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On the QAV America podcast this week, I did a deep dive into a tiny bank based in Virginia that nearly wiped itself out, loaning a bucket load of money to a billionaire senator that owns a luxury hotel with a decommissioned Cold War era bunker underneath it, but somehow has managed to come out on the other side with an $80 million cash windfall.
And I thought it was a good enough story that I'd share it with you guys.
So this is a bank called Carter Bankshares, ticker CARE, it's on the NASDAQ, essentially a boring little community bank that got tangled up in this terrific soap opera that sounds like it came out of Dallas or Dynasty or Succession.
The bank was started by a guy with the highly improbable name of Worth Carter, who worked as a Safeway cashier to put himself through law school and then ended up founding his first bank in Virginia in 1974 with eight employees and called it the FIRST NATIONAL BANK because that's what Americans do.
And over the next 40 odd years, he set up 10 more community banks across Virginia and North Carolina, grew them all organically, and then rolled them all up in 2006 into Carter Bank and Trust, which floated on the NASDAQ.
He kept running it as his personal empire until he died in 2017, aged 79.
And this guy was old school to the core, a bit like Buffett.
He knew every branch manager by name, drove himself to meetings in an old car, and did a lot of direct business with people he had relationships with, including guys like Jerry Falwell, Jr.
But the real story is about one particular guy he did a lot of business with over the years, a guy with the equally improbable name of Jim Justice.
Seriously, where does America find these people?
And this story is hilarious.
So... Jim Justice, the junior United States Senator from West Virginia since 2025, former governor of West Virginia from 2017 to 2025.
Republican, once a billionaire, but his current net worth is either $664 million or nothing, depending on which source you believe.
So he's either the richest or the brokest Senator in the United States at the moment.
He inherited a coal mining empire from his father, nearly 100 companies under the umbrella of the Bluestone Coal Corporation.
And at some point he also bought a luxury resort in West Virginia called the Greenbrier Hotel.
It's been around over 100 years, has some championship golf courses, has hosted 28 presidents.
And underneath it was a thing called Project Greek Island, a massive underground bunker built during the Cold War as an emergency shelter for United States Congress.
Its existence was declassified after the Washington Post blabbed about it in 1992, after which the government decommissioned it because a secret bunker that everyone knows about is just a fancy underground room.
Worth Carter made his first loan to Jim Justice in 2001, it was a single $4.5 million real estate loan, but then he kept lending and kept lending to Justice and his consortium of businesses until the exposure to the Justice family reached $775 million at the time Worth Carter died.
Now here's the thing, American banks have a legal lending limit of roughly 15% of their capital to any single borrower.
So in Carter's case, that limit would have been around about $75 million.
So instead of making one $75 million loan to Justice, the bank ended up making dozens of loans to dozens of separate entities that Justice controlled.
Coal companies, agricultural businesses, the Greenbrier, sporting clubs, hospitality arms, and each loan sat at roughly $75 million.
All of them personally guaranteed by Jim Justice, his wife, his son, and all crossed collateralized.
And Worth Carter kept rolling over the loans year after year.
But after he died in 2017, new management took over.
They looked at the exposure and apparently said something like, oh hell no.
So over the next five or six years, they forced Justice to pay down the debt.
He got it down to about $300 million at one point, but then decided enough was enough and sued the bank for a billion dollars.
Yes, you read that right.
He sued the bank.
And his argument, which was put beautifully in a Forbes article that I read, basically said that the bank over nearly 20 years had loaned him more than $700 million and then had the gall to expect it to be paid back on time.
And because that story is not complicated enough, there's a subplot involving Lex Greensill, a guy who grew up in the same little country town in Queensland, Australia that I did, who went to the UK, founded Greensill Capital, became a billionaire, and then the whole thing collapsed spectacularly in 2021 and took a chunk of Credit Suisse down with it.
Bluestone, Justice's coal company, owed money to Greensill as well, which pulled Carter bank into the orbit of all of that.
So this little Virginia community bank, originally founded to serve Martinsville, once called the plug tobacco capital of the world and then the sweatshirt capital of the world, now mostly known for NASCAR, ended up connected to Credit Suisse's collapse.
As some corner boy says to McNulty in the cold open of the first episode of The Wire, the greatest TV show ever in my humble opinion, "that's America, man."
And here's the coup de grace.
In March of 2026, just a few months ago, Carter Bank sold the entire Justice loan book to a Dallas billionaire named Robert Rowling, no relation to JK as far as I know.
Rowling owns Omni Hotels and set up an entity called White Sulphur Springs Holdings to take on the Justice loan book.
He paid $289 million cash for it, and at the time Carter had written the book down to around $209 million on their balance sheet.
Why would he pay the extra $80 million?
Well, it looks like it was to get control of the Greenbrier, which was collateral on the loan.
He moved for control of the hotel almost immediately.
The Justice family is contesting it in court.
But from Carter Bank's perspective, their bad loans went from $244 million to $24 million in one quarter.
They booked an $80 million gain on the transaction and are paying their first dividend in 10 years.
So the obvious caveat here is that the big operating cash flow number they've got at the moment is mostly a one-off.
This isn't some cigar butt that's generating tons of cash on a regular basis.
It's a one-trick pony, but I'm okay with that because this isn't some sort of an accounting trick.
This is a real cash event.
They sold a real asset, collected real money, and it's sitting in the bank right now.
The management team that took over the bank after Worth Carter's death have spent nearly a decade untangling what was a genuinely catastrophic concentration risk, fought through litigation, and solved the problem for a profit.
The underlying business is essentially a reasonably solid community bank.
They have a pretty large retail branch presence, which is either a weakness or a genuine point of differentiation for rural and small town customers who still want to walk into a bank.
And they now have $80 million in cash they didn't have before, which they've earmarked for share buybacks, IT upgrades, and organic growth.
The thing that really put it on my radar this week was the 2x price to operating cash flow.
The stock has already run hard.
It's up from $16 to $31 in 15 months, so a lot of re-rating may have already happened.
But I'm okay with that.
Honestly, after having to sell all of my all stocks over the last couple of weeks, I'm happy to take a interest in a quiet little Virginia bank with a genuinely insane backstory.
*Disclaimer: Not financial advice. I'm just an Australian value investor with a podcast and a spreadsheet who loves a good story and an ex-bunker. DYOR.*