.94 % 2,132,911 31,687 6.03 % 1,986,702 30,522 6.16 %

Commercial & Industrial 251,682 3,769 6.01 % 224,422 3,946 7.13 % 204,287 3,404 6.68 %

Residential Mortgages 820,831 8,739 4.27 % 829,413 8,728 4.27 % 811,414 8,581 4.24 %

Other Consumer 25,246 285 4.53 % 26,526 279 4.27 % 27,883 389 5.60 %

Construction 473,565 8,348 7.07 % 466,197 8,096 7.04 % 429,511 7,358 6.87 %

Other — — — % 231,620 — — % 278,194 — — %

Total Loansa

3,726,974 53,077 5.71 % 3,911,089 52,736 5.47 % 3,737,991 50,254 5.39 %

Other Restricted Stock, at Cost 8,476 128 6.06 % 15,969 245 6.22 % 8,428 140 6.66 %

Total Interest-Earning Assets 4,736,054 61,728 5.23 % 4,748,330 59,339 5.07 % 4,634,635 57,918 5.01 %

Noninterest Earning Assets 120,968 129,942 126,303

Total Assets $ 4,857,022 $ 4,878,272 $ 4,760,938

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-Bearing Demand $ 900,160 $ 3,400 1.51 % $ 818,471 $ 2,709 1.34 % $ 805,749 $ 3,661 1.82 %

Money Market 511,221 2,522 1.98 % 567,093 2,975 2.13 % 536,366 3,510 2.62 %

Savings 325,283 130 0.16 % 327,138 111 0.14 % 347,863 129 0.15 %

Certificates of Deposit 1,872,499 15,350 3.29 % 1,897,557 15,760 3.37 % 1,885,486 16,759 3.57 %

Total Interest-Bearing Deposits 3,609,163 21,402 2.38 % 3,610,259 21,555 2.42 % 3,575,464 24,059 2.70 %

Federal Home Loan Bank Borrowings — — — % 160,033 1,556 3.94 % 108,753 1,186 4.37 %

Federal Funds Purchased — — — % — — — % — — — %

Other Borrowings 10,775 139 5.17 % 10,870 140 5.22 % 10,713 143 5.35 %

Total Borrowings 10,775 139 5.17 % 170,903 1,696 4.02 % 119,466 1,329 4.46 %

Total Interest-Bearing Liabilities 3,619,938 21,541 2.39 % 3,781,162 23,251 2.49 % 3,694,930 25,388 2.76 %

Noninterest-Bearing Liabilities 710,174 662,638 662,168

Shareholders' Equity 526,910 434,472 403,840

Total Liabilities and Shareholders' Equity $ 4,857,022 $ 4,878,272 $ 4,760,938

Net Interest Income4

$ 40,187 $ 36,088 $ 32,530

Net Interest Margin4

3.40 % 3.08 % 2.82 %

a Nonaccruing loans are included in the daily average loan amounts outstanding.

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

NET INTEREST MARGIN (FTE) (YTD AVERAGES)

(Unaudited)

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

(Dollars in Thousands) Average

Balance Income/

Expense Rate Average

Balance Income/

Expense Rate

ASSETS

Interest-Bearing Deposits with Banks $ 184,375 $ 3,405 3.72 % $ 62,670 $ 1,391 4.48 %

Tax-Free Investment Securities4

24,769 571 4.65 % 11,642 169 2.93 %

Taxable Investment Securities 702,290 10,905 3.13 % 813,269 13,451 3.34 %

Total Securities 727,059 11,476 3.18 % 824,911 13,620 3.33 %

Commercial Real Estate 2,148,588 63,623 5.97 % 1,941,884 59,702 6.20 %

Commercial & Industrial 245,345 7,715 6.34 % 205,771 6,624 6.49 %

Residential Mortgages 825,567 17,467 4.27 % 811,584 17,080 4.24 %

Other Consumer 25,882 564 4.39 % 28,104 808 5.80 %

Construction 470,567 16,444 7.05 % 434,919 14,626 6.78 %

Other 102,574 — — % 277,279 — — %

Total Loansa

3,818,523 105,813 5.59 % 3,699,541 98,840 5.39 %

Other Restricted Stock, at Cost 12,202 373 6.16 % 7,469 252 6.80 %

Total Interest-Earning Assets 4,742,159 121,067 5.15 % 4,594,591 114,103 5.01 %

Noninterest Earning Assets 125,430 124,048

Total Assets $ 4,867,589 $ 4,718,639

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-Bearing Demand $ 859,541 $ 6,109 1.43 % $ 775,490 $ 7,047 1.83 %

Money Market 539,003 5,497 2.06 % 530,944 6,829 2.59 %

Savings 326,206 241 0.15 % 351,473 242 0.14 %

Certificates of Deposit 1,884,958 31,110 3.33 % 1,901,751 34,964 3.71 %

Total Interest-Bearing Deposits 3,609,708 42,957 2.40 % 3,559,658 49,082 2.78 %

Federal Home Loan Bank Borrowings 79,575 1,556 3.94 % 89,400 1,888 4.26 %

Other Borrowings 10,822 279 5.20 % 10,566 287 5.48 %

Total Borrowings 90,397 1,835 4.09 % 99,966 2,175 4.39 %

Total Interest-Bearing Liabilities 3,700,105 44,792 2.44 % 3,659,624 51,257 2.82 %

Noninterest-Bearing Liabilities 686,538 661,308

Shareholders' Equity 480,946 397,707

Total Liabilities and Shareholders' Equity $ 4,867,589 $ 4,718,639

Net Interest Income4

$ 76,275 $ 62,846

Net Interest Margin4

3.24 % 2.76 %

a Nonaccruing loans are included in the daily average loan amounts outstanding.

LOANS AND LOANS HELD-FOR-SALE

(Unaudited)

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025

Commercial

Commercial Real Estate $ 2,143,362 $ 2,127,928 $ 2,000,766

Commercial and Industrial 262,432 245,455 221,880

Total Commercial Loans 2,405,794 2,373,383 2,222,646

Consumer

Residential Mortgages 814,383 815,263 814,188

Other Consumer 25,154 26,264 27,991

Total Consumer Loans 839,537 841,527 842,179

Construction 489,263 513,551 443,573

Other — — 238,723

Total Portfolio Loans 3,734,594 3,728,461 3,747,121

Loans Held-for-Sale 467 341 246

Total Loans $ 3,735,061 $ 3,728,802 $ 3,747,367

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

ASSET QUALITY DATA

(Unaudited)

For the Periods Ended

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025

Nonaccrual Loans

Commercial Real Estate $ 21,562 $ 21,649 $ 9,613

Commercial and Industrial 13,546 91 1,048

Residential Mortgages 1,945 1,766 4,142

Other Consumer 72 28 29

Construction 436 437 207

Other — — 235,542

Total Nonperforming Loans 37,561 23,971 250,581

Other Real Estate Owned 3,356 3,443 1,657

Total Nonperforming Assets $ 40,917 $ 27,414 $ 252,238

Nonperforming Loans to Total Portfolio Loans 1.01 % 0.64 % 6.69 %

Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned 1.09 % 0.73 % 6.73 %

Allowance for Credit Losses to Total Portfolio Loans 1.48 % 1.41 % 1.90 %

Allowance for Credit Losses to Nonperforming Loans 146.88 % 219.03 % 28.34 %

Net Loan (Recoveries) / Charge-offs QTD $ (657) $ (14,929) $ 165

Net Loan (Recoveries) / Charge-offs YTD $ (15,586) $ (14,929) $ 222

Net Loan (Recoveries) / Charge-offs (Annualized) to Average Portfolio Loans QTD (0.07) % (1.55) % 0.02 %

Net Loan (Recoveries) / Charge-offs (Annualized) to Average Portfolio Loans YTD (0.82) % (1.55) % 0.01 %

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

ALLOWANCE FOR CREDIT LOSSES

(Unaudited)

Quarter-to-Date Year-to-Date

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Balance Beginning of Period $ 52,503 $ 71,491 $ 73,518 $ 71,491 $ 75,600

Provision (Recovery) for Credit Losses 2,010 (33,917) (2,330) (31,907) (4,355)

Charge-offs:

Commercial Real Estate — — — — —

Commercial and Industrial — — — — 7

Residential Mortgages — — — — —

Other Consumer 161 138 288 299 459

Construction — — — — 1

Other — — — — —

Total Charge-offs 161 138 288 299 467

Recoveries:

Commercial Real Estate 248 — — 248 —

Commercial and Industrial — — 2 — 5

Residential Mortgages 2 2 2 4 10

Other Consumer 57 65 119 122 229

Construction 511 — — 511 1

Other — 15,000 — 15,000 —

Total Recoveries 818 15,067 123 15,885 245

Total Net (Recoveries) / Charge-offs (657) (14,929) 165 (15,586) 222

Balance End of Period $ 55,170 $ 52,503 $ 71,023 $ 55,170 $ 71,023

DEFINITIONS AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

(Unaudited)

1 Pre-tax Pre-provision Income (Non-GAAP)

Quarter-to-Date Year-to-Date

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Net Interest Income $ 39,950 $ 35,934 $ 32,359 $ 75,884 $ 62,497

Noninterest Income 28,730 70,974 4,908 99,704 11,809

Noninterest Expense 29,986 31,012 29,304 60,998 57,346

Pre-tax Pre-provision Income (Non-GAAP) $ 38,694 $ 75,896 $ 7,963 $ 114,590 $ 16,960

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

2 Adjusted Net Income (Non-GAAP)

Quarter-to-Date Year-to-Date

(Dollars in Thousands, except per share data) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Net Income $ 28,911 $ 85,757 $ 8,510 $ 114,668 $ 17,463

Less: Gain on the Insurance Transaction (35,949) — — (35,949) —

Less: Gain on the Loan Sale Transaction — (65,000) — (65,000) —

Specific Reserves Released from the Loan Sale Transaction — (18,035) — (18,035) —

Net Recoveries from the Loan Sale Transaction — (15,000) — (15,000) —

Losses (Gains) on Sales of Securities, net 12,531 (80) — 12,451 —

Equity Security Unrealized Fair Value Loss (Gain) 71 45 (22) 116 (159)

Losses on Sales & Write-downs of Bank Premises, net 105 1 60 106 57

Losses on Sales and Write-downs of OREO, net 1,326 569 262 1,895 343

1035 Exchange fee on BOLI — — 252 — 527

Acquisition Costs — — 386 — 386

Gain on BOLI death benefit6

— — — — (1,882)

FHLB Early Prepayment Credit — (130) — (130) —

Severance Pay — — 40 — 40

Contingent Liability — — 38 — 38

Total Tax Effect 4,603 20,502 (214) 25,105 (259)

Adjusted Net Income (Non-GAAP) $ 11,598 $ 8,629 $ 9,312 $ 20,227 $ 16,554

Average Shares Outstanding - diluted 21,838,645 21,846,942 22,805,881 21,842,497 22,839,412

Adjusted Earnings Per Common Share (diluted) (Non-GAAP) $ 0.53 $ 0.40 $ 0.41 $ 0.93 $ 0.72

3 Tangible Book Value (Non-GAAP)

Quarter-to-Date Year-to-Date

(Dollars in Thousands, except per share data) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Total Shareholders' Equity $ 539,146 $ 504,902 $ 405,635 $ 539,146 $ 405,635

Less: Goodwill and Other Intangible Assets, net of deferred tax liability (2,001) (2,064) (2,263) (1,997) (2,263)

Tangible Shareholders' Equity (Non-GAAP) 537,145 502,838 403,372 537,149 403,372

Shares Outstanding 22,162,213 22,159,980 22,669,834 22,162,213 22,669,834

Tangible Book Value (Non-GAAP) $ 24.24 $ 22.69 $ 17.79 $ 24.24 $ 17.79

4 Net interest income has been computed on a fully taxable equivalent basis ("FTE") using 21% federal income tax rate for the 2026 and 2025 periods.

Net Interest Income (FTE) (Non-GAAP) Quarter-to-Date Year-to-Date

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Interest and Dividend Income (GAAP) $ 61,491 $ 59,185 $ 57,747 $ 120,676 $ 113,754

Tax Equivalent Adjustment4

237 154 171 391 349

Interest and Dividend Income (FTE) (Non-GAAP) 61,728 59,339 57,918 121,067 114,103

Average Earning Assets $ 4,736,054 $ 4,748,330 $ 4,634,635 4,742,159 4,594,591

Yield on Interest-earning Assets (GAAP) 5.21 % 5.05 % 5.00 % 5.13 % 4.99 %

Yield on Interest-earning Assets (FTE) (Non-GAAP) 5.23 % 5.07 % 5.01 % 5.15 % 5.01 %

Net Interest Income (GAAP) $ 39,950 $ 35,934 $ 32,359 $ 75,884 $ 62,497

Tax Equivalent Adjustment4

237 154 171 391 349

Net Interest Income (FTE) (Non-GAAP) 40,187 36,088 32,530 76,275 62,846

Average Earning Assets $ 4,736,054 $ 4,748,330 $ 4,634,635 4,742,159 4,594,591

Net Interest Margin (GAAP) 3.38 % 3.07 % 2.80 % 3.23 % 2.74 %

Net Interest Margin (FTE) (Non-GAAP) 3.40 % 3.08 % 2.82 % 3.24 % 2.76 %

CARTER BANKSHARES, INC.

CONSOLIDATED SELECTED FINANCIAL DATA

5Adjusted Efficiency Ratio (Non-GAAP)

Quarter-to-Date Year-to-Date

(Dollars in Thousands) June 30,

2026 March 31,

2026 June 30,

2025 June 30,

2026 June 30,

2025

Noninterest Expense $ 29,986 $ 31,012 $ 29,304 $ 60,998 $ 57,346

Less: Losses on sales & write-downs of Branch Premises, net (105) (1) (60) (106) (57)

Less: Losses on Sales & write-downs of OREO, net (1,326) (569) (262) (1,895) (343)

Less: 1035 Exchange fee on BOLI — — (252) — (527)

Less: Acquisition Costs — — (386) — (386)

Less: Severance Pay — — (40) — (40)

Less: Contingent Liability — — (38) — (38)

Adjusted Noninterest Expense (Non-GAAP) 28,555 30,442 28,266 58,997 55,955

Net Interest Income 39,950 35,934 32,359 75,884 62,497

Plus: Taxable Equivalent Adjustment4

237 154 171 391 349

Net Interest Income (FTE) (Non-GAAP) 40,187 36,088 32,530 76,275 62,846

Less: Losses (Gains) on Sales of Securities, net 12,531 (80) — 12,451 —

Less: Equity Security Unrealized Fair Value Loss (Gain) 71 45 (22) 116 (159)

Less: Gain on BOLI death benefit6

— — — — (1,882)

Less: Gain on the Insurance Transaction (35,949) — — (35,949) —

Less: Gain on the Loan Sale Transaction — (65,000) — (65,000) —

Less: FHLB Early Prepayment Credit — (130) — (130) —

Plus: Noninterest Income 28,730 70,974 4,908 99,704 11,809

Net Interest Income (FTE) (Non-GAAP) plus Adjusted Noninterest Income $ 45,570 $ 41,897 $ 37,416 $ 87,467 $ 72,614

Efficiency Ratio (GAAP) 43.66 % 29.01 % 78.63 % 34.74 % 77.18 %

Adjusted Efficiency Ratio (Non-GAAP) 62.66 % 72.66 % 75.55 % 67.45 % 77.06 %

6The Gain on BOLI death benefit is tax-exempt.

7Loan Growth (Non-GAAP)

Year-to-Date

(Dollars in Thousands) June 30,

2026 June 30,

2025

Portfolio Loans $ 3,734,594 $ 3,747,121

Less: Loans Related to the Loan Sale Transaction (238,723)

Adjusted Loans (Non-GAAP) $ 3,508,398

Portfolio Loan Growth (GAAP) (0.33) %

Loan Growth (Non-GAAP) 6.45 %

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