CHARLESTON, S.C., July 23, 2018 (GLOBE NEWSWIRE) -- Carolina Financial Corporation (the ”Company”) (NASDAQ:CARO) today announced financial results for the second quarter of 2018. 

Financial highlights at and for the three months ended June 30, 2018, include:

  • Net income for the second quarter 2018 increased 60.2% to $15.0 million, or $0.70 per diluted share, from $9.3 million, or $0.58 per diluted share for the second quarter of 2017.  Included in net income are pretax merger-related expenses of $0.5 million and $0.3 million for the second quarter of 2018 and 2017, respectively.
  • Operating earnings for the second quarter of 2018, which exclude certain non-operating income and expenses, increased 70.9% to $15.6 million, or $0.73 or per diluted share, from $9.1 million, or $0.56 per diluted share, for the second quarter of 2017.
  • Operating earnings for Q2 2018 have been adjusted to eliminate the following significant items:
    • Pretax merger-related expenses of $506,000
    • The fair value gain on interest rate swaps of $451,000.
    • The loss on sale of securities of $746,000.
  • Performance ratios for Q2 2018 compared to Q2 2017:
    • Return on average assets was 1.65% compared to 1.72%.
    • Operating return on average assets was 1.72% compared to 1.69%.
    • Return on average tangible equity was 17.02% compared to 16.02%.
    • Operating return on average tangible equity was 17.74% compared to 15.65%.
  • Loans receivable, gross grew $107.7 million, or at an annualized rate of 9.3% since December 31, 2017.
  • Nonperforming assets to total assets were 0.28% at June 30, 2018 compared to 0.20% at December 31, 2017.
  • Total deposits increased $103.9 million since December 31, 2017. Core deposits increased $76.6 million since December 31, 2017.
  • On June 11, Carolina Financial Corporation completed the sale of 1.5 million shares of its common stock. The net proceeds of the offering to the Company, after estimated expenses, were approximately $63.1 million.

“We continue to see the impact of solid organic growth and prior acquisitions on earnings.  Overall, results for the second quarter of 2018 continued to improve with an increase in net income to $15.0 million compared to the second quarter of 2017.” stated Jerry Rexroad, Chief Executive Officer.

Financial Results

Carolina Financial Corporation

  • The Company reported net income for the three months ended June 30, 2018 of $15.0 million, or $0.70 per diluted share, as compared to $9.3 million, or $0.58 per diluted share, for the three months ended June 30, 2017. Included in net income for the three months ended June 30, 2018 and 2017 were pretax merger-related expenses of $0.5 million and $0.3 million, respectively.  The Company reported net income for the six months ended June 30, 2018 of $19.0 million or $0.90 per diluted share, as compared to $14.2 million, or $0.94 per diluted share, for the six months ended June 30, 2017. Included in net income for the six months ended June 30, 2018 and 2017 were pretax merger-related expenses of $15.2 million and $1.6 million, respectively. 
  • Operating earnings for the second quarter of 2018, which excludes certain non-operating income and expenses, increased 70.9% to $15.6 million, or $0.73 per diluted share, from $9.1 million, or $0.56 per diluted share, for the second quarter of 2017. Operating earnings for the six months ended June 30, 2018, which excludes certain non-operating income and expenses, increased 106.4% to $30.8 million, or $1.45 per diluted share, from $14.9 million, or $0.99 per diluted share, for the same period of 2017.
  • The Company’s net interest margin-tax equivalent increased to 4.11% for the second quarter of 2018 compared to 4.03% for the second quarter of 2017.
  • The Company reported common book value per share of $24.60 and $22.76 as of June 30, 2018 and December 31, 2017, respectively.  Tangible common book value per share was $18.11 and $15.71 as of June 30, 2018 and December 31, 2017, respectively.
  • At June 30, 2018, the Company’s regulatory capital ratios exceeded the minimum levels currently required.  Stockholders’ equity totaled $551.8 million as of June 30, 2018 compared to $475.4 million at December 31, 2017. Tangible equity to tangible assets at June 30, 2018 was 11.5% compared to 9.7% at December 31, 2017.

Community Banking

  • Community banking segment net income increased 76.8% to $14.9 million for the three months ended June 30, 2018 compared to $8.4 million for the three months ended June 30, 2017. Included in net income for the three months ended June 30, 2018 and 2017 were pretax merger-related expenses of $0.5 million and $0.3 million, respectively.  The community banking segment net income increased 46.0% to $18.9 million for the six months ended June 30, 2018 compared to $13.0 million for the six months ended June 30, 2017. Included in net income for the six months ended June 30, 2018 and 2017 were pretax merger-related expenses of $15.2 million and $1.6 million, respectively. 
  • Community banking segment operating earnings increased 89.0% to $15.6 million for the three months ended June 30, 2018 compared to $8.2 million for the three months ended June 30, 2017.  The community banking segment operating earnings increased 126.4% to $30.8 million for the six months ended June 30, 2018 compared to $13.6 million for the six months ended June 30, 2017.
  • Provision for loan loss during the three months ended June 30, 2018 was $534,000.  There was no provision for loan loss during the three months ended June 30, 2017.   Asset quality and historical loss experience continue to remain favorable.  The provision for loan loss was primarily driven by the organic loan growth.
  • Non-performing assets were 0.28% and 0.20% of total assets at June 30, 2018 and December 31, 2017, respectively.
  • Loans receivable, gross increased to $2.4 billion at June 30, 2018 compared to $2.3 billion at December 31, 2017.  Loans increased $107.7 million, or at an annualized rate of 9.3% over December 31, 2017.
  • Total deposits increased $103.9 million since December 31, 2017. As of June 30, 2018 and December 31, 2017, core deposits, defined as demand deposits, savings accounts and money market accounts, comprised approximately 67.2% and 66.9% respectively, of total deposits.

Wholesale Mortgage Banking

  • Net income for the wholesale mortgage banking segment was $598,000 for the three months ended June 30, 2018 compared to $1.2 million for the three months ended June 30, 2017. Net income was $1.2 million for the six months ended June 30, 2018 compared to $1.9 million for the six months ended June 30, 2017. The decrease in the three months ended June 30, 2018 was primarily due to a loss on sale of other real estate owned of approximately $92,000 and the cost to terminate an equipment lease in the amount of $206,000. Income taxes in 2017 were significantly lower due to tax benefits related to the vesting of employee stock-based compensation.
  • Net interest margin was 1.74% for the three months ended June 30, 2018 compared to 1.73% for the three months ended June 30, 2017. Originations for the three months ended June 30, 2018 and 2017 were $205.6 and $213.9 million, respectively. Net margin was 1.74% for the six months ended June 30, 2018 compared to 1.76% for the six months ended June 30, 2017. Originations for the six months ended June 30, 2018 and 2017 were $386.1 million and $394.7 million, respectively.

Conference Call

A conference call will be held at 10:00 a.m., Eastern Time on July 24, 2018. The conference call can be accessed by dialing (866) 464-9448 or (213) 660-0874 and requesting the Carolina Financial Corporation earnings call. The conference ID number is 1880558. Listeners should dial in 10 minutes prior to the start of the call.  The live webcast and presentation slides will be available on www.haveanicebank.com under Investor Relations, “Investor Presentations.”

A replay of the webcast will be available on www.haveanicebank.com under Investor Relations, “Investor Presentations” approximately three hours after the call and can be accessed by dialing (855) 859-2056 or (404) 537-3406 and requesting conference number 1880558.

About Carolina Financial Corporation

Carolina Financial Corporation (NASDAQ:CARO) is the holding company of CresCom Bank, which also owns and operates Atlanta-based Crescent Mortgage Company.  As of June 30, 2018, Carolina Financial Corporation had approximately $3.7 billion in total assets and Crescent Mortgage Company was approved to originate loans in 48 states partnering with community banks, credit unions and mortgage brokers. 

Addendum to News Release – Use of Certain Non-GAAP Financial Measures and Forward-Looking Statements

This news release contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”).  Such statements should be read along with the accompanying tables, which provide a reconciliation of non-GAAP measures to GAAP measures.  This news release and the accompanying tables discuss financial measures, including but not limited to, core deposits, tangible book value, operating earnings and net income related to segments of the Company, which are non-GAAP measures.  We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner.  Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP.  Investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company.  Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

Please refer to the Non-GAAP reconciliation tables later in this release for additional information.

Forward-Looking Statements

Certain statements in this news release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective.  Such forward-looking statements include but are not limited to statements with respect to our plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expressions.  Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate.  Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized.  The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans, or expectations contemplated by the Company will be achieved.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company’s loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (5) changes in the U.S. legal and regulatory framework including, but not limited to, the Dodd-Frank Act and regulations adopted thereunder; (6) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company; (7) the business related to acquisitions may not be integrated successfully or such integration may take longer to accomplish than expected; (8) the expected cost savings and any revenue synergies from acquisitions may not be fully realized within expected timeframes; and (9) disruption from acquisitions may make it more difficult to maintain relationships with clients, associates, or suppliers.  Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).  All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.  We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

 CAROLINA FINANCIAL CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
             
          June 30, 2018 December 31, 2017
          (Unaudited) (Audited)
                
          (Dollars in thousands)
 ASSETS        
  Cash and due from banks    $27,327  25,254 
  Interest-bearing cash     54,751  55,998 
   Cash and cash equivalents     82,078  81,252 
  Securities available-for-sale     804,968  743,239 
  Federal Home Loan Bank stock, at cost    19,019  19,065 
  Other investments     3,429  3,446 
  Derivative assets      6,001  2,803 
  Loans held for sale     39,473  35,292 
  Loans receivable, gross     2,427,221  2,319,528 
  Allowance for loan losses     (12,987) (11,478)
   Loans receivable, net     2,414,234  2,308,050 
             
  Premises and equipment, net     62,530  61,407 
  Accrued interest receivable     12,664  11,992 
  Real estate acquired through foreclosure, net   1,726  3,106 
  Deferred tax assets, net     6,073  2,436 
  Mortgage servicing rights     23,626  21,003 
  Cash value life insurance     57,982  57,195 
  Core deposit intangible     18,003  19,601 
  Goodwill      127,592  127,592 
  Other assets      13,693  21,538 
   Total assets     $3,693,091  3,519,017 
             
 LIABILITIES AND STOCKHOLDERS' EQUITY     
 Liabilities:        
  Noninterest-bearing deposits    $577,568  525,615 
  Interest-bearing deposits     2,131,230  2,079,314 
   Total deposits      2,708,798  2,604,929 
  Short-term borrowed funds     354,500  340,500 
  Long-term debt      46,347  72,259 
  Derivative liabilities     129  156 
  Drafts outstanding     10,454  7,324 
  Advances from borrowers for insurance and taxes   4,558  3,005 
  Accrued interest payable     1,560  1,126 
  Reserve for mortgage repurchase losses    1,592  1,892 
  Dividends payable to stockholders    1,354  1,051 
  Accrued expenses and other liabilities    12,015  11,394 
   Total liabilities     3,141,307  3,043,636 
 Stockholders' equity:       
  Preferred stock      -  - 
  Common stock      226  210 
  Additional paid-in capital     412,300  348,037 
  Retained earnings     139,799  123,537 
  Accumulated other comprehensive (loss) income, net of tax   (541) 3,597 
   Total stockholders' equity     551,784  475,381 
  Total liabilities and stockholders' equity   $3,693,091  3,519,017 
             


  CAROLINA FINANCIAL CORPORATION
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited)
               
        For the Three Months For the Six Months
        Ended June 30, Ended June 30,
         2018  2017  2018  2017 
                    
        (In thousands, except share data)
  Interest income         
   Loans   $32,753  18,280  64,416  33,247 
   Investment securities  6,359  3,661  12,066  6,214 
   Dividends from Federal Home Loan Bank stock 263  115  438  216 
   Other interest income  102  67  234  115 
    Total interest income  39,477  22,123  77,154  39,792 
  Interest expense         
   Deposits   4,248  2,098  7,891  3,790 
   Short-term borrowed funds  1,705  429  2,958  784 
   Long-term debt   619  498  1,269  850 
    Total interest expense  6,572  3,025  12,118  5,424 
  Net interest income   32,905  19,098  65,036  34,368 
  Provision for loan losses  559  -  559  - 
   Net interest income after provision for loan losses 32,346  19,098  64,477  34,368 
  Noninterest income         
   Mortgage banking income  4,215  4,289  8,017  7,897 
   Deposit service charges  1,988  998  4,012  1,856 
   Net (loss) gain on sale of securities (746) 621  (1,443) 806 
   Fair value adjustments on interest rate swaps 451  (69) 1,255  (127)
   Net increase in cash value life insurance 385  281  775  492 
   Mortgage loan servicing income  2,090  1,604  4,114  3,170 
   Other    2,644  1,081  4,346  1,941 
    Total noninterest income  11,027  8,805  21,076  16,035 
  Noninterest expense         
   Salaries and employee benefits  13,541  9,255  27,210  17,864 
   Occupancy and equipment  4,094  2,439  7,747  4,621 
   Marketing and public relations  322  416  698  797 
   FDIC insurance   265  75  520  175 
   Recovery of mortgage loan repurchase losses (150) (225) (300) (450)
   Legal expense   157  151  233  216 
   Other real estate expense, net  105  26  11  45 
   Mortgage subservicing expense  568  505  1,132  991 
   Amortization of mortgage servicing rights 889  665  1,868  1,335 
   Merger-related expenses  506  279  15,216  1,599 
   Other    4,074  2,304  7,635  4,283 
    Total noninterest expense  24,371  15,890  61,970  31,476 
  Income before income taxes  19,002  12,013  23,583  18,927 
  Income tax expense   4,036  2,673  4,561  4,684 
   Net income  $14,966  9,340  19,022  14,243 
               
  Earnings per common share:        
   Basic   $0.70  0.58  0.91  0.95 
   Diluted  $0.70  0.58  0.90  0.94 
  Dividends Per Common Share $0.06  0.04  0.11  0.08 
  Weighted average common shares outstanding:       
   Basic    21,243,094  16,029,332  20,961,182  14,980,349 
   Diluted   21,495,014  16,180,171  21,216,872  15,144,796 
               


CAROLINA FINANCIAL CORPORATION
(Unaudited)
(Dollars in thousands)
 
      At or for the Three Months Ended
Selected Financial Data:  June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
 June 30,
2017
               
Selected Average Balances:           
Total assets   $3,627,401  3,522,407  3,048,214  2,230,586  2,166,803 
Investment securities and FHLB stock  809,625  770,161  647,276  521,569  510,706 
Loans receivable, net    2,401,075  2,322,203  2,003,429  1,463,771  1,412,940 
Loans held for sale    23,137  21,645  25,001  27,282  22,412 
Deposits     2,677,401  2,616,640  2,352,303  1,710,263  1,633,285 
Stockholders' equity    497,694  477,830  380,529  286,524  277,708 
               
Performance Ratios (annualized):           
Return on average stockholders' equity  12.03% 3.40% 6.65% 11.16% 13.45%
Return on average tangible equity (Non-GAAP)  17.02% 4.90% 8.78% 13.24% 16.02%
Return on average assets   1.65% 0.46% 0.83% 1.43% 1.72%
Operating return on average stockholders' equity (Non-GAAP)  12.54% 12.51% 11.69% 11.02% 13.15%
Operating return on average tangible equity (Non-GAAP)  17.74% 18.06% 15.44% 13.08% 15.65%
Operating return on average assets (Non-GAAP)  1.72% 1.70% 1.46% 1.42% 1.69%
Average earning assets to average total assets  89.82% 89.28% 89.25% 91.09% 90.68%
Average loans receivable to average deposits  89.68% 88.75% 85.17% 85.59% 86.51%
Average stockholders' equity to average assets  13.72% 13.57% 12.48% 12.85% 12.82%
Net interest margin-tax equivalent (1)  4.11% 4.20% 4.19% 3.94% 4.03%
Net charge-offs  (recovery) to average loans          
 receivable    0.04% (0.21)% 0.02% 0.02% (0.01)%
Nonperforming assets to period end loans          
 receivable    0.42% 0.45% 0.30% 0.44% 0.48%
Nonperforming assets to total assets  0.28% 0.30% 0.20% 0.29% 0.31%
Nonperforming loans to total loans   0.35% 0.36% 0.17% 0.33% 0.38%
Allowance for loan losses as a percentage of          
 gross loans receivable (end of period) (2)  0.54% 0.53% 0.49% 0.72% 0.75%
Allowance for loan losses as a percentage of gross          
 non-acquired loans receivable (Non-GAAP)  0.80% 0.85% 0.84% 0.87% 0.93%
Allowance for loan losses as a percentage          
 of nonperforming loans (2)   153.84% 146.93% 291.81% 216.53% 196.85%
               
Nonperforming Assets:            
Nonacquired loans 90 days or more past due          
 and still accruing   $19  -  -  -  - 
Nonacquired nonaccrual loans   8,423  8,649  3,934  4,924  5,461 
 Total nonperforming loans   8,442  8,649  3,934  4,924  5,461 
Real estate acquired through foreclosure, net  1,726  1,963  3,106  1,640  1,417 
 Total nonperforming assets  $10,168  10,612  7,040  6,564  6,878 
               
(1) Net interest margin-tax equivalent reflects tax-exempt income on a tax-equivalent basis.
(2) Acquired loans represent 33.5%, 36.8%, 41.1%, 17.3%, and 19.4% of gross loans receivable at June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively.
               


Carolina Financial Corporation              
Segment Information               
(Unaudited)               
(Dollars in thousands)     
                  
      For the Three Months For the Six Months Increase (Decrease)
      June 30,  Ended June 30, Three  Six
       2018  2017  2018  2017  Months  Months
Segment net income:               
Community banking   $  14,928   8,443    18,912   12,951  6,485   5,961 
Wholesale mortgage banking     598   1,238    1,160   1,884  (640)  (724)
Other       (568) (346)   (1,065) (591) (222)  (474)
Eliminations      8   5    15   (1) 3   16 
Total net income   $  14,966   9,340    19,022   14,243  5,626   4,779 
                  
      For the Three Months Ended   
      June 30, 
  2018
 March 31, 
  2018
 December 31, 
  2017
 September 30, 
  2017
 June 30, 
  2017
   
Segment net income:               
Community banking   $  14,928   3,984  6,050  7,837  8,443    
Wholesale mortgage banking     598   562  118  449  1,238    
Other       (568) (497) 124  (320) (346)   
Eliminations      8   7  36  27  5    
Total net income   $  14,966   4,056  6,328  7,993  9,340    
                  
      For the Three Months Ended June 30, 2018   
       Community   Mortgage          
       Banking   Banking   Other   Eliminations  Total   
Interest income   $39,060  458  14  (55) 39,477    
Interest expense    6,066  77  506  (77) 6,572    
Net interest income (expense)   32,994  381  (492) 22  32,905    
Provision for loan losses   534  25  -  -  559    
Noninterest income from external customers  5,570  5,434  23  -  11,027    
Intersegment noninterest income   242  9  -  (251) -    
Noninterest expense    19,348  4,748  275    24,371    
Intersegment noninterest expense   -  240  2  (242) -    
Income (loss) before income taxes   18,924  811  (746) 13  19,002    
Income tax expense (benefit)   3,996  213  (178) 5  4,036    
Net income (loss)   $14,928  598  (568) 8  14,966    
                  
      For the Three Months Ended June 30, 2017   
       Community   Mortgage          
       Banking   Banking   Other   Eliminations  Total   
Interest income   $21,691  427  8  (3) 22,123    
Interest expense    2,747  42  278  (42) 3,025    
Net interest income (expense)   18,944  385  (270) 39  19,098    
Provision for loan losses   -  -  -  -  -    
Noninterest income from external customers  3,494  5,311  -  -  8,805    
Intersegment noninterest income   242  31  -  (273) -    
Noninterest expense    11,448  4,164  278  -  15,890    
Intersegment noninterest expense   -  240  2  (242) -    
Income (loss) before income taxes   11,232  1,323  (550) 8  12,013    
Income tax expense (benefit)   2,789  85  (204) 3  2,673    
Net income (loss)   $8,443  1,238  (346) 5  9,340    
                  
                  
                  
Carolina Financial Corporation              
Segment Information, Continued              
(Unaudited)               
(Dollars in thousands)     
                  
      For the Six Months Ended June 30, 2018   
       Community   Mortgage          
       Banking   Banking   Other   Eliminations  Total   
Interest income   $76,317  889  27  (79) 77,154    
Interest expense    11,150  130  968  (130) 12,118    
Net interest income (expense)   65,167  759  (941) 51  65,036    
Provision for loan losses   534  25  -  -  559    
Noninterest income from external customers  10,630  10,358  88  -  21,076    
Intersegment noninterest income   483  26  -  (509) -    
Noninterest expense    52,278  9,137  554  1  61,970    
Intersegment noninterest expense   -  480  3  (483) -    
Income (loss) before income taxes   23,468  1,501  (1,410) 24  23,583    
Income tax expense (benefit)   4,556  341  (345) 9  4,561    
Net income (loss)   $18,912  1,160  (1,065) 15  19,022    
                  
      For the Six Months Ended June 30, 2017   
       Community   Mortgage          
       Banking   Banking   Other   Eliminations  Total   
Interest income   $38,949  822  13  8  39,792    
Interest expense    4,965  54  459  (54) 5,424    
Net interest income (expense)   33,984  768  (446) 62  34,368    
Provision for loan losses   -  -  -  -  -    
Noninterest income from external customers  5,912  10,123  -  -  16,035    
Intersegment noninterest income   483  64  -  (547) -    
Noninterest expense    22,772  8,216  488  -  31,476    
Intersegment noninterest expense   -  480  3  (483) -    
Income (loss) before income taxes   17,607  2,259  (937) (2) 18,927    
Income tax expense (benefit)   4,656  375  (346) (1) 4,684    
Net income (loss)   $12,951  1,884  (591) (1) 14,243    
                  
                  
                  
                  
                  
      For the Three Months Ended June 30,
      Loan Originations Mortgage Banking Income Margin
       2018  2017  2018  2017  2018   2017 
Additional segment information:              
Community banking   $  32,796   24,416    648   582  1.98%  2.38%
Wholesale mortgage banking     205,569   213,853    3,567   3,707  1.74%  1.73%
Total    $  238,365   238,269    4,215   4,289  1.77%  1.80%
                  
                  
      For the Six Months Ended June 30,
      Loan Originations Mortgage Banking Income Margin
       2018  2017  2018  2017  2018   2017 
Additional segment information:              
Community banking   $  64,223   39,169    1,302   941  2.03%  2.40%
Wholesale mortgage banking     386,063   394,683    6,715   6,956  1.74%  1.76%
Total    $  450,286   433,852    8,017   7,897  1.78%  1.82%
                  


                   
Carolina Financial Corporation               
Reconciliation of Non-GAAP Financial Measures - Consolidated            
(Unaudited)                
(In thousands, except share data)      
      At the Month Ended    
      June 30, March 31, December 31, September 30, June 30,    
       2018   2018  2017  2017  2017     
                   
Core deposits:                
Noninterest-bearing demand accounts $  577,568    547,744  525,615  333,267  330,641     
Interest-bearing demand accounts     584,719    558,942  551,308  309,241  298,123     
Savings accounts      198,571    212,249  213,142  69,552  70,336     
Money market accounts     458,558    463,676  452,734  377,754  380,108     
 Total core deposits (Non-GAAP)    1,819,416    1,782,611  1,742,799  1,089,814  1,079,208     
                   
Certificates of deposit:                
Less than $250,000      788,693    791,789  755,887  567,483  539,177     
$250,000 or more      100,689    102,569  106,243  50,357  45,344     
 Total certificates of deposit     889,382    894,358  862,130  617,840  584,521     
Total deposits   $  2,708,798    2,676,969  2,604,929  1,707,654  1,663,729     
                   
      At the Month Ended    
      June 30, March 31, December 31, September 30, June 30,    
       2018   2018  2017  2017  2017     
                   
Tangible book value per share:                
Total stockholders' equity  $  551,784    475,046  475,381  290,224  281,818     
Less intangible assets      (145,595)  (146,387) (147,193) (44,953) (45,123)    
Tangible common equity (Non-GAAP) $  406,189   $328,659  328,188  245,271  236,695     
                   
Issued and outstanding shares     22,570,182    21,057,539  21,022,202  16,159,309  16,156,943     
Less nonvested restricted stock awards    (137,345)  (136,395) (134,302) (99,639) (101,489)    
Period end dilutive shares     22,432,837    20,921,144  20,887,900  16,059,670  16,055,454     
                   
Total stockholders' equity  $  551,784    475,046  475,381  290,224  281,818     
Divided by period end dilutive shares    22,432,837    20,921,144  20,887,900  16,059,670  16,055,454     
Common book value per share  $  24.60    22.71  22.76  18.07  17.55     
                   
Tangible common equity (Non-GAAP) $  406,189    328,659  328,188  245,271  236,695     
Divided by period end dilutive shares    22,432,837    20,921,144  20,887,900  16,059,670  16,055,454     
Tangible common book value per share (Non-GAAP)$  18.11    15.71  15.71  15.27  14.74     
                   
      At the Month Ended    
      June 30, March 31, December 31, September 30, June 30,    
       2018   2018  2017  2017  2017     
Acquired and non-acquired loans:               
Acquired loans receivable  $  813,688      877,012    952,220    257,461    278,275     
Non-acquired loans receivable     1,613,533      1,503,006    1,367,308    1,227,000    1,157,145     
Total loans receivable   $  2,427,221      2,380,018    2,319,528    1,484,461    1,435,420     
% Acquired    33.52%  36.85% 41.05% 17.34% 19.39%    
                   
Non-acquired loans   $  1,613,533      1,503,006    1,367,308    1,227,000    1,157,145     
Allowance for loan losses     12,987      12,708    11,478    10,662    10,750     
Allowance for loan losses to non-acquired loans (Non-GAAP) 0.80%  0.85% 0.84% 0.87% 0.93%    
                   
Total loans receivable   $  2,427,221      2,380,018    2,319,528    1,484,461    1,435,420     
Allowance for loan losses     12,987      12,708    11,478    10,662    10,750     
Allowance for loan losses to total loans receivable  0.54%  0.53% 0.49% 0.72% 0.75%    
                   
                   
Carolina Financial Corporation               
Reconciliation of Non-GAAP Financial Measures  - Consolidated            
(Unaudited)                
(In thousands, except share data)      
                   
      For the Three Months Ended For the Six Months Ended
      June 30, 
  2018
 March 31, 
  2018
 December 31, 
  2017
 September 30, 
  2017
 June 30, 
  2017
 June 30, 
  2018
 June 30, 
  2017
As Reported:                
Income before income taxes  $  19,002    4,581  10,630  11,968  12,013    23,583    18,927 
Tax expense   $  4,036    525  4,302  3,975  2,673    4,561    4,684 
Net Income   $  14,966    4,056  6,328  7,993  9,340    19,022    14,243 
                   
Average equity   $  497,694    477,830  380,529  286,524  277,708    487,532    243,890 
Average tangible equity (Non-GAAP) $  351,703    331,047  288,156  241,489  233,256    360,148    214,727 
Average assets   $  3,627,401    3,522,407  3,048,214  2,230,586  2,166,803    3,575,708    1,967,563 
                   
Return on average assets   1.65%  0.46% 0.83% 1.43% 1.72% 1.06%  1.45%
Return on average equity   12.03%  3.40% 6.65% 11.16% 13.45% 7.80%  11.68%
Return on average tangible equity (Non-GAAP)  17.02%  4.90% 8.78% 13.24% 16.02% 10.56%  13.27%
Tangible equity to tangible assets   11.45%  9.65% 9.73% 11.09% 11.03% 11.45%  11.03%
                   
Weighted average common shares outstanding:              
 Basic       21,243,094    20,908,225  19,207,307  16,029,332  16,029,332    20,961,182    14,980,349 
 Diluted      21,495,014    21,119,316  19,443,353  16,187,869  16,180,171    21,216,872    15,144,796 
Earnings per common share:               
 Basic    $  0.70    0.19  0.33  0.50  0.58    0.91    0.95 
 Diluted   $  0.70    0.19  0.33  0.49  0.58    0.90    0.94 
                   
                   
Operating Earnings and Performance Ratios:              
Income before income taxes  $  19,002    4,581  10,630  11,968  12,013    23,583    18,927 
(Gain)/Loss on sale of securities     746    697  242  (368) (621)   1,443    (806)
Fair Value Adjustments on interest rate swaps    (451)  (803) (419) (90) 69    (1,255)  127 
Merger related expenses     506    14,710  6,391  311  279    15,216    1,599 
Operating earnings before income taxes    19,803    19,185  16,844  11,821  11,740    38,987    19,847 
Tax expense (1)      4,205    4,242  5,721  3,926  2,612    8,168    4,912 
Operating earnings (Non-GAAP)  $  15,598    14,943  11,123  7,895  9,128    30,819    14,935 
                   
Average equity   $  497,694    477,830  380,529  286,524  277,708    487,532    243,890 
Less average intangible assets     (145,991)  (146,783) (92,373) (45,035) (44,452)   (127,384)  (29,163)
Average tangible common equity (Non-GAAP) $  351,703    331,047  288,156  241,489  233,256    360,148    214,727 
                   
Average assets   $  3,627,401    3,522,407  3,048,214  2,230,586  2,166,803    3,575,708    1,967,563 
Less average intangible assets     (145,991)  (146,783) (92,373) (45,035) (44,452)   (146,384)  (29,163)
Average tangible assets (Non-GAAP) $  3,481,410    3,375,624  2,955,841  2,185,551  2,122,351    3,429,324    1,938,400 
                   
Operating return on average assets (Non-GAAP)  1.72%  1.70% 1.46% 1.42% 1.69% 1.72%  1.52%
Operating return on average equity (Non-GAAP)  12.54%  12.51% 11.69% 11.02% 13.15% 12.64%  12.25%
Operating return on average tangible assets (Non-GAAP) 1.79%  1.77% 1.51% 1.44% 1.72% 1.80%  1.54%
Operating return on average tangible equity (Non-GAAP) 17.74%  18.06% 15.44% 13.08% 15.65% 17.11%  13.91%
                   
Weighted average common shares outstanding:              
 Basic       21,243,094    20,908,225  19,207,307  16,029,332  16,029,332    20,961,182    14,980,349 
 Diluted      21,495,014    21,119,316  19,443,353  16,187,869  16,180,171    21,216,872    15,144,796 
Operating earnings per common share:              
 Basic (Non-GAAP)  $  0.73    0.71  0.58  0.49  0.57    1.47   $  1.00  
 Diluted (Non-GAAP)  $  0.73    0.71  0.57  0.49  0.56    1.45   $  0.99  
                   
(1)  Tax expense is determined using the effective tax rate adjusted to eliminate the impact of the non-operating items.    
                   


                   
Carolina Financial Corporation               
Reconciliation of Non-GAAP Financial Measures - Community Banking Segment          
(Unaudited)                
(In thousands, except share data)      
                   
      For the Three Months Ended For the Six Months Ended
      June 30, 
  2018
 March 31, 
  2018
 December 31, 
  2017
 September 30, 
  2017
 June 30, 
  2017
 June 30, 
  2018
 June 30, 
  2017
Segment net income:                
Community banking   $14,928    3,984  6,052  7,837  8,443  18,912   12,951 
Wholesale mortgage banking   598    562  117  449  1,238  1,160   1,884 
Other     (568)  (497) 124  (320) (346) (1,065)  (591)
Eliminations    8    7  35  27  5  15   (1)
Total net income   $14,966    4,056  6,328  7,993  9,340  19,022   14,243 
                   
Community banking segment operating earnings:              
Income before income taxes  $18,924    4,545  10,447  11,714  11,232  23,468   17,607 
Tax expense (1)    3,996    561  4,397  3,877  2,789  4,556   4,656 
Bank segment net income  $14,928    3,984  6,050  7,837  8,443  18,912   12,951 
                        
Weighted average common shares outstanding:              
 Basic     21,243,094    20,908,225  19,207,307  16,029,332  16,029,332  20,961,182   14,980,349 
 Diluted    21,495,014    21,119,316  19,443,353  16,187,869  16,180,171  21,216,872   15,144,796 
                   
Bank segment earnings per common share:              
 Basic    $0.70    0.19  0.31  0.49  0.53  0.90  $0.86  
 Diluted   $0.69    0.19  0.31  0.48  0.52  0.89  $ 0.86  
                   
Bank segment income before taxes  $18,924    4,545  10,447  11,714  11,232  23,468  $17,607 
(Gain) loss on sale of securities   746    692  242  (368) (621) 1,438   (806)
Fair value adjustments on interest rate swaps  (451)  (755) (419) (90) 69  (1,207)  127 
Merger related expenses   506    14,710  6,391  311  279  15,216   1,590 
Operating earnings before income taxes  19,725    19,192  16,661  11,567  10,959  38,915   18,518 
Tax expense (1)    4,152    4,288  5,778  3,828  2,721  8,159   4,934 
Operating bank segment earnings (Non-GAAP) $15,573   $14,904  10,883  7,739  8,238  30,756  $13,584 
                   
                   
Operating bank segment earnings per common share:              
 Basic (Non-GAAP)  $0.73    0.71  0.57  0.48  0.51  1.47  $0.91 
 Diluted (Non-GAAP)  $0.72    0.71  0.56  0.48  0.51  1.45  $0.90 
                   
(1)  Tax expense is determined using the effective tax rate adjusted to eliminate the impact of the non-operating items.    
                   

For More Information, Contact: 
William A. Gehman III, EVP and CFO, 843.723.7700