Carter Bankshares, Inc. Announces Third Quarter 2025 Financial Results

Rhea-AI Summary

Carter Bankshares (NASDAQ:CARE) reported Q3 2025 net income of $5.4M or $0.24 diluted EPS, down from $8.5M ($0.37) in Q2 2025. Net interest income was $33.7M in Q3 2025 and pre-tax pre-provision income was $10.4M. For the nine months ended September 30, 2025, net income was $22.9M or $1.00 diluted EPS.

Key balance-sheet items: total portfolio loans rose to $3.8B (annualized loan growth 9.4%), net interest margin was 2.86% (up 6 bps QoQ), and the efficiency ratio improved to 73.43%. Credit remains concentrated: loans tied to entities associated with James C. Justice II carry an aggregate principal of $228.6M and the Bank reported total NPLs of $258.6M (6.74% of loans) at September 30, 2025.

Positive

• Total portfolio loans increased to $3.8B
• Annualized loan growth of 9.4% vs June 30, 2025
• Net interest income rose to $33.7M in Q3 2025 (+4.2% QoQ)
• Net interest margin expanded to 2.86% (+6 bps QoQ)
• Nine‑month net income of $22.9M (YTD EPS $1.00)

Negative

• Largest credit relationship principal balance of $228.6M at Sept 30, 2025
• Total NPLs of $258.6M (6.74% of loans) at Sept 30, 2025
• Interest income foregone of $85.2M aggregate since Q2 2023
• Provision (credit losses) expense of $2.9M in Q3 2025

Insights

Bank finance analyst

Mixed quarter: margin and loan growth improved, but a very large nonperforming credit relationship continues to depress income and reserves.

Net income for the quarter was $5.4 million ($0.24 diluted EPS), down from $8.5 million the prior quarter, while year-to-date net income improved to $22.9 million ($1.00 diluted EPS) for the nine months ended September 30, 2025. Net interest income and net interest margin expanded to $33.7 million and 2.86% respectively in the quarter, driven by lower funding costs and higher loan balances; loan balances rose to $3.8 billion with annualized quarter growth of 9.4%.

The Company remains heavily affected by one large Other-segment relationship tied to the Justice Entities whose NPL principal stood at $228.6 million at September 30, 2025 and has reduced aggregate interest income by $85.2 million since nonaccrual began in Q2 2023. That relationship represents 88.4% of total NPLs and 6.0% of total portfolio loans; curtailment receipts of $73.4 million since June 30, 2023 partially offset the exposure but timing and amounts of future collections remain unspecified in the disclosure.

Key dependencies and risks include resolution timing and cash collections from the Justice Entities, movements in NPLs (NPLs were $258.6 million or 6.74% of loans) and the adequacy of specific reserves (specific reserve for that relationship was $21.7 million). Watch curtailment payments (the quarter included $7.0 million), quarterly provision (Q3 provision expense $2.9 million), and any changes to the discounted cash flow assumptions the Company uses for its largest credit relationship. Expect material updates within the next few quarters as collections, additional nonaccrual migrations and resumed construction loan originations (noted to come online over the next 12 to 18 months) will influence earnings and credit metrics.

MARTINSVILLE, VA / ACCESS Newswire / October 23, 2025 / Carter Bankshares, Inc. (the "Company") (NASDAQ:CARE), the holding company of Carter Bank (the "Bank") today announced quarterly net income of $5.4 million, or $0.24 diluted earnings per share ("EPS"), for the third quarter of 2025 compared to net income of $8.5 million, or $0.37 diluted EPS, for the second quarter of 2025 and net income of $5.6 million, or $0.24 diluted EPS, for the third quarter of 2024. Net interest income was $33.7 million for the third quarter of 2025, $32.4 million for the second quarter of 2025, and $28.8 million for the third quarter of 2024. Pre-tax pre-provision income¹ was $10.4 million for the third quarter of 2025, $8.0 million for the second quarter of 2025 and $6.8 million for the third quarter of 2024.

For the nine months ended September 30, 2025, net income was $22.9 million, or $1.00 diluted EPS, compared to net income of $16.2 million, or $0.70 diluted EPS for the same period in 2024. Net interest income was $96.2 million for the nine months ended September 30, 2025, and $85.3 million for the nine months ended September 30, 2024. Pre-tax pre-provision income¹ was $27.3 million and $20.2 million for the nine months ended September 30, 2025 and 2024, respectively.

The Company's financial results continue to be significantly impacted by loans in the Bank's Other segment of the Company's loan portfolio, the significant 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 significant majority of the Other segment with an aggregate principal balance of $228.6 million as of September 30, 2025. Interest income was negatively impacted by $6.5 million during the third quarter of 2025, $6.7 million during the second quarter of 2025, and $8.8 million during the third quarter of 2024, due to these credits being on nonaccrual status. Interest income has been negatively impacted by $85.2 million in the aggregate since placement of these credits on nonaccrual status during the second quarter of 2023.

As of September 30, 2025, $73.4 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 $228.6 million as of September 30, 2025. Curtailment payments received during the third quarter of 2025 totaled $7.0 million. For additional information regarding the Bank's credit relationship with the Justice Entities, see "Credit Quality."

Financial Highlights for the Three and Nine Months Ended September 30, 2025

• Total portfolio loans increased $88.5 million, or 9.4%, on an annualized basis, to $3.8 billion at September 30, 2025 from June 30, 2025 and increased $239.8 million, or 6.7% from September 30, 2024;

• Net interest income totaled $33.7 million, an increase of $1.4 million, or 4.2% compared to the prior quarter, and an increase of $4.9 million, or 17.1% compared to the year ago quarter;

• Net interest margin, increased six basis points to 2.86% for the third quarter of 2025, compared to 2.80% for the prior quarter and increased 28 basis points for the year ago quarter. Net interest margin, on a fully taxable equivalent ("FTE") basis³, increased five basis points to 2.87% for the third quarter of 2025, compared to 2.82% for the prior quarter and increased 28 basis points from the year ago quarter. Net interest income and net interest margin continue to be significantly impacted by the Bank's largest lending relationship remaining on nonaccrual status since the second quarter of 2023;

• NPLs increased by $8.1 million to $258.6 million at September 30, 2025 compared to June 30, 2025. NPLs to total portfolio loans were 6.74% at September 30, 2025, 6.69% at June 30, 2025 and 8.00% at September 30, 2024;

• The allowance for credit losses to total portfolio loans was 1.92%, 1.90% and 2.25% at September 30, 2025, June 30, 2025 and September 30, 2024, respectively; and

• The efficiency ratio was 73.43%, 78.63% and 80.17%, and the adjusted efficiency ratio (non-GAAP)⁴ was 73.37%, 75.55%, and 80.65% for the quarters ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively. The efficiency ratio was impacted by the Bank's largest lending relationship that was placed in nonaccrual status during the second quarter of 2023, a one-time gain on death benefit in the first quarter of 2025, expenses related to the Company's surrender of bank owned life insurance ("BOLI") in the first and second quarters of 2025 and acquisition costs related to the acquisition of two leased branch facilities and the associated deposits from First Reliance Bank in the second quarter of 2025.

"We are pleased to report continued strong fundamentals and positive trends for the third quarter of 2025. During the quarter, we again realized margin expansion and solid loan growth throughout our footprint. Our annualized loan growth of 9.4% reflects 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. Our balance sheet remains slightly liability sensitive. As the Federal Reserve reduces short-term interest rates in the near term, we believe we are well positioned to benefit especially given the short-term nature of our certificates of deposit ("CD") portfolio," stated Litz H. Van Dyke, Chief Executive Officer.

Van Dyke concluded, "Although our large nonperforming credit relationship continues to have a negative impact on our financial and credit metrics, aside from this impact, our fundamentals, financial 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 and continuing into 2026."

Operating Highlights

Credit Quality

NPLs as a percentage of total portfolio loans were 6.74%, 6.69% and 8.00% at September 30, 2025, June 30, 2025 and September 30, 2024, respectively. At September 30, 2025, NPLs increased $8.1 million to $258.6 million compared to June 30, 2025. The increase was primarily driven by two loans that moved into nonaccrual status in the third quarter of 2025 which included a commercial real estate ("CRE") loan of $14.6 million and a residential mortgage loan of $0.8 million. This CRE loan is secured by an office building whose government agency tenants are vacating during the fourth quarter of 2025. Although this CRE loan was originated at a relatively low loan-to-value ratio, the Bank is closely reviewing this CRE loan, and other similar loans in its CRE portfolio, for changes in valuation and other market impacts. This increase was partially offset by $7.0 million in curtailment payments made by the Bank's largest credit relationship.

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 $228.6 million at September 30, 2025. This NPL relationship represents 88.4% of total NPLs and 6.0% of total portfolio loans at September 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 specific reserves with respect to the Bank's largest NPL credit relationship were $21.7 million at September 30, 2025 compared to $24.0 million at June 30, 2025. The decline during the third quarter of 2025 was driven by the aforementioned curtailment payments. The Company uses the discounted cash flow model with updated assumptions and inputs regarding the credit relationship, legal risk and related risks.

During the third quarter of 2025, the provision (recovery) for credit losses was an expense of $2.9 million, compared to a recovery of $(2.3) million in the second quarter of 2025 and a recovery of $(432) thousand during the third quarter of 2024. The increase from the prior quarter was primarily driven by $3.8 million in general reserves established for higher new loan volume during the third quarter of 2025, along with the establishment of a $1.2 million specific reserve on an existing CRE relationship that has been in nonaccrual status since the first quarter of 2025 as a result of an updated appraisal. These increases were partially offset by a $2.3 million reduction in the Other segment reserve, resulting from a lower reserve rate, which declined from 10.18% at June 30, 2025 to 9.49% at September 30, 2025, and lower curtailment payments in the third quarter of 2025 compared to the second quarter of 2025.

During the third quarter of 2025, the provision (recovery) for unfunded commitments was an expense of $335 thousand compared to a recovery of $(335) thousand in the second quarter of 2025 and an expense for unfunded commitments of $191 thousand in the third quarter of 2024. The change from the prior quarter was primarily due to increased unfunded commitments in construction loans.

Net Interest Income

Net interest income for the third quarter of 2025 increased $1.4 million, or 4.2%, to $33.7 million compared to the second quarter and increased $4.9 million, or 17.1%, compared to the same period in 2024. The increase in net interest income compared to the second quarter of 2025 was primarily due to a six basis point decline in funding costs, and a two basis point increase compared to the prior quarter in the yield on average interest-earning assets. The increase in net interest income compared to the third quarter of 2024 was primarily due to a 45 basis point decline in funding costs, offset by a five basis point decrease in the yield on average interest-earning assets.

Net interest income on an FTE basis³ was $33.9 million and $96.7 million for the three and nine months ended September 30, 2025, respectively, increasing $4.9 million and $10.8 million compared to the same periods in the prior year. Net interest income for the three and nine months ended September 30, 2025 was positively impacted by lower rates paid on average interest-bearing liabilities and higher average balances of loans compared to the prior year periods. These positive impacts were partially offset by declines in both the average balances and the yields on securities during the three and nine months ended September 30, 2025.

Net interest margin was 2.86% and 2.78% for the three and nine months ended September 30, 2025, respectively, compared to 2.58% and 2.57% for the three and nine months ended September 30, 2024. Net interest margin on an FTE basis³ (non-GAAP) was 2.87% and 2.80% for the three and nine months ended September 30, 2025, respectively, compared to 2.59% for both the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2025, lower interest-bearing funding costs were positively impacted by the Federal Reserve's reduction of short-term interest rates by 25 basis points during the third quarter of 2025, as well as by cumulative reductions of 100 basis points implemented between September 2024 to December 2024.

Noninterest Income

Noninterest income was $5.4 million for the third quarter of 2025, an increase of $0.5 million, or 9.4%, compared to the second quarter of 2025, but decreased $0.1 million compared to the third quarter of 2024. The primary driver of the quarter-over-quarter increase was $0.3 million in higher insurance commissions, along with a $0.1 million increase in service charges, commissions and fees.

For the nine months ended September 30, 2025, noninterest income increased $1.2 million compared to the same period in 2024. This growth was primarily due to a $1.8 million increase in other noninterest income, partially offset by a $0.5 million decline in insurance commissions. The increase in other noninterest income included a $1.9 million gain on a BOLI death benefit recorded in the first quarter of 2025. The decline in insurance commissions was due to lower activity in the first nine months of 2025.

Noninterest Expense

Noninterest expense was $28.7 million in the third quarter of 2025, representing a decrease of $0.6 million from the prior quarter. The quarter-over-quarter decline was mainly due to OREO activity on four OREO properties of $0.4 million and a $0.3 million 1035 exchange fee as a result of the early surrender of one of the Company's BOLI policies, both of which were recorded in the second quarter of 2025.

Compared to the third quarter of 2024, noninterest expense increased by $1.3 million. This increase was driven primarily by higher professional and legal fees of $0.7 million due to acquisition costs related to the branch purchase in the second quarter of 2025 previously discussed, higher occupancy expense, net of $0.6 million and other noninterest expense of $0.5 million. These increases were partially offset by $0.6 million in lower salaries and employee benefits. While base salaries increased during the quarter, total salary expenses decreased due to higher salary cost deferrals associated with higher loan growth, which reduced the amount of salary expense recognized in the third quarter. The increase in occupancy expense was due to higher software and maintenance costs and increased depreciation expense from the branch purchase previously discussed. Other noninterest expenses also increased primarily due to the previously mentioned activity on four OREO properties.

For the nine months ended September 30, 2025, noninterest expense increased $4.9 million compared to the same period in 2024. This impact was primarily driven by the following increases; $2.1 million in other noninterest expense, $1.8 million in occupancy expenses, net, $0.8 million in advertising expenses, $0.8 million in professional and legal fees and $0.7 million in data processing expenses. These increases were partially offset by a $1.3 million decrease in salaries and employee benefits. As discussed previously, while base salaries increased during the nine month period, total salary expenses decreased due to higher salary cost deferrals of $5.0 million associated with higher loan growth, which reduced the amount of salary expense recognized in the nine months ended September 30, 2025.

Financial Condition

Total assets increased by $56.0 million, to $4.8 billion as of September 30, 2025, compared to June 30, 2025. Cash and due from banks increased $7.0 million to $106.9 million at September 30, 2025, up from $99.9 million at June 30, 2025. Available-for-sale securities decreased $27.3 million compared to June 30, 2025. These securities represented 15.0% of total assets at September 30, 2025, down slightly from 15.8% at June 30, 2025. The decrease was primarily driven by normal paydowns and calls, the unrealized losses of $8.0 million, partially offset by purchases during the third quarter.

Total portfolio loans increased $88.5 million, or 9.4%, on an annualized basis, to $3.8 billion at September 30, 2025 compared to June 30, 2025. The breakdown of loan growth compared to June 30, 2025 related to the following increases: $62.4 million in commercial real estate loans ("CRE"), $23.1 million in construction, $12.7 million in residential mortgages and $1.1 million in other consumer, partially offset by the following decreases: $7.0 million in Other and $3.8 million in commercial and industrial ("C&I").

Total deposits decreased during the seasonally slow third quarter by $11.9 million to $4.2 billion as of September 30, 2025 compared to June 30, 2025. FHLB borrowings increased $62.0 million to $175.5 million at September 30, 2025 compared to June 30, 2025 to fund loan growth.

At both September 30, 2025 and June 30, 2025, approximately 81.6% of our total deposits of $4.2 billion were insured under standard Federal Deposit Insurance Corporation ("FDIC") insurance coverage limits, and approximately 18.4% of our total deposits were uninsured deposits over the standard FDIC insurance coverage limit, respectively.

Capitalization and Liquidity

The Company remained well capitalized at September 30, 2025. The Company's Tier 1 Capital ratio was 10.66% at September 30, 2025 as compared to 10.87% at June 30, 2025. The Company's leverage ratio was 9.41% at September 30, 2025 as compared to 9.46% at June 30, 2025. The Company's Total Risk-Based Capital ratio was 11.91% at September 30, 2025 as compared to 12.12% at June 30, 2025.

During the three and nine months ended September 30, 2025, the Company repurchased 262,269 and 809,601 shares of its common stock at a total cost of $4.9 million and $14.0 million, respectively, at weighted average cost per share of $18.70 and $17.35, respectively.

At September 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 $544.0 million. The Company has unsecured facilities with three other correspondent financial institutions totaling $30.0 million, a fully secured facility with one other correspondent financial 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 September 30, 2025. In addition to the above funding resources, the Company also has $416.1 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 as of September 30, 2025. For more information or to open an account visit 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 financial measures and should be read along with the accompanying tables in our definitions and reconciliations of GAAP to non-GAAP financial measures. This press release and the accompanying tables discuss financial 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 financial services industry. Non-GAAP measures should not be considered as an alternative to GAAP or considered to be more relevant than financial 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 financial condition as reported under GAAP and all other relevant information when assessing the performance or financial 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 financial 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 financial 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 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 and its deposit, loan and securities portfolios;

• inflation, market and monetary fluctuations;

• changes in trade, 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;

• 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 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, and of any governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects 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 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;

• 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 and government shutdowns;

• 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

• re-emergence of 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, 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, 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.

Carter Bankshares, Inc.
investorrelations@CBTCares.com

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
BALANCE SHEETS

		September 30, 2025				June 30, 2025				September 30, 2024
(Dollars in Thousands, except per share data)		(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and Due From Banks, including Interest-Bearing Deposits of $64,391 at September 30, 2025, $51,890 at June 30, 2025 and $61,603 at September 30, 2024		$	106,948			$	99,905			$	104,992
Securities Available-for-Sale, at Fair Value			727,903				755,212				742,635
Equity Securities			10,269				10,200				5,207
Loans Held-for-Sale			478				246				390
Portfolio Loans			3,835,653				3,747,121				3,595,861
Allowance for Credit Losses			(73,762	)			(71,023	)			(80,909	)
Portfolio Loans, net			3,761,891				3,676,098				3,514,952
Bank Premises and Equipment, net			71,653				72,105				73,433
Goodwill			1,193				1,193				-
Core Deposit Intangible			1,007				1,073				-
Other Real Estate Owned, net			330				1,657				1,512
Federal Home Loan Bank Stock, at Cost			11,598				8,653				7,437
Bank Owned Life Insurance			51,649				48,365				59,203
Other Assets			95,200				109,384				103,674
Total Assets		$	4,840,119			$	4,784,091			$	4,613,435
LIABILITIES
Deposits:
Noninterest-Bearing Demand		$	606,203			$	635,192			$	628,901
Interest-Bearing Demand			809,527				805,013				649,005
Money Market			552,564				544,764				504,206
Savings			335,502				343,659				372,881
Certificates of Deposit			1,906,551				1,893,611				1,930,075
Total Deposits			4,210,347				4,222,239				4,085,068
Federal Home Loan Bank Borrowings			175,500				113,500				90,000
Reserve for Unfunded Loan Commitments			3,072				2,737				3,105
Other Liabilities			38,362				39,980				48,437
Total Liabilities			4,427,281				4,378,456				4,226,610
SHAREHOLDERS' EQUITY
Common Stock, Par Value $1.00 Per Share, Authorized 100,000,000 Shares;
Outstanding- 22,406,406 shares at September 30, 2025, 22,669,834 shares at June 30, 2025 and 23,072,014 shares at September 30, 2024			22,406				22,670				23,072
Additional Paid-in Capital			79,997				84,146				91,732
Retained Earnings			356,488				351,069				325,326
Accumulated Other Comprehensive Loss			(46,053	)			(52,250	)			(53,305	)
Total Shareholders' Equity			412,838				405,635				386,825
Total Liabilities and Shareholders' Equity		$	4,840,119			$	4,784,091			$	4,613,435
PERFORMANCE RATIOS
Return on Average Assets (QTD Annualized)			0.45	%			0.72	%			0.49	%
Return on Average Assets (YTD Annualized)			0.64	%			0.75	%			0.48	%
Return on Average Shareholders' Equity (QTD Annualized)			5.24	%			8.45	%			5.99	%
Return on Average Shareholders' Equity (YTD Annualized)			7.61	%			8.85	%			5.99	%
Portfolio Loans to Deposit Ratio			91.10	%			88.75	%			88.02	%
Allowance for Credit Losses to Total Portfolio Loans			1.92	%			1.90	%			2.25	%
CAPITALIZATION RATIOS
Shareholders' Equity to Assets			8.53	%			8.48	%			8.38	%
Tier 1 Leverage Ratio			9.41	%			9.46	%			9.53	%
Risk-Based Capital - Tier 1			10.66	%			10.87	%			10.83	%
Risk-Based Capital - Total			11.91	%			12.12	%			12.09	%

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
INCOME STATEMENTS

		Quarter-to-Date												Year-to-Date
		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
(Dollars in Thousands, except per share data)		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Interest Income		$	59,170			$	57,747			$	56,595			$	172,924			$	165,227
Interest Expense			25,451				25,388				27,797				76,708				79,918
NET INTEREST INCOME			33,719				32,359				28,798				96,216				85,309
Provision (Recovery) for Credit Losses			2,896				(2,330	)			(432	)			(1,459	)			75
Provision (Recovery) for Unfunded Commitments			335				(335	)			191				(114	)			(88	)
NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR CREDIT LOSSES			30,488				35,024				29,039				97,789				85,322
NONINTEREST INCOME
Gains on Sales of Securities, net			-				-				-				-				36
Service Charges, Commissions and Fees			1,860				1,765				1,820				5,499				5,547
Debit Card Interchange Fees			1,942				1,942				1,907				5,988				5,926
Insurance Commissions			1,004				714				1,063				2,062				2,611
Bank Owned Life Insurance Income			357				357				375				1,055				1,088
Other			207				130				257				2,575				792
Total Noninterest Income			5,370				4,908				5,422				17,179				16,000
NONINTEREST EXPENSE
Salaries and Employee Benefits			14,023				14,082				14,603				41,762				43,019
Occupancy Expense, net			4,582				4,230				3,944				13,284				11,485
FDIC Insurance Expense			1,450				1,436				1,529				4,316				4,782
Other Taxes			867				922				878				2,736				2,680
Advertising Expense			669				708				585				2,288				1,470
Telephone Expense			312				307				324				923				1,083
Professional and Legal Fees			1,852				1,921				1,193				5,003				4,248
Data Processing			1,367				1,395				1,337				4,206				3,462
Debit Card Expense			959				991				889				2,942				2,453
Other			2,623				3,312				2,151				8,590				6,454
Total Noninterest Expense			28,704				29,304				27,433				86,050				81,136
Income Before Income Taxes			7,154				10,628				7,028				28,918				20,186
Income Tax Provision			1,735				2,118				1,399				6,036				3,943
Net Income		$	5,419			$	8,510			$	5,629			$	22,882			$	16,243
Shares Outstanding, at End of Period			22,406,406				22,669,834				23,072,014				22,406,406				23,072,014
Average Shares Outstanding-Basic & Diluted			22,294,228				22,805,881				22,832,619				22,655,931				22,810,114
PER SHARE DATA
Basic Earnings Per Common Share*		$	0.24			$	0.37			$	0.24			$	1.00			$	0.70
Diluted Earnings Per Common Share*		$	0.24			$	0.37			$	0.24			$	1.00			$	0.70
Book Value		$	18.42			$	17.89			$	16.77			$	18.42			$	16.77
Market Value		$	19.41			$	17.34			$	17.39			$	19.41			$	17.39
PROFITABILITY RATIOS (GAAP)
Net Interest Margin			2.86	%			2.80	%			2.58	%			2.78	%			2.57	%
Efficiency Ratio			73.43	%			78.63	%			80.17	%			75.89	%			80.09	%
PROFITABILITY RATIOS (Non-GAAP)
Net Interest Margin (FTE)3			2.87	%			2.82	%			2.59	%			2.80	%			2.59	%
Adjusted Efficiency Ratio (Non-GAAP)4			73.37	%			75.55	%			80.65	%			75.77	%			80.33	%

*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)

		September 30, 2025												June 30, 2025												September 30, 2024
(Dollars in Thousands)		Average Balance				Income/ Expense				Rate				Average Balance				Income/ Expense				Rate				Average Balance				Income/ Expense				Rate
ASSETS
Interest-Bearing Deposits with Banks		$	64,407			$	720				4.44	%		$	58,006			$	643				4.45	%		$	43,817			$	597				5.42	%
Tax-Free Investment Securities3			11,583				84				2.88	%			11,622				85				2.93	%			11,740				84				2.85	%
Taxable Investment Securities			802,184				6,672				3.30	%			818,588				6,796				3.33	%			815,885				7,266				3.54	%
Total Securities			813,767				6,756				3.29	%			830,210				6,881				3.32	%			827,625				7,350				3.53	%
Tax-Free Loans3			84,366				695				3.27	%			89,362				732				3.29	%			99,810				815				3.25	%
Taxable Loans			3,709,172				51,018				5.46	%			3,648,629				49,522				5.44	%			3,464,899				47,813				5.49	%
Total Loans			3,793,538				51,713				5.41	%			3,737,991				50,254				5.39	%			3,564,709				48,628				5.43	%
Federal Home Loan Bank Stock			8,956				144				6.38	%			8,428				140				6.66	%			11,304				210				7.39	%
Total Interest-Earning Assets			4,680,668				59,333				5.03	%			4,634,635				57,918				5.01	%			4,447,455				56,785				5.08	%
Noninterest Earning Assets			123,748												126,303												108,760
Total Assets		$	4,804,416											$	4,760,938											$	4,556,215
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Demand		$	809,318			$	3,509				1.72	%		$	805,749			$	3,661				1.82	%		$	604,630			$	2,838				1.87	%
Money Market			554,903				3,614				2.58	%			536,366				3,510				2.62	%			502,008				4,012				3.18	%
Savings			341,123				141				0.16	%			347,863				129				0.15	%			386,698				153				0.16	%
Certificates of Deposit			1,899,939				16,761				3.50	%			1,885,486				16,759				3.57	%			1,835,329				18,515				4.01	%
Total Interest-Bearing Deposits			3,605,283				24,025				2.64	%			3,575,464				24,059				2.70	%			3,328,665				25,518				3.05	%
Federal Home Loan Bank Borrowings			119,870				1,284				4.25	%			108,753				1,186				4.37	%			171,424				2,143				4.97	%
Other Borrowings			11,145				142				5.05	%			10,713				143				5.35	%			10,070				136				5.37	%
Total Borrowings			131,015				1,426				4.32	%			119,466				1,329				4.46	%			181,494				2,279				5.00	%
Total Interest-Bearing Liabilities			3,736,298				25,451				2.70	%			3,694,930				25,388				2.76	%			3,510,159				27,797				3.15	%
Noninterest-Bearing Liabilities			658,178												662,168												672,208
Shareholders' Equity			409,940												403,840												373,848
Total Liabilities and Shareholders' Equity		$	4,804,416											$	4,760,938											$	4,556,215
Net Interest Income3						$	33,882											$	32,530											$	28,988
Net Interest Margin3											2.87	%											2.82	%											2.59	%

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
NET INTEREST MARGIN (FTE) (YTD AVERAGES)
(Unaudited)

		Nine Months Ended September 30, 2025												Nine Months Ended September 30, 2024
(Dollars in Thousands)		Average Balance				Income/ Expense				Rate				Average Balance				Income/ Expense				Rate
ASSETS
Interest-Bearing Deposits with Banks		$	63,256			$	2,111				4.46	%		$	33,049			$	1,352				5.46	%
Tax-Free Investment Securities3			11,622				253				2.91	%			11,779				255				2.89	%
Taxable Investment Securities			809,533				20,123				3.32	%			836,993				22,730				3.63	%
Total Securities			821,155				20,376				3.32	%			848,772				22,985				3.62	%
Tax-Free Loans3			89,036				2,188				3.29	%			105,569				2,566				3.25	%
Taxable Loans			3,642,182				148,365				5.45	%			3,434,407				138,025				5.37	%
Total Loans			3,731,218				150,553				5.39	%			3,539,976				140,591				5.31	%
Federal Home Loan Bank Stock			7,970				396				6.64	%			16,089				892				7.41	%
Total Interest-Earning Assets			4,623,599				173,436				5.02	%			4,437,886				165,820				4.99	%
Noninterest Earning Assets			123,946												97,235
Total Assets		$	4,747,545											$	4,535,121
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Demand		$	786,890			$	10,556				1.79	%		$	544,680			$	5,639				1.38	%
Money Market			539,018				10,443				2.59	%			512,539				11,934				3.11	%
Savings			347,985				383				0.15	%			412,549				435				0.14	%
Certificates of Deposit			1,901,140				51,725				3.64	%			1,734,538				50,950				3.92	%
Total Interest-Bearing Deposits			3,575,033				73,107				2.73	%			3,204,306				68,958				2.87	%
Federal Home Loan Bank Borrowings			99,668				3,172				4.26	%			273,413				10,637				5.20	%
Other Borrowings			10,761				429				5.33	%			8,749				323				4.93	%
Total Borrowings			110,429				3,601				4.36	%			282,162				10,960				5.19	%
Total Interest-Bearing Liabilities			3,685,462				76,708				2.78	%			3,486,468				79,918				3.06	%
Noninterest-Bearing Liabilities			660,253												686,560
Shareholders' Equity			401,830												362,093
Total Liabilities and Shareholders' Equity		$	4,747,545											$	4,535,121
Net Interest Income3						$	96,728											$	85,902
Net Interest Margin3											2.80	%											2.59	%

LOANS AND LOANS HELD-FOR-SALE
(Unaudited)

(Dollars in Thousands)		September 30, 2025				June 30, 2025				September 30, 2024
Commercial
Commercial Real Estate		$	2,063,181			$	2,000,766			$	1,857,997
Commercial and Industrial			218,038				221,880				241,474
Total Commercial Loans			2,281,219				2,222,646				2,099,471
Consumer
Residential Mortgages			826,944				814,188				782,930
Other Consumer			29,077				27,991				29,813
Total Consumer Loans			856,021				842,179				812,743
Construction			466,701				443,573				399,502
Other			231,712				238,723				284,145
Total Portfolio Loans			3,835,653				3,747,121				3,595,861
Loans Held-for-Sale			478				246				390
Total Loans		$	3,836,131			$	3,747,367			$	3,596,251

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
ASSET QUALITY DATA
(Unaudited)

		For the Periods Ended
(Dollars in Thousands)		September 30, 2025				June 30, 2025				September 30, 2024
Nonaccrual Loans
Commercial Real Estate		$	24,124			$	9,613			$	978
Commercial and Industrial			1,072				1,048				1,094
Residential Mortgages			4,822				4,142				4,482
Other Consumer			26				29				20
Construction			39				207				231
Other			228,554				235,542				280,905
Total Nonperforming Loans			258,637				250,581				287,710
Other Real Estate Owned			330				1,657				1,512
Total Nonperforming Assets		$	258,967			$	252,238			$	289,222

Nonperforming Loans to Total Portfolio Loans			6.74	%			6.69	%			8.00	%
Nonperforming Assets to Total Portfolio Loans plus Other Real Estate Owned			6.75	%			6.73	%			8.04	%
Allowance for Credit Losses to Total Portfolio Loans			1.92	%			1.90	%			2.25	%
Allowance for Credit Losses to Nonperforming Loans			28.52	%			28.34	%			28.12	%
Net Loan Charge-offs QTD		$	157			$	165			$	15,345
Net Loan Charge-offs YTD		$	379			$	222			$	16,218
Net Loan Charge-offs (Annualized) to Average Portfolio Loans QTD			0.02	%			0.02	%			1.71	%
Net Loan Charge-offs (Annualized) to Average Portfolio Loans YTD			0.01	%			0.01	%			0.61	%

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
ALLOWANCE FOR CREDIT LOSSES
(Unaudited)

		Quarter-to-Date												Year-to-Date
(Dollars in Thousands)		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
Balance Beginning of Period		$	71,023			$	73,518			$	96,686			$	75,600			$	97,052
Provision (Recovery) for Credit Losses			2,896				(2,330	)			(432	)			(1,459	)			75
Charge-offs:
Commercial Real Estate			-				-				-				-				-
Commercial and Industrial			-				-				21				7				40
Residential Mortgages			-				-				5				-				32
Other Consumer			256				288				421				715				1,389
Construction			-				-				1				1				157
Other			-				-				15,000				-				15,000
Total Charge-offs			256				288				15,448				723				16,618
Recoveries:
Commercial Real Estate			-				-				-				-				-
Commercial and Industrial			1				2				1				6				3
Residential Mortgages			2				2				5				12				29
Other Consumer			96				119				97				325				368
Construction			-				-				-				1				-
Other			-				-				-				-				-
Total Recoveries			99				123				103				344				400
Total Net Charge-offs			157				165				15,345				379				16,218
Balance End of Period		$	73,762			$	71,023			$	80,909			$	73,762			$	80,909

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)		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
Net Interest Income		$	33,719			$	32,359			$	28,798			$	96,216			$	85,309
Noninterest Income			5,370				4,908				5,422				17,179				16,000
Noninterest Expense			28,704				29,304				27,433				86,050				81,136
Pre-tax Pre-provision Income (Non-GAAP)		$	10,385			$	7,963			$	6,787			$	27,345			$	20,173

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)		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
Net Income		$	5,419			$	8,510			$	5,629			$	22,882			$	16,243
Gains on Sales of Securities, net			-				-				-				-				(36	)
Equity Security Unrealized Fair Value Gain			(69	)			(22	)			(144	)			(228	)			(207	)
Losses on Sales and Write-downs of Bank Premises, net			11				60				9				68				54
(Gains) Losses on Sales and Write-downs of OREO, net			(89	)			262				(502	)			254				(852	)
1035 Exchange fee on BOLI			-				252				-				527				-
Acquisition Costs			33				386				-				419				-
Gain on BOLI death benefit5			-				-				-				(1,882	)			-
OREO Income			-				-				(16	)			-				(44	)
Severance Pay			-				40				-				40				-
Contingent Liability			-				38				303				38				303
Total Tax Effect			24				(214	)			73				(235	)			164
Modified Endowment Contract (MEC) 10% penalty on BOLI Surrender			123				-				-				123				-
Tax Effect on BOLI Surrender			259				-				-				259				-
Adjusted Net Income (Non-GAAP)		$	5,711			$	9,312			$	5,352			$	22,265			$	15,625
Average Shares Outstanding - diluted			22,294,228				22,805,881				22,832,619				22,655,931				22,810,114
Adjusted Earnings Per Common Share (diluted) (Non-GAAP)		$	0.26			$	0.41			$	0.23			$	0.98			$	0.69

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.

Net Interest Income (FTE) (Non-GAAP)		Quarter-to-Date												Year-to-Date
(Dollars in Thousands)		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
Interest and Dividend Income (GAAP)		$	59,170			$	57,747			$	56,595			$	172,924			$	165,227
Tax Equivalent Adjustment3			163				171				190				512				593
Interest and Dividend Income (FTE) (Non-GAAP)			59,333				57,918				56,785				173,436				165,820
Average Earning Assets			4,680,668				4,634,635				4,447,455				4,623,599				4,437,886
Yield on Interest-earning Assets (GAAP)			5.02	%			5.00	%			5.06	%			5.00	%			4.97	%
Yield on Interest-earning Assets (FTE) (Non-GAAP)			5.03	%			5.01	%			5.08	%			5.02	%			4.99	%
Net Interest Income (GAAP)		$	33,719			$	32,359			$	28,798			$	96,216			$	85,309
Tax Equivalent Adjustment3			163				171				190				512				593
Net Interest Income (FTE) (Non-GAAP)			33,882				32,530				28,988				96,728				85,902
Average Earning Assets			4,680,668				4,634,635				4,447,455				4,623,599				4,437,886
Net Interest Margin (GAAP)			2.86	%			2.80	%			2.58	%			2.78	%			2.57	%
Net Interest Margin (FTE) (Non-GAAP)			2.87	%			2.82	%			2.59	%			2.80	%			2.59	%

CARTER BANKSHARES, INC.
CONSOLIDATED SELECTED FINANCIAL DATA

4 Adjusted Efficiency Ratio (Non-GAAP)		Quarter-to-Date												Year-to-Date
(Dollars in Thousands)		September 30, 2025				June 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
Noninterest Expense		$	28,704			$	29,304			$	27,433			$	86,050			$	81,136
Less: Losses on sales and write-downs of Branch Premises, net			(11	)			(60	)			(9	)			(68	)			(54	)
Less: Gains (Losses) on Sales and write-downs of OREO, net			89				(262	)			502				(254	)			852
Less: 1035 Exchange fee on BOLI			-				(252	)			-				(527	)			-
Less: Acquisition Costs			(33	)			(386	)			-				(419	)			-
Less: Severance Pay			-				(40	)			-				(40	)			-
Less: Contingent Liability			-				(38	)			(303	)			(38	)			(303	)
Adjusted Noninterest Expense (Non-GAAP)		$	28,749			$	28,266			$	27,623			$	84,704			$	81,631
Net Interest Income		$	33,719			$	32,359			$	28,798			$	96,216			$	85,309
Plus: Taxable Equivalent Adjustment3			163				171				190				512				593
Net Interest Income (FTE) (Non-GAAP)		$	33,882			$	32,530			$	28,988			$	96,728			$	85,902
Less: Gains on Sales of Securities, net			-				-				-				-				(36	)
Less: Equity Security Unrealized Fair Value Gain			(69	)			(22	)			(144	)			(228	)			(207	)
Less: Gain on BOLI death benefit5			-				-				-				(1,882	)			-
Less: OREO Income			-				-				(16	)			-				(44	)
Plus: Noninterest Income			5,370				4,908				5,422				17,179				16,000
Net Interest Income (FTE) (Non-GAAP) plus Adjusted Noninterest Income		$	39,183			$	37,416			$	34,250			$	111,797			$	101,615
Efficiency Ratio (GAAP)			73.43	%			78.63	%			80.17	%			75.89	%			80.09	%
Adjusted Efficiency Ratio (Non-GAAP)			73.37	%			75.55	%			80.65	%			75.77	%			80.33	%

⁵The Gain on BOLI death benefit is tax-exempt.

SOURCE: Carter Bankshares, Inc.

View the original press release on ACCESS Newswire

FAQ

What were Carter Bankshares (CARE) third quarter 2025 earnings and EPS?

Carter Bankshares reported Q3 2025 net income $5.4M, or $0.24 diluted EPS.

How large are CARE's nonperforming loans at September 30, 2025?

Total NPLs were $258.6M, equal to 6.74% of total portfolio loans at Sept 30, 2025.

What is the size and impact of the Justice Entities credit on CARE (Sept 30, 2025)?

Loans linked to the Justice Entities had an aggregate principal balance of $228.6M and represent 88.4% of total NPLs at Sept 30, 2025.

Did CARE report loan growth in Q3 2025 and by how much?

Yes—total portfolio loans increased to $3.8B with 9.4% annualized loan growth versus June 30, 2025.

How did CARE's net interest margin and net interest income perform in Q3 2025?

Net interest income was $33.7M and net interest margin expanded to 2.86% in Q3 2025.

What was the provision for credit losses at CARE in Q3 2025?

The provision for credit losses was an expense of $2.9M in Q3 2025.

How much curtailment payments did CARE receive from its largest credit relationship in Q3 2025?

Curtailment payments totaled $7.0M during Q3 2025, reducing the largest NPL balance.