▸ A significant part of the Company’s lending business is focused on small to medium-sized business which may be impacted more severely during periods of economic weakness.· · · · ● 1 ▸ A significant portion of the Company’s commercial loan portfolio is secured by real estate, and adverse changes in the real estate market or economic conditions could adversely affect our results.· · · · ● 1 ▸ Claims, litigation, and other legal proceedings could expose the Company to significant costs and liabilities and adversely affect its reputation, financial condition and results of operations.· · · · ● 1 ▸ Customers may increasingly bypass traditional banking relationships, which could adversely affect the Company’s revenue and funding sources.· · · · ● 1 ▸ Failure to keep pace with technological change could adversely affect the Company’s business and ability to remain competitive, and it may experience operational challenges when implementing new technologies.· · · · ● 1 ▸ Failure to maintain effective internal control over financial reporting and disclosure controls could materially adversely affect the Company’s financial condition and results of operations.· · · · ● 1 ▸ Future issuances of the Company’s common stock or securities convertible into common stock could dilute existing shareholders and adversely affect the market price of its common stock.· · · · ● 1 ▸ Heightened scrutiny and evolving expectations regarding environmental, social and governance (“ESG”) matters may increase costs and expose the Company to additional risks.· · · · ● 1 ▸ If economic conditions deteriorate in the markets the Company serves, its business, financial condition, results of operations, and growth prospects could be materially adversely affected.· · · · ● 1 ▸ If these conditions were to occur, they could impair our access to funding, place pressure on our liquidity position, and materially adversely affect our financial condition and results of operations.· · · · ● 1 ▸ If these trends continue, the resulting loss of deposits, revenue streams, and customer relationships could materially adversely affect our financial condition, results of operations, and long-term growth prospects.· · · · ● 1 ▸ Legislation, regulatory, and governmental policy changes could materially affect the economy, the financial services industry and our business.· · · · ● 1 ▸ Liquidity risks and adverse developments affecting the financial services industry could materially adversely affect our financial condition and results of operations.· · · · ● 1 ▸ Our ability to execute our business strategy depends on attracting and retaining qualified personnel.· · · · ● 1 ▸ Our real estate lending activities may result in the acquisition of OREO, which could increase expenses and negatively impact our financial condition and results of operations.· · · · ● 1 ▸ The CFPB may increase our regulatory compliance burden and could affect the consumer financial products and services that the Company offers.· · · · ● 1 ▸ The Company depends on dividends from its bank subsidiary for substantially all of its revenue, and regulatory restrictions on the Bank’s ability to pay dividends could adversely affect its financial condition.· · · · ● 1 ▸ The Company faces significant competition from financial institutions and other providers of banking and financial services, which could adversely affect its growth and profitability.· · · · ● 1 ▸ The Company is subject to extensive regulation and supervision, and changes in laws or regulatory expectations could materially adversely affect its business.· · · · ● 1 ▸ The Company is subject to losses due to errors, omissions or fraud by its associates, clients, counterparties or other third parties.· · · · ● 1 ▸ The Company is subject to physical and financial risks associated with climate change and other weather and natural disaster impacts.· · · · ● 1 ▸ The Company uses models in its business, and could be adversely affected if its design, implementation, or use of models is flawed.· · · · ● 1 ▸ The Company’s allowance for credit losses may be insufficient to absorb expected losses in its loan portfolio, which may adversely affect its business, financial condition and results of operations.· · · · ● 1 ▸ The Company’s business is dependent on its executive management team and other key personnel, and the loss of their services could adversely affect its operations.· · · · ● 1 ▸ The Company’s concentration in commercial real estate loans, including construction loans, increases its credit risk and could adversely affect its financial condition and results of operations.· · · · ● 1 ▸ The Company’s profitability is significantly influenced by economic conditions in the markets that it serves.· · · · ● 1 ▸ The Company’s reliance on customer deposits for funding and liquidity could adversely affect its financial performance if access to such funding becomes impaired.· · · · ● 1 ▸ The Company’s risk management framework may not be effective in identifying or mitigating risks, which could adversely affect its financial condition and results of operations.· · · · ● 1 ▸ The development and use of Artificial Intelligence (“AI”) technologies present risks that could adversely affect the Company’s business, financial condition, and results of operations.· · · · ● 1 ▸ The market price of the Company’s common stock may fluctuate significantly and could decline, which could result in losses to its investors.· · · · ● 1 ▸ The trading volumes in our common stock may not provide adequate liquidity for investors.· · · · ● 1 ▸ This credit relationship comprises 87.7% of the Company’s nonperforming assets and NPLs and 5.5% of total portfolio loans at December 31, 2025.· · · · ● 1 ▸ Inflation could negatively impact the Company’s business, its profitability, and its stock price.· · ● ● ● 3 rw ▸ Nonperforming assets can take significant time to resolve and may adversely affect the Company’s results of operations and financial condition, and could result in additional losses in future periods.· · ● ● ● 3 rw ▸ The Company’s level of credit risk is elevated due to relationship exposure to the Company’s largest credit relationship.· · ● ● ● 3 rw ▸ The Company’s liquidity could be adversely affected if it were unable to access short-term funding or monetize liquid assets.· · ● ● ● 3 rw ▸ The value of the Company’s investment securities could decline.· ● ● ● ● 4 rw ▸ The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business.· · · ● · 1 ▸ The financial services industry may be subject to new or changing legislation, regulation, and government policy, which could affect the banking industry and the broader economy.· · · ● · 1 ▸ Claims and litigation against the Company could result in significant expenses or losses or damage to our reputation, which may have a material adverse effect on its financial condition, results of operation or business.· · ● ● · 2 ▸ Company’s ability to make new loans or meet existing lending commitments, and could adversely impact the Company’s overall financial condition, liquidity and regulatory capital.· · ● · · 1 ▸ Regulatory capital standards may require the Company and the Bank to maintain higher levels of capital and liquidity, which could adversely affect its return on equity and otherwise affect its business.· · ● ● · 2 ▸ Changes in interest rates could adversely affect our income and cash flows and may result in higher defaults and lower collateral values in a rising rate environment.· ● ● ● · 3 ▸ The replacement of LIBOR as a financial benchmark presents risk to certain financial instruments that we own or to which we are a party.· ● · · · 1 ▸ The success of our business strategies depends on our ability to identify and recruit individuals with experience and relationships in our primary markets.· ● ● ● · 3 ▸ We rely on dividends from our subsidiaries for most of our revenue.· ● ● ● · 3 rw ▸ A large percentage of the Company’s commercial loans are secured by real estate, and an adverse change in the real estate market or in economic conditions more generally may result in losses and adversely affect our profitability.● ● ● ● · 4 rw ▸ Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could have a material adverse effect on our results of operation and financial condition.● ● ● ● · 4 ▸ Future issuances of the Company’s common stock could adversely affect the market price of the common stock and could be dilutive.● ● ● ● · 4 ▸ Our ability to meet contingency funding needs, in the event of a crisis that causes a disruption to our core deposit base, is dependent on access to wholesale markets, including funds provided by the FHLB of Atlanta.● ● ● ● · 4 ▸ Our allowance for credit losses may be insufficient.● ● ● ● · 4 ▸ Our customers may increasingly decide not to use the Bank to complete their financial transactions, which would have a material adverse impact on our financial condition and operations.● ● ● ● · 4 ▸ Our profitability depends significantly on economic conditions.● ● ● ● · 4 ▸ Our real estate lending business can result in increased costs associated with Other Real Estate Owned (“OREO”).● ● ● ● · 4 ▸ Our risk management framework may not be effective in mitigating risk and loss.● ● ● ● · 4 ▸ group Risks Related to the COVID-19 Pandemic● · · · · 1 ▸ The COVID-19 pandemic and resulting adverse economic conditions has adversely impacted the Company’s business and results, and could have a more material adverse impact on our business, financial condition and results of operations.● · · · · 1 ▸ The Company is dependent on its management team, and the loss of any senior executive officers or other key personnel could impair its relationship with its customers and adversely affect its business and financial results.● ● ● ● · 4 rw ▸ The Company is subject to more stringent capital and liquidity requirements as a result of the Basel III regulatory capital reforms and the Dodd-Frank Act, which could adversely affect its return on equity and otherwise affect its business.● ● · · · 2 ▸ The Company may be involved in a variety of litigation and other actions, which may have a material adverse effect on its financial condition, results of operation or business.● ● · · · 2 rw ▸ The Company relies on independent appraisals to determine the value of the real estate which secures a significant portion of our loans, and the values indicated by such appraisals may not be realizable if foreclosure on such loans is forced.● ● ● ● · 4 rw ▸ The Company’s level of credit risk is elevated due to the concentration of commercial real estate loans and commercial real estate construction loans in its portfolio.● ● ● ● · 4 rw ▸ The full effects of the COVID-19 pandemic may have a material adverse effect on the Company in numerous ways.● · · · · 1 ▸ The market price of our common stock may fluctuate significantly in response to a number of factors.● ● ● ● · 4 ▸ Uncertainty relating to London Interbank Offered Rate (“LIBOR”) calculation process and potential phasing out of LIBOR may adversely affect us.● · · · · 1 ▸ We are subject to extensive government regulation and supervision.● ● ● ● · 4 ▸ We face strong competition from financial services companies and other companies that offer banking services which could negatively affect our business.● ● ● ● · 4 ▸ We rely substantially on deposits obtained from customers in our target markets to provide liquidity and support growth, and impairment of our access to funding may negatively affect our financial performance.● ● ● ● · 4 rw ▸ The Company’s common stock is subordinate to its existing and future indebtedness and is structurally subordinated to the claims of the Bank’s creditors.● · ● ● ● 4 rw ▸ group CARTER BANKSHARES, INC. AND SUBSIDIARIES● ● ● ● ● 5 ▸ group ITEM 1A. RISK FACTORS - (continued)● ● ● ● ● 5 ▸ group Risks Related to Liquidity● ● ● ● ● 5 ▸ group Risks Related to Market Conditions, Interest Rates and Investments● ● ● ● ● 5 ▸ group Risks Related to Owning the Company’s Stock● ● ● ● ● 5 rw ▸ group Risks Related to Regulatory Compliance and Legal Matters● ● ● ● ● 5 ▸ group Risks Related to the Company’s Business Strategy● ● ● ● ● 5 rw ▸ Risks Related to the Company’s Operations, Cybersecurity and Technology● ● ● ● ● 5 rw ▸ The Company’s business is subject to interest rate risk and fluctuations in interest rates may adversely affect its earnings, income, cash flow, capital levels and credit quality.● ● ● ● ● 5 rw ▸ The Company’s earnings and financial condition are significantly influenced by monetary and fiscal policies of the federal government and its agencies.● ● ● ● ● 5 rw 
