8 unchanged sentences
However, excessive interest rate risk can threaten a financial institution’s earnings, capital, liquidity, and solvency.
−Removed: The Company’s ALCO is responsible for the reviewing the interest rate sensitivity position of the institution, establishing policies to monitor and limit exposure to this type of risk, and employing strategies to ensure our asset-liability structure produces the maximum yield-cost spread available based on current market conditions.
+Added: The Company’s ALCO is responsible for reviewing the interest rate sensitivity position of the institution, establishing policies to monitor and limit exposure to this type of risk, and employing strategies to ensure our asset-liability structure produces the maximum yield-cost spread available based on current market conditions.
The Company’s Investment / Interest Rate Risk Committee, a committee of the Board of Directors, reviews and approves the policies established by ALCO.
8 unchanged sentences
A sensitivity analysis for deposit betas, deposit decay rates and loan prepayment speeds is performed at least annually within the ALM to help ALCO better understand the impact of these critical assumptions on the ALM results.
−Removed: The ALCO reviews the assumptions of the ALM at least quarterly and periodically adjusts them when deemed appropriate.
+Added: The ALCO reviews the assumptions of the ALM at least quarterly and periodically adjusts the ALM assumptions when deemed appropriate.
The ALCO also uses different interest rate scenarios and shifts in yield curve shapes to measure the sensitivity of earnings to various interest rate environments.
3 unchanged sentences
We have temporarily suspended the + 300 and + 400 basis point rate shock analyses.
−Removed: Due to the FOMC’s recent actions to reduce the Fed Funds Target Rate by 25 bps during each of its September 2025 and October 2025 meetings and the current rate forecast that implies the FOMC may continue to reduce the Fed Funds Target Rates for the remainder of 2025 and into 2026, we believe the impact to net interest income when evaluating the + 300 and +400 basis point rate shock scenarios do not provide meaningful insight into our interest rate risk position or project a probable interest rate environment for the foreseeable future.
+Added: Due to the FOMC’s recent actions to reduce the Fed Funds Target Rate by 25 bps during each of its September 2025, October 2025 and December 2025 meetings and the current rate forecast that implies the FOMC may continue to reduce the Fed Funds Target Rate during 2026, we believe the impact to net interest income when evaluating the + 300 and +400 basis point rate shock scenarios do not provide meaningful insight into our interest rate risk position or project a probable interest rate environment for the foreseeable future.
CARTER BANKSHARES, INC.
1 unchanged sentence
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: The following tables reflect the earnings simulation results at the dates presented utilizing a forecasted static balance sheet over the next twelve months.
+Added: The following table reflects the earnings simulation results at the dates presented utilizing a forecasted static balance sheet over the next twelve months.
All percentage changes presented are within prescribed ranges set by ALCO.
−Removed: September 30, 2025 December 31, 2024
+Added: March 31, 2026 December 31, 2025
Change in Interest Rate (basis points) % Change in Pretax Net Interest Income % Change in Pretax Net Interest Income
5 unchanged sentences
-400 (1.4)% 4.8%
−Removed: The results from the earnings simulation imply that the Company’s balance sheet is liability sensitive at September 30, 2025 and December 31, 2024.
−Removed: The above table indicates that as of September 30, 2025, in a rising interest rate environment, the Company is positioned to have a small decrease in net interest income due to the balance sheet composition, related maturity structures, and repricing correlations to market interest rates for assets and liabilities.
−Removed: In a declining interest rate environment, the Company is positioned to have an increase in net interest income for the same period driven by the same factors discussed above and below.
−Removed: The liability sensitive position at September 30, 2025 is due to a variety of factors which include 1) higher than market rate unfunded loan commitments that were originated during 2024 and early 2025 with fixed rates that are assumed to draw down, or convert to funded loan balances, during the next twelve months, 2) shortened maturities of the time deposit portfolio due to shorter term time deposit promotional campaigns in response to the inverted yield curve, and 3) more aggressive non maturing deposit betas utilized in a rates down environment versus a rates up environment based on bank specific non-maturing deposit rate beta assumptions observed during the most recent rate cycle.
+Added: The above table indicates that as of March 31, 2026, in a rising interest rate environment, the Company is positioned to have a small increase in net interest income due to the balance sheet composition, related maturity structures, and repricing correlations to market interest rates for assets and liabilities.
+Added: In a declining interest rate environment, the Company is positioned to also have a slight increase in net interest income for less severe parallel rate shocks driven by the same factors discussed above and below.
+Added: The slightly asset sensitive position at March 31, 2026 is due to a variety of factors which include 1) higher than market rate unfunded loan commitments that were originated during 2024 and early 2025 with fixed rates that are assumed to draw down, or convert to funded loan balances, during the next twelve months, 2) the recent shortened maturities of the time deposit portfolio over the past 24 months due to shorter term time deposit promotional campaigns in response to the inversion in the shorter end of the yield curve where financial institutions typically offer time deposit products (overnight out to five years), 3) more aggressive non maturing deposit betas utilized in a rates down environment versus a rates up environment based on bank specific non-maturing deposit rate beta assumptions observed during the most recent rate cycle, and 4) the recent balance sheet composition shift related to the Transaction with proceeds being used to retire all outstanding FHLB borrowings and the balance of the proceeds being held as Excess Reserve with the Federal Reserve Bank currently yielding the floating Interest Rate on Reserve Balances (IORB) of 3.65%.
Economic Value of Equity Modeling
Economic value of equity simulation is used to calculate the estimated fair value of assets and liabilities over different interest rate environments.
−Removed: The ALM calculates the economic value of equity based on discounted cash flow analysis.
+Added: The ALM calculates the economic value of equity based on DCF analysis.
The net economic value of equity is the economic value of all assets minus the economic value of all liabilities.
4 unchanged sentences
We have temporarily suspended the + 300 and + 400 basis point rate shock analyses.
−Removed: Due to the FOMC’s recent actions to reduce the Fed Funds Target Rate by 25 bps during each of its September 2025 and October 2025 meetings and the current rate forecast that implies the FOMC may continue to reduce the Fed Funds Target Rates for the remainder of 2025 and into 2026, we believe the impact to net interest income when evaluating the + 300 and +400 basis point rate shock scenarios do not provide meaningful insight into our interest rate risk position or project a probable interest rate environment for the foreseeable future.
+Added: Due to the FOMC’s recent actions to reduce the Fed Funds Target Rate by 25 bps during each of its September 2025, October 2025 and December 2025 meetings and the current rate forecast that implies the FOMC may continue to reduce the Fed Funds Target Rate during 2026, we believe the impact to net interest income when evaluating the + 300 and +400 basis point rate shock scenarios do not provide meaningful insight into our interest rate risk position or project a probable interest rate environment for the foreseeable future.
Results for the economic value of equity modeling are driven primarily by the shape of the underlying yield curves and option-adjusted spreads used to discount the projected cash flows of assets and liabilities, and the assumed life span of the assets and liabilities being discounted.
2 unchanged sentences
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - (continued)
−Removed: The following tables reflect the economic value of equity analyses results at the dates presented.
+Added: The following table reflects the economic value of equity analyses results at the dates presented.
All percentage changes presented are within prescribed ranges set by management.
−Removed: September 30, 2025 December 31, 2024
+Added: March 31, 2026 December 31, 2025
Change in Interest Rate (basis points) % Change in Economic Value of Equity % Change in Economic Value of Equity
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.