Carter Bankshares, Inc. (CARE)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 diluted EPS was $0.24, down QoQ and flat YoY; EPS missed Wall Street consensus of $0.43 as provision expense rose and NPLs ticked higher, while net interest margin expanded to 2.86% . EPS estimates from S&P Global were 0.43 versus actual 0.24 for Q3 2025; 0.2967 vs 0.41 for Q2 2025; 0.3033 vs 0.32 for Q1 2025.*
• Net interest income rose 4.2% QoQ and 17.1% YoY to $33.7M, with NIM expansion benefiting from lower funding costs and prior rate cuts; efficiency ratio improved to 73.43% from 78.63% in Q2 .
• Credit quality mixed: NPLs/loans increased to 6.74% from 6.69% in Q2 due to two new nonaccruals (one CRE at $14.6M), partially offset by $7.0M curtailment payments on the largest NPL relationship; ACL/loans held at ~1.92% .
• Management reiterated liability sensitivity and expects near-term rate reductions to be a tailwind; share repurchases continued ($4.9M in Q3; $14.0M YTD) and loan growth accelerated (+9.4% annualized) .

What Went Well and What Went Wrong

What Went Well

• Margin expansion and loan growth: “we again realized margin expansion and solid loan growth… annualized loan growth of 9.4% reflects good momentum” (CEO Litz Van Dyke) .
• Efficiency improved: GAAP efficiency ratio improved to 73.43% vs 78.63% in Q2 and 80.17% YoY; adjusted efficiency at 73.37% vs 75.55% in Q2 .
• Capital and liquidity remained strong; continued buybacks (262,269 shares in Q3; 809,601 YTD) and FHLB capacity plus unpledged AFS securities provide ample funding flexibility .

What Went Wrong

• EPS miss versus consensus and sequential decline: EPS $0.24 missed S&P Global consensus $0.43; QoQ EPS fell from $0.37 as provision expense swung to $2.9M from a $(2.3)M recovery in Q2 . EPS estimates from S&P Global shown in the Estimates Context table.*
• NPLs/loans rose to 6.74% due to two new nonaccruals (including a $14.6M CRE office) and seasonal deposit softness; FHLB borrowings increased $62.0M to fund loan growth .
• Continued earnings drag from large nonaccrual relationship (Justice Entities): Q3 interest income negatively impacted by $6.5M; aggregate negative impact since Q2’23 totals $85.2M .

Financial Results

Segment / portfolio composition:

Key KPIs and balance sheet:

Guidance Changes

Management reiterated positioning to benefit from near-term rate cuts and liability-sensitive balance sheet; no numerical ranges were issued .

Earnings Call Themes & Trends

Note: No Q3 2025 call transcript was found in the document set or company site; themes below reflect prepared remarks and press releases across Q1–Q3. [ListDocuments returned no transcript; investors site links reflect press releases.]

Management Commentary

• “We are pleased to report continued strong fundamentals and positive trends… we again realized margin expansion and solid loan growth… our loan pipeline remains healthy… our balance sheet remains slightly liability sensitive… we believe we are well positioned to benefit [from rate reductions]” — Litz H. Van Dyke, CEO .
• “Although our large nonperforming credit relationship continues to have a negative impact… aside from this impact, our fundamentals, financial performance, and asset quality metrics all remain solid. We are committed to resolving this lending relationship…” — Litz H. Van Dyke .
• On Q2 branch purchase and deposits: “completed the purchase of two leased branch facilities… acquired $55.9 million of deposits… thrilled to welcome… associates and customers” — Litz H. Van Dyke .
• On capital returns: “stock repurchase program to purchase up to $20.0 million… most prudent way to deliver shareholder value” — Litz H. Van Dyke .
• Q1 outlook: “expect tailwind from prior construction lending… further declines in short-term interest rates should positively benefit our net interest margin” — Litz H. Van Dyke .

Q&A Highlights

• No Q3 2025 earnings call transcript was available; Q&A highlights cannot be extracted. Narrative is based on prepared remarks and press releases [ListDocuments showed no earnings-call-transcript for CARE; investors site provides press releases].

Estimates Context

Values retrieved from S&P Global.*

Result implications:

• Q3 2025: EPS miss (0.24 reported vs 0.43 consensus; S&P shows 0.26 actual), and revenue below consensus; prior two quarters showed EPS beats and revenue above consensus, suggesting estimate resets likely lower post-Q3.*

Key Takeaways for Investors

• NIM expansion and disciplined funding costs are offsetting credit costs; continued rate reductions should support margin and earnings into Q4/Q1 .
• Credit remains the swing factor: modest NPL uptick from new nonaccruals and provision build in Q3; ongoing curtailments and reserves against the largest relationship mitigate tail risk .
• Strong loan growth (CRE, construction, mortgages) with a healthy pipeline suggests sustained asset-side momentum, though funding via higher FHLB borrowings bears watching .
• Capital and liquidity are solid; buybacks continue and could be an EPS lever if credit normalizes and margin tailwind persists .
• Near-term, expect consensus EPS revisions lower on Q3 miss and higher provision expense; medium-term thesis hinges on resolving the Justice Entities relationship and sustained NIM improvement .
• Seasonal deposit dynamics and liability sensitivity position Carter to benefit from further short-rate declines; watch insured deposit mix stability (~81.6%) .
• Operational efficiency improving; if credit stabilizes, earnings power should reflect efficiency ratio gains and growing net interest income .

Additional relevant press releases:

• Leadership promotions (Meece and Sword) reinforcing finance and controller roles (Sept 2, 2025) .
• Approval to become a state member bank of the Federal Reserve Bank of Richmond (Nov 13, 2025), streamlining regulatory structure for future initiatives .