Key Highlights

  • Diluted EPS of USD 0.35 fell below the consensus estimate of USD 0.54 but exceeded USD 0.24 a year earlier.
  • Revenue of USD 46.22 million trailed the consensus estimate of USD 47.19 million, while net interest income rose 22%.
  • Net interest margin widened to 3.51% from 2.86%, while net charge-offs reached USD 12.1 million.
  • Nonperforming loans dropped to USD 27.9 million, or 0.74% of portfolio loans, from 6.74% a year earlier.

Carter Bankshares, Inc. (NASDAQ:CARE) reported third quarter 2026 net income of USD 7.8 million, or USD 0.35 per diluted share, below the consensus estimate of USD 0.54 and above USD 5.4 million, or USD 0.24, in the third quarter of 2025. Revenue, measured as net interest income of USD 41.2 million plus noninterest income of USD 5.0 million, totaled USD 46.22 million against a consensus estimate of USD 47.19 million. Adjusted net income, a non-GAAP measure, was USD 7.6 million compared with USD 5.7 million a year earlier.

Margin Gains and Credit Charges

Net interest income rose 3.2% from the second quarter and 22.3% from a year ago, helped by higher securities yields after a second quarter portfolio repositioning and lower funding costs. The net interest margin of 3.51% compared with 3.38% in the prior quarter, and the tax equivalent margin, a non-GAAP measure, was 3.55%.

Credit costs weighed on the result. The company recorded USD 12.1 million of net charge-offs, including USD 8.0 million on a commercial and industrial relationship that included a Chapter 11 filing and USD 4.0 million on a commercial real estate loan, against a provision of USD 10.5 million. Annualized net charge-offs were 1.28% of average portfolio loans. Noninterest expense was USD 29.5 million, and the efficiency ratio stood at 63.84%, versus 73.43% a year ago.

Balance Sheet, Capital and Management Commentary

Chief Executive Officer Litz H. Van Dyke said core performance stayed strong despite isolated credit headwinds, noting that loans excluding the first quarter loan sale grew about 4.53% from a year earlier even with elevated payoffs. Portfolio loans rose USD 36.0 million in the quarter to USD 3.8 billion after about USD 161.0 million of payoffs, while total deposits fell USD 80.2 million to USD 4.1 billion.

The allowance for credit losses was USD 53.6 million, or 1.42% of portfolio loans, and covered nonperforming loans at 191.79%. The Tier 1 capital ratio was 14.24% and the leverage ratio 11.95%. The company repurchased 74,151 shares for USD 2.2 million in the quarter, and about 17.9% of deposits were uninsured.

Items That Frame the Next Quarter

Management pointed to a healthy lending pipeline, with growing momentum in small business and commercial and industrial lending and construction commitments scheduled to fund over the next 12 to 18 months. A dedicated SBA 7(a) lending team launched in the quarter, and a dividend reinvestment plan offering up to 1.0 million shares began applying to the first dividend declared and paid after August 24, 2026.

Other figures to follow include the net interest margin path from 3.51%, the adjusted efficiency ratio of 64.64% versus 62.66% in the second quarter, nonperforming assets of USD 29.2 million, and liquidity, with USD 818.7 million of additional FHLB borrowing capacity and USD 575.3 million of unpledged available-for-sale securities.