Carter Bankshares in Martinsville, Va., has severed ties with its biggest and most problematic business relationships.
The $4.9 billion-asset company disclosed in a regulatory filing that it sold a batch of nonperforming loans connected to Sen. Jim Justice (R-W.Va.) and his family. Carter said it sold loans with an aggregate principal amount of roughly $209.5 million for consideration of $289.5 million in cash.
The loans have not been earning interest since mid-2023, when Carter placed the portfolio in nonaccrual status. In other words, the sale sharply reduces the bank’s problem-loan burden and meaningfully reshapes how its credit profile will look to investors, analysts and regulators.
Carter, which had previously recorded a specific reserve of $18 million tied to the loans, said the sale should favorably impact its tangible book value by $3.49 a share.
Justice had a close relationship with the bank’s founder, Worth Carter, who died in 2017. New leadership at the bank began to institute more rigid financial practices, and issues with the loans eventually found their way into the courts.
Justice-related companies owed the bank as much as $775 million before bringing that down to about $300 million in April 2023 when litigation began.