Highlights

  • Carter Bankshares shows 324.79% basic EPS growth, P/E of 5.29 and PEG of 0.00.
  • Second quarter 2026 net income was $28.9 million, or $1.31 per diluted share.
  • The Loan Sale Transaction brought $289.5 million in cash and an $80.0 million net gain.
  • The company repurchased 108,601 shares for $2.9 million under its $10.0 million program.

One-year earnings growth of 324.79%, paired with a trailing twelve-month P/E of 5.29 and an expected-basis PEG of 0.00, puts Carter Bankshares (NASDAQ:CARE) among undervalued growth stocks, with shares trading at USD 30.12 on October 28, 2026, down 0.66%. Alongside those figures, the Virginia financial holding company announced a $10.0 million share repurchase program on February 2, completed the Loan Sale Transaction on March 26, and reported second quarter 2026 net income of $28.9 million, or $1.31 per diluted share, in its quarterly report for the period ended June 30, 2026.

Carter Bankshares is headquartered in Martinsville, Virginia, is incorporated in Virginia and has been a financial holding company since October 27, 2025. It is the parent of Carter Bank & Trust, an FDIC insured, Virginia state-chartered bank and member of the Federal Reserve System that operates 63 branches in Virginia and North Carolina. The company reported assets of $4.8 billion at June 30, 2026, offers commercial banking, consumer banking, mortgage and other services, and operates through a single reportable segment, Community Banking.

Growth: Second Quarter Earnings, Gains and Net Interest Income

Net income was $28.9 million in the second quarter of 2026 against $8.5 million a year earlier, and basic and diluted earnings per share were both $1.31 against $0.37.

Net interest income was $40.0 million, an increase of $7.6 million, or 23.5%, from the second quarter of 2025, and the net interest margin was 3.38% against 2.80%. Total noninterest income was $28.7 million against $4.9 million in the prior-year quarter, which the company attributed primarily to a $35.9 million pre-tax gain on the Insurance Transaction, partially offset by $12.5 million of losses on securities sales in the Portfolio Repositioning.

In the first quarter, the Loan Sale Transaction produced a net gain of $80.0 million, made up of a $65.0 million gain and a $15.0 million net recovery. The company said the transaction was accretive to first quarter diluted earnings per share by $3.50, and the Insurance Transaction was accretive by $1.30 for the second quarter. It described about $100.9 million of aggregate gains in the first six months as nonrecurring.

Valuation: P/E of 5.29, PEG of 0.00 and Return Measures

The P/E ratio of 5.29 is measured on trailing twelve-month earnings, and the PEG ratio of 0.00 is on an expected basis. Return on average assets was 2.39% for the second quarter against 0.72%, and return on average shareholders' equity was 22.01% against 8.45%.

The company said the Loan Sale Transaction increased book value per share by $3.49 for the first quarter. Shareholders' equity was $539.1 million at June 30, 2026, up $119.4 million, or 28.5%, from December 31, 2025.

Capital Returns, Liquidity and Balance Sheet

On February 2, 2026, the board authorized the purchase of up to $10.0 million of common stock over twelve months beginning February 11, 2026. In the second quarter the company repurchased 108,601 shares at a total cost of $2.9 million, a weighted average cost per share of $26.50. It declared cash dividends of $0.10 per share, or $2.2 million.

At June 30, 2026, the leverage ratio was 11.65%, the Common Equity Tier 1 ratio was 14.26% and the total risk-based capital ratio was 15.51%, against 11.95% at December 31, 2025. The company and the bank remained well capitalized. The company had no outstanding FHLB borrowings against $178.5 million at December 31, 2025.

Disclosed Risks and Outlook

On April 12, 2026, James C. Justice, II, family members and related entities sued the company and the bank in the Circuit Court of Greenbrier County, West Virginia, in a complaint amended on April 29. They seek rescission of the sale of the Judgments, injunctions against unaffiliated third-party defendants, direct damages of at least $500 million, consequential and punitive damages, and costs. The company denies the allegations and intends to defend the matter. It said it cannot yet determine the likelihood of an adverse result or estimate a range of possible loss.

Total portfolio loans fell $145.0 million from December 31, 2025, primarily owing to the Loan Sale Transaction. Nonperforming loans were $37.6 million, or 1.01% of portfolio loans, against $244.0 million, or 6.29%, at December 31, 2025.

The company did not issue numerical guidance. It said its goal is to shift from balance-sheet restructuring to a prudent growth strategy, primarily organic with possible opportunistic acquisitions, and it expects to use remaining Portfolio Repositioning proceeds to fund organic loan growth during the remainder of 2026.