Carter Bankshares Q3 2026: Two Bad Loans Swamp an Otherwise Solid Quarter
As seen on the 24/7 Wall St. homepage on October 29, 2026.
Two bad loans wiped out the quarter: an $8.0 million charge-off on a commercial borrower that filed Chapter 11, plus a commercial real estate credit, pushing EPS well short of expectations. Revenue still beat and net interest margin expanded, so the core bank is working. Credit is the only question that matters here.
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Carter Bankshares reported adjusted earnings of $0.35 per diluted share for Q3 2026, missing expectations. Revenue came in above expectations, and net interest margin expanded sequentially to 3.51%.
Two specific credits did the damage. An $8.0 million charge-off tied to a commercial and industrial borrower that filed for voluntary Chapter 11 bankruptcy and a $4.0 million charge-off on a commercial real estate loan after collateral was revalued together drove net charge-offs to $12.1 million for the quarter, pushing provision expense to $10.5 million.
Strip out those two events and the underlying bank looks considerably healthier. Net interest income rose to $41.2 million, supported by higher loan yields, lower deposit costs and a reduction in higher-cost Federal Home Loan Bank borrowings. Portfolio loans grew from the prior quarter despite payoffs.
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Carter Bankshares has now posted two consecutive misses after beating expectations in each of the four quarters from Q3 2024 through Q3 2025. The recurrence of outsized credit costs in back-to-back quarters is what investors need to resolve before regaining confidence in the earnings trajectory.
CEO Litz H. Van Dyke pointed to a healthy lending pipeline, growing small business momentum and construction commitments expected to fund over the next 12 to 18 months. No numeric guidance was provided, so credit quality in the commercial real estate and commercial and industrial books remains the metric that matters heading into Q4 2026.
Mentioned: CARE